Sourcing vs Execution in PE

Based on the most helpful WSO content, here’s how you can approach your dilemma:

1. Pivoting to Execution-Focused Roles Later: Transitioning from a sourcing-heavy role to an execution-heavy one can be challenging but not impossible. Firms often value candidates with strong execution experience, especially those with investment banking backgrounds, as they are seen as more technically proficient in deal structuring and diligence. However, if you can demonstrate solid execution exposure (e.g., leading IC#1, short-form models, or diligence processes), it could help mitigate the perception of being "just a sourcing guy." Networking and leveraging your current firm's reputation will also be critical.

2. Is Execution Overly Romanticized?: Execution is often seen as the "sexy" part of PE because it involves deal structuring, financial modeling, and negotiations. However, sourcing is the lifeblood of PE. Without deals, there’s nothing to execute. Senior professionals in PE are often judged by their ability to bring in high-quality deals. If you excel at sourcing and can close deals, you’ll be indispensable. That said, a well-rounded skill set combining both sourcing and execution is ideal for developing an investor mentality.

3. Balancing Sourcing and Execution: If your current role allows you to continue gaining meaningful exposure to execution (e.g., diligence, modeling, and deal structuring), it could make a significant difference in the long run. Highlighting these experiences on your resume and in interviews will help position you as a well-rounded candidate. Additionally, being at a reputable software PE firm with $20 billion AUM already gives you a strong platform to build your career.

4. Banking vs. Staying in PE: Spending two years in banking could provide you with a more execution-heavy skill set, but it comes with trade-offs. You’d be stepping away from PE, potentially delaying your long-term goals. If you’re already gaining execution exposure in your current role, staying at the PE firm might be the better move. Moreover, your background as a Mexican professional working abroad in Europe or the US is highly valued in the Mexican PE market, which could give you a unique edge when returning.

5. Perception of Sourcing Professionals: While sourcing-focused roles can sometimes be viewed as "second-class" compared to execution-heavy roles, this perception is changing. Many firms now recognize the importance of sourcing and even have career tracks for sourcing professionals that lead to partner-level roles. Compensation tied to sourcing can also be lucrative, especially if you’re closing deals.

Recommendations:

• Stay at the PE Firm: If you genuinely enjoy the role and the firm, and you’re gaining exposure to execution, it might be better to stay. Focus on building a track record of sourcing and closing deals while continuing to develop your execution skills.
• Leverage Your Background: Your international experience and unique perspective as a Mexican professional will be highly valued in the Mexican PE market. Use this to your advantage when planning your long-term career moves.
• Network Strategically: Build relationships with professionals in execution-heavy roles to learn from their experiences and potentially pivot later if needed.
• Develop Technical Skills: Continue honing your modeling and deal execution skills through on-the-job experience, online courses, or certifications to ensure you’re not seen as "just a sourcing guy."

Ultimately, the decision depends on your long-term goals and how much you value the current opportunity versus the potential benefits of a banking stint. If you can balance sourcing and execution in your current role, you may not need to pivot to banking at all.

Sources: https://www.wallstreetoasis.com/forum/investment-banking/breaking-into-private-equity-from-banking?customgpt=1, PE Deal Sourcing Comp / Lifestyle, Private Equity vs Megafund Credit, Private Equity vs. Venture Capital in 2018, Taking the plunge.. from New Zealand