Struggling with caring about deals we do
I moved to PE last year after 3y at a sweatshop bank, and one thing I have been struggling with is the feeling of actually caring about the deals we’re looking at, does anyone feel the same?
When I was in banking everything was pretty detached in a way - you’re just selling a service to somebody. Here we have agency over our decision but the reality is I don’t believe in most of the decisions, and most people are just trying to find creative ways and convince themselves to get a deal done, because the reality is that most businesses out there are very average at best. And I think this wouldn’t change at another fund
Every conversation is also about executing cost cutting programmes, firing people and so on. I feel like this is really net value destroying for society, especially when I’m looking at industries that should be managed for the greater good
has anyone struggled with the same after the transition from banking? Other point of views appreciated
Nowhere near as experienced as you, but also think people you work with also matters a lot in how you perceive specific deals to be interesting. Have been on transactions where you're selling a boring asset, working with boring people which is just mind-numbingly boring. On the flip-side, working on interesting stuff with people you like is huge.
Unfortunately it’s true that I am not a bit fan of my colleagues
But I have come to accept it’s the reality across most of PE from speaking to other friends or ex colleagues of mine. PE feels a lot more like a “normal” job environment but high intensity, banking is almost like being at school again. Quite a few people with odd personalities
This probably just means the job isn't for you long-term.
If you can't find things to be interested in / excited about in the businesses you cover, you're going to struggle to motivate yourself as you get more senior and have more ownership over decisions. Don't see how you make a long career investing other people's money if you don't believe the things you work on are good investments or interesting.
That said - if you're at a firm where the only idea they have to make a business more valuable is truly "fire people" - you should know that that isn't true everywhere. You might find another firm's style more engaging / believe in it more.
I don't think this is uncommon at all- just a reflection of a lack of trust in the firm and strategy. For what it's worth I don't think this is true for all places. I felt the same way at my prior firm and I feel a lot more engaged at my current one where a) the seniors are humble enough to actually listen and care about what you have to say and b) have differentiated insights and relationships that add value beyond just running around banked auctions with no angle.
Disagree with the poster above that's saying this career isn't for you long-run. I don't think anyone in the investing business wants to work with seniors that aren't insightful/have no edge.
I struggled with this a lot as an associate as well and for me a lot of it was feeling detached from the deals being tied to my comp given no carry at that level. In retrospect, I would have tried to reframe it as needing to make sure I did a deal for the sake of my career trajectory, as having closed a platform really impacts you significantly if you're going to have to lateral or go to MBA and recruit afterwards back to PE. I think it's less impactful internally if the firm just isn't that active during your associate years / they will understand more clearly if you did good work but just got unlucky on actually closing a deal, but even still it is easier to promote you if you did a deal. Try to use that framing to incentivize yourself and feel less detached
This business has largely turned into a race to deploy capital, raise bigger fund -> increase fees -> repeat. Some investments will work out, some won't so much. Seems like the main goal for funds is to manage to avoid goose eggs and be active enough so that the party can go on. It's largely a commoditized, process oriented industry of musical chairs. Though it also can be quite interesting thinking through a thesis analyzing risks/opportunities etc, where the job is genuinely interesting. I also try to view the processes as a way to see my work in action, wrangling all your 3rd parties, driving workstreams with operations/finance teams to get things done, being the one to make decisions (even if just trivial matters) whether on a deal, sale, or portco work, can be quite rewarding to see that you played a role in a tangible outcome that you can point to.
Good point of view- thank you
Agree on the rest of the points, it’s especially bad at listed GPs (like in my case) where you always have market scrutiny / pressure
some of my female friends work in consumer specifically for this reason, much more fun buying cosmetics or smoothie companies than some machinery or plumbing rollups
Problem with consumer (at least consumer products) is that it's generally a pretty bad area for private equity to invest in. There's a graveyard of funds that have blown up doing it. Personally, I think it's better to be a founder in consumer vs an investor.
yes you are correct, but the thing is consumer is stable, not replaceable by AI, and can always be acquired, funds likes VMG, TSG, CAVU are still good seats for consumer
I would not fall for the consumer PE facade at all. Most branded/growthy consumer investing is not real PE. It’s vanilla cookie cutter stuff. Bad investments. Bad returns. Looks good on LinkedIn or Instagram. Yes probably more fun for girls who want to sit on the board of a “beauty brand” or talk about makeup. But that’s not a scalable replicable style of investing over the next 20 years.
Big exception is a Sycamore type shop which does something more specialized and has super sharp people and still top notch fund
Sorry, just to clarify. Sycamore hasn't raised a fund since 2018 because Fund II is below the pref and Fund III is middle of the pack.
This is the reason people stay in banking. Sounds like the job isn’t for you but question why you didn’t realise this earlier? Assuming you worked with your current fund or similar while in banking you would have had good insight into what PE associates are doing on a day to day basis
I’m gonna assume from your title that you are still in banking, the day to day is actually different and significantly more interesting.Even though you still spend time in excel and ppt the breadth of things you do is significantly wider
What I’m struggling with is the underlying motivation to care about the deals I’m looking at. In banking you don’t care because you’re just selling a service. I just don’t feel the “principal” mindset here when I know what’s gonna happen is at the first sign of weakness they’re gonna put through some new cost cutting programme to keep margins. And in a way I almost feel sorry for all these people that have to deal with our decisions and pressure
>70% of PE returns L10Y have come from revenue growth. Margin expansion is only c.10%.
Unless you are at a turnaround shop (Apollo, HIG,etc.) “cost cutting” is never a core part of the investment thesis.
90% of the time, the thesis is to grow the business which almost always involves 1) investing in growth CAPEX and 2) hiring more people (regardless of what the sell side tries to feed you about the “operating leverage”).
If you think that your seniors are making the wrong decisions or are “net negative” for society, leave. There are tons on MM PE shops out there where people are making a buck by improving the companies they own
You're not supposed to care about deals. Only the money you get for completing them.
Business stress🤷🏻😗
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