Thoughts on Investor Relations? A good or bad move?

Hello Everyone,

I was recently approached by a recruiter from one of the Big 3 PE firms about an IR position. As an analyst I had never really considered it as an option until now. The pay is extremely competitive compared to what I'm making now as an analyst at a consulting firm (They're offering me 6 figures plus sign on which I believe is a bit high for the space, correct me if I'm wrong), but wanted to get the community's take on the field, exit ops, or other things I might want to consider before making the leap.

My concerns (not being an expert) is that growth is a bit flat. I'm 26 years old, relatively early in my career and don't want to make the mistake of chasing a short term jump in pay only to shoot myself in the foot and not have any good exit ops or vertical growth potential within the firm,

As I understand I would be working with the team responsible for the fund raising as well as some of the strategy folks for the educational purpose of answering some anticipated LP inquiries. The rest of the responsibilities outlined seem very vanilla.

So I guess another question is how attractive is fund raising and cursory level strategy experience in the eyes of other firms? Does anyone have any stories about moving around from IR to other teams within their firm or to competitors?

All thoughts and questions welcome. Thank you!

 
Most Helpful

I'll recycle and repost this from another response I gave.

Pros: generally better hours and less need to deal with the deal minutae.
Cons:

  • far less respect than deal professionals, both internally and externally;

  • less control over your career and process

  • highly repetitive and logistics oriented

There is a huge amount of variance in terms of comp. I do see some former IBD people, but it's generally more equity sales folks or former placement agents. I also do see some deal people who switch over, but that's more rare.

You do see far more women in IR than men. The job is very EQ-heavy and involves relationship building, and many women outperform the men in that department.

I'll paint you some pictures and you make the call as to whether it suits you:

  • You will get to repeat the same presentation 300 times on the phone and in person with LPs

  • You will try to pull LPs thru a process, which takes a lot of logistics and handholding and this is not mentally interesting, but you have to make sure that a million logistical things go right and they sign the dotted line

  • You will go to conferences and schedule a ton of meetings and juggle calendars. If you're at KKR people will want to meet you. If you are at a MM firm, you're going to be like a cheap hooker walking the streets (via email) shilling your smaller fund. You'll get to send out 300 individual and personalized emails to all LPs at a conference saying "Hi, I'm at RRK, a mid-market fund that has had stellar 20% returns. We focus on oil & gas. Care to meet? I give great handjobs." Well ok maybe no HJs, but there's a lot of begging for meetings and phone calls, 80%+ are ignored.

  • You have to track a lot of minutae in the CRM. You have to follow-up. You are judged by how much you close.

  • You will spend countless hours in Preqin and Pitchbook researching out LPs and their preferences, only to be ignored or told what you're selling is not what they like to invest in. You will get angry responses back ("Did you even check out our website first???!!" Yes I did. My bad. Sorry.)

  • All deal MDs/CIOs think their fund is awesome. So if your fund doesn't attract money, you will be blamed. If your fund raises money, you probably will not get credit. When I raised $1,5bn at a high returning fund, I was given no credit and only a standard 2 month bonus, because the fund returns made IR look easy. When I joined a smaller fund that then struggled with returns, I got reamed daily. It was beyond toxic. The CIO was yelling "What do you do all day??? You've raised FUCKING ZERO!!!" As if it's my fault no one wants to invest in a fund that has major strategy drift, a CIO that belittles LPs to their face, has little focus, and a negative 25% annualized return.

The degree to which an IR role is fun to do depends greatly on the firm / product, the degree to which you're respected and compensated, and your own disposition.

I'll give you some case studies:

  • My former analyst didn't want to touch deals, didn't feel she could really do finance, but liked people. She organized family office gatherings for fun on weekends. She has now been hired to a megafund. Good for her.

  • Another friend was a FoF LP that went to a mid-sized fund which he has helped to grow to >$1 or 2 bn. He told me he gets paid a nice base and a very significant % of the capital raised. I think he might clear $500k / year during a fundraising year. Plus he gets carried interest.

  • My last IR gig I took a 40% pay cut (went down from $275k+ to $150k) because I was desperate to work on the deal side in healthcare. Punchline? I got slotted permanently in IR and didn't work on deals. Bitter? You bet. I worked 80+ hour weeks, 7-days per week, only took a few days vacation in year 2 because it was mandatory, and I still had to spend much of the time on a laptop.

  • The person junior to me at that shop came from equity sales. She worked at the role for a year then went back to the ibank to make more money. She found the hours in IR to be longer than equity sales, and not well compensated.

The degree to which IR has better lifestyle depends also heavily on the shop. IR has to make a lot of calls and be on emails constantly. You're always on the hunt. You have to generate your own leads (unless I suppose, it's KKR). You may be traveling a lot. I know some IR people that are >50% of the time on the road. Others travel maybe a couple of weeks a quarter.

And the degree of ease and fun in raising is dictated by the product. When I was raising for an ultra-high returning PE fund, the calls came to us. I got to meet Fouad Said (Oxford's business school is named after him), got to meet Henry Kravis who headlined an investor conference we put on, met the named founders of more LPs than I could remember. When I worked at smaller startup PE funds it was like I had an infectious disease - no one want to even shake my hand at a conference, much less have a sit-down.

Maybe that's for you. Maybe it isn't. Just go in with a clear understanding of what you're walking into and what you're giving up.

 

Did a short stint at a top-tier placement agent. Here are my takeaways:

Pros: Easy work, not asset-driven, so limited modeling. Mostly presentation making, speaking to LPs and GPs about fundraising opportunities, organizing meetings between the two, administrative stuff of the sort. Pay is good for the effort it takes to raise capital. The work you need to put in to get a 10mm commitment is roughly the same as the amount you need for an 100mm+ commitment, and you make fees based on the total sum raised for your client. At the senior level, the job is really cushy and easy. Rarely were partners ever at the office past 4:30. They mostly travel around and keep up relations with the big pensions across the country, so a lot of wine and dine.

Cons: -Pretty disrespected area of the business - Reeaallllyyyyy difficult to recruit out of if you want any type of investments role later on, which is why I left ASAP - IMO (at least for placement agents) a dying part of the industry as PE is trending towards consolidation of MM and UMM funds, they are creating their in-house IR teams and them+their reputation/track record is enough to raise capital. - Work feels boring and administrative for the most part. You don't feel like the work you do is that important or consequential, and leads to you feeling weird about where you are in your career. Rarely do you help out with asset-level/deal work. Rarely do you touch a model except formatting existing ones for a presentation etc.

TLDR. would not recommend, unless youre set on the easier lifestyle and happy to stay in this industry and work your way up. If you have other ambitions, move to something with more mobility

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