Top performing PE Associates
Ignore title above; understand that this question has been asked in different shapes and forms but here it goes:
I’m starting as an associate at an UMM / MF, and wanted to know what differentiates a top performing associate vs a normal associate (aka associates who get a promotion to principal vs those who do not). I am also interested in understanding your views on two additional items:
(a) assuming baseline intellect, ability to ask questions and voice opinions etc., how much do optics matter when it comes to people forming opinions and them carrying forth? I.e., do you need to build a particular image in the first few weeks / achieve certain goals?
(b) do you have any tangible ideas on managing the stress in this job? Especially not thinking about work / managing anxiety when you’re not at work? I know this is not a lifestyle job, but would appreciate any insights into how to manage it slightly better
Thanks in advance!
Bump
Real answer is it’s not really under your control. You work with a midlevel / partner that is constructive and secure in themselves? They’ll teach you and you’ll be seen as doing well over time.
you get staffed with a team that looks at associates as resources to be wrung dry? Doesn’t matter how good you are - unlikely to thrive.
the other thing that’s true of PE that’s less true in banking is there’s more implicit bias - what I mean is this. You tend to see similar people “bunch up” - the westchester / Wharton partner shockingly seems to get along well with an associate of similar background - it’s just human nature.
A certain portion is not under your control but there are still a lot of things that are. If an associate excels at their position and demonstrates a willingness to support their VPs/Principals with tasks that are traditionally their responsibility they will be more likely to differentiate themselves. Nothing will guarantee a standout reputation, but there are things that make an associate highly likely to have a good reputation and give them a chance of standing out.
1. Work Hard (do not complain and do what is asked)
2. Be intellectually engaged in work (i.e. don't just process. Read the monthly reporting pack from your portco, ask questions and speak up)
The rest is out of your control. PE is not an industry that really cares about junior development. The associates that get staffed on deals early on continue to get staffed on deals and it becomes a perpetual cycle where the rest of the pack falls behind
Comment above is true. So much depends on who you work with and their willingness to teach and mentor you, how effectively that person can run a process, and whether you get fortunate with your staffing / portcos.
Anecdotally from my associate class, in terms of raw intellect there was a pretty high baseline (+/- 10% variance), but that ultimately wasn’t the reason why some got promoted vs others did not. Competence is only a baseline, high performance is a strong pre-requisite.
Besides the standard advice of working hard, making sure your stuff is correct, speaking up and articulating insightful views, I’d focus on whether there are specific subindustries, transaction styles, etc as you go through your associate years where you feel you are naturally more inclined to or have an “edge” in - this may act as your point of differentiation between being just another associate to perhaps partner one day at this firm or another.
Thank you; could you please elaborate on "finding my edge" as the true differentiator? Are there any specific insights on how to leverage these at the associate level, when the programs are usually structured to rotate your across industries / associates having little to no say in deciding which deals / sub-sectors they get staffed on?
I got emotional reading this coming from a senior person in the industry. I did my Associate stint after batting way out of my league during on-cycle relative to the prestige of my bank. Thought I had the golden ticket—3 completed deals at least coming down the pike, sleepwalking into HBS, a cushy return offer to sit on while I go skiing in Chile, etc.
Actual experience was a nightmare that made me leave the industry entirely. Some midlevels and seniors actively looked down upon me from the moment I walked in, to the point that I was supposed to “prove myself” (one even said this during my review and attributed it to my bank) with public and private company profiles while my GS/MS peers got live processes out the gate. Was so demotivated that I didn’t even turn around those profiles on time, got pulled from the one actually active process I was on as a result, and had to spend my entire second year clawing my reputation back through portco work and first round bids before I closed a deal right before I left.
Now, am I to blame for not recognizing earlier what was going on and adapting my mindset to grind through it and earn my keep? Absolutely, and it’s a huge regret. But my bosses also saw me not just as only a resource, but a waterboy who needed to wipe down the seats before he would be allowed to practice. After 18 months of anticipating how much more intellectually stimulating PE was going to be compared to banking and then getting hit with months of hardcode-and-PPT work instead, you can imagine how demotivating that start was. My banking managers I will cherish and consult with for the rest of my life. My big bad prestigious blue-chip PE VP’s? Would cross the street if I saw them walking at me from the other way.
May I ask what school / kind of school you went to if you don’t mind sharing? Was the treatment only due to your bank or also your school?
Sorry to hear about your experience, my man. If you don't mind, what did you do after leaving?
It’s sad but it’s an unfortunate reality. That is also why the tops of these firms look very, very homogenous…. I’m not just talking about schools. Just pull up a webpage…
I understand that plenty of things are not in my control (at least not beyond working hard, accurately, voicing opinions, providing upwards leverage etc.), but are there things you would recommend from an optics perspective? What I am trying to understand is - people in this industry tend to work off of a basic image and use data points to reinforce that image, therefore making early wins / achieving smaller goals well publicly important - would you agree with this?
My banking stint somehow felt more like "keep your head down and continue working long hours (sometimes on meaningless tasks) and you will be fine", but this feels a more political environment in general.
Speaking from the UMM perspective…
It’s honestly really challenging to be a top PE associate. In theory (and in reality in my experience), the quality of associates will be really strong across the board. My associate class was something like 90% top bucket banking analysts. Every person in the seat has come from a good bank, good school, etc and excelled everywhere and is expecting to be top associate there.
In banking, you can be decently smart and do decent quality work and be top bucket on sheer work ethic. There’s plenty of kids looking to coast in banking that it isn’t too hard to be in the top group.
In PE, everyone works their tail off. Everyone is smart and super strong technically.
In my experience of what actually makes someone top associate, it’s a) adding real value, b) politics and c) luck.
A) Every associate can stay up all night and build a good model and that no longer is enough to impress anyone, and same goes for any “typical associate task”. Some associates are able to take it to the next level (draft IC materials without VP oversight, drive actual DD insights vs just mindlessly analyzing data, build relationships with portco csuite to protect mid level, etc). None of this is required, but it’s the extra mile that makes you actually stand out.
B) for better or for worse, I think PE politics are actually way worse than banking. At any decently large PE firm there’s a shockingly small number of people that have real power, and at a smaller firm it might be up to 1-2 founders only. These few people will make snap judgements and it unfortunately matters a lot. Plenty of solid associates are loved by a partner and get the red carpet treatment while other just as good associates aren’t well-liked. My first week I went on a management meeting and flew private with a senior partner, we talked the whole time and clicked and it certainly helped me out over the 2 years, even though it wasn’t work related at all.
C) luck is massive in PE. Some associate is going to end up dealing with a bankrupt portco for a year and get no deal reps, and then they’re seen as less then due to association with a bankrupt company (obviously no fault of their own) and lack of new deal work. Some other kid is going to get put on a live deal 2 weeks before it signs and somehow get credit for closing the deal. It’s just random but all you can do is take the cards you’re dealt and do your best.
Thanks for the detailed response. Could you please expand on "drive actual DD insights vs just mindlessly analyzing data"? Is there a way you can develop this as a skill? Lots of analysis in banking was mindless because it is normally "client driven"; how do you orient your mind to drive actual insights from the data vs just mindlessly do what you are told?
From my experience, it’s mostly luck and culture. Everyone from an associate level is smart and comes from top IB/Consulting groups and can do the job (at the end of the day it’s just learning how to cut data, which insights you’ve learned from doing it 100x, how to put together materials to convey the message properly, etc) which you learn how to do. I think you can get a slight edge by going above being an excel monkey or PPT jockey and leading diligence or deriving insights for the senior team so they don’t just see you as a resource. However, I say that knowing that some of my peers did this and didn’t get promoted relative to others because they didn’t fit the culture or some higher up connected with the associate on a personal level, etc.
All this to say - yes you can punch above your weight in terms of title but I’ve noticed most PE firms (than other industries) are very political and will just promote who they like and who plays the corporate game. So if you want to maximize that, just play the game I guess. If you aren’t into politics, it’s probably not for you (and will only get worse as you move up and the pyramid becomes even more narrow).
Politics really boils down to making the right/important people like you. It's true in banking and true in PE. Figure out which mid-levels are good/important and align yourself with them: work hard and be fun to work with. Once you get their buy-in you'll naturally be asked to play up and it's a virtuous cycle from there. That is basically the only thing that differs between an average and top associate. (source: am top associate)
Stress:
The way I keep myself sane is by remembering the following: no one is dying on an operating table (ik its not a great comparison but this is what helps me), I'm not putting out literal fires. It will all be ok. The typo on page 14213 of the ppt will be fixed, and the balance sheet will balance...not sure if that helps
My parents work very blue-collar jobs and honestly hearing about their physically demanding jobs puts things in perspective for me each and every day
Good vs. Great:
I wouldn't think about it that way. I'd think about it as effective vs. not - effective in communicating, effective in showcasing your contributions, and effective in contributing to culture.
It's not always the great associate that gets promoted. it's the one that is liked and is able to communicate well and effectively. The person that gets promoted always shows the work they do and the tangible impacts. Don't think "people will see all my hard work". No. You have to be proactive in showing them. for instance, you read a relevant report, send around notes. Your MD asks you to attend some conference - send around a summary of learnings and folks you met. A part of this job is showing you are doing work
hopefully helpful :)
This is super helpful; exactly the type of advice I was looking for. Do you mind if I PM you? TIA
of course. feel free to PM
Assuming you meet the minimum baseline for (1) common sense, (2) corporate finance knowledge and (3) modelling skills: luck
Luck is literally the only thing that matters, I’ve seen so many brain-dead, low EQ people get promoted over the objections of the rest of the team because they got into the lucky sperm club / are the same ethnicity or wtv as some c-suite backer / are of X nationality when the firm is trying to crack X country, etc
That being said, the 3 factors mentioned above are what will let you pass your probation period and let you lateral if you find yourself in a toxic hell hole.
Re: all the advice about being able to make the “right people” like you or wtv, it doesn’t really work that way in a bad culture. You don’t always have a choice / you may not want to take that choice. Bad cultures are usually due to incompetent people, and these people always need a scapegoat.
I can’t emphasise getting positive feedback from ex employees (lack of -ve feedback is insufficient since few people openly bash their ex employers) and being wary of firms that grow too fast too soon.
Largely agree with all that's been said. Only point I'd make is I might focus on nailing the execution of the job (typical associate tasks mentioned above) in the first 6-12 months. There tends to be a steep learning curve coming from banking, and generally you need to build trust before a mid-level is going to let you truly play up.
Once you've earned that trust is when you start getting opportunities to do all the things mentioned above - play up, draft parts of the overview / IC materials on a deal, lead parts of DD calls, etc., and people just generally take your opinions / insights more seriously. At least anecdotally from my own experience / observations.
Yes it's more political than banking and yes ultimately some of it will come down to luck, so wouldn't overengineer it too much. Work hard, get the initial things right (and hit your deadlines) and pivot along the way as you get more accustomed to the firm / team and observe what the folks ahead of you that get promoted are doing.
By leading DD calls, do you mean the later stage calls with management? Because at my firm associates lead (industry) expert calls at the early stage and late stage too.
Probably referring to advisor calls (like BCG etc). Think leading expert calls is the associate's role at all funds
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