UMM/MF PE to Secondaries Path
Currently an aso 1 at a UMM traditional PE firm and thinking about my career past the aso stint. I am strongly considering secondaries but had a few questions, if anyone has a few min to spare:
1. Given I'm in a relatively diligence-heavy role, would I have an advantage in pursuing GP-led strategies? Do these firms looks favorably upon a UMM PE stints compared to others?
2. How feasible is returning to traditional PE (MMPE most likely), especially from a GP-led strategy? Is secondaries worth pursuing over a MMPE snr associate seat if I favor upward mobility / better WLB?
3. Secondaries and continuation funds in particular had a big boost over the past few years from a difficult selling environment. As the market "returns to normal," is this influx of CF opportunities expected to decrease?
4. Secondaries funds are underwritten to lower MOIC and carry econs so comp is typically described as lower, but would it be accurate to say that this is partially mitigated compared to buyout funds by smaller teams?
Thanks in advance!
I thought about this. Was UMM PE and rolled off my program this past summer
1. Yes, they want PE backgrounds.
2. It will be hard unless you go to first time fund or smaller org. UMM PE will not be as receptive for the background given how many people stay on the PE path
3. No one really knows but there has been a lot of growth over the last 2-3 years. My gut says secondaries are here to stay although growth will slow
4. Actually secondaries funds perform better than PE funds (esp CVs. Most sponsors try to roll their best assets to monetize them twice. Obv some bad CVs *clearlake)
I think secondaries is a great mix of W/L and comp although I decided to not hop off the buyout path
Thanks! Why did you decide to stay in buyout? Are you planning to stay long-term?
More than anything, make sure you like the strategy. Secondaries is getting a fair bit of attention lately but it’s important to remember that you’ll be playing a very different role in the market than buyout and primary investors. You are the liquidity valve. Cleaning the fish tank. I spend most of my time sourcing, structuring and executing deals, thinking about SPVs and other ways to get a deal done etc. Not as much financial engineering and the level of diligence varies widely on the available info.
If you made the jump I would seek out a smaller secondaries fund and try to stay for the long run. Comp is lower on average so you’re better off toughing it out to get economics than wasting a couple of lower compensated years just to jump back to buyout. It’s a good part of the market to know about but not something every buyout guy needs to know intimately. Will mention WLB is better than buyout in almost every instance.
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