Unpredictability of PE is Killing Me
I'm currently coming towards the end of my first year as an Associate at a Middle Market PE fund based in NYC. While I love the work (thesis generation, learning about different businesses / industries, learning about different business functions within portfolio companies, etc.) and have been receiving pretty good reviews, I really have a tough time with the unpredictability of my schedule within PE.
No way around it, I'm a person who enjoys routine and being able to have some control over their schedule (within reason, I'm still very much aware I'm at the bottom of the totem pole). Although I find it highly annoying to have any sort of daily routine blasted away by a particular live deal sprint or the ever present portfolio company ask, its the random traveling that really bothers / stresses me.
That said, I'm wondering if anyone has any suggestions. I know that as I move up the ranks of PE, travel and the unpredictability of the day-to-day are only going to increase. At this point, I'd love any suggestions about career paths with some of the positives I have today, without some of the ulcers.
Assuming you came form banking, were your hours more predictable?
I understand your frustration as I have felt some of this myself. The best way i have tried to address this is by freeing up my morning. The unpredictability really messed with me as it relates to working out during the work week. i use to try to do it after work, which was a bitch since i would be too tired to even workout after work. I now just do it in the morning around 7am. The other thing i hated were interfering weekend plans, i realized its either I'm making late evenings plans or simply a quick brunch, that way it gives me enough time to allocate towards works to get enough done but not totally fuck up my entire weekend.
I'd suggest you just start laying out the things you wanna do and find small ways to incorporate them into your schedule despite the unpredictable nature of the job
I feel you - as you've noted and probably seen at your own firm, travel only ramps up with seniority and with more responsibilities around portfolio management, you're never really off the clock. People that aren't deal junkies and manage to stomach this for a career usually do so by making the most of their downtime with the understanding that whatever long-term plans/vacations they have are subject to getting blown up.
If this doesn't sound appealing to you (and it doesn't to most), I would recommend looking at LP/co-invest roles or potentially public equities where hours tend to see less variation.
Trying not to repeat the above comments since they hit the nail on the head... but this is pretty much a requirement of the job. It's certainly worse at the ASO level, but even VPs / Principals will get blown up by PortCo issues or Partner asks on the weekend.
I was never comfortable with the idea of getting blown up on vacation and because of that never took time off. Weekends I felt I could only prioritize 1 thing (i.e., one event / chore I could check out for) and everything else would have to be second to work if it came up.
I remember I had one Saturday where I had to coach a basketball game at 10am (middle school team), then right after we had an end of season party, then my parents were visiting me and we had a dinner / concert at night. My VP asked me to work on a PortCo ask that Saturday (wasn't even a live deal, just a deadline he gave to the partner in his head) and I told him I quite literally had important plans all day. He didn't believe me so I listed them out and he told me to pick which one was most important and go to that and I'd have to skip my other things for work. I did end up coaching that morning but skipped the party and was late to dinner, but man I was bummed. I was fine giving up control of my weekdays and most of my weekends, but I couldn't have one day off to celebrate my team's season and spend time with my parents? It would be one thing if I was asked to skip watching playoff football at the bar (which had happened the weekend before), but if I can't prioritize family and giving back ahead of work, it wasn't worth it for me.
Hopefully I don't sound like I'm venting but brought this up to show that this is sort of the way things are for awhile on that career path, and even partners work weekends. Once I realized that I knew PE wasn't for me long term since I really value having free time and not having to feel 'on call' all the time (literally 24/7). Not saying that this should be your next move, but rather try to figure out what is most important to you in the long term so you can try to move towards a job that will fit in with that.
Damn, this sounds terrible. As an undergrad considering prospective career paths, is PC/Distressed & Special Sits at a MFPE firm better than Corp PE in terms of the unpredictability of work as well as overall time working/WLB?
Yeah it was pretty brutal NGL. To clarify I'm in a new role now but at the time I was at a UMM, Sector Specific (non-Tech) PE Firm in a Tier 1 City (don't wanna get too specific).
It's a fair question; I have a few buddies in Private Credit and their hours were definitely better than mine. At the same time, there are definitely still deal sprints that lead to canceling plans. I think any job that is transaction oriented is going to have those ups and downs; it's the nature of the industry. Better question is how often are you okay with those coming up (once a month, once a quarter, etc.) and how long you can put up with it.
I survived IB since I knew it was going to be like that, but I thought and hoped PE would be better. When it wasn't, I felt it was time to leave.
Private Credit yes should generally be better on WLB. On distressed/special sits - that part of the investing world is filled with blood thirsty psycopaths who are on a mission to kill - so would expect worse WLB if anything.
Your VP is a total dildo to make you write out and choose. Unreal. I would publicly berate that VP in a team meeting if he worked for me.
Seriously... that VP is not the norm. I hope he was working right next to you all Saturday with that ridiculous ask. If you had a decent relationship with the Partner at the time, I would have went around my VP and asked him how important this was.
youre a BITCH. shouldve said im already busy, ill work on it tomorrow
Yeah man not sure if you read the comment but I told him twice that I had plans, and he pushed back harder and harder each time. Easier said than done, trust me.
If my VP treated me like that I would (more politely) tell him to shove it. No one is going to respect you or think you’re worth their time if you let yourself get walked over to THAT extent. Sure REPE is more chill than buyout, but I still nothing in finance is ever THAT important
Perhaps you have a point but I politely (as you said) told him I couldn't work multiple times, and he wasn't having it. It's a tough look when the VP is also making the 50+ year-old CFO work on Saturday and you as the associate aren't there on the Zoom calls. I agree that it's ridiculous the VP wouldn't cover for me, but not sure what else I could have done outside of being downright insubordinate (which, maybe I should've been in retrospect, but hard to think like that when tens of thousands of bonus dollars are on the line).
*deleted*
On deal sprints all bets are off but if you have a good associate it gets far better at every level in my opinion.
Know the feeling. It's frustrating, somewhat similar in MM PE London. It's not so much working on the weekend (other than say ~2 hrs reading on Sunday), but I hate the random tasks or last min travel sometimes.
Perhaps consider Investor Relations or PE Secondaries / Co-Invest? Still involves thesis generation in the latter, learning about diff industries etc.
Happy to chat about LP / co-invest WLB. Made the switch from UMM PE 10 years back and find that the trade offs have been well worth it. Feel free to DM.
For the benefit of the group, a few questions.
what do you like about the move? How many transactions do you do per year? What’s the comp progression been like?
thanks.
For me, the best parts have changed over time. Initially, the appeal was getting control over my life again like the OP mentioned. Over time, I've appreciated more and more what I characterize the "risk/reward" of the role. There's a TON to unpack there but effectively it means stability and steady income (and a ton less stress thinking about the future and at higher levels, actively sourcing deals and playing the politics game), at the "cost" of the crazy upside that comes with direct PE. And at the end of the day, for me, it's about being able to eat dinner with my family and spending 1-2 hours with my daughter before she goes to bed every night - just being there as she grows up, without having to worry about which deal is going to blow up my plans.
More specifically on the topic of junior WLB - our associates work 40-50 hours a week, but we are fully remote on Monday and Friday, so I am assuming they are not glued to their laptops while things are slow. Very little weekend work, even when on deals (although the A+ associates put in a couple hours to "get ahead" for the week). There's high WFH flex (illnesses, appointments, etc.). Vacations are encouraged and the entire team tries to manage workload to staff around them (long weekends, weddings, etc.). Also, everyone on the team takes on average two 1-2 week vacations per year (typically during summer and between Xmas-New Years), where we push back on our GP deal timelines to account for these. Personally, I am going on parental leave (as a male) for ~3 months once my second kid is born this year, which I really appreciate. Ultimately, we are still a deal business and when we need to crank, we crank - but everyone who is on the LP side is there for the WLB, so there is high focus on efficiency and avoiding late nights and weekends when possible. It's also a lot easier to push out timelines as a co-investor (especially if you have credibility with your GP partner that you can eventually deliver) than it is on the GP side, where missing a milestone or deadline may lose you the deal.
I caveat that I am at a SWF/pension (think CPPIB, GIC, etc.) with permanent capital instead of funds, so our comp system is a bit different. Comp generally is definitely the trade-off and you can expect TC to somewhat align with pre-2021 IBD levels ($200-300K for associates; $400K-$1M for VP/Principals; and $1-2M for MDs). As you progress, there is a greater portion of the TC that is deferred. Other LP FoF (Lexington, NB, etc.) will have carry, but keep in mind their cash comp may be lower, they have fundraising burdens, and their fee structures are typically 1/10 instead of 2/20 (and those FoF who belong to a larger platform have to give half their carry to the "house" - firms like Strategic Partners/Blackstone; Ardian; AlpInvest/Carlyle, etc.). I like to pro forma my comp for hours worked and sanity, so I generally multiply my TC by 1.5x to make myself feel better.
One major thing about comp though is the consistently - there's very little variability in the bonus, and we are not cyclical. Our CIO told us that if our mandate was cut to $0 this year (as a lot of SWFs/pensions are getting overweight on PE as a % of AUM since other asset classes have tanked), no one would get fired. There is immense job security, perhaps more so than any other finance role.
Our team generally does ~8-12 deals a year, with each deal taking ~3-5 weeks to complete. Those timelines require us to focus more on the setup and core thesis / underwriting assumptions, and less on the accounting and 3rd party DD that consumed my life as an associate in UMM PE. I also get to do 3-4 deals a year and learn about 3-4 new business models / industries / GP strategies / geographies, which I find very interesting. For me, starting from a fully baked GP IC deck and market report and making an investment decision is a lot more interesting than CREATING that work, even though I definitely lose some depth in the analysis (but gain broader perspective).
As you can infer, there's no chance I will make $10M+ in carry through the life of a fund (and have 2-3 funds paying out that level of carry simultaneously). But, the comp is enough for me, and the benefits of job security + having time to focus on family and the other important things in life is (to me, at least) well worth it. It's all about the (lower) risk/reward.
Thanks for the great write-up. I know you said you wouldn't make $10MM in carry per fund like a GP but, in LP firms where they're consistently raising funds and charging 1/10, is it possible to have several millions per vehicle in carry at the MD level? I am also thinking long term about my life/career and wondering LMM/MM PE vs. larger FoF with a direct co-invest strategy.
Yes, definitely possible at a strong flow FoF. It's all dependent on how fast you raise and deploy however, and you'll have to take into account the economics. Maybe easiest to use numbers to outline an example below.
Take a large-cap FoF (owned by someone like Blackstone or Carlyle) who raises a $4bn co-invest fund. The carry pool for that is $600mm (10% carry on a 2.5x gross MOIC or gain of $6bn). 50% of that goes to Blackstone/Carlyle, so $300mm of carry is left for the partnership. If you don't have a large cap owner, then more of that belongs to the partnership, but the trade-off is that you won't have an IR and sales distribution machine to fundraise and your velocity + fund size will be lower.
Doing backwards math on a PE fund, a $300mm carry pool implies a $1.5bn gain, which assuming 2.5x MOIC is a $1bn fund. So effectively, a "large-cap" co-invest fund is equivalent in carry economics to a $1bn LMM fund.
Same principles apply to secondaries. Blackstone Strategic Partners just raised $25bn, so you can do the math there (roughly equivalent to UMM PE).
If you assume you can raise/deploy co-investment 2x as fast as a $1bn LMM fund (i.e., every 2-3 years instead of 5 years), then all of sudden your economics are equivalent to a $2bn PE fund. If your partnership layer is thinner (because less need for multiple sourcers / cap markets / op partners), then the economics get even better as your carry points are higher.
There's other puts and takes because FoFs need to share economics with partners across other less-lucrative strategies (primaries, etc.), but that's the general idea.
Generally though as you go to higher velocity and larger funds, you'll find yourself grinding similar to how you would in direct PE as it's all about deployment and raising. Until the music stops (PE index tanks and fundraising dries up) or our jobs are replaced by ChatGPT.
Do funds like yours hire straight from IB? Including post-MBA associates?
Usually through recruiters or opportunistically. Most firms prefer analysts with 2 years of banking experience, as the path is typically 3+ more years until VP promote. MBAs are typically less patient. If you DM me your background, I can give you more specific feedback.
For those at smaller (below MM) PE shops, do you feel like your experience is like OP’s, or is WLB generally better at smaller shops (understanding comp is also proportionally lower)? Like the rest of us, trying to make sure I know what I might be getting into…
I'm at an LMM (~$600m latest fund) and my experience has been nowhere near as bad as op or the poster further up... The one point op made regarding travel still holds though. The frequency of travel was one part of PE I wasn't really expecting coming in. It ebbs and flows, but I've had a couple months where I'm travelling 2 - 3 weeks in the month. Others will be 0 so there's really no way to plan for it (outside of knowing when the quarterly board meeting travel will be).
My fund's pretty tight knit and I could never imagine only being able to prioritize one weekend activity like rubiomn9 said... Weekend work is rare for me outside of deal sprints. Also at my fund they're very good about not blowing up vacations. I've taken three separate week-long vacations in 1.5 years and I've pretty much been able to not look at my emails during them (gotten great reviews and offered senior associate promotion, so not seen as slacking).
As a counterpoint to the above comment. Work at an LMM (~$500m latest fund) and my experience is exactly like the OP. Weekend work is basically consistent and I usually expect to be working most of my weekend, deal sprint or not. I took the gig as it brought my wife and I close to family, but the level of turnover this fund had experienced consistently over the last couple of years was a bad sign coming in.
Even at the lower end of the market, there's definitely no guarantee you'll end up at a place where WLB will be better. I worked at 3 banks before PE, and my hours now are worse now than 2 of those 3 banks (for a discount of the pay)
The unfortunate truth is: it is a lot of hours and predictability is low from week to week. The good news is: as you go up in seniority you move from your stationary to your laptop, and then onwards to you ipad and mobile. You can take a call or type an email from many destinations and that certainly gives you a lot of freedom that is quite unique to the job, especially in the context of the comp.
Ultimately you are never truly ‘free’. A deal stays with you for many years (especially the unfortunate ones) and the pressure is immense - to deliver deals and good returns. You have to love the job - if you don’t, it is a tough journey ahead. And while you can find ways to increasingly incorporate hobbys and turn your professional network into (sort of) friends (or vice versa) it never slows down.
Agree. Not being able to control your time is the worst thing. Once had a portfolio company submitting bad monthly numbers. 5 mins after we got the numbers my partner tells me we're catching a flight in 3 hours. I also found that the unpredictability of my schedule was very much due to the schedule of my VPs. Whenever my VPs were busy, they only had time to look through things on late nights/weekends. So I would always get urgent requests late at night or during the weekends simply because there was no time for my VPs to check it during daytime. As a result I would many times sit around with little to do during the daytime and then being hit with a bunch of urgent requests during the nights/weekends. Really sucks when its 9-10pm and you're mentally prepared to leave any second and then you get hit by some urgent request by your VP because he has been stuck in meetings all day.
This drove me insane. I had a VP who used to give me comments at 10:00pm and tell me not to go to bed until I send back revisions and he sends another set of comments. So I'd send back at like 11:30am and then wait up for him to send another set of comments. But that dickhead had gone to sleep already so I'd be waiting up at least another 30 minutes minimum waiting for him to respond.
If you are reading this and you do this to your Associates, just know that if Dante had written Inferno in 2023, he would have made an innermost circle of hell for you.
" I had a VP who used to give me comments at 10:00pm and tell me not to go to bed until I send back revisions and he sends another set of comments."
WTF is this? I'm lucky the VPs here are not like that. That must me from the top down. this type of behavior seems crazy to me.
My hours are predictable, in that I just know I’ll be working 100 hours a week, so there’s no reason to make plans, etc.
My experience in PC is that my weekends are rarely ever completely blown up, same goes for my colleagues. You still get the same relevant experience (evaluating businesses, meeting management, etc) you also get to close more deals but the level of unpredictability isn’t nearly as bad as you laid out
Are the deal cycles shorter/faster in PC?
ITS FUCKING KILLING ME
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