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
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.
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.
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.
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.
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.