Very Tough Decision - Short-term Comp vs. Long-term job
Very tough decision for me here, I'll try and put it succinctly, but appreciate anyone and everyone's thoughts on what I should do. It basically boils down to massive short-term comp vs a long term job, but with some nuances.
I am a VP level guy. My last 2 PE firms (as Senior Associate out of business school, which I paid for myself, and then VP) were basically startups, and I accepted very below market comp and no cash bonuses in order to get the high upside of carry, to learn a lot, and to get exponential pay as we grew. Definitely learned a lot, but got laid off from both these firms with no bonuses and not much comp. That's 5 straight years since I earned real comp (2 years b-school, 3 years at the 2 jobs). Last layoff was about 7 months ago so I've been feeling even more financial pressure with no paycheck since then.
Current financial situation as a result: No savings, some credit card debt, lots of financial stress. Basically, I'm pretty piss poor in general, much less for my age and level. I'm a single dad with a toddler so that's been incredibly stressful to provide for, but I do have parents close by who watch him a lot (saving daycare fees).
Recruiting situation: Pretty bad. Because of these 2 job moves in my recent past, I had a lot of trouble getting past first round interviews. I got better and better at explaining my situation, but I was basically persona non grata with any PE firm, the Big 4, corp development, smaller firms, and just about anything else I tried etc. It's been a tough journey.
While looking for a full-time gig, I got connected to this guy who was raising $15M of capital for his company. In exchange for me leading and executing that capital raise, I would get 2% of the capital raise upon close. That's $300k! Obviously, a life-changing impact for my personal balance sheet. I did my diligence to see if this was a reputable guy and a reputable company that could and would raise capital and pay me, and I was satisfied. So, I started this project 2 months ago. I estimate the project would close end of May. On top of that, the guy said if this goes well (and he loves my value-add), he would do the same for me for his 2nd company in the late summer, which should be another $200k. I have good reason to believe in this happening. After that, I would need to find a fulltime job, this time being out of the full-time market for 12 months but $500k richer.
In the meantime, I recently finally started to get real traction in interviewing with a firm for a full-time job. I just got the offer, which is the first and only one I've gotten in 7 months of recruiting. It's also a small PE firm, but has some existing investments that have done well and is growing. Comp is ok but not great - all-in about $150k for the rest of this year. Helps the financial situation but not dramatically so. I'm supposed to begin mid-April. It would (hopefully) be a long-term job, rebuild my resume, enhance my PE skills, and set my career path for the long-term in PE or whatever I choose to do after doing this for at least 5 years.
Let me get to the crux of the decision I need to make: Because of the timing I have 3 options: 1) finish the cap raise, get amazing short-term comp, lose the full-time offer, do the 2nd cap raise for great comp, and then basically be out in a tough market again where my job moves and 12 months without a FT job are problematic; 2) Drop out of the cap raise, get no comp, be near broke, start at this good PE job with ok pay and basically have to wait until Dec 2020 (end of next year) to get a bonus that actually really moves the needle in my life in terms of credit card debt, savings, and being financially comfortable. 3) try and thread the needle and do both (but not the 2nd cap raise), but I'd have to push the PE firm start date 6 weeks and there's almost no way that conversation goes well, especially if the guy thinks to himself "who's to say this guy will actually start in 6 weeks and is not just leading me on?" He's a nice guy but he certainly could think he is being taken advantage of, or I am misleading him, or I am breaking my word.
What do people think I should do, or what would you do in this situation?
Could you tell the PE firm about the first capital raise situation? Maybe the PE firm will let you start a little later or let you finish up your first capital raise while working full-time. I would think if you explained the timing situation, coupled with being a single dad, most employers (even in PE) would either understand and accommodate at least finishing up the first raise or try to make you partially whole via sign-on bonus for the money you're leaving behind (hell I've seen PE firms give analysts recruiting into associate roles sign on bonuses for giving up their 2nd/3rd year analyst bonus). If not, frankly it'd raise some questions about whether this is an employer I'd want to work for long term.
Well, it sounds like you started the capital raise project right around when you started interviewing with the PE firm. So without an offer in hand, it would have been prudent and logical for you to earn additional income while interviewing, and timing of capital raises are always unpredictable. In other words, you weren't purposely misrepresenting when you could start. (A PE firm of all people should understand fundraising is hard to predict, although that also cuts both ways because your estimate 6 weeks could go on even longer).
I don't think you necessarily need to "beg". I don't see anything wrong with saying something along the lines of: "I have an existing project that took longer than originally expected. I believe it'll be wrapped up in 6 weeks. I absolutely want to accept the offer, but because my situation, would it be possible to start in X or find another alternative that is more amenable to you." and see what they counter with. It's hard to speculate how the PE firm would take it, because I have no idea which firm you're interviewing with or how the managing partner is (or whoever is the decision maker). I've generally found that for really strong candidates, especially experienced hires that are viewed as potentially partner material, the firm would want to try to at least do something to accommodate. Particularly small firms that don't want to be constantly churning employees.
If I absolutely had to choose one or the other, I'd probably personally take the PE offer assuming it's a place I envision I could stay for a while. Between hopefully a livable annual cash comp plus presumably carry that will eventually vest, I suspect you'd be ultimately better off financially taking the offer.
All that said, if I were interviewing with a small PE firm and presumably one that I intend on staying for a while, culture and sensitivity to an employee's personal obligations would be really important to me. If my potential employer wasn't even willing to entertain a rational discussion on a very sensitive and important topic, I'd have serious reservations about joining the firm or certainly wouldn't view the firm as a long-term place for me. That is just my personal opinion, which I really caveat is based on my personal experiences and position in life. And by position I don't mean that monetarily I'm set, so money isn't a consideration. I just mean I've been in the workforce for a while (similar to you), and I'm less willing to overlook important things like how a firm treats its employees just to build my resume. The other thing to consider is if you've already been at two PE firms, you most likely have the opportunity to join one or maybe two more PE firms in your career. I don't think I've seen very many people (or anyone) have more than 3 or 4 PE firms on their resume before being forced out of the PE industry. After that, regardless of the reasons, I think most firms will assume you weren't partner material. Given that, you'd ideally want your next PE job to be one that you think you can make a "career" out of.
Alternatively, maybe you could try to delay starting for 4 weeks. Do whatever you can on the capital raise in the 4 weeks with a negotiated compensation payout based on hitting certain milestones (legally documented of course). I can't imagine this guy would want to terminate your services midway and have to reengage someone else. No one likes to drag out fundraising. And 4 weeks isn't all that longer than 2 weeks.
Decisions like this are incredibly challenging. Your personal circumstance is incredibly challenging. My hat's off to you for how articulate you're able to be in describing and analyzing this situation.
I've raised for a business of my own that I started outside of a competitive day job (ill-advised for the legal complications it presents), for businesses in my portfolio that needed larger checks or different strategic capital than I could add, and have made a career of writing checks into companies that were raising or selling.
The most inevitable fact is that capital raises will always take longer than you want. I'm not sure how it went from six to eight to ten weeks while you've been making new comments in this thread, but that highlights the point I'm trying to make.
It seems that you have effectively no way to guarantee the timeline of your capital raise doesn't get continually shoved farther out. It seems like the desperation of your situation (and again, kudos to you for balancing it all: a firing, consistent networking and interviewing, and single parenting) may be blinding this fact a little bit.
I fully get how life-changing that dollar amount could be, how much weight would get lifted off your shoulders if that hit your bank account. I simply want to caution you that some guy who has no real skin in the game if this raise goes south (other than slower progress in that business) does not have complete incentive alignment with you. You have complete skin in the game: potentially losing what you identify as the last opportunity to re-enter the private equity industry.
Ever heard the joke about the bacon and egg breakfast? What's the difference between the chicken and the pig ... the chicken is involved, but the pig is committed.
Your cap raise client is the chicken and you're the pig. He could cut you loose today without paying you a dime (as you've already stated).
I'm usually not encouraging people to take the risk-averse path, but in this case you may be best advised to negotiate a start date slightly further out (four weeks, illustratively), spend that period of time figuring out how to restructure your time on the cap raise to a part-time (or at least nights-and-weekends) commitment, and try to get the cap raise done outside of your 9-5 hours at the buyout shop.
Good luck. This is a tough one. I'm impressed by what you've done in a tough situation, and I hope you can find a way to marry both outcomes in a way that works for you.