VP -> PortCo Consultant + Entrepreneur

Based on the most helpful WSO content, your proposed transition from VP to a PortCo consultant while pursuing entrepreneurship is not uncommon, but it does require careful planning and negotiation. Here are some key considerations and insights:

1. Negotiating the Exit and Consultant Role

• Smooth Transition: Many firms value continuity, especially at the VP level, where you likely have deep relationships with portfolio companies. Proposing a consulting arrangement post-exit can be mutually beneficial. Highlight how your involvement will ensure a seamless transition and continued value for the firm and its portfolio companies.
• Compensation Structure: Clearly define the scope of your consulting role, expected deliverables, and compensation. This could be project-based, retainer-based, or tied to specific outcomes (e.g., M&A support, board advisory).
• Legal and Compliance: Ensure that your consulting arrangement complies with any non-compete or restrictive covenants in your current employment agreement. Some firms may have clauses that limit post-exit activities, even in a consulting capacity.

2. Balancing Consulting and Entrepreneurship

• Time Management: Consulting for portfolio companies can be demanding, especially if you're involved in strategic finance, M&A, or board support. Be realistic about how much time you can dedicate to your business idea while fulfilling consulting obligations.
• Gradual Transition: Starting your business part-time while consulting allows you to test and refine your idea without the financial pressure of going all-in immediately. This approach is often recommended for first-time entrepreneurs.

3. Navigating Fund Restrictions

• Fund Policies: Since your fund prohibits outside investments and business activities, you’ll need to exit before pursuing your entrepreneurial venture. Be transparent about your intentions when negotiating your exit to maintain goodwill and avoid potential conflicts.
• Exit Timing: Timing your departure post-bonus is a common strategy to maximize financial stability during the transition. Ensure you understand the fund’s bonus payout schedule and any clawback provisions.

4. Examples from WSO Threads

• Consulting for PortCos: Many professionals transitioning out of private equity take on consulting roles with their former portfolio companies. This is particularly common for VPs and Principals who have built strong relationships and possess valuable expertise.
• Entrepreneurship Post-PE: Starting a business after a PE career is a well-trodden path. Leveraging your network, operational experience, and financial acumen can give you a significant advantage as an entrepreneur.

5. Key Risks to Consider

• Conflict of Interest: Ensure that your consulting work does not create conflicts with your entrepreneurial activities, especially if your business idea overlaps with the fund’s investment focus.
• Burnout: Balancing consulting and entrepreneurship can be taxing. Be mindful of your workload and prioritize tasks that drive the most value for both endeavors.

Final Thoughts

Your plan is both practical and strategic. By negotiating a consulting role with your current portfolio companies, you can maintain income stability while building your business. Just ensure that you navigate fund restrictions, legal considerations, and time management effectively. Many professionals on WSO have successfully executed similar transitions, so you’re in good company!

Sources: Q&A: I grew up in Consulting and reinvented my brand 3 times, Transitioning from tech to a serious finance job (yes, you read that right), https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1, From trader to consultant