Was it a mistake? A confused Private Equity junior.
I went through the typical path – top school / top BB IBD 2 yrs then I joined a PE earlier last year. I didn’t join a mega fund like most of my friends did – I joined a newly established PE founded by some very competitive and credible senior partners from some top mega fund, the shop they started by their own.
As you may see why, there’s a huge upside – good compensation and carry orally promised – yes they promised that even I’m still quite junior, and I see my self well positioned in the long term being the very first of my level.
It’s been a good year for the fund, raised a very decent dollar fund with multi-billion AUM – should say it’s quite impressive as a regional fund I. Hired half the team, and I, as the very first of my level, quite proud of myself as a founding member, and of course being the first of a lot of things.
I closed 2 deals and another one on the way within less than a year. Seems everything is doing great right? Now here comes the problem.
- The culture is terrible: very tough bosses and extreme personalities, 7 days a week they just never stop
- So obviously bad hours
- Industry focus – very traditional and even atypical for similar funds - don’t want to start another thread here but I bet most ppl just wouldn’t like it
- Super heavy portfolio mgmt. work – we didn’t do any buy out this year, just large cap growth / significant minority but I’m already spending 50% of my time doing those portfolio mgmt. work
- Deal sourcing – we got very good deal sourcing ability – mostly proprietary, but I got pushed by my boss to cover an industry and go out to find companies – I know this is a good thing to do but when I’m already spending 90 hours on my execution and analysis work a week, I’m just not that driven to sacrifice my life to go the extra mile - but this will definitely affect my promotion this year.
- Bonus – ok as I have been suffering the above I built up a very high expectation – actually not that high, but still, less than any of my peers back in banking and those who joined those mega funds
- Chemistry – we work directly with partners - they are very hands on and we really don’t have many ppl – I can tell one senior doesn’t like me at all. Maybe I’m a little laid back against their extreme hardworking personality
No kidding I’m working about 1.5x hours my peers are working every week and still get less paid, why am I doing this? am I too greedy? I just simply assumed ppl starting a new shop would just be generous to the very first ppl who followed them – just as a gesture. I see no gesture. And forget about the carry, that’s just too far away for me. Am I thinking this wrongly?
Even megafunds are hit or miss. Taking a chance as an early junior employee at a new firm led by highly credentialed founders is, in my opinion, a great risk to take, and I would have made the same choice in your shoes.
Mistakes are only mistakes if you knew that you wouldn't like this job and decided to take it on anyway. You can only evaluate past decisions in the context of the information you had at that time - in this case, I think you made the right decision, but it's just not working out.
For now, you can only look forward. Do you think you have a future at the fund? Do you think that future is worth the pain you're going to have to endure to get there? If not, you should start thinking about exits. You have the right to be frustrated about your hours and your work environment. At the same time, the partners are hoping to make their first fund a home run (understandably), so you'll be worked to the bone for a while, at least until the fund grows enough for your to start having some junior resources to support you.
Make sure you're taking the long-term view of your career. What do you eventually want? Can this current firm get you there? Will switching firms change your trajectory?
A friend of mine was in a situation very similar to yours four years ago as he was one of the founding members of a mid-market PE set up by a top guy previously working at BK/KKR/Bain.
It is fair to say his life was hell as his boss was on his back all the time (had personally put $50m in the fund), he was trying to source investments while doing all the admin for the fund and obviously working on deals. At the end of the first year, he was destroyed and actually had to ask his boss for a four week break to recover. At that point, he decided to stick for another three years and slowly his life got better as they started hiring new people (i.e. his boss was less on his back, he was able to delegate more work, etc.).
Last year, he got approached by a great middle market PEH and the guys were so impressed by his skills that he was bumped to Principal. For four years, he worked like a dog and didn't have much of a social life, but today he works in a much healthier environment with a good work/ life balance.
I am not telling you to stick around if the culture is really awful, but to think about the skills you are developing and your real exit opps. It's always difficult to compare yourself to your peers, but your skillset is most likely better than theirs!
Also keep in mind that the first few years in IBD are always very painful, so you are definitely better off, from a development perspective, working in this fund than pitching every single company in the space.
Last, it is perfectly normal to spend an insane amount of time working on and for your portfolio companies. To give you an example, I am currently working on a multibillion transaction that keeps me awfully busy, but despite that I still had to dedicate 40 hours of my time last week.
Now, you should ask yourself the following questions: - Forget about the culture and the hours, do you like what you do? - Do you see yourself working in Private Equity for a foreseeable future? - Are there other funds where you would like to work? If you answer yes to these questions, you can start asking yourself how long you are willing to stay at your current place.
If you feel like asking me questions, feel free to drop me a PM.
Hope this helps. Camondo