What did PE feel like 15 years ago?
I think my main issue with PE is that it feels super corporate, saturated, and that the peak has passed + it's really difficult to get promoted. I'm curious how things felt 15-20 years ago. Is there anyone with experience back then? What did the industry feel like? Did it feel as suffocating as it does today? Did it feel like it was really difficult to progress?
I have family and friends who experienced it were a part of it etc.
I think it was better on many of those dimensions of frustration you describe, but also it was much smaller. There was no PE for anyone without the hyper target background. For those people, I think it is still somewhat similar. There is just a broader pool of folks now in junior to mid level PE but the top ranks have not expanded as much. That is not a holistically comprehensive perspective, Just the start of one.
I’ve done this ~20 years. It wasn’t that different. MF were still very corporate and it was 2-and-out for pre-MBAs. Same for most UMM firms. Being an VP was a grind. Emerging shops or MM/LMM offered an opportunity to join and keep climbing but was still dependent on the firm growing AUM. Plenty of JAMMBO shops founded in the 1990s or early 2000s became zombies during the GFC and ultimately folded. A lot of the firms where you feel like promotions are elusive today will either grow/promote people or die. If they die, the folks with a track record will spin out. There will be a resurgence of new firm fund raises eventually.
Yes, more capital and firms are in the market. I’d say it is marginally more efficient than 15 years ago but not demonstrably so. The secondary market is much bigger. Fund less sponsor model is much bigger in the MM/LMM. Everything else… kinda the same. The old guys who ran the firms seemed risk averse and out of touch. They still are today, I guess.
I had the same doubts about the party being over 20 years ago. Glad I did what I did. It remains a phenomenal get rich slow scheme. Emphasis on slow.
This is so interesting. What do you think is different today? If you were an associate, what would you do? Are there strategies or asset classes that you’d go into?
Has the grind been worth it for you and your friends? Is anyone disappointed with their choices? Again, I don't mind working hard, I just have this anxiety over giving my entire life to a firm and then being pushed out and bouncing around firms, with a broken family/marriage, etc.
I don’t think that much is different. I see less unbanked opportunities, but that’s probably a byproduct of my firm moving up market somewhat.
If I were an associate, I would try to get the most experience possible. Pick the firm with solid deployment and deal flow. Once you’re there, act like an owner. Try to get as many deals under your belt as possible.
I’m not a wealth of knowledge on sectors. I’ve always remained industry agnostic and more situational specific. My guess is value/turnaround will do fine. Plug and play PE is going to struggle without meaningful rate cuts, although those will come eventually. Tech/growth equity is so foreign to what I do, I can’t opine.
The grind has been 100% worth it for me. I genuinely enjoy what I do and have done well. I like my partners and enjoy seeing my portcos grow. I also like the money.
There are always folks who regret things. As time has gone along, from analyst to partner, plenty of my peers have left the industry. Some are very successful. Others seem less so. Lots of people are pretty private/prideful, so few admit regret over leaving. With few exceptions, the folks that have made it 20 years without leaving have been pretty successful.
I moved around a couple of times. The last move was the best decision of my career. Don’t really sweat needing to lateral until principal and up.
I never worried about my professional life and personal life being at odds. My wife is a saint and totally gets the job. Finding someone that supports what you want to accomplish is huge. I’ve seen plenty of mid level guys drown with a spouse that resents the job/demands. That’s tough.
Thank you for taking the time to write this.
How would you advise an associate thinking about joining a secondaries firm today? Do you believe the market will sustain its rapid growth/could be a better area for a long-term career vs buyout PE over the next 20 years? (Understand comp may be lower but better WLB/promo opportunities)
I never considered secondaries personally, so I’m not the best person to ask. I think secondaries and FoF are kind of the same. That’s more an asset management track, just focused on private markets. Nothing wrong with that, but it has very little in common with direct PE investing.
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