Why does everyone shit on PE secondaries?
Title. Apologies in advance if this is a dumb question. I personally am very interested in pursuing PE secondaries.
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Who are you talking to that’s shitting on secondaries? It’s a super hot area right now with increasingly higher interest as a banking exit opp…
If anything they should shit on it more... please don't let the masses spoil a good industry.
I work in the industry and can share my perspective.
Secondaries started out (years ago) as an opportunistic strategy within a primary fund of funds. FoF managers would opportunistically double up on fund exposure via a secondary if they could get it for a modest discount - it was more of an IRR play to double down on high conviction allocations. That being said, there wasn't much "underwriting" involved.
Over the years, LP secondary buyers have become notoriously known as top down underwriters where a lot of them just throw out pricing based on fund names without actually underwriting assets...I know a buyer that pays 80 cents for everything, regardless of the manager or assets.
So in short, you've got the old guard buyers that act like traders and now some young blood that actually tries to do some bottom up analysis.
When you say 80 cents on the dollar, are you talking of their current marked value or of original cost?
The NAV (current value)
This meme is very much the point. The further away from the actual business, the more shit the space gets. It is why funds of funds get shit on. "All they do" is invest in other funds while those other funds are the ones actually responsible for making money. Secondaries gets shit for a similar reason. You are not the ones who actually put the money in to create the fund. You are just the ones who give existing investors a liquidity event.
It is dumb. There is absolutely nothing wrong with a career in secondaries. You get to do interesting work. It is just different work than what is considered "sexy"
80 cents on the dollar is the high end haha. We’re working on a continuation fund rn and got bids in the 40-50 cent range (for relatively reasonably valued assets imo). And we’re incentivized to push it because that’ll do wonders for our carry pool.
If CV bids are that low then they are not reasonably priced assets, it's just zombie assets you can't sell.
80% is like the bottom end of market for LP stakes pricing
No one shits on it, you just make slightly less money/less prestige In exchange for slightly better WLB
I work 40 hours a week and earn 400k
Are you at like a partners / NB type shop? Imagine Alp and SP are significantly more hours
Can I pm you to learn more? I’m a 2yr aso at an MM PE, thinking of pivoting.
It's one of the best private markets jobs you can have imo. Solid pay better hours but the Deerfield -> Harvard -> GS -> KKR kids just hate on it because its "less prestigious" than MF buy-out. Someone else already mentioned this but there's a lot of shops that just slap a discount on these assets and call it a day. However the interesting and actual strategic funds are the ones that do deep bottom-up analysis and underwrite each asset they're buying to get the best/most reasonable discount they can. The work can be deeply intellectual because you're analyzing asset and fund level data, and well as bringing in qualitative aspects like negotiating with GP's to get a price that works for both parties.
I shouldn't even be posting this people need to stfu about secondaries and keep it DL because it really is one of the best jobs in finance.
Absolutely agree. I’m doing a more direct / single asset strategy, and as a private markets junkie there’s no better job. I’m happy as a clam who cares about the prestige lol. Pay is more than enough too.
Curious for your thoughts - what is the typical pay range for associates up to partner?
Doing more fund secondaries myself, mind if I PM you to chat about the directs side?
What level of DD can you do on each asset? Management access restricted or unfettered? Can you do your own QofE and industry work etc.?
The funny thing is that BX secondaries will almost certainly raise more than BX flagship PE...
I’m working super chill hours in secondaries, it’s awesome. Shhhh
Mods should take this thread down
What does comp progression look like in PE secondaries? Looking to leave my MF PE job and this seems like an exciting and growing strategy with good WLB
There’s honestly not that many jobs at top tier PE firms in big markets. So anyone shitting on any PE roles probably doesn’t even have one or is average for some random fund.
Secondaries has not been chill lately.
Think it is because most people don’t understand the benefits it offers in terms of career.
I’m trying to make the move and luckily found some online materials which had Secondary specific knowledge to help me Bridge the gap from IB/ LBO PE
Do you mind explaining the career benefits you mention
- able to invest funds quicker than direct so more likely to have economics in multiple funds
- time for economics to start paying out typically quicker than direct PE
- less range of outcomes than direct PE so less likely to end up with economic allocation that is worthless
Could you please PM me those materials?
Done!
would you be able to PM me as well?
PM’ed
Can you PM this as well?
Done
Hi, do you mind PM those materials? Thank you!
Could you PM me those materials as well?
Could you PM the materials please? Thank you!
also very interested in these materials!
could you PM me materials plz? thx
Hi if you still have the materials could I receive them as well? Thank you!
.
The work is absolutely mind numbing , there’s virtually no modelling involved outside of filling in a waterfall template and the comp is less than banking
Also your hours are similar ( I was at a European BB)
It’s NOT paradise
"there’s virtually no modelling involved outside of filling in a waterfall template"
eh? What kind of secondary buyer is this? Weird
Can you specify?
Currently trying to assess if I'd be interested in secondaries. So far, I'm under the impression that it's mostly high-level modeling (i.e. aggregating assets, and at most tweaking a couple of assumptions in models made by others). Limited knowledge on each firm and limited interaction with portco management. So for someone interested in combining investing with a bit of operational work, it would not be a fit--am I correct?
Categorically inaccurate
=B2*(1-20%)?
Anyone can apply a roll forward valuation to each of the 5-6 assets in a fund then goal seek an IRR
It’s not hard lol
Secondaries is obviously growing massively now, but not really seeing seats for people trying to lateral from the direct side (Sr. Assoc level). Am finding that a lot of funds still like to hire at junior levels and promote from within...is that still the case? Weird to see so much growth but constrained headcount expansion unless I'm missing something.
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