Few years out of school -- PE jump without business school?
Hey all -- made a new account for anonymity. Thanks in advance for any thoughts.
Wondering what the best path forward is for me to get into private equity.
Here's the situation: went to semi-target undergrad, got into IB and stayed a little over a year. For the past three years I've been working in operating roles at startups (combo of strategic finance and product management). I also have lots of work experience building financial models for companies, M&A transactions, etc. outside of my IB and startup experience. It's a long story and might give me away so I don't want to get into the details, but I've built many models for management teams or live deals.
I've never technically been in a full-time buyside role but think I would really enjoy it. I don't mind working long hours and I like analytical work. Many of my friends did the IB -> PE route and what they tell me about screening, diligence, portco operations, etc. sounds like all things I would really enjoy.
I'm not going to pretend that I'll for sure be in a PE role my whole career but I'm also comfortable with going to something more low-key (corp dev) if I want to slow down later in my 30s. At the very least I'd like to try PE to see if it is something I'd like.
My question for the community would be about how to go about getting a buyside role without going to business school (or back into IB)? I live in a tier 2 finance city (LA / SF / Chicago) and have reason to stay. Telling my story / getting the "why PE?" question down will take a lot of work, but I have the technical chops to do it. I have a strong VC network but early stage VC isn't a space I want to be in long-term and I'm worried if I take a VC job it'll just push off getting a PE (or even growth equity) job until even later.
Any thoughts on how I should approach this? I'm guessing I'd slot in at the associate level but also know how demanding these are to get even with a good background (2 years IB). If I have to go back to IB or business school to make this happen I'm willing, but would ideally figure out a way around it.
(Edit: also happy to answer any questions about reasons why I'm doing this; now that I've gotten my taste of startups (cofounded 1 and worked at another) I have a lot less FOMO. Feel like I have a lot more clarity around next steps now, even if it takes a while.)
I think it would be helpful to understand your expectations about what type of firm you’d like to land at. With your experience in IB and strategic finance focus and modeling work at startups, I think you could be a competitive candidate for Associate roles, but it would likely be at a smaller LMM firm (sub ~$700M & maybe smaller). In tier 2 cities like Chicago, there will be plenty of less established firms willing to give you a shot. The further up market you go, it will become considerably tougher if not near impossible. Can’t tell from your post, but if you were in a well regarded banking group, that will also definitely help.
Appreciate the perspective, thanks. And yes I'd be targeting MM or LMM shops especially to start. I wouldn't expect an UMM to take someone who wasn't from 2 years IB or a PE lateral.
My advice would be to find a highly acquisitive PE-backed company and aim for a corporate development role. If you find one of these and do well; that will open many doors for you. Best of luck.
-PE Headhunter Mike
Great idea Mike, hadn't thought of that. Will add acquisitive sponsor-backed companies to the list.
What do you think the best way to find these would be? My process would include a combination of having conversations with PE folks + headhunters, in addition to going to PE funds websites and finding companies (sometimes they list their acquisitions) and cold reaching out to the corp dev team from there. Anything else you'd recommend?
That's a great place to start.
Another avenue to look at would be doing a Pitchbook search for PE backed companies in a target market, sort by # of acquisitions, make a list of partners on said deals and sending some emails/making phone calls.
IB + Finance/M&A/operating experience seems like a good background to get into PE. You will be an associate but maybe you can try and swag them that you have more experience than most so you'd expect a faster promotion timeline (much higher likelihood at a small firm with less strict guidelines and one that tends to promote from within and doesn't require b school).
Totally. I think that kind of smaller, more flexible firm is what I'd be happiest at anyways (in addition to likely being the best / only option for me right now). While some of my operating experience likely won't help (wrangling engineers doesn't really apply), some of my experience also includes things like fundraising and recruiting several executives that would be helpful in a PE context.
Hi OP, stumbled on this post pretty late but quite literally in the exact same situation with a little over a year IB to operating/strat fin but at a larger company. Initially made the move because thought my long-term goal was towards climbing corporate and CFO aspirations. About two years here in my current role and I've enjoyed my experience and the people/culture, but I think my goals are changing more towards wanting to be in a finance role that has more direct ties to either revenue generation or finance roles closer tied to the growth of a company rather than the more support function relationship of finance to the main value drivers (engineers at tech companies, etc.) at a large established company.
I've thought about moving to a more m&a focused corp dev role, maybe at a portco where inorganic growth is a big growth driver compared to a larger corporate m&a group. I did also think about investing similarly to you - LMM focused and perhaps moving to a T2 city where it might be less competitive. I know its hard outside the traditional path, but in terms of a story, a mix of banking M&A+operating seems valuable at a lmm that doesn't separate out investment and operations teams. Would really appreciate your thoughts and experience 1-2 years later.
Hey man sure thing.
So I ended up interviewing at a bunch of different kinds of firms that all sorta looked the same: tech industry focus, small teams, entrepreneurial. Mix of growth equity, later stage VC and private equity (buyout). Didn't really try or get any traction at any large firms.
The firm I ended up joining was actually a sell-side investment bank. I've been here for about 18 months now - my initial recruiting process took about 6 months, from Jan (when I wrote that post) to July when I signed the offer. Describing my full thoughts on the experience so far would take more time than I have right now, but generally I'm happy. I'm underpaid but have a good title, work-life balance, autonomy and generally like my coworkers. In the next 1-2 years I'll have to decide if I want to stay. I have a path to partner, the bigger question is if the firm (including me) can do well enough so that as I grow there's enough deal flow. My most likely exit op is either PE BD or going to another IB, perhaps up into the middle market.
Maybe one more piece of info that might be worth sharing: when I got my current IB offer, I also had an offer for a Director of Finance role at a fast-growing mid-stage startup. In the short-term I would've gotten paid more to take that role too. I chose the IB route for two reasons: 1) I like the work better. I have a sales/hustle part of me that is well-suited to business development, which isn't something CFOs help with. 2) the CFO role taps out on compensation faster than the IB track. Related to both of those points: one way to continue to progress on the CFO path is to shift into a COO then CEO role, and increasingly manage larger and bigger organizations. This is how you get out of your "not a revenue generating role" problem and also a bit of the comp problem as CEOs (almost) always have the biggest comp package on the operating team. But I had no interest in going down that route and managing a big team - I love moving fast with small teams/by myself, which is why my current track works well for me.
All that to say - ask yourself the hard, long-term questions. The CFO route is one path, which includes the stuff you don't seem to like (accounting, general ledger, budgeting, etc.). Then there's the ops route, trying to roll into the COO/CEO. You can probably take a step in that direction right now: find a role where they need your finance background but there's also more operations / bizops responsibilities. If you don't want either of those, explore the banking or corp dev routes a bit more and figure out what you like to do and where you can thrive long term.
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