Am I an idiot for trying to pivot to PE?
I’m an engineer with a VP title at a PE backed oil company in Texas. The team is very small and I have some decent equity in my company but it seems clear to me that I’m viewed as a worker and not a decision maker. The CEO and President are both in their 30s so they have a long way to go before they would want to hand the reins over to me from what I can tell. We had a successful (>3x ROI) exit on our first entity last year and started a new entity with the same PE backing and I got a decent raise and significantly more equity, but still not mega bucks if/when we exit again. I’m currently in the ballpark of a post-MBA salary in terms of comp., though a little lighter in salary and a little heavier on bonus. Obviously the equity is a big lever in terms of comp. I like my job fine but it hasn’t been particularly challenging. I do have pretty amazing work/life balance though.
My long term goal is to be a CEO of a portfolio company or a MD of a PE shop. I love the idea of building a team or working with management teams of portfolio companies. However, I feel like with only an engineering degree those are pretty difficult goals. I took the GMAT and did well (>760) so I was thinking of trying to go to b school then get a role in IB or ideally PE but I can’t help but feel like in some ways I would be going backwards, especially when you factor opportunity cost. The other factor is I’m already 29 so I would be 32 by the rime I finished school. Seems pretty old to be just starting out as an associate. Is that just going to be the cost I have to pay to help me reach my goals? Has anyone ever heard of an employee from a portfolio company going to a role with the PE firm that backs them?
Dude, you’re 29 and in a relatively senior (reporting to the CEO?) position at a company that could be on the fast track to success, assuming you replicate the earlier effort. Trust me when I say you will NOT find a junior-level IB role that is more fulfilling than this, and that you’re probably on a faster track to get to a CEO role now, albeit likely at another company.
Thanks for your perspective. I report to the President but the company is extremely small (fewer than 10 employees).
Do you think an MBA is a good/necessary investment for me?
Take this with a grain of salt as I am still and undergrad, but maybe think of doing an executive MBA after your next promotion.
I know a guy who did this exact move. You come in as an operating partner initially touting your ability to drive P&L at the asset level.
And for clarity this was without an MBA
If the dream is CEO of your own portfolio company, then you are already leaps and bounds ahead of most (including IBers and PE).
Have 1 to 2 more good exits and then I would start having conversations with PE firms about your own LoE operation.
If your dreams are other then what you’re doing now, then now is a good time to pivot (i.e. business school)
I rarely recommend this option, but I know someone that’s done it, and it’s worked out great for him. Look at some of the top part-time executive MBA programs. That way the opportunity costs isn’t as high, and you can still get where you want to go, with better traction. (Only do this if you’re not changing industry.)
Agree with the above - I would try to strike up a relationship with the associates that cover you and let them know that you're interested in learning more about the business side and going through some of their financial models and just talk to them more often.
Also agree that going back to B-School would be a complete waste....I'm in a similar position (energy PE backed, though in finance/BD) and work with all ex-bankers and sometimes wonder if my long-term career would benefit from going to do banking, but in reality I would just be going back to editing powerpoints and sitting in a chair for 80 hours a week having walked away from a job most bankers view as an ideal exit from banking.
Another perspective, think about what you know and affect in your job, probably a portion of the P&L and maybe none of the BS and probably decent influence on a portion of cashflow. You've got to know the financials cold to survive anywhere worthwhile in PE so use that as your guidepost. identify what you control and understand and build your knowledge outwards until you can see the whole business running through the financials. I suggest going about this humbly looking for help and mentors. As you build your chops you'll see more, see further, get more respect and be able to talk the language of business. Then one day the PE/IB guys will be super jealous of you because you can speak their language (it's not that hard) but you're also an engineer and they're not and you understand how stuff works in a factory and they don't. Then you have finance and operations licked, learn transactions and the world is yours. You can do all that by the time you're 40 and be writing your own ticket for the next 30 years.
Good luck
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