AMA: 1st Year Analyst Software M&A - From non-target knucklehead to front office M&A

DeleteMePlz's picture
Rank: King Kong | 1,141

Hey all,

This site has been a big help to me over the years and I wanted to see if there's anyone out there I can help by answering some questions.


  • Lower/middle class from the southern US, first generation
  • Started out at a semi-target in STEM , finished my freshman year with a <3.0. Had some personal baggage and immaturity that I didn't sort out till junior year.
  • Transferred from STEM to finance. Got GPA up and took on unpaid startup and PE internships while working part time.
  • Applied to over 1,000 jobs in the last 5 months, a ton of rejections, 30 first round screenings, 4 in-office superdays and finally a single offer which I took (canceling 2 other superdays in process).

I'm now a first year analyst with a strategic acquirer of niche software companies. The analysis is similar to buyout PE, in fact they compete with a number of well-known MM software funds for mandates.

My generic advice to all the students out there: rise and grind with enthusiasm and the opportunities will come.


Comments (17)

May 13, 2019

so are you from Roper or Constellation?

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May 13, 2019

Someone similar. How are they seen by players in the growth equity space?

May 14, 2019

That's not how an AMA works.

    • 21
May 14, 2019

I won't hijack. All I'll say is that both have some great assets, but by no means are they similar to growth equity. They're looking for vertical market assets with strong cashflow.

They're definitely closer to the Thoma's and the Vista's of the world. My sense is Roper can be pretty competitive and will pay strategic values for assets they need to own.

Constellation is never going to be paying the top price - that's their MO. They're value investors.

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May 14, 2019

I love AMA's that fail. Nothing better than someone who thinks they are interesting realize they aren't.

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Most Helpful
May 14, 2019

I mean sure it's a failure in that people didn't ask many questions on the thread. My goal is to try and be helpful and encouraging to any college students going the non-traditional path since people doing that helped me turn myself around.

Believe it or not some people do this because they have time to kill and want to help others, not ego stroke.

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May 15, 2019

Motivation is for the weak

    • 4
May 14, 2019

Do you have that particular job because you have some background knowledge in software or is everyone there a finance grad who just happens to be involved with software.

Basically did you do anything to fill that niche or do they hire anyone who knows just finance

May 14, 2019

For a semester I was taking CS classes in Python and SQL which combined with most of my friends being computer engineers got me interested in software. During one of my internships almost 2 years ago I had the opportunity to work on a couple software deals and meet with a managing partner of a large tech buyout fund. Talking to him at length smoothed over some of the knowledge gaps I had and made me want to commit to learning more about the space.

It probably also helps that another of my internships was in BD and product development for a niche SAAS startup, so I was able to talk about how that got me interested in more mature market-specific software companies.

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May 19, 2019

What is the comp like at your firm? Any data on exit opportunities or do most people try to rise through the ranks?

May 19, 2019

The comp varies heavily by location and which team you're on but is typically 20%-30% less than you'd expect from MM/LMM PE. I'm located in a secondary/tertiary city that's a low COL area so my comp reflects that, but you can expect it to range anywhere from 50k-85k base with 25%-50% bonus. Since I'm still new to the team I'll copy/paste an answer I got from another analyst who has been with the firm for a few years and helped me get an internal perspective.

"The biggest con is definitely the pay. There's no doubt they pay below market rate. For me though, the pros greatly outweigh the cons. It's an incredibly autonomous organization. I make less than almost all my analyst/associate friends at other funds in the city, but I get substantially more responsibility. I get to more or less run my own deals. I know principals at PE funds who have a comparable day to day. I'm owning the model, IM, presenting offers, coordinating with legal on the purchase agreements, etc. As you prove yourself here, they give you more and more runway. No micro management. It's not a structure that works for everyone, but I really enjoy it."

As far as exit opportunities, I've seen a few paths people take:

  • Exit to PE/VC either by starting a small specialized firm or joining one. I haven't seen any big names (MF/UMM) but I haven't looked into the background of everyone who has ever worked for the firm. To elaborate a little further on PE specifically, during my FT process I got to final rounds with a well known MM software PE fund (>$1B AUM). When following up with a few seniors I connected with during that process I shared where I was headed for FT and they said it was a solid firm with a great rep in the software space. They've indicated they'd like to stay in touch as I develop my skills here in case another opportunity with them opens up down the line. While this is purely anecdotal, I think it at least indicates that (barring failure to perform) I'll have the credentials to potentially exit to software-focused funds.
  • Exit to a portfolio company. I've seen a number of profiles of people leaving the M&A team to join one of the portcos in a Corp/Biz Dev role, in some cases entering as high up as CEO/CFO level. Similarly I've seen profiles of senior level guys from a portco joining the M&A team for the company and then moving to a senior level position at a larger portco.
  • Building themselves up within the company's M&A team. People don't "rise through the ranks" in a traditional sense too often, but rather create their own team. If you really prove yourself like the analyst I quoted said, you can develop your own group over time and start running a book making larger and larger acquisitions.
May 20, 2019

Congratulations! Really glad to hear your hard work paid off. I have a few questions:

  1. How important is product knowledge or knowing the mechanics of these software companies for buyout funds?
  2. Where do you see yourself in 5 years, 10 years? (Staying with the firm or the lifestyle not for you?
  3. What are the typical hours like?
  4. What do you think got you this offer throughout your countless interviews? What resources did you find most helpful?
  5. Thoughts on continued networking or how you kept in touch with your network (esp. that MD)?

Thanks in advance!

May 20, 2019
  1. Specific product knowledge was not important to get into my role. I needed a solid understanding of valuing SAAS companies, how their accounting worked and being able to articulate my interest in specifically software. The mechanics for a buyout aren't that different for software companies than non, the only major one being that there typically isn't much collateral to use senior secured debt (unless the company has its own server farm for example which is less and less common as more firms move to cloud-based services).
  2. Down the line it's hard to say. I know that ultimately I want to be investing in private market software, so I'm really glad I get to start out here. Whether that's in the capacity as a group leader at my current firm or working to become a GP at a software-focused PE/VC fund remains to be seen. I haven't been here long enough to say for certain whether or not this lifestyle is for me (though I will say reasonable hours and lots of freedom to work remote is pretty sweet when I see how some of my other entry-level PE and IB friends are living)
  3. Depends greatly on the group. I'll again be referencing what I have heard from a more tenured analyst since I haven't seen a full deal cycle.

"Depends greatly on the group, but for me 55-60 if it's quiet. Typical week is 60-70. With an active deal, when traveling, etc it's 80-90+"

  1. The final round came down to a 2.5 hour case interview with a senior manager and the head of M&A. I did well with the model, was able to clearly articulate my thought process in analyzing the case and asked a ton of qualifying questions which I think also showed how I was thinking through the case. As far as resources, WSO has been great for getting my entry knowledge to a lot of areas (for a while I was into S&T, RX, Mgmt Consulting and RE Dev). Far and away I think the best thing anyone can do when trying to learn about a topic is just google it a few times and read through the first couple pages of results to build a knowledge base. Then cold reach out to a few dozen people who work in the space and ask if you can have conversations with them to learn more. Getting that base knowledge is important so you can ask thoughtful questions in those 10-15 min conversations instead of wasting your and their time getting on the phone and asking generic "so what do you like about your industry, why did you choose it, etc."

purely my opinion
I can't emphasize enough, if you're really interested in something try to learn as much as you can on your own BEFORE reaching out and asking professionals questions. If you ask thoughtful questions and show that you've done research before reaching out they'll be more interested in you and what you have to say. If you're another know-nothing kid asking vague questions it's hard to differentiate yourself from the hundreds of others just like that.

  1. Continued networking isn't hard. Just shoot an email every once in a while touching base to share what you've been up to and asking what's new in their neck of the woods.
Sep 18, 2019