Q&A: Principal at megafund
I feel like giving guidance to younger people is important. Unfortunately, I have a relatively straightforward background: * Target school 3.8+ GPA * Did the usual investment clubs, pwm internship freshman summer * Boutique IB sophomore * BB junior then got a return offer * Did 2 as analyst then 2 as associate then MBA * Now principal at megafund in New York. Feel free to ask me anything.
Op, first, thanks so much for doing this. Could you talk a little bit more about how your ib experience prepared you for PE, and do you notice a difference in the quality of candidates from BBs vs other Banks?
At what point did you want to continue on your career path at a private equity firm? Why did you not want to explore public equities or venture capital?
Was it a difficult transition from an associate in PE to a Principal?
To be honest it was about prestige and keeping doors open for the post pe world, but I ended up liking pe more than I anticipated and couldn’t imagine not being at my firm
To add, i think there are low barriers to entry for vc and vc funds and the overall process isn’t as interesting to me. I enjoy the restructuring as opposed to the early stages in vc or growth equity
Thank you for giving back.
Being able to discuss deal experience in depth, and this is different than just having big deals on the resume. I would rather have a candidate who knows the ins and outs of an mm deal than having a big name on the resume but not being able to discuss if. I also look for people I want to spend 12 hours a day with, and this can’t be underrated
I enjoy working with the portfolio companies a lot more than I expected and this helped to keep me in pe longer than I anticipated.
Big names aren’t everything
I need candid advice of how to move to a strong middle/upper middle market fund from a non-MBB consulting firm that historically places weakly in the LMM. I've reached out to my firm and school alums but the Rolodex is thin. Many headhunters told me the funds I want to work at don’t hire from my firm. Not sure of the path forward as I don't want to go work at a lousy fund.
Pmed you
Hi, if you could shoot me a PM as well, I'd greatly appreciate it. I work at a heavy DD Tier 2 consulting firm and have worked on VDD/CDD for megafunds, but I would greatly appreciate recruiting advice. My firm places at lesser known MM funds and the occasional UMM. Any recruiting advice in general to target UMM or even megafunds in traditional or growth equity would be great.
What sector do you focus on? Did you move from IB directly to a MF or were you at a MM shop first? How competitive was PE recruiting from your MBA (assuming HSW?)
Retails. Directly to a mega fund. Very competitive.
If you could go back to your sophomore year of high school, what, if anything, would you have done differently?
Chased more girls
Thanks for doing this.
Elaborate on your promotions throughout PE. Why do you think you were promoted over others / how many years at each level? It'd also be nice if you could give us ball park comp at each level.
Just to clarify, did you do the 2 year analyst and 2 year associate at the BB? Then, got your MBA and become principal at PE? If so, can you talk about how you were able to recruit as a principal right out of MBA as opposed to post MBA associate role?
I think OP means they did the standard 2+2+2 IB -> PE -> MBA. OP what type of PE firm did you do after IB, MF?
Yes, but was an associate before principal
As others have also said, thank you for doing this.
Do you believe it is possible to learn the technical IB skills without doing the standard summer stint? Upcoming summer role will be relatively light on technicals. Want to be fully prepared to answer any technical questions for FT interviews so was wondering if you had any advice on how to go about studying technicals outside of work experience.
The guy (or girl) is a principal in private equity, and your best question is how to supplement your Vault guide? He probably hasn't been in banking for 10 years
What's the best advice you have for climbing the ranks once you're in PE? Biggest challenges for transitioning from associate to VP to principal? Thoughts on overall PE industry today (in general and as a career choice)?
Thank you for doing this.
Knowing what you know now, would you choose the same career path again? Maybe another asset class or aspect of the PE world (e.g. portfolio ops)?
Furthermore, I'd like to hear your advice on breaking into a UMM/MF via a non-traditional path, especially after an MBA (M7). Would you recommend doing IB or consulting as a stepping stone? (Or something else entirely?)
How tall are you?
6’2
I'll have to be that guy that inquires about compensation. I feel like we get a lot of BS datapoints on this forum and it's good to just set the record straight on this. Anything you can offer would be helpful (it certainly wouldn't compromise your identity in any way).
there are reputable publications on this, i think 2018 is available.
LMM - MM - UMM PE firms usually pay btwn $100k and $150k as base with 100% bonus, sometimes more. MF are usually $135-$150k in base and more than 100% bonus. LMM - MM funds usually offer co-invest and carry, larger firms don't.
How easy is it for you to pick up babes? Paging Brady4MVP.
Thanks for doing this. On a more serious note, do you think your MBA opened any doors that were shut to you otherwise? What factored into your decision to go to business school?
lol.
how do you not want to blow your fucking brains out trying to make partner at mega fund in NY given all the political bs? serious question
hey Whiskey5
Just wanted to ask you a question about that, since you're obviously high up in the totem pole. How are politics different in the LMM space as compared to a megafund. I've heard numerous colleagues from school tell me the same thing, funny since they are just starting out in IB or in their PE associate roles for the older ones. We're all 22 and just out of school (and I'm a consultant so I really have no idea what finance is honestly), but I repeatedly here about "politics" and the headaches associated with it. Is it just not as prevalent in the LMM?
WallStreetOasis.com
Hate to be the pessimist but can we get confirmation that OP is a MF principal?
Not unless he/she decides to become a certified user... Until then, the best bet is to judge based on the quality of the responses
Thought so. I understand Principal at MF would likely be busy and that could very-well be the reason for the slow(ish) responses. Lack of feedback was the only thing that led me to be a bit doubtful. Guess time will tell.
Of which there are many...
Suggestion - don’t allow uncertified clowns to initiate AMAs. One of the reasons why content on the site has deteriorated over the years.
Thanks for doing this.
Do you think staying on as an associate in IB impacted your ability (positively or negatively) to move to PE?
How did PE recruiting work out of business school? Is it as streamlined as the process for IB analysts?
What's your career end goal? Stay at your current fund forever, move into a new sector, or start your own fund?
any advice for incoming full time analysts that are arriving without an IB summer analyst stint? I did my internship in a different FO function
Refine your modelling skills as much as possible.
I work at a middle market fund... i did banking earlier. it seems there is a very structured path for many for some time - I.e. similar to what you did - banking then private equity then an MBA and then more private equity.... my question is afterwards, what do folks end up doing? The ones that don’t become partner in private equity?
After a while there are often limited roles that you can easily fit into - I.e. “Pre-MBA” and “Post-MBA,” etc.
What separates the folks that stay in private equity for a short time vs ones that are able to rise up the ranks? It seems like most people leave private equity after a few years.
Thanks in advance!
Can you talk about what you think pros/cons are of working at specific large funds as an associate? Based on your experience and friends in the industry.
e.g. BX, Apollo, KKR, Bain, Carlyle
Thanks for doing this. Couple questions about the industry: - What is the typical waterfall structure and how does "carry" flow down to the specific deal team members? If you were considering roles at the sr. asso level, how would you diligence the opportunity for carry? - How can I learn more about how investment decisions are made at PE funds? Are there investment committee memos online? - How many platforms do you look to close in one year? - Could you elaborate on the typical due diligence process for a platform investment? What are the types of analyses that you run and what industry do you work in? How many deals do you look at a week and how much work goes into quashing deals you won't invest in?
Am I likely to break in at 27 with derivatives / pricing ops experience at a bulge bracket along with experience researching private M&A deals? I can create the models from the WSO courses and have passed CFA Level 1 as well.
Forgot to mention - I got the pwm internship my junior year at Florida State with a 2.8+ GPA while in the honors program. I’m currently in Boston and it feels really competitive which is why I’m finally opening my horizons to NYC.
Appreciate the insight!
Being completely candid here - your chance is near 0.
If that’s the case, should I do an MBA? I’m sure a pre MBA internship would help. What else could I do to increase my chances?
This is the worst AMA.
Either the purpose of this AMA was to give yourself a pat on the back or you're some weirdo that enjoys living vicariously through a MD principal, but this sucks. What on Earth is the point of an AMA if you're just going to vomit boiler plate answers to the vanilla questions and dodge the good ones?
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