Q&A: Principal in UMM PE

Thought it would be fun to do a Q&A and contribute to the WSO community after years of reading the forums for advice, industry intel, and jokes. Not sure if anyone cares about a Q&A, but I figure I'd ask since I get hit up on linkedin/undergrad alumni network fairly frequently.

My background: semi-target undergrad, consulting, MF, UMM PE.

Happy to hit any topics like PE industry overall, recruiting, trends/outlook, lifestyle, etc. I will try to be helpful when I can and snarky when I can't

 

It is obviously easiest to move from banking into PE in the same industry vertical. However, when we recruit associates we typically look for smart people who have stable stakes (financial modeling, personable, hard worker, etc.) and then ultimately hire those who can demonstrate they think like an investor, have a sense for value, and who genuinely seem interested in PE vs. just going through the motions

For you specifically, I'd tailor your resume to highlight deals that are are closest to traditional PE industries vs. power/utilities. Additionally, be sure you are rock solid on themes that are relevant for TMT/consumer, like breaking down unit economics, understanding where comps trade and leverage you can get, key trends in the sectors, etc. Additionally, try to get reps outside your industry group if you want to maximize your chance of success, though not necessary if you are recruiting at a generalist fund

 

Our firm is large enough to have deal sourcing/BD team, but tbh at our scale most platform deals are brought in by IPs through our banker relationships. All businesses with EBITDA over >$40 million is very well banked, and frankly most companies >$15-20 million these days.

I've found that our BD team is most productive with add on activity, as they can call on the small intermediaries and turf up deals with $1-10 million EBITDA

 

With many of the banks shortening A2A time and increasing comp do you think it makes sense to recruit for PE? Are you worried (and should people that are still trying to make a decision about IB/PE) about things being crowded at the top of most PE firms and not having a path to promotion?

 

Choosing to go to PE vs. staying in banking is a personal decision based on what you like to do -- selling companies/client services or putting capital at risk to generate a return. I have a friend who went to PE and then went back to IB because he liked "the deal", winning mandates, and client services vs. investing in or owning companies. No wrong answer.

PE is definitely way more crowded today than it was 10 years ago when I joined, but there has been a major proliferation of funds as well. As long as LPs continue to allocate capital to PE and returns are attractive, there will be funds and therefore seats available. As an IP, the key is finding a growing firm with a good track record

 

Thank you so much for taking the time - really do appreciate it: 

1) How hard is it to move post principal / director in PE? It seems as if a lot of people get sort of stuck at this level

2) I am considering the merits of staying in IBD vs going to PE. As someone who is very familiar with the space, do you have any thoughts on what type of people / workstyles are likely to succeed / enjoy IBD vs PE? I have heard those who are interested in closing a higher volume of transactions

3) If I am aiming for a post-mba UMM Principal seat, do you think the best path is to try to get 2 years of MF experience pre-mba? 

Thank you once again for your time and help! 

 

1. It's hard to move up at every level. As with any industry, there are fewer seats the higher up you are and it gets increasingly more competitive. In order to move to MD you have to demonstrate: 1) clear ability to source good deals and 2) strong investment process and track record. If you have those and deliver results, you'll move up

2. IB vs. PE are two different jobs in the same ecosystem. Bankers are in sales/client service and PE professionals are investors. Both work hard and WLB is driven by firm culture and deal cycle. Bankers get paid to do any deal, PE gets paid when successful investments are made.

3. Most pre-MBA associate PE experience generally a requirement to get into post-MBA role. Very few seats and high competition. MF helps odds but a good LMM or MM fund are great options.

 

What are the typical backgrounds that your firm looks for in terms of lateral hires at the Senior Associate / VP level? Would you entertain someone with a private credit background (investing across cap stack including equity co-invest) or hire someone with a special situations background, opportunistically doing distressed buyouts?

 

At our fund for VP-level, you need to have at least 2-4 years of direct PE investing experience. We do traditional LBO investing, so private credit background less relevant as credit is focused on downside protection vs. underwriting upside. I would definitely look at special sit backgrounds given the asymmetry of their return target.

However, there are other funds/firms that invest across cap stack (i.e. equity, mezz, pref, etc.) structures that could be useful for someone with a private credit background than a traditional LBO fund strategy

 

Thanks for the Q&A! I have a few questions:

1) How is the lifestyle at the senior levels in PE ? I don't mind grinding a few years but I really want to have time for hobbies/family/friend when I reach senior ranks.
Is this possible in MM/UMM PE ?

2) Would you recommend starting in MF even if I want to do MM/UMM PE in the long-run for the better lifestyle ? 

3) How to position yourself for PE recruiting as a consultant ? Obviously doing some DD helps but any other things to focus on ? 

Thank you ! 

 

1. Very firm dependent. Do some diligence on the firm/fund because the range is wide. I prob work ~55 hrs a week on average with the typical peaks and valleys around deal flow

2. Don't think it matters

3. Recruiting as a consultant is challenging but not impossible. You have to convey a very strong case on why you want to be in PE and why you should be hired above bankers. You will be at a disadvantage on the modeling aspect and will need to prove your proficiency. Will need to talk up how you think like an investor and how your projects were M&A or value-creation oriented

 

Was wondering if you could help interpret this report 

what does average carry across funds mean lol? According to this survey a VP at a 10Bn dollar fund would have a base of 200k, bonus of 323 K (~525k) all in and 3.9 mill of carry?! So assuming a 5 year holding period the annualized comp would come out to ~1.3mm including bonus, base and carry? Is my math correct? That's insane comp. 

 

Here to stay but returns likely to compress given competition for assets (LOs, SWFs, SPACs, MM/UMMs creeping up), increasing multiples, and more LP capital entering the space. GPs are incentivized to deploy capital at 15-20% IRR and raise a new fund with AUM 2x prior fund vs. shooting for 30%+ IRR with smaller funds, so they will keep doing it

 

Build banker, advisor, and industry relationships. It's a low conversion rate but interesting if you enjoy it (I do). Rare to find proprietary deals these days for large platforms, but success is extremely rewarding

Principal/MD hours are much worse at MF than my current firm. Principals at MF often work 7 days a week and some go into the office 6 days. A few guys I know were putting in 80+ hours/week consistently as Principal and maybe 70+ as MD. Sounded unbearable to me at my old age lol

Work life balance at MM/UMM firms vary significantly. Have to do your DD

 

Thanks for the context. Curious as to what Associate/Analyst(if your MF has them) hours look like currently?

 

Follow up on this, have you seen US IB analysts recruiting for PEs in London or rest of Europe (either the analysts wanted to leave US or got US MF/MM PE offer & company lateraled them over due to visa/interest)? Currently try to navigate this but don’t know where to start, thanks

 

1) Best resources you've found to prep for both PE recruiting / if you did any prep as an incoming associate?

2) Advice on developing an investor's mindset / what makes candidates differentiated during the interview

3) Any outside literature / books you've found helpful?

Appreciate the time and help.

 

1. I joined PE over 10 years ago so my feedback is dated, though principles probably hold. I networked alot, used recruiters as much as possible, used personal network on the buyside, and connections through clients. Also used sources like vault guides, WSO/blogs, undegrad alumni networks, and read a ton of PE/investing case studies.

2. Your work and answers should be focused on how to create/generate value, and not just going through the motions. Your job is to underwrite risk, not just "try to get a deal done"

3. The Outsiders is a great book. Also this for jokes

 

Hey, thanks for doing this. I'm at an UMM, too. But you seem like a nice guy so I know you don't work at my UMM.

My question is: have you ever considered alternative career paths in recent years (let's say, during or after your Associate stint), and if so:

  1. Which did you consider
  2. What were the pros and cons of each for you personally, and
  3. How did you come to the conclusion that you would enjoy PE more?

I am deciding whether or not to leave, because there are elements to the job that are deal breakers for me, but I have a hard time with the self-understanding to assess which exits I actually would enjoy doing for a jillion hours per week.

Thank you very much.

 

Lol at first comment. Culture matters a ton

Yes on alternative career paths:
- Started career as consultant. Loved it for 2 years but didn't want to be salesperson as senior consultant
- I was an operator at a portco for a few years. Liked it but didn't love it and it didn't play to my strengths long term
- I worked at a L/S equity HF for a bit. Liked the pace and looking at interesting businesses but missed being closer to companies and driving change

PE isn't perfect, but it is closest to what I like to do and am good at

I recommend you do the DD for your career as you would if you were investing in a company. Spend time self-reflecting on what you are good at, what you like to do, what you don't like to do, how you want to spend your time, and lifestyle. Talk to friends and contacts across industries and gather data points about the topics I mentioned above. You will learn more about yourself and what you want to do long term

 

Great, thread, thanks. 

Coming from the HF side where the vast majority of my time is on investment analysis and owning my own investments - which is fairly standard I'd say - what percent of your time is spent actually analyzing investment opportunities vs process mgmt and portfolio work. How does this change by title? I've always thought this was one of the biggest differences between HF and PE, especially at the jr and mid levels - its much more of a process mgmt job than an investing job. To be clear, this is not a knock at all, as these transactions are highly complex and that is a valuable skillset, as is working with portfolio companies. In the same vein, for the part of the job that is actual analyzing at investment opportunities, how much is top down driven vs. having an actual material say in the matter? Likewise, how much of the diligence and industry work is done in house, vs having more of a high level thesis and outsourcing the true diligence. 

 

This is a great question and the answer is related to portfolio construction and concentration. In L/S HF you'll own anywhere from 10-30 long positions and 10-50 shorts at all times, but in PE you'll only invest in 1 new platform every 12-18 months. As such, HF will spend a higher % of time on security analysis vs. typical MM/UMM PE as you can change your position sizing consistently

I prob spend 30-40% of my time on my portfolio companies, 40-60% of time on new investments (incl. sourcing), and 10-20% on process, but this can vary significantly with deal/portco lifecycle. At junior level it's prob more time on investments, at likely 70%+

In general MDs/Principals drive investment decisions on deal team, but VP/Associate/analysts who differentiate themselves add value to the investment process and support thesis or kill deal because of DD findings

We do all core company and industry DD in house, but always use advisors before closing a deal. We'll use MBB for market study to confirm/refute thesis and help with nuance of industry dynamics

 

Thanks for doing this. Have been at a MF as an associate for a few years, and interested in moving downstream for similar reasons to the ones you’ve expressed. How did you approach this transition, and what are some of the most compelling UMM funds in your mind, from a WLB and trajectory perspective? Not too specific on industry, fairly agnostic between basically anything but energy, FIG, and heavy industrial type places. 

 

Transition is pretty straightforward, assuming you got good deal reps at MF. You may have to do another 1-2 years as an associate before getting direct promote to VP (assuming no MBA), as the new firm will want to test you out before moving to VP. If you go to MBA, you will recruit directly for VP role.

Some interesting MM/UMM firms are American Securities, New Mountain, AEA, GTCR, CD&R, LGP, Roark, Genstar, Olympus, Harvest, Berkshire Partners, Kelso, Kohlberg, some HIG funds, OMERS, ONEX, ONCAP, Jordan, Golden gate. All generally good investors that I respect. I'm sure I missed a bunch

WLB is very fund and sometimes team-specific, so you'll have to more diligence on that. Tbh at the associate level at most of those firms will be tough. Just the nature of the job

Edited: posted reply under wrong question

 

Thanks for doing this! Curious to hear how the recruiting and interview process looks like at the VP or Principal level? I have a few interviews lined up for VP roles at other firms but am a little unsure what to expect for the process. The Associate process is well documented but there are not many resources out there for lateraling a the VP level.  

 

Thanks a lot for doing this. I am at a MF right now where I likely won’t have an opportunity to stay and have been reflecting on what I want long term as I think through next steps. A few questions for you:

  1. Do you actually enjoy this job? If it weren’t for the money, I would have no question about moving into a different career path because I don’t enjoy the work (~90% of it being monotonous process / financial analysis work), but it continues to seem like the most attractive risk/reward option (and I’d like to be able to afford to live in NYC long term) so curious if you think you truly need to enjoy it to make it to a senior level
  2. Did you consider business school at all? While I recognize times have changed and it likely doesn’t make sense from a career perspective today, for personal reasons (i.e., break from the grind, make new friends likely to be in similar life situations post-MBA, last opportunity to have time to do a lot of travel before eventually settling down) I am seriously considering it and was curious if you noticed any substantial differences in success among peers who did the MBA v. those who did not
  3. Have you seen many PE associates move to cover a different industry vertical as a VP or is this a pretty hard move to accomplish? Part of my feeling from #1 is likely driven by covering an industry now that doesn’t interest me

Appreciate the time!

 

1. Yes, I truly enjoy what I do. I get paid to learn about new companies/industries, help improve companies via improved ops processes/capital allocation/M&A, and put $$ behind my ideas. Super satisfying. Being an associate sucks but the training is invaluable, so keep your head up. Move to a firm with better WLB that invests in a similar way that you want to. That's the goal

2. I did, and went through the whole process. Ultimately used my b-school acceptances as hedge/ultimatum to force my firm to promote me or I would leave. I think the biggest value of MBA is the network and the 2 year vacation

3. Yeah all the time. Many funds are generalist below MD/Principal (like mine) and don't care what you did as associate, although may be different for infra/utilities, etc. I like generalist model for analyst to VP (and even 20-50% time for Principals) to develop as a well-rounded investor
 

 

How to weigh starting career in IB vs consulting if end goal is PE?

 

PE will see returns continue to compress over the next 10 years as more capital chases fewer deals

PE investing is similar to the public markets, where investors with a solid process and differentiated view are able to drive excess returns. Additionally, firms that can systematically add value through operational improvements, accelerating organic growth, and executing add on M&A will continue to generate solid returns

 

Do you have advice for folks who want to lateral into senior associate or VP roles in growth stage investing? I came from consulting and an UMM PE background (one of the firms that you mentioned in a reply above) and have since gone to an operating role. I liked investing (but not really the process work), and while I'm enjoying my operating work, I'd really rather be deploying capital.

 

I don't have a great perspective on the recruiting process for growth investing, but your background of consulting, UMM PE, and operations should be attractive to almost any buyside firm. I recommend you tap your personal/professional/university network and try to get in front of relevant recruiters and firms

If you like investing but not the process work, have you thought about VC or a HF? Less "process" and more rapid pace of deploying capital

 

Thanks for doing this. Got some ugly questions flavored by a cynical view of my ~3 years of PE experience. Feel free to answer (or not) any of the below with as much detail as you'd like.

1. How often do you have IC kill a deal you think would have otherwise been a good one?

2. What's the biggest blow-up you've been a part of and what was the primary failure?

3. How much does internal firm "bureaucracy" and/or politics affect getting deals done?

4. Biggest regret/mistake/etc. in your PE career so far? 

5. How big is your core deal team? Whats the weak link in your view?

 

1. Depends on the deal team, i.e. how aggressive or how good they are at underwriting. I have never had a deal killed outright by IC, but I have had purchase price lowered which ultimately didn't make it to next round. This is because I think I generally present a fair and balanced investment case and possess pricing discipline. There are times I have been too aggressive and other times I have been too conservative.

2. Great question. Thankfully, I've never had a big blow up *knocks on wood*. When I have seen others do it, it is usually because of investing in an idea without great DD, buying into banker bullshit, or letting emotions take over in the "heat of the deal". It's amazing how much shitty DD I have seen in MM PE

3. One reason I like my firm is that good deals will get done -- bureaucracy and politics never get in the way. However, there is real pricing discipline, so unfortunately we have passed on too many deals at [12x] because we wanted to buy it at [11x]

4. Forgetting to be humble at times

5. Deal team generally 4 people: MD, Principal, VP, Associate, but P-VP-ASC drive most of the work. With a lean team can't afford to have weak link

 

The pitch matters, but less from formatting or length and more from substance of insights. I need to be convinced a banker knows my company, sector, buyers, and how to sell the story to get max value

100 pages for a pitchbook is overkill. If a banker can't sell themselves effectively in 15-20 pages, why would I hire them to sell something on my behalf?

 

Hey there I have a few questions. Backround; High school junior interested in business. White male,rural NC with 4.0 uw, 1510 sat(770m). Good ec’s including Econ research paper which may be published by time of applying this fall.

This year is unprecedented with vol increase in applications so my thought I’d ED2 BC which is a good fit for me,and ED1 Vanderbilt Econ( definite reach but in the running)

So,first question is what’s your thought on these schools. I know BC is semi target as well and like direct admit. But it’s definitely far from family so Vandy for reputation and location but unsure of Econ. Vs BC business.

My second question is,if doing finance at BC if I’m from NC how difficult is it to find a Job,any job, that’s 70k to start. I’d be looking at loans and realize many have high goals on wall St. etc,I’m really interested in knowing I’ll find something that allows me to pay back 40k in loans. I appreciate the reply and thanks again.

 
Most Helpful

Not to hijack this comment, but just explanation for why this set of questions elicited this response:

Fcf_yield is investing his time in responding to questions from the WSO community. As someone with 10+ years of PE experience, he (she?) brings a perspective that is not super common here on WSO. A lot of the early career folks here (bankers and junior PE) can get answers to questions that most people on this forum are not in a position to answer. When someone asks him generic questions that could truly be answered by even the students on this forum, it is akin to asking your MD how to run a VLookup in excel. He probably knows the answer (although a bit dated), but it really isn’t a good use of his time — the question is best left from a fellow analyst or associate.

As someone who has done AMA’s on WSO over the years, it can be frustrating getting asked questions that are best answered by those earlier in their careers.

My apologies for the tangent, thank you for doing this fcf_yield.

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 

Thanks for doing this.

1) I work as an investment analyst in asset management and I am curious as to what you think the chances are for me to move from AM to PE associate. Is the biggest hurdle going to be the modeling or finding a way to differentiate myself in the interview process?

2) What are your thoughts on knowing a more technical language like Python? Is it useful, or is there a better place to be spending my time?

 

1. Depends on your role at AM. If you are doing middle/back office work, it will be very challenging. If you are in a direct investing role (public, private, co-invest, credit, direct lending, etc.) then your odds are higher. The biggest hurdle will be convincing someone through your resume that you can do the job (modeling, fundamental business and security analysis, preparing IC memos, etc.). Most likely, networking will be a big part of your path to PE. Alternatively, you could do 1-2 years of banking to check the box and make the transition easier... although that path has its obvious cons

2. I think coding fosters creative problem solving using large datasets, which is a net positive for investing in the 21st century. But it won't help you as much as getting traditional deal reps if your goal is PE
 

 

Do you see the compression in PE returns impacting adjacent asset classes such as mezz?

 

Thanks for doing this, all of your responses so far have been very insightful.

I'm a Senior Associate at a lower MM PE firm (over $1B AUM, current fund around ~$500M). Do you think I could get lateral looks at regular MM PE firms (say ~$1-3B current fund)? Did your firm ever look at lower MM lateral candidates? I understand I'd have to do an extra year or so at same level before consideration for VP.  

 

Yes. We have hired an associate with 2 years PE experience from a LMM fund. He did 2 more years as an associate and got promoted to VP without an MBA. Need to have great deal reps, think like an investor, and explain how you added value to your firm and its portcos. Doable but have to find the right fund/group. Use your network and recruiters and have a solid story. Practice modeling too just in case

 

Thanks a lot for doing this, lots of helpful responses here. I’m working at an MM bank and will be trying to recruit for MM PE. I’ve seen what PE professionals do and think I’d enjoy the work and could be good at it and I love the idea of working with and improving MM companies. However, I think my weak spot is that I haven’t really done much investing in public markets - how crucial is it to present yourself as an investor when first moving to PE and how would you recommend doing that? My original strat was to focus on my other strengths and interests in PE but curious to hear your perspective on it and if there are any resources you would recommend to getting more in the investor mindset

 

Definitely. The issue is walking away from carry checks, taking a huge personal and professional risk, and investing/operating at a much smaller scale where I have less credibility (i.e. today I buy business with $50-150M of EBITDA, but if I started a fund I'd be buying businesses with EBITDA of $1-10M)

Best path is prob to launch with someone with a longer track record so we can get to $500M+ AUM in first fund

 

I enjoyed consulting alot, but I also know that my projects were way better than many of my peers at my firm and others. I got really lucky with some early staffings which put me in some of the cooler industries/deals that allowed me to make the jump to PE. Many of my friends in consulting struggled or never made it.

If you only goal is to get into PE, IB is prob easier path. However, make sure you like how you spend your time. If you go into a top consulting firm, like what you do, and learn how to model/analyze business, you'll make it to PE. Don't forget the journey

 

Thanks a ton for doing this! Any opinion on joining an UMM/MF out of undergrad as an analyst versus going to banking first? 

 

Tactically: after cranking through key analyses, taking a step back and looking at the bigger picture to provide key takeaways in simple, easy-to-read bullets. This helps bring more clarity to written and verbal communication and helped develop my investor mindset

Holistically: appreciate the seat I was in. It was extremely difficult to make the jump from consulting to MF and I should have been more humble after finishing a few years. I thought I was hot shit but in hindsight guys like me were dime a dozen. Humility and hard work go a long way and there were times I shouldn't have lost sight of that reality

 

Thanks for doing the AMA. Hoping to get your perspective on: 

- Prospects of working in an execution role only i.e. no portco work (other than refis or bolt-ons) so just evaluating investment opps day in day out 

- Working at a shop that leverages advisors to a good extent with the aim of going 'wider' and being able to evaluate more opp. This would be similar to what some pensions/institutional managers with direct investing arms do 

 

Execution-only role: Meh not for me. IMO part of the value of PE investing is getting close to portcos to understand ops and how to improve the business vs. just being a commoditized provider of capital. I think this is how to sustainably drive alpha, and thus invaluable

Shops using advisors: most UMM/MFs all use advisors (market, IT, surveys, background checks, legal, etc.). The point is less about being able to "go wider" and rather be more thorough in DD to improve underwriting quality

 

When evaluating IB analysts do you find that group matters, be it in the screening or interview process? Will coming from a LevFin group (albeit a stronger one like JPM/CS/BAML) impact recruiting in that headhunters / interviewers will instantly view me as a credit guy/gal? Haven't gone through recruiting yet, but want to avoid / mitigate falling into that stereotype.

 

Maybe at the margin, but really splitting hairs. In general we'd prefer M&A > industry > lev fin, but honestly the person, experience, and interview performance is more important. Just get in the door and then crush your interview

If you are in lev fin just make sure you have a good story on why you want to go into PE and why lev fin/credit was good training but not right for you. Also, be sure to talk about your deals from an equity perspective and not just spout off the lender terms/syndication execution

I came from consulting so any IB/finance experience will be easier than the time I had

 

Thanks for doing this. I recently started at an UMM/MF after bschool and your perspectives have been incredibly valuable.

Any advice you have for 1st year VPs? How to be more effective on these job, with management teams, juniors, or MDs? Also advice on path to Principal and promotion?

 

Make the life of your Principal and MD easier (be proactive, deliver high quality work on time and without error, etc.). Develop a real opinion on your deals and pound the table when you feel strongly about something (positive or negative). Your job is to prove yourself as an investor and be deal QB, so crush those items. Add-on reps are great lower-risk opportunities to prove your chops

Path to Principal is typically 4-6 years depending on the firm, but be aware of the # of seats available. The next two promotions are hard as the number of available seats drop materially, and finding the right firm/group/specialty (or being lucky on timing) can be the most important thing (other than investment returns)

 

Thank you for doing this.

Currently a VP at a MM firm, where we invest across industries but deal teams are silo'd (i.e., I'm a VP for X industry working with a partner who focuses on this industry).

I like the firm but somewhat concerned about the long-term trajectory of this specific industry team (both internally and externally with LPs, etc.). We have a deal (completed before I joined but I'm now managing) that has been a disaster and frankly an embarrassment for the firm (big equity check for us + co-investors). I'm worried this calls into question our ability to invest in this sector and could undermine my future at the firm by association.

Based on your experience, how concerned do you think I should be by this dynamic? Is it better to hold-on and do our best to try to fix this, or should I consider making a move before my reputation is tied up in this mess.

 

Ultimately, your name will be attached to specific deals you do. If you inherited an impaired asset, you had better do a few other great deals to offset. If you are able to turn it around and also do 1-2 winners, then you should be fine but it will be an uphill battle. Have an open and honest discussion during your annual reviews and gauge their response. If it isn't good, maybe think about leaving in order to be in a better position for promotion/realizing carry?

I cannot stress enough the importance of being at a growing firm/fund with good returns. Makes everything much easier

 

Thank you for doing this.

As an analyst looking to move in the UMM, would you suggest to target more structured, institutionalised funds (the likes of CD&R) or newer funds that invest in companies around the same size, maybe a bit smaller, but with the chance to grow with the fund?

As a second question, I see many funds now be more open to LP co-investing with them compared to the past. Do you experience this trend as well? What's your view about this more "active" role of some LPs?

Thanks

 

First question depends on your risk tolerance. Going to an established firm is lower risk/reward. You will make good money, get great reps, see solid flow, and have a great stamp on your resume. If you go to a startup fund you will probably get paid less in cash comp but more in carry %, which should grow into much higher $$ over time if the firm/you are successful. It will also be more entrepreneurial (i.e. you'll do more shit work, work harder for flow, less infrastructure, etc. but get paid for it). No right or wrong answer

Yes LPs love co-invest because it shows their constituents that they are adding value and it allows them to average down their fees. Most LP coinvest has no mgmt fee and has no or reduced carry. Many funds use LP coinvest for 10-50%+ of total equity check. No right or wrong answer but this is a good way to scale up and punch above your weight if you really like an asset

 

I'm still in undergrad and currently have an internship at a regional M&A boutique. This summer, I'll be interning with one of the lower/not so great BBs in their IB department, but will be in a lending role (more risky than Corporate Banking, but less risky than LevFin). If my end goal is to end up at a MM PE fund, do you think it would be more wise for me to try to network my way into getting an offer in LevFin or M&A at the bank? (Obviously contingent on me not blowing it and getting no offers whatsoever)

 

Thanks so much for taking the time. 

There are a lot of posts about the day to day about PE associates / analysts. Can you please go through what your general day to day looks like or if easier bucket it into the main buckets of work you are involved with and time spent on each e.g. legal, portco work, deal execution, relationship building etc.

thanks so much.

 

This is a great thread, thanks to fcf for doing this. Love the doses of snark throughout. Given i have similarly gained lots of useful nuggets in my career from this site, would anyone be interested in a Q&A thread from a younger VP? Somewhat similar background to fcf yield but came up through banking and toyed with the idea of business school before landing where i am. If enough people say yes or upvote i'll start a new thread

 

Might be dating myself here but is there a reason my posts won’t work? I tried creating a Q&A thread twice in the PE section but it won’t let me. Do the mods need to approve first, is that the issue? 

 

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March 2024 Private Equity

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  • Intern/Summer Associate (32) $82
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