Hey guys,
I am taking an interview with a reputable middle market private equity firm for a pure business development role. I have some M&A experience under my belt, but am wondering what types of exit opps there are for this position. I don't want to paint myself into a corner where I am no longer marketable after a couple years of pure business development, but it is enticing as an entrance to the buyside. On what kind of trajectory would a private equity business development role put me? Would I be permanently excluding myself from positions more deal-centric? Any idea on realistic compensation for this type of role?
As always, thoughts are welcome and appreciated. Thanks for reading.
bus dev for the firm, or for the portfolio companies?
bus dev for the firm
As with all experiences, it's probably all in how you sell the story. You came from a technical background in M&A, and now you're developing your deal generation skills. A necessary combination for the deal partner track. I'm sure you'll still be reviewing deals in some capacity (initial review), and "learning how to think like an investor."
If this is a pre-MBA stint, I think you could pair the above "story" with a good MBA, and get on the deal partner track after school. Your biz dev position will certainly open up some contacts to hit up later.
Outside of that route, PE FoF would be the best fit exit op IMO.
Thanks, VBB. Good thoughts. Why do you think PE FOF would be a good fit?
Can anyone else provide any additional insight here?
bump
It really depends what you're looking to do next. It will definitely help you develop your skills for MD/partner to help you make the jump from monkey to rain maker, however, it can make it harder because people will just think you're a sales person and not be technical. It will likely put you on a different track unless you lateral back to a technical role after b-school.
it'll be tough because you'll pigeon hole yourself into a BD person. If you're interested in investing and being on the deal side long term, the move isn't the right one.
Private Equity Deal Origination / Business Development (Originally Posted: 02/24/2014)
There really isn't much on this site (or really anywhere) regarding private equity business development / deal origination professionals. I know that in Growth Equity, demand for these types of positions is growing as the market space gets crowded. I have an internship this summer for this position. So, I was hoping I could get some insight from you guys. It seems like it could be a fun job, as you get to build a ton of relationships/travel. However, you're not gonna gain as much technical skills as you would on the Deal Execution side. Therefore, I'm curious as to how compensation / earning potential / exit opps compares to the Deal Execution side. If anyone has any insight, I'd love to hear it.
bump
Since your post is a couple years old, can you follow up with your own internship experience and beyond in this role?
Platano, the internship was great. It really opened my eyes. After the internship, I took a position on the capital raising side. I wasn't able to break into PE deal origination full-time until recently. I think private equity deal origination is one of the more underrated roles within PE. The work is interesting -- you're gonna be one of the first people to see a deal come through. Most deals are sourced through investment bankers and other intermediaries. The role requires more soft skills than deal-execution but there is still an analytical component as you'll process/screen new opportunities to determine if those investments are suitable for your fund. Someone who can source deals will always be in high demand -- many people on the deal-execution side don't want to source deals / don't have the skills necessary for the position. Generally, the hours are better than the deal-execution side because you can only make calls during certain hours. However, I'm sure hours vary depending on the firm.
Here's a good article that sheds some light on the role: http://www.axial.net/forum/private-equity-bd/
PE Business Development Out of Undergrad (Originally Posted: 02/16/2015)
I am currently interviewing for an assistant BD role out of undergrad. The firm has ~1 B AUM. The position would of course be more heavily weighted on calls than actual analysis, a bit of a shift from jobs I'd been pursuing (ER, Prop Trading, Consulting). However, from what I have read about business development I think I would really enjoy the work.
This position is actually becomming my top choice, but I'd like to hear any criticisms you guys have on roles such as this. I've heard the usuals (money, not real valuation work etc...),
Also... - Do you guys believe the role of a business developer will remain integral to (growth focused) PE firms? - Do you see any shifts in the responsiblities or compensation of PE BD professionals in the coming years? - In the event I hate it (unlikely) and would like to switch my career focus to something more analytical, am I screwed?
I have no information on compensation thus far but that isn't a huge concern of mine.
I searched around the forum but didn't find any examples of people taking PE BD roles out of undergrad
Bump.
Sourcing proprietary opportunities will remain integral to growth / low MM PE so I wouldn't worry about that. The fund you would be going to might be different, but generally speaking, there's no path from BD to the investment side. The experience is more akin to a sale job so if you don't like it, I assume you won't like sale / PWM and I'm not sure what other exit ops you might have.
echo the comment above. BD and investment roles are very split and if you do BD for a bit, you will get pigeonholed and will find it almost impossible to move out to more analytical roles. This is pretty obvious as well, but BD roles pay significantly less than investment roles, esp as you move progress in your careers.
bump
As the market becomes more competitive each year (more $ searching for same # of deals), there will be an increased focus on building out an exclusive BD within firms even at the smaller AUM levels. BD is a beast of its own as it relates to career progression, but if you can successfully source quality deals you will do well. It's a results oriented role so you will quickly find out if it is a fit for you or not. A number of middle market firms I know of would love to hire a business development person but the supply of these types is very limited (or they are way too expensive).
PE Arm of Family Office--Business Development/Sourcing role? (Originally Posted: 03/03/2016)
Do not know very well this space, but: 1. True, they don't have to, but I guess the CIO is incentivized to make good returns and that will depend on exiting/entering new investments. If you bring in things that are highly attractive, it will be in their best interest to participate in. 2. I would ask this to a recuiter/headhunter. Ppeople at small recruiting shops have been very helpful to me on giving me unbiased advise when I was between two offers, particularly on what would be exit opps. 3. Regarding comp, you have to follow your guts. Most "small shops" or family offices won't have a clear bonus policy, so you have to be comfortable with that and look more at the opportunity than the exact total comp. Even in BB it is not even clear! (Many BB giving $0 bonus today!). $120 base could be reasonable depending on years of experience. But I let people with similar backgrounds answer this better.
Thanks BlackUnicorn. That's a good idea to reach out to some other recruiters.
With regard to the comp thing, I've done some research and it sounds like a lot of BD roles have "commission" i.e. 2-5k per LOI and up to 100K per closed deal on an opportunity they sourced. I don't think that kind of structure would make sense in a family office since they won't necessarily do as many deals as a PE shop though.
Does anyone else have any other info about how BD professionals typically get paid?
REPE Business Development (Originally Posted: 08/24/2014)
Anyone have any experience/insight into Business Development groups at the top REPE shops? Specifically, comp, lifestyle and exit ops?
This can be a good gig. Generally need associate level PE or similar experience first. Lifestyle depends on the shop. Exit opps are typical IR/BD roles.
Sure seems like a lot of talent out there that never gets to MD based purely on their inability to make it rain. All the modeling skills in the world wont get you to the big leagues and rain maker is the one skill that will always pay the top $.
Also agreed that entering too early can stall a career as well.
Have made it through second round interviews for a purely biz-dev role. Coming from sales background the opportunity to get into PE and be an integral part of the fund's growth is appealing.
Anyone out there currently in a BD role? One person I spoke with in a similar position has $75K base with $15K in potential bonus. Not the type of income typically associate with PE, but I'm also not sure what their potential for growth is. Seems like a "career" type of role...
I work for a family office and although my structure is very different from what a PE firm would employ (I also work with one portfolio company in a BD role) if you can bring in one deal a year you should easily command in excess of $150K per year. If not, and you love the work, get out in front of as many prospects as you can, learn as much as you can about marketing, and then go out on your own. The fees you can earn from providing proprietary deal flow to those who cannot or do not want to put the effort in is HUGE!
Popular exit is going to industry in a BD role. I know a guy that was BD MD at a PE firm and then exited to a large private company as SVP of BD. Lives the most chill life imaginable making $$$.
Is BD at PE highly valued for business schools in terms of experience? Considering a switch to BD at a respected MM PE fund and I would want the option to go to business school after 1-2y if I do not enjoy the role. Thanks
Agree with the other comments that it's how you sell the story. If it's a smaller firm, you may have an opportunity to pitch in with some of the earlier deal evaluation - especially if it's directly adjacent to your role in bus dev.
I think people mistakenly look down on bus dev in PE. Like any industry that's growing more competitive, there's going to be increased specialization of labor. In midmarket, bus dev positions are going to increase and become increasingly valuable. Sourcing platforms and rollup opps is crucial for any firm.
In some ways, a great bus dev guy who understands the numbers is more valuable than another run of the mill deal jockey, who thinks he's a young master of the universe
Thanks for the insight, that's helpful. Any idea of the value of PE BD experience for business schools? Not much info available on WSO about PE BD.
Again, it's all how you sell the story...
I know PIMCO sends business development associates to HBS every year. Post-MBA business development roles are actualy very popular at HSW, especially with MFs and AM. Makes sense given how strategic these roles tend to be.
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