Considering a switch to BD in PE

Macronmania's picture
Rank: Gorilla | 557

Hi fellow monkeys,

Here is the situation. I've been at my firm (F500) for about a year and a half in an analyst position within the executive group primarily focusing on corporate finance, investor relations and some corporate strategy projects. I've also passed the first 2 CFA exams and taking on the 3rd one in June this year.

I was contacted by a recruiter for a BD analyst position in a respected local MM PE fund. It's a difficult place to break in without IB experience which I don't have and it sounds like a good opportunity even though I'm afraid I won't like the job function. However, I see value into learning the "sales" aspect of high finance.

My short term goal is to get into a M7 program in the next 2-4 years and I am thinking having PE experience even though it's not investment team exp would help my case. How is BD at PE valued by an admission committee?

Also if you guys could shed some light on:
- What is the average pay and & % bonus you've seen for BD at PE at the analyst/associate level?
- Would the BD experience help me land an investment team gig straight out of MBA? I am thinking I will have to do an IB stint first but I am wondering if some of you have made the direct transition?

Thank you for your time.

Comments (15)

Jan 25, 2019

Hi Macronmania, just trying to help:

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  • More suggestions...

I hope those threads give you a bit more insight.

Jan 27, 2019

Bump...

Jan 27, 2019

Anyone?

Jan 29, 2019

IMO, if you truly want to get into an M7 school and eventually end up on the execution/decision making side of things, do not go into BD. Those guys get pigeon-holed as much as anybody and rarely are able to break out of it.

That's not to say that BD roles at a reputable MM PE shop is a bad job. They are actually pretty great when you factor in comp, lifestyle (once you've graduated from traveling 24/7), etc.). Just one man's take, but I would definitely recommend trying to get into IB as analyst, doing a 1.5-2 years, PE associate, M7, PE VP. Nothing wrong with getting on "the track" after two good years doing corp fin.

    • 2
Jan 27, 2019

Thanks for the honest feedback, that's exactly what I'm looking for. Another factor to consider is that I am in South Florida and there are literally no decent IBs around and probably 4-5 respectable MM PE firms so opportunities are limited... I was thinking of relocating for an MBA but not before then. Oh well, I've got some thinking to do.

    • 1
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Jan 29, 2019

After rereading your post, I suppose if you are truly dedicated (and believe you have the stats to get in) to getting into an M7 and wanting to get into IB afterwords, it may not be a horrible idea. I would certainly still get the CFA as it will show you have the analytical bandwith and dedication to understand the finance concepts in banking. You'd also get good experience with sales and understanding different investment styles and what not, which would help in banking. You'd have to be comfortable with the traveling load though.

Sorry for walking back my initial comment and adding even more uncertainty. I would recommend truly thinking about your priorities, what you want to achieve, and how you plan on getting there.

    • 2
Jan 30, 2019

Chiming in given my current role (see username):

The skillset you leverage as a PE BD professional is somewhat overlapping but largely distinct from the investment / execution role. BD is all about relationship and project management... think of it as a sales job, except instead of selling a widget, you're selling your firm as a potential exit strategy for an owner. If you're the extroverted type, it doesn't get better in finance as you're still exposed to deals (to a point), but actually get to talk to humans instead of spreadsheets.

That said, if numbers are more your speed, I'd recommend the IB -> PE track, unless this is a sourcing intensive execution role (Insight, Summit, etc.). Some firms will have BD guys do some technical work, although it's mostly back of the envelope (ie quick determination if a company is worth the investment team's time) and scattered. All depends on your LT goals

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Jan 27, 2019

Great to hear from someone currently in a PE BD role, thanks for your feedback. I would definitely consider myself extroverted so I am thinking if I get the job I give it a try and if it doesn't go as planned I reset my career track in 2y with an MBA.
A few questions if I may:

-How large is your BD team? Is it expanding? Seems like the industry trend is to hire more and more BD guys.

-How much travelling do you have to do?

-Does your initial screening/recommendation for the investment team on deals that you bring on carry some weight? In other words, are you respected for the work you accomplish?

-Could you ballpark base + % bonus for analyst/associate/VP? It's difficult to find data points.

Final round is tomorrow so any additional color would be very helpful...

    • 1
Jan 27, 2019

Any salary point for a BD analyst? Got a lunch with the head of the group on Monday... would be really helpful!

Mar 20, 2019

Typically salary + bonus (plus carry for VP+ positions). While this will be less than the investment team all-in at comparable levels of seniority, it's a much better work life balance. Some shops may offer additional compensation on each deal you effectively source but wouldn't count on it. Happy to talk more and curious to hear how your lunch and interview progression went as well.

    • 1
Jan 27, 2019

Hi @truthengine14 thanks for the feedback. Interview went well, I accepted the job and I had my first day yesterday actually. I will be happy to provide an update a couple months into the job!

Most Helpful
Mar 21, 2019

I wrote another long post about PE sourcing in another thread. See below for the copy paste.

With specific regards to the question you listed above.

B School: My gut feeling is that unless you have a blue-chip background(High GPA/GMAT and Ivy league school), there's low chance at Harvard/Stanford/Wharton. Even with it there's still a low chance. At the rest of the M7 I think you could be competitive with a good application. If you could move fast and go from Analyst to Senior associate/VP in 4-5 years, even if its on the sourcing side, I could see the bottom half of the M7 taking you as you're technically PE and PE candidates seem to be less represented at the non H/S schools. Not an expert though, but that's my feeling.

Comp will vary firm to firm, probably similar to a sales structure in which you have a low-ish base, chance for a big bonus, and you should make sure you understand the incentive structure well. Some places will pay out for successful termsheets, closed deals, committed capital, etc. I even know a place that would pay bonuses based on if the deal warrants a flight to visit the company for diligence. Sourcing PE deals is tough and its the longest of enterprise sales cycles, so make sure you understand what is expected and don't expect to think you're going to source 10 deals in your first year just because it's highly unlikely. As an analyst, I'd expect somewhere in the mid 100k range, largely depends on the firm size and AUM though.

With regards to moving into an investment role post MBA. Chances are slim to none even with an M7 MBA. Sourcing deals is completely different from executing and if you have no banking background, I doubt anyone will take a chance on your for a Post-MBA deal execution role. If you do banking for a few years I could see you having some shot with the right story(successful deal sourcer --> successful banker, a small shop could take a chance on you). Or you could hope to get lucky, find a really small startup PE shop, impress them with your deal sourcing prowess and try to work your way into executing deals too given the size of the fund. Would be very rare though.

*Comment from other post

"The comp figures above are generally right, but it varies firm to firm. In general sourcing at a PE firm requires a strong sales related skillset with a little bit of an IR bend to it as well. Depending on your focus area you're pitching the firm to founders, CEO, bankers, other PE firms, etc and have to be a great relationship builder and manager.

Travel is usually pretty heavily as you're traveling to visit prospective companies, heading to conferences, etc.

You've got to be good at the basic sales tools and systems like outreach, salesforce, and also be versed in the finance systems like pitchbook, datafox.

Lastly you've got to be organized, persistent, and ok with working on deals for years before they actually close, if they ever close. I talked to a sourcing associate at a firm recently and he said that propriety deals take 3-4 years to close from first contact to close. With that being said, add-ons, banker deals, etc can be easier to find and close, but the velocity can be very slow depending on the firm.

Personally, I think it's a great career for the right type of person that likes to hustle, has a very strong sales skillset, doesn't mind travel, and wants a little more autonomy over their life. Hours will be long, but they're generally more flexible than anything that is transaction focused. Sure, you might work a weekend because you want to prep an email campaign ahead of your trip to a conference the following week, but you're not getting calls/emails at all hours becuase a deal is falling apart or because you need to do a bunch of diligence ahead of a bid deadline in 72 hours.

The last thing I'll say is, sourcing can be a career, but you need to pick the right firm. Certain firms have sourcing as a career track role from analyst to partner. People get paid well and get paid based on deals closed/dollars committed. I know a guy that was an add-on machine at a big PE firm and he made more than the Associates/VPs on the deal team. You just need to find a place where sourcing is valued equally to the deal team(which is absolutely is) vs a place where they have a churn and burn approach and just overstaff junior resources on sourcing to boil the ocean to find deals."

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Jan 27, 2019

Hi @mrharveyspecter thanks for the feedback, I think you're spot on!

Mar 28, 2019
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