Corporate / Business Development Exits

I'm around 1 year into a PE stint, and am getting a sense that from a work-life balance perspective this is not the job for me long term. I don't anticipate wanting to jump to another PE firm afterwards. Beyond more PE, it seems like a somewhat typical exit afterwards is corporate / business development and strategy roles (and to a lesser extent, project management). For context, I came from consulting.

Has anyone here moved to those roles that can speak to them? I'm trying to get a sense for a) how common these exits are / how accessible these roles might be, b) how does compensation compare, and how is this segmented between base / equity, and c) how day-to-day life compares and if improved WLB is realistic. Any other relevant information would be appreciated.

I would like somewhat comparable pay, but recognize that the improved WLB comes at a cost in pay and would accept that. I'd love a 9-5/9-6 with some greater flexibility overall.

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Comments (17)

  • Associate 1 in PE - LBOs
Oct 12, 2021 - 10:58am

And also, any other exits that are equally good from a WLB perspective would be good to know if the strategy / Corp dev stuff is not the only other common exit.

  • Associate 3 in PE - LBOs
Oct 12, 2021 - 12:06pm

Vanilla corp dev is a pretty common exit and something that I personally explored. Having a consulting background definitely opens more doors to hybrid strategy/M&A roles as well. You shouldn't have any issues getting looks although recruiting is more unstructured. 
 

WLB and comp will really vary.  If you're doing M&A for a PE-backed buy and build thesis, 9-5 might be a stretch.  In general your hours should be better than PE but a consistent 40-hour work week is tough with any M&A component.  Comp makeup will depend on the org's maturity.  For manager-level roles at mid/late stage startups in NYC, I was getting quoted in the $150-$200 range with varying options packages.

  • Associate 1 in PE - LBOs
Oct 13, 2021 - 9:22am

Thanks for the response -- super helpful. It sounds like you didn't end up going the Corp Dev route. Why not, and what did you end up going with instead?

It sounds like the options packages are incremental to the $150-200k; would this be in line with what Bass12 quoted (e.g., $1-1.5m over the 3-5 year hold period?) or were you seeing different figures?

  • Associate 3 in PE - LBOs
Oct 13, 2021 - 12:06pm

I ended up joining a co-investor which offered significantly better hours.  The deciding factor was really cash comp and culture.  It's really tough to put a confident value on the options for startups and I would've had to have been joining a future unicorn to justify the cash comp ding.  I think the outcome below is one end of the spectrum, but there's a whole other end where your options are underwater.  Need to do as much diligence as possible.

Most Helpful
Oct 12, 2021 - 4:48pm

I did 2 years of IB and 2 years of PE and am now wrapping up my first year of work for a PortCo of one of the megafunds. I will probably make around ~$230-$250k cash comp this year ($175k base / rest in bonus based on achieving acquired EBITDA M&A target) with cash comp hopefully ramping over next few years with promotions etc., and currently have 1,000,000 incentive units (options) that strike at $1.50 per share (which was the share price at the time they were granted). The company is an industry that was hit particularly hard by COVID, and I think/hope the share price was decently depressed when the options were granted (although like any PE PortCo, the sponsor pulls out all of the stops and PF adjustments when valuing the biz, trust me) 

The rough math on the equity piece would be that the options will be worth: (Exit MOIC - Strike Price) * 1M, so at a 3.0x MOIC on the deal, the options would be worth ~$1.5M. We're on track to exit (potentially IPO) in the ~2023 timeframe, and I think there's a good chance we hit north of 3.0x (3.0x case includes a conservative view of exit multiple IMO and we have been way outperforming on acquired EBITDA vs. the underwriting model).

In terms of work life balance, it is definitely better than PE, but not a walk in the park. We do 25-30 acquisitions a year, and I have had plenty of late nights (more than anticipated going in). However, I really like the people that I work with and that makes a huge difference. I have a super flexible vacation schedule and can basically travel freely (within reason) as long as my work is getting done. 

If we exit at a 3.0x MOIC in 2023, that would imply ~$750k of average total comp every year (split ~$250k cash / $500k from equity proceeds of $1.5M divided by 3). Takeaway is that cash comp is very mediocre, but the equity component can make roles like this very interesting IMO (so important to place your bets on a good horse in this sense)         

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  • Associate 1 in PE - LBOs
Oct 13, 2021 - 9:19am

Very helpful -- thank you for the detail. A few questions, if you don't mind me asking:

Was this one of your previous firms portco's / i.e., did you get plugged in there, or was this found through a headhunter?

I think the vacation schedule flexibility is fantastic -- definitely what I'm looking for. I'm also curious what your title is and what might be typical coming out of a 2 year PE stint. I see "Corp Dev Associate" roles a lot but it seems like Manager level roles are more typical after the typical associate track.

Did Business Dev / Corp Strategy roles ever come up as an option as you were looking? I have to assume comp and WLB here would be optimized particularly at startup-y and tech roles.

Oct 13, 2021 - 9:48am

No, it was not one of my prior firm's portfolio companies. My prior firm did have a portfolio company in the same industry as my current company, but I did not work directly on that deal, so I was only loosely knowledgeable about the industry going in to the current job.

I got the job through a headhunter, and it probably helped that our group head is friends with some folks that I worked with at my old PE firm. I came on as a Senior Manager (akin to a "Senior Associate" at our company, and will be promoted to Director hopefully by year-end)

Equity comp can obviously vary HUGELY depending on 1) the portfolio company, and 2) the sponsor. At my company, the equity account on the biz is currently in the multi-billion dollar range, so me earning $1-$2 million at close would be a rounding error on the final funds flow and returns calcs for the sponsor.

There would likely be completely different math on a company with a $100M equity check / $25M of EBITDA. However, I'd argue that the risk/return profile is completely different there too. I think it is more plausible to hit outsized returns (4.0x+) on a company of that size vs. a more mature company like mine, so there may be a scenario where a lower $ equity grant gets you to the same place in terms of total equity comp. There's a huge spectrum of risk/reward out there, so you just have to pick your spot   

Oct 13, 2021 - 9:50am

I left under similar experience (a few years IB too is all).I went to strategy and love it.

They also pay 150 bases pretty easily with bonus and stock structure. The hours are not nearly as bad.I highly recommend brotha

Edit: I am at a post LBO PE portco working on side projects and on M&A strategy. My base is 175 and I should hit over 210 if we include all incentives

  • Associate 1 in PE - LBOs
Oct 13, 2021 - 9:37pm

Thanks, man -- good to hear it's going well! How did you find this role / do you have headhunters that you used?

50-60 hours a week is definitely more reasonable. Are crunch times comparable to banking / PE deal times?

  • Managing Director in IB-M&A
Oct 13, 2021 - 1:16pm

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