Do you think PE prepares you to have your own business/be a CEO?
I really like private equity, but I’m not sure yet if I want to follow this path my whole career. Would you say that, let’s say at VP level, you are ready to leave and run a business/pursue a CEO/CFO position? Does PE prepares you for this?
People go from working @ PE funds to being dropped into an operating role @ portfolio companies all the time at the LMM level. Not sure outside of that.
Are you on the deal or operating side of the business? Obviously, closer to operations better prepares you for an executive role.
I think if you’ve only done PE up to that point, you’ll need some reps in other areas of the company to really run it. Midlevel PE folks slot most naturally into VP/Director of finance roles given skillset, but honestly if you wanted the CEO skillset, spend some time in sales / customer success to really understand the market and voice of customer. Also, depends on the size of the company and what type of PE you were focused on. For instanc if you worked most closely with LMM or micro PE industrial companies that would be where you’re best suited.
If you’re starting something from scratch, the skills in PE aren’t actually that relevant day to day. They do help give you some credibility, think strategically, and maybe provide a decent network if operating in similar industry. Also you’re probably ambitious and have some savings - great. More important at the early stage is the ability to sell - sell to customers the product, potential employees the opportunity, and investors the vision. The advanced analysis / diligence skillset doesn’t really come into play until much later, and if you reach that point you can prob hire someone to do this.
Yes and no. If you've been a lifetime banker/PE professional I think of it kind of like a quote from the movie Rounders, to paraphrase "You'll see all the angles, but you'll never have the fucking stones to play one."
Conceptually you'll think you'll know what it takes to run and operate a business, but to actually execute is a different story. Just to take one discrete part of a business, sales. As a VP at a MM PE firm, have you ever been a sales person, managed sales people, set quotas, managed a closing motion, set up sales tools and infrastructure? How about for marketing? product? legal? etc.
While that stuff isn't rocket science, usually a good CEO generally has superpowers in a few of those areas and can extrapolate to others. Coming from PE, you'll presumable know finance/ops pretty well, which is a start, but obviously there's a ton of other things that you'll be the chief decision maker on, not to mention the interpersonal element of running a business and managing people.
Good investors aren't necessarily good operators and in fact, they rarely are. The skillset that is needed to be a great GP of a fund is different than being a CEO. With that being said, being in PE, especially at the LMM and MM levels and with funds that are highly operationally involved will give you a sense of what it takes and perhaps even tastes of what it takes to be an operator. PE is a selective enough field that you'll usually be able to work your way into Finance/Ops/Strategy related roles and work your way up from there.
I read this in a harvey specter voice
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