Exit to LMM PE - Pros & Cons?

Only an intern but speaking from what I’ve learned through a PE internship and family/friends in the industry-

Pros: lifestyle is generally better vs larger cap PE, but this is super firm dependent and just depends on the seniors at the firm and the culture they set. You also typically will get way more hands on experience across all aspects of PE- expect to be heavily involved with everything from sourcing to diligence and deal work to portfolio management. There are also typically way more opportunities for growth/promotion, as the culture is flatter and it’s easier to come in and make an impact as an associate and get fast tracked for promotion. Expectation to get an MBA for promotion isn’t as common, but again depends on firm.

Cons: comp will start lower and will probably stay lower across the board, though this depends (see next bullet). Another big factor is prestige and exit ops- typically much harder to get into a top MBA program because there are so many applicants from the top MFs, and harder to move upstream or exit into a corporate role. If you exit into a portfolio company, it will obviously be a much smaller company compared to doing the same from UMM/MF PE. Heard a lot of people feel like they get siloed into this type of PE, especially if the fund performs poorly.

The unknown- you are really wagering on the future success of the fund. In the upside case, let’s say you join a 300M fund with smart people. Source some deals and do good work and seniors notice, get promoted to VP in two years. Can make partner in another ~5 years. Let’s also say the fund performs well and the next fund is $500M. Because you got in at the ground floor, you’re carry math is just going to be pretty great. Let’s say you return double the fund, carry is $100M on a $500M fund. If there’s only two seniors and a handful of mid level people, you can be looking at millions in carry as a VP and $20M+ as a partner. This is often way better than larger funds, as there are just so many investors and it’s hard to generate great returns. The downside risk is the fund doesn’t do well, doesn’t clear its hurdle rate and carry is near worthless. Fund size shrink and your base salary sucks. Now you’re looking for a job coming from a failed no-name fund, which is not a good position to be in at all.

I personally am gunning for LMM PE because I’m a risk taker and the upside is super exciting to me. The richest PE professional I know isn’t the one at BX or KKR, it’s the guy who joined a fund no one here has heard of, he got promoted quickly and got great carry economics on a fund sizes BX is in his 50s and still works 60+ hour weeks and is never home for dinner, and this guy who went to a small fund made way more money and is out of the office by 5 every day.