How to break into PE Portfolio Operations from Consulting?

Hi All,

I am currently a Manager in Management Consulting at a Big 4 focusing on intelligent automation and technology but have experience in strategy roles. I have deep experience in life sciences and would like to learn more about how to break into a PE Portfolio Ops role(think KKR Capstone). Currently based in NYC. My questions:

  1. What are the notable PE firms within NYC that run internal portfolio operations? I know of KKR and American Securities but not many others

  2. Are there certain headhunters in NYC who focus on portfolio ops within PE?

  3. What kind of backgrounds do these roles typically look for?

  4. What is the recruiting process like?

Any info you could provide would be greatly appreciated.

 
m_1:
FWIW almost all LMM PE firms are more ops intensive than large funds. Might be easier to break in that way.

He is not asking how to break into operations focus PE. He is asking how to break into portfolio teams of large PE.

I'm grateful that I have two middle fingers, I only wish I had more.
 
Most Helpful

Hello,

Never say never but it is very difficult to break into PE Portfolio Ops if you are a Manager in MC in a Big 4. Usually PE Portfolio Ops teams prefer the following for your seniority level: (1) Deal count experience across industries and deal sizes (if you are in a Big 4 you usually get this if you are in the Strategy M&A or Transaction Advisory practices focusing on operational and commercial due diligence). (2) Strategy consulting experience from a top-tier consulting firm (MBB) and a top-tier MBA (Harvard, Stanford, Wharton, Columbia, Booth, etc.). Please feel free to check LinkedIn for people's backgrounds. Unless you are more senior (where it is less important whether you have a blue chip company name or top-tier MBA) it is pretty much the same pool of people from the MBBs and top-tier MBAs. (3) Some type of specialization (and not being a generalist). It seems you have this.

Now I try to answer your questions. Add 1) Here are a few: Bain Capital, KKR, TPG, General Atlantic, Blackstone, Cerberus, CD&R, Sun Capital Partners, Permira, Thomas H. Lee Partners, Apax Partners, Advent International, Platinum Equity Partners, Audax

Add 2) Not that I know of. PE Portfolio Ops headhunting is not a big business. PE firms usually find you (because you worked in a portfolio company, you worked for them as a consultant, someone in the firm knows you, etc.) and there are limited amount of roles. Some PE firms use one-man headhunter shops for these PE Portfolio Ops recruiting activities. Some headhunter firms that occasionally do PE Portfolio Ops recruiting are Long Ridge Partners (but usually for Operating Partner roles), Henkel Search Partners, SG Partners. However, you as a Big 4 Manager are not part of their target group (they target Partner levels).

Add 3) High deal count, cross industry experience, Performance Improvement/Value Creation consulting experience (usually you get it via Alix Partners or Alvarez & Marsal type of shops when you work in their PE Performance Improvement practices), McKinsey/Bain/BCG consulting experience with their Private Equity and Principal Investment, Corporate Finance, Private Equity or Due Diligence practices, some Big 4 practice areas (Value Creation, Strategy M&A, PE Portfolio Ops, etc.) if you come from industry than a leadership role at SVP/C-level in a particular function (IT, Operations, Supply Chain, etc.) and industry (HCLS, Consumer, etc.).

Add 4) Recruiting process can be very unstructured because PE firms who hire PE Portfolio Ops roles take their time to screen all of their candidates. It is not unheard of that you go through 8-20 interviews. In general: Phone screening with HR, up to 3 phone interviews with PE Portfolio Ops team members, 3 in-person interviews, after that they might bring you in for a case study (similar to the PE investment side: LBO model, 3-statement financial model, developing an investment thesis, identifying operational performance improvement opportunities for the target, identifying operational risks, development of an initial day 100 plan for post deal closing period), after you make it through the case study you might have another 3-4 in-person interviews. Competition is tough...I have seen 400+ applications for one PE Portfolio Ops role. Chances for getting a job offer from a MBB consulting firm is ~4-5%. PE Portfolio Ops chances are ~0.5% (my educated guess based on my experience).

If you are determined to make the move to a PE Portfolio Ops role it can be done. Be prepared for 1-2 years of job search, countless applications (400+) and rejections, and a lot of networking coffee chats (contact people via LinkedIn and ask for a 20 minute phone chat or coffee chat). Be clear about your value proposition and what your story is. This is important. It is not enough to say that you are a MC Big 4 Manager who wants to move into PE. Your background needs to fit the investment strategy of the PE firm (industry focus, distressed vs. growth investment, etc.).

My recommendation: Get a top-tier MBA (if you don't have one), move into the Strategy M&A/PE Value Creation practice of your Big4 firm and stay there for minimum 3 years or go to a MBB firm in their dedicated PE/due diligence practices, develop relationships with your PE clients, try to make the move into PE Portfolio Ops again in 3-5 years at the VP level.

 

Glad that you asked. Post MBA you need to be either at: - BCG Private Equity and Principal Investment Practice - Bain & Company Private Equity Due Diligence Practice (they offer a rotation into that practice and you stay there 1-2 years, if you like it more) - McKinsey Corporate Finance Practice (M&A or Divestiture sub-team)

EY Parthenon, PwC Strategy& M&A team, Deloitte Monitor M&A team, KPMG Strategy M&A team, A&M PE Performance Improvement team, Alix Partners PE Performance Improvement Team are a longer shot (not a real good reason because you get the same experiences as at MBB but people who are the hiring managers usually have MBB and top-tier MBA backgrounds so they would like to hire people with the same background - it's odd, I know).

All other practices at these above mentioned firms are not relevant imho (but as always, there are exceptions).

You need to be at these firms 3+ years post MBA and you need to have the following on your resume: - minimum of 20+ Commercial Due Diligence deals AND minimum of 20+ Operational Due Diligence deals. If you are just one-sided on CDD this will not help much. - cross industry experience: HCLS, Consumer, Industrial, Financial Services, etc. Have a good balance of industry exposure! Deal size is important (odd, I know) - have you worked on similar deal sizes as your targeted PE firm? If you only worked on $500m type of deals and you target a large cap fund which does $1b type of deals than this might not work (PE firms can afford to be picky) - you need to demonstrate that you were part of the deal processes and you understand it. Do you know how quality of earnings, valuation models, tax advice, sales & purchase price agreement, transition services agreements (in case of carve-outs), commercial/operational due diligence findings and how they impact EBITDA adjustments, etc. come together? If you were just doing CDD studies for your PE clients this will not help much. This will continued to be outsourced to CDD shops...why hire you as an internal resource if you are just an one trick pony? - you need to demonstrate that you understand deal financials (LBO, debt financing, capital structure, etc.). No one wants someone on the Portfolio Ops team who does not speak the same language as the investment team. This can get odd in the investment committee meetings if you don't understand the full picture.

At this relative junior level (even if you are 2-3 years post MBA this is still considered junior level) the firms are not hiring that many people and they can be VERY selective.

 

Great answer. Though having worked in Big4 Advisory, I didn't see anyone move from M&A Strategy/CDD or M&A Ops to a PE Ops team. Not that it can't be done, but this could be due to the size of the PE Ops teams being much much smaller than the investment teams. I met 2 guys from KKR Capstone 1-2 years back (one was ex-BCG and the other MBB + Alix) and they said they were less than 40 people globally, when there are about 400 in the investment team.

So my recommendation would be the MBA+MBB or getting a job at MBB now with your tech and life sciences niche experience (and they may sponsor the MBA for you).

 

Thank you! Yes, I totally agree that it is extremely rare to move from Big 4 M&A Strategy/CDD or M&A Ops to a PE Ops team. However, it happens from time to time (and who knows what the circumstances were...sometimes because the PE firm was a client, they knew someone inside of the firm, they networked their way in, etc.). I know of case in point examples at KKR Capstone, Platinum Equity Partners, Thompson Street Capital Partners, Lion Equity Partners, etc. LinkedIn is a great tool to find those people and study their backgrounds.

I agree that MBA+MBB increases the chances. Just make sure that you join the MBB in the right practices with exposure to deals, PE clients and CDD/ODD/post-merger integration/separation work.

 

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