How to Diligence Firm Culture / Determine Fit (Post-MBA / After 2-Year Program)

Pro Forma's picture
Rank: Gorilla | 544

Hi all - Wanted to get some perspective / insight from some of the more senior / tenured WSO members on something I have been trying to figure out for a while.

Come this summer I'll be rolling off of my associate program at an upper middle market PE shop (household name). I'm planning to apply R2 to H/S/W/B, though am not 100% sure I'll go to b-school (will leave this discussion for another topic) and may just look at joining another firm / skipping MBA. In any case, at some point I will ultimately need to make a decision about what firm to join for the "long-haul", and I would like a not-insignificant portion of that decision to be driven by fit and culture.

This, however, leads my to my issue: I'm not entirely sure how I can diligence this topic from the outside based on a few interviews with my potential future employers. Through my 1.5 years of being a PE associate I've observed one can learn a lot from just a few short hours (whether it be an MP, dinner, diligence session, etc.), however there is also so much you can never learn until you are in the seat.

My current firm is very political, cut-throat, and grind-y, but there is certainly no way an outside observer could guess that based on meeting the team or even asking the question point-blank. For this reason, and because I want to make sure I "put down roots" in an environment in which I can succeed, I'm wondering if anyone has any advice or strategies for assessing fit and diligencing culture from the outside BEFORE accepting an offer and being in the seat.

My initial thought would be I should just try to network and do some reference checks with former employees, though there is just so much misinformation and exaggeration, as well as potentially some sour grapes with the former employees (they left for a reason, right?). My second thought, and one I have heard from others, is "Just move to a smaller shop - those dynamics don't exist at smaller shops" - I think this notion is wildly misinformed and not realistic whatsoever. In my opinion, size of firm has no bearing on fit and culture... happy to be told I'm wrong though!

EDIT: Typed this a few times and it keeps getting lost so hoping this makes it through... Also interested in hearing how I could figure this info out in the short time frame between getting an offer and needing to make a decision. I'm not entirely sure how post-MBA / post-2&Out recruiting works, but I would expect it is pretty similar to pre-MBA recruiting in that you are kind of at the mercy of what the recruiters show you / who is hiring. I would expect this dynamic prevents you from doing a lot of pre-diligence work and specifically target a certain firm or set of firms, forcing you to react to what is available in a short period of time.

Can certainly provide any additional info on how I am thinking about things if needed.

Would love input from a few folks in particular (and I don't mean to insult anyone!): @CompBanker @APAE @Dingdong08 (is he still around?)


Comments (7)

Nov 12, 2018

Talk to people who, like you, rolled off 2-year associate programs and so left "voluntarily". They will have the best color.

Secondary sources would be if you have anyone you're close with in your firm who can comment on what they've heard about other places. Works best when you have a more targeted list but over years of working with PE firms and in the industry, senior people tend to pick up on the "true" reputations of different shops. This is especially true for recent MBA grads who may have a network of people like them at other shops and are still commiserating with each other.

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Nov 12, 2018

I found leveraging LinkedIn (to accomplish what you just described) incredibly helpful. I sent a few 2 liner msgs to ex associates saying "Hey I have an offer from a firm you previously worked with. Would you mind speaking with me for just 10 mins regarding your experience?"

Of course you ll be subject to bias and exaggeration, but there's very little you can do to control that outside of increasing the # of data points you're gathering. I spoke to atleast 5-7 ex associates prior to signing my PE offer. My experience following accepting that role pretty much mirrored what this collection of folks had spoken about. A couple of the most important things that came out of that conversation were 1) who to hitch your political bandwagon to (this is imp in PE), and 2) who to AVOID working for/with (arguably the most helpful).

Glad you've taken the time to think thru diligence. Not enough people take the time and effort to do this prior to formally accepting and I think it's a big mistake. The worst that can happen is that ex associate or VP doesn't reply back to you. Big deal, atleast you would've tried

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Most Helpful
Nov 12, 2018

Lot's of good advice above, as always. I'll offer up what I can.

You're number one source of knowledge is definitely former employees. I still get calls from prospective employees, including Partners, that are reference checking my former employer which I left 5+ years ago. While it is unlikely that someone will rip apart an organization, it is really important that you ask the right question. Hopefully your instincts are strong enough that you can properly interpret the feedback you will receive.

Personally, I've found that there are a handful of additional ways that you can get hints about culture prior to joining, although it is certainly not foolproof:

First, ask for the PPM from their latest fundraising. This should go into depth about the firm's strategy, relationships, sourcing techniques, etc. Reading it will give you a feel for how the firm position's itself. Pay attention to the writing style. Is it blunt, arrogant, apologetic, verbose, etc.? This document has been reviewed 100x by the Partners and should reflect in part the firm's style.

Second, read literature on the firm and pay attention to the classification of employees. In press releases, are all the quotes from the Partners or do they include quotes from VPs / Principals? Does the founder have a quote in every transaction? In the PPM, do they constantly reference "senior leadership team" as opposed to "leadership team." These things are subtle, but they can frequently hint at the distinction on which team members the leadership views as valuable.

Building on that last point, I frequently find that each firm has a line they draw for who is involved in important decision making and who is not. At some firms, the founders harness all that power (which also usually shows itself in the founders taking the lions share of the carry). At larger firms, it can be anyone that has made Partner. Some firms consider anyone post-MBA or in a partner track position as valuable and "above the line." Try to determine where that line is drawn.

Third, turnover is important. When scouring LinkedIn for former employees, try to get a feel for what turnover has occurred at the more senior ranks. Do they have a ton of former VPs? Did these VPs leave after only a year or two? Did they go to other firms and were they successful there? Obviously there are so many factors behind someone leaving their firm. Usually if they had another PE job lined up within a month of leaving, the termination was voluntary. If they were without a job for months, it was probably involuntary (exceptions surely exist). Try to get a sense for any patterns.

Lastly, always be sure to ask. I've always asked people straight up on what type of culture they promote within the organization and have found that people are generally pretty forthcoming. Just make sure you don't reveal the type of culture you're looking for prior to asking, otherwise you run the risk that they will respond with what they think you want to hear. Tell them that you really value fit (which you do) and would love to get a sense for the culture. Ask for concrete examples: Do employees get together outside of work? Does the firm hold offsites or participate in any events together? Are significant others invited? The feedback will help shape things for you.

All this said, you will never have a full information set. At some point you'll need to take a leap of faith and trust your gut. Just make sure you're honest with yourself about what you want before making a decision. Goodluck!

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Nov 13, 2018

Lots of good advice above, a few other thoughts:

In addition to a PPM, you could also/alternatively request a copy of their most recent annual meeting deck. Sometimes that showcases some color/personality (e.g., if they have jokes or funny slides built in to break up the annual meeting a bit). May also showcase who is presenting - i.e., is it all the same partner(s) or do they have VPs/Principals presenting portcos as well (this is something I specifically did and the group enthusiastically shared it).

Re: working style, this may be obvious, but you can also get a sense of the grind-iness of it via the workflow - how many IOIs/LOIs do you submit in a year? Do you have a "type" or do you put something in on everything? How many deals/add-ons per year? etc.

If you're moving geographically, I also found it very helpful to speak to folks who were in-market with the firm in question (accountants, lawyers, bankers, etc.). Lots of times local people have more interaction in casual settings and can speak to whether or not they are good people to grab a beer with or other things. May not be so helpful in a market like NYC, but if you end up in a smaller market that can be more meaningful.

I would also second the comment about asking directly - ask what makes the culture and if/how do they get together in a non-work way. Stuffy Christmas party at the Union Club? Do they do something fun around the annual meeting time? Informal drinks as a group? etc.

Hopefully some mixture of all the advice here gets you to the point of having a decent gut feel at the end of the day.

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Nov 13, 2018

One thing I would caution you about is viewing your next firm as your "forever home". I know it's tempting to think this way especially since you'll be coming on in a role that's probably career track with various incentives vesting over time, but the truth is that most people in PE jump around a bit. Obviously there are some people who have been at their one firm for a dozen years and once you're senior and the economics start becoming real significant, you probably shouldn't jump around too frequently, but as you point out, it's really tough to get the view on a firm, even as an insider (will probably take you some time to feel it out).

Do your DD on the firms youre looking at, but just know that like in any deal, a lot of the time there will be some hidden surprises no matter how well you try to turn over every stone.

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Nov 14, 2018


I think @CompBanker crushed that answer and offered extraordinarily similar advice to what I would share. You're in good hands there.

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Nov 20, 2018
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