Lateraling PE to PE

burnertwitter's picture
Rank: Chimp | banana points 14

With full time recruiting in full swing for PE Associates, I wanted to see if anyone on here has any experience lateraling between PE firms?

I am looking for information more on moving from lower middle market to core middle market or middle market to upper middle market rather than information on lateraling from Associate to VP (but this could be the case if it was both a promotion and moving upstream). I would also be curious if anyone moved all the way up to MF but figure this is a little less common.

If anyone has been through this process, I would be very curious to hear about your overall experience. Some examples questions I have include: how you first started looking around, what were some reasons you started looking (assuming you weren't being forced out after 2 years), how long did you stay in the first PE role, what time of year did you started looking, what headhunters or other resources were most helpful, did you come up with an initial list of target firms (if so, how did you come up with this list), and any general insights would be greatly appreciated.

I tried to search for other threads on this topic but didn't find much so if it already exist would appreciate for someone to point me in the right direction.

Private Equity Interview Course

  • 2,447 questions across 203 private equity funds. Crowdsourced from over 500,000 mem.
  • 9 Detailed LBO Modeling Tests and 15+ hours of video solutions.
  • Trusted by over 1,000 aspiring private equity professionals just like you.

Comments (13)

Dec 7, 2017

Curious here as well.

Dec 7, 2017

To the extent people don't answer, i would make a list of the top 25-50 funds and run through their vp / senior associate profiles and make a list. I've done that, and took about 4 hours but very helpful in terms of calibrating where people are coming from. I'll say about 35% of people were no MBAs (which includes lateral and direct promote - i did not bifurcate), 30% from HBS, ~15-20% from GSB ~10% from wharton and then rest "other".

But there are clearly funds that do and don't entertain laterals. I think the traditional HHs are the main pipeline though could be wrong. For the list, download from PEI i'm sure your fund has access, if not ask a banker to send to you.

Think the role will almost certainly be "experienced" associate or senior associate and not VP, which is a 2 + 4 or 2 + 2 + MBA role historically.

Am looking to do large cap -> large cap or upper MM lateral, so would love to hear insight from others as well.

    • 3
Dec 11, 2017

.

Dec 26, 2017

push

    • 1
Feb 26, 2018

Bump, curious here as well. Specifically interested to know if any firms entertain the possibility of / there have been any instances of experienced associates opting to switch companies and effectively 'restart' at the level of associate 1? I figure that choosing to 're-do' one year in the grand scheme of life is a reasonable trade-off at a better opportunity for some folks.

Learn More

9 LBO Modeling Tests, 10+ hours of PE Cases and 2,447+ interview insights across 203 private equity funds. The WSO Private Equity Interview Prep Course has everything you'll ever need to break into the competitive PE industry. Learn more.

Mar 12, 2018

Bumping again - very curious

Mar 12, 2018

First of all, I think that every fund and even every person within a given fund is going to perceive someone wanting to lateral at the associate level differently. That being said, from my experience, most people aren't really receptive for a few reasons:

-As an IBD analyst, you went through a fair and competitive PE recruiting process and where you ended up is a reflection of your abilities. I think for people that did their analyst stint in a regional office, there's a case to be made that the logistics of recruiting in a different city while working 90 hours a week prevented you from placing at a firm that matched your quality, but then some people will wonder why you started in a regional office in the first place. If you were in NYC or SF, I can't think of any way to reasonably spin this.

-Fund economics tie people down over the long term so they rarely leave on their own accord and are usually pushed out. Obviously, having golden handcuffs does force people to show long-term commitment whether they like it or not, but the fact is that long-term commitment is expected. By showing that you are already unhappy and looking to trade up after a few months does not reflect well on your character. Also, there's the (obvious from your post) fear you might use this transition as another stepping to a bigger fund.

That being said, there are time when an unforeseen departure does happen (ie. an associate goes to HF) and if a firm ends up being significant short of staff, everything I said above goes out the window and finding an experienced associate who can jump ship and dive right in without having to be trained takes precedence. When that happen, HH are always involved so I would focus my effort on making sure I am on every HH radar and able to see these off-cycle opportunities.

    • 5
    • 5
Mar 14, 2018
mtnmmnn:

First of all, I think that every fund and even every person within a given fund is going to perceive someone wanting to lateral at the associate level differently. That being said, from my experience, most people aren't really receptive for a few reasons:

-As an IBD analyst, you went through a fair and competitive PE recruiting process and where you ended up is a reflection of your abilities. I think for people that did their analyst stint in a regional office, there's a case to be made that the logistics of recruiting in a different city while working 90 hours a week prevented you from placing at a firm that matched your quality, but then some people will wonder why you started in a regional office in the first place. If you were in NYC or SF, I can't think of any way to reasonably spin this.

-Fund economics tie people down over the long term so they rarely leave on their own accord and are usually pushed out. Obviously, having golden handcuffs does force people to show long-term commitment whether they like it or not, but the fact is that long-term commitment is expected. By showing that you are already unhappy and looking to trade up after a few months does not reflect well on your character. Also, there's the (obvious from your post) fear you might use this transition as another stepping to a bigger fund.

That being said, there are time when an unforeseen departure does happen (ie. an associate goes to HF) and if a firm ends up being significant short of staff, everything I said above goes out the window and finding an experienced associate who can jump ship and dive right in without having to be trained takes precedence. When that happen, HH are always involved so I would focus my effort on making sure I am on every HH radar and able to see these off-cycle opportunities.

I gave up in the first paragraph. Placements 6 months in have NOTHING to do with your quality and everything to do with your resume (School, GPA, IB Group).

Talk to any Sr. Associate or VP at a PE fund that does on-cycle recruiting and ask them about the "quality" of their new associates.

GTFO of here with this

    • 3
Best Response
Mar 14, 2018

@HugLife's reaction was predictable and matches my first thought.

The environment today is not what it was even six years ago. Recruiting has gotten pushed so far ahead of start date that funds are taking fliers on people with twenty weeks of banking experience.

For someone like @mtnmmnn who is likely thinking back anecdotally to his process (when everyone knew more or less which week in March the process was going to kick off, and it went in an orderly fashion, and all the analysts knew more or less where they stood in terms of likelihood of speaking with a particular firm even before headhunter invites went out), it's accurate to think that your fund placement reflects the caliber you deserve.

Secondly, someone who came out of a really strong school may have some blinders on regarding the meritocracy of the process. If you went to Yale and were at a strong bank (which you worked for and deserve), it's easy to skip the moment of critical thinking to consider that there may be a kid just as smart and hardworking as you who for whatever reason (had to stay close to a chronically ill parent, couldn't afford tuition, whatever) had to go to a worse school, where that then snowballed into more limited analyst recruiting opportunities, which progressed into a narrower tier of private equity opportunities.

People look for quick tells or shortcuts that make their decision easier. We all know that schools and banks are good but ultimately imperfect proxies for judging someone's abilities. We all also know that there are numerous outliers (the stellar analyst at Jefferies or Guggenheim, the amazing associate at Irving Place, the brilliant kid who took the full-ride to Penn State over a crap package at Duke), and unfortunately the system lacks adequate mechanisms to properly receive and assess those outliers truly meritocratically. Luck plays the largest role in that Penn State kid getting a shot at Goldman rather than Harris Williams, then again for an interview at TPG or Berkshire instead of Irving Place or Brightwood.

The bottom half of @mtnmmnn's post I do agree with. Someone trying to lateral mid-program as an associate shoots up a lot of 'pink flags': not quite red, but worth examining closely.

Your better bet is to get to the 18-month mark and go through the headhunter processes for 'senior associate' roles. There's a whole host of firms (a lot of family offices, actually) who like people with two years of banking and two years of private equity. The logic is often that those guys who aren't going to school are skipping it because they don't want to do it, so if you get them, you have better odds at that person sticking with your firm with some longevity.

    • 9
Mar 15, 2018

@APAE This is what I think every time a see a new post from you with more great insights...