Likely Getting Pushed Out at End of 2 Years (LMM Buyout)

Grindtime's picture
Rank: Orangutan | 309

Figured I'd finally post this, and reach out to the usual studs on this board who have a bit more insight then myself.

A little background:

Semi-target, 3.6 GPA, 2 years MM banking, and I've been at a LMM buyout fund for the past 18 months. During this time, I've known from the start that it was going to be a tough one (VP is a workaholic, demands perfection), and on top of everything, I accepted the initial role for $70k base given that they were still in start-up mode and the promise of a mark-to-market on fund 2. We now have fund 2, and my "market pay" was increased to $100k....bonus probably getting me into the $150 range assuming everyone is happy with performance (which I'll get into later). I was given a $10k bonus year one, if that's any indication of how these guys value comp. And on top of everything, I found out that my immediate peer who is in BD, got bumped to $135. Absurd.

My situation: group, compensation, abusive VP

This group, is highly highly highly value-based: no deal is good enough at the price we enter, and without fail, will cut price in exclusivity 10/10 times. What this means, is that I still don't have a closed deal on my resume. I have worked on several up into exclusivity, where only remaining diligence was confirmatory, but we would always just find an excuse to make it cheaper, and subsequently lose the deal. On top of everything, I haven't been compensated for my heavy workload and hours, and have worked under a verbally abusive VP who treats me like an intern.

$200k all in is unacceptable as a 3rd Year
My question to you guys is: this group has some issues; I've known this since day 1, but kept thinking of the pot of gold at the end of the rainbow....which is now nonexistent. A 3rd year making less than $200k all in is unacceptable. I've been thinking of my plan next, and frankly, I'm not sure what to do (nor do I have many friends to speak about this with).

How to proceed?
I've realized, outside of the money, I'm not sure how much joy I get out of this gig (side note: I don't know what it's like to make money in this business in the first place given my trash comp, so there's that). My freedom is limited, and I'm constantly stressed. Now, I think I could do it for several more years, but I don't know if I'd be "happy". It may be that my immediate boss has ruined my experience, it may be the industry, I just don't know. I could use this opportunity to swing the experience into a positive, get 2 years under my belt (HOPEFULLY close 1 deal), and potentially try and move into a corp dev / strat role, take some time to reevaluate priorities and travel for a bit, or try and find a firm that gives me the lifestyle balance / comp where I may be much happier. However, if I do the first 2, am I shooting my self in the foot considerably if I'd like to eventually get back into an investing role? If I didn't have a boss that was constantly on my ass about deliverables, thinks everything is high priority and needs to be done right this minute, and maybe would let me have a chance to go on a single date on a week night by leaving early, or grab a dinner with friends....maybe I'd be more content on long term prospects. But right now, I'm a seriously jaded given the lack of either a shit ton of money, or a easier lifestyle.

I don't plan, nor want, to go to a huge corporate fund. LMM shops is where I'm comfortable, and I know the deals fairly well and the responsibilities to be expected. Do you think a brief hiatus into another role, or break, followed by school or attempts to get into another small fund seem attainable? Would love some opinions fellas.

Comments (38)

Controversial
Apr 25, 2019

Well, that's unfortunate.

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Apr 25, 2019

You should be able to lateral to a different similar PE fund. Might start over as a Y1 or Y2 associate, but should be doable. Ideally find a place with (1) better lifestyle), (2) b school placement, or (3) track record of putting associates into portfolio roles. Should be doable to land something that checks one of those boxes.

If you want to go straight to corp dev without another interim stop in PE, plenty of roles out there looking to hire ex-PE associates. Reach out to headhunters and something will turn up.

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Apr 25, 2019

Sounds like a shitty fund. People fail to realize just because you are a potential buyer it does not give you the right to be bad actors.

Do you feel like you've learned a lot? If you were honest with yourself, do you think you can be a VP? If so, consider continuing in PE, at a different fund. If not, consider leaving PE entirely. Unfortunately with this much "experience" on your resume, you will not be hired as senior associate so you may find yourself on par with A1.5/2 again which is far from ideal if you are not given a clear path to at least get to A3/VP.

Not a lot I can offer but certainly wish you the best.

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Apr 25, 2019

Appreciate the insight as is buddy! Anything is better than racking out the brain / entering a panic mode.

Regarding the total experience, besides a lack of closed deals, I have absolutely learned a pretty impressive amount. We are/were small, so the reason I'm getting pushed out right now is "apparently" that I have struggled to fulfill the above and beyond aspect, which is an improvement process / lack of comped motivation / bad environment. Compared to peers of mine at larger institutions though, my responsibilities have been significantly more involved I think and would likely translate to a similar sized fund quite well. I don't mind the sr. associate bump vs. rehired as an associate 2.

If I'm truly thinking of a VP role though, no I'm not ready. I need a couple more years to harness the big picture thinking (and credit terms, etc.). Not to mention the entire lifestyle to being a VP, besides the compensation, is seriously heavy in terms of hours/lifestyle. It's TBD if I'm totally honest with myself.

I'd love to go a different route for a bit, and potentially re-enter once I know for certain. Do you think that would be possible post MBA or trying something else?

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Apr 25, 2019

Not being an ass, but I've noticed that many "promises" employers make for big pots of gold down the road - both first hand from friends and second hand from this forum, almost never materialize. They're just "selling" you and it's a big red flag if a company has to "sell" you on a job, in most cases.

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Apr 30, 2019

I wonder, though, whether it makes a difference if the terms are outlined: e.g., you get exactly X at Y date if you achieve Z. Also, if the terms are outlined then at least at Y date then you can confidently leave and know you're not missing out.

Of course, if the terms aren't outlined then that's a huge red flag.

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May 17, 2019
BBDreamin:

Not being an ass, but I've noticed that many "promises" employers make for big pots of gold down the road - both first hand from friends and second hand from this forum, almost never materialize. They're just "selling" you and it's a big red flag if a company has to "sell" you on a job, in most cases.

Why doesn't this comment receive more silver bananas. This should be THE top comment. Employers are shit. The moment you cease to have value to them u are out. All the talk about loyalty is BS. Remember your employer has one objective - achieve a good ROI on you. You get cut once your ROI is negative.

May 17, 2019

Yeah and unfortunately you can get screwed for all kinds of reasons, even if firing you or lying to you about comp was stupid. Just ask Patrick (WSO founder)

Apr 25, 2019

This sounds like the worst LMM buyout firm I have ever heard of. Leave yesterday

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Apr 25, 2019

Market is hot right now, you got this

Most Helpful
Apr 25, 2019

My advice is different from @Whiskey5's (what's up man, always good to see you).

First off, yes this situation sucks. It sounds like your direct boss is a complete ass. It sounds like that continues at the higher levels of the firm; anyone who is too short-sighted to realize that you can't jerk people around at the tail end of a process without killing your personal and firm reputation is also an ass. Sorry you're going through all that, and doubly sorry that they're heaping injury on insult by comping you so far below market.

@monkey_brah is right. The lateral market has opened up dramatically. You should not struggle getting another role at a firm of comparable size. You may have to move geographies (you very likely know that most of the true lower middle market shops are in Tier-2 cities).

I wouldn't suggest going through the big-name headhunters (Bellcast, Dynamics, Oxbridge, Henkel, et al.) as my first recommendation since you're unlikely to get tremendous traction due to the narrowness of their client base, but if you have thick skin and don't mind spending the time doing all the phone screens, you'd be surprised how many off-cycle things are in those people's brains. Oxbridge and Search1 probably more so.

One other path would be the family office route. See the tail end of a comment I made earlier this week. I'm not sure your geography, but if you're in New York, Bay Area, Chicago, or LA then you're in a gold mine. The number of places who would give their left arm for a qualified, trustworthy, discreet guy who did four years at reputable shops who's proven himself to himself and is now simply looking for a healthier lifestyle where he's treated like a human ...

This may be the answer to your comment that "I'd love to go a different route for a bit, and potentially re-enter once I know for certain".

What I'm getting at is that I don't think abandoning the trajectory you've labored so hard to put yourself on (jumping through increasingly narrow hoops: college admission, summer internship, analyst role, private equity role) because you had an honest-to-god shit latest role.

You've gotten to experience all the dark lows of a seat in private equity (internal politics, boss breathing down your neck, crummy comp relative to peers internally, a bunch of wasted work on deals that didn't close but very much could/should have ...) without getting to experience any of the bright highs (deal closed, board seat or at least observer, platform add-on, supporting management and soaking up a sliver of their deep knowledge, selling a portfolio asset, getting to interact with peer firms on a collaborative transaction ...).

I would want to know what all those feel like before I made a determination about whether the career path was really for me.

My advice then is to find a way to immediately get to another role where you can taste all those things. Then re-evaluate business school, the continued vertical climb at that firm, a corporate role, or whatever else.

Again, sorry how much this has sucked. I think it's fixable by moving. Always remember that when people treat you like shit, it's a reflection of how much they're worth, not how much you're worth.

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Apr 25, 2019

@apae we are long over due for a catch up brother.

APAE's advice is sound as always -- i didn't realize associate lateral market is flourishing, its been a while for me.

OP -- you need to take a stand here. do you like PE or do you not? if you don't enjoy the work, find your exit now and climb as high as you can in corp dev. if you like PE, agree with @apae and keep going in the industry.

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Apr 25, 2019

@APAE - As always, your insight and suggestions are top tier. Really appreciate the thoughtfulness, and I'm sure many others will also. You are understanding my position to an absolute tee, and I've got a lot to think about. Ever since I got this role, I haven't been completely concerned with finding other roles at similar funds if i quit / did something else - I don't have dreams of grandeur slaving away for a multi billion dollar fund, never have....one of my close friends is of similar seniority at Apollo, and not even his $450k annual comp can fix the baggy eyes / depression / disappearing hair.

Lateral ops, and family office opps, could very well be an interesting avenue. However, given the timing of things, do you think my chances diminish significantly if a scenario approaches where I leave my current firm / am let go, and have to find the next opp while not currently employed? I know it's harder just by human nature of first impressions, but I've developed a solid ability to interview and hold my own + regardless of closed deals, I can talk to my experience quite well I think.

@Whiskey5 I am being a bit wishy washy, I know. I think that is just kind of the process, no? Sure some folks enter, love, and stay in investing roles forever, but I've got to think a significant portion also thinks about trying out other experiences as well? I dislike my experience to date, it might be better elsewhere, but also so could a corp dev role or taking a 6-month hiatus. I just don't know if that has the tangential effect of effectively making the decision for me on whether or not I "like PE".

Appreciate it gents; even just the acknowledgement of my shitty situation is therapeutic. If you were in my city (of the list APAE mentioned, got me), I'd supply ample booze as payment.

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Apr 25, 2019

Great post.

OP -- keep in mind, if you are in NY, it is now illegal for prospective employers to ask you your current compensation. This plays well to your situation given the subpar comp. they can certainly ask what your expectations are, just not your current level.

I'm not trying to make it all about comp, because even if your pay was market rate, you should leave anyway.

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Apr 30, 2019
APAE:

One other path would be the family office route. See the tail end of a comment I made earlier this week. I'm not sure your geography, but if you're in New York, Bay Area, Chicago, or LA then you're in a gold mine. The number of places who would give their left arm for a qualified, trustworthy, discreet guy who did four years at reputable shops who's proven himself to himself and is now simply looking for a healthier lifestyle where he's treated like a human ...

Would love to know a little bit more about the family office gold mine. I just came off a long recruiting cycle and had just one family office interview. Did the whole headhunter/linkedin/alumni contacts and still only got the one, so wonder how I missed out on all of that. Thank you

Apr 25, 2019

Man sounds like you really got fooled by a delusional snake charmer............ That bonus is worse than first year analyst IB stub comp (below street)

Apr 26, 2019

Keep in mind also that you may "not like the work" because all of your experience to this point has been.....working for a dickhead and your whole view is skewed. Having a different work environment might change your view. Perhaps consider lateraling out and then give it 6 months. If you still don't like it you won't have any problem shifting gears into a different role.

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May 5, 2019

This. I've seen people "wash out" of their chosen career path after a particularly horrible experience with a shitty company/boss. It's like they see so much of the negative side of their industry they forget the positive.

Apr 26, 2019

Keep your head up. Sounds like you got a bad deal - it happens. It's impossible to know group dynamics in a general interview process and you sometimes see the worst in people when they get stressed or their asses are in the hot seat. Getting pushed out after two years is very common, so it shouldn't raise red flags, and if you worked on a bunch of deals, but didn't close them, you can talk about how and why they didn't close and chalk it up to experience. Seems like you'll have a bunch of different options out there and a bright future. Stay positive and keep plugging away.

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Apr 27, 2019

Why would you ever leave banking to go to a place like that. Can you go back to your MM?

Apr 27, 2019

I'm really sorry for hear that you're feeling this way, and honestly I'm feeling some of the same. Your considerations are pretty much on the spot of how I'm feeling, and the dilemma is quite difficult to navigate.

People have advised me in the past to think hard about what one likes to do (in a job), the pros and cons of the current job, and how you want your next job to be. Would you want to do what you are doing now but with better hours? Would you be willing to do that with or without a certain comp (knowing yours is really low already).

Hope to hear what you end up deciding regardless. Hang in there!

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Apr 30, 2019

First, I'm sorry you are in that situation. It sounds like the absolute worst from all ends. The fact that they grind you and blow up deals while paying you below market is about the worst I can imagine. The fact that they haven't closed anything in 2 years is incredible, reminds me of a certain crappy IB "boutique".

I would definitely look to lateral to another firm and move cities if you have to. Leaving the industry now will kill the momentum you have built up through hard work. If you know how to get something almost to the finish line, that's good enough for junior staff. It's on your principals/MD's etc. to be able to guide you on how to get across the finish line. Be careful in your interviews to not bag on your current place. There will be questions about why nothing has closed, but it will become obvious to your interviewer why if you just give them the facts.

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May 8, 2019

The lateral opportunity may be the move here to at least experience a different culture (hopefully better, maybe not) - and might put some feelers out there and get interviewing chops up to speed again. Regarding the no deal completion: do you think the red flags are increasingly raised if close out my time at the current firm and travel a bit? Just so disheartened at immediately continuing into another role.

Or, as a couple other folks have mentioned, maybe do the lateral/new gig route first then evaluate the travel period.

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May 9, 2019

It all depends on the new firms needs. They may be a firm that has planned well and don't have an immediate need. Where you could take a month off before starting or so. I honestly would skip the time off for the right opportunity. It sounds like you actually enjoy the job, just not the seat you're in.

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Apr 30, 2019

This sounds like the worst

Apr 30, 2019

My experience with the current lateral market is that while there appear to be a good amount of spots, there are many more qualified candidates and lots of firms perfectly fine with wasting tons of folks' time.

Also, to the point of relocating to whatever secondary city you can get a PE offer from - I've found those processes to be some of the biggest time wasters. You are at a pretty big disadvantage compared to folks with ties to that city.

Apr 30, 2019

Feel for you man.I was in a very similar situation a few years ago - had been at a MM fund for almost 4 years and just very burnt out, wanted out. FWIW, I quit with no plans, took some time off, chilled, and then got a corp dev/strategy role at a growth company which I really like. Some thoughts that are going to be all over the place, no order:

You are really underpaid. This is your career, man - you have to be proactive and aggressive in looking out for yourself. I think it's OK to have taken 70k salary to get into the buyside, but when that first year bonus came in at 10k, I woulda immediately had one foot out the door. For your level of experience and those hours, I'm sure you knew that was BS.

Oftentimes, high achieving individuals (most kids who end up in IB) have this feeling of failure when they leave a job. You've likely never really, truly "failed" before at something big, and so when a bad job situation either forces you out or you decide to leave, it might feel amiss. Those feelings are normal, but you should never hesitate to take the initiative in your career and your life. In fact, one subtle change about our generation is that a lot of promotions/pay bumps occur simultaneously with a job change - wage growth has flattened, leading incumbent employers to disincentivize paying up their existing workers... but at the same time, employment rate is super high so everyone is poaching everyone else's employees, but they gotta pay up to do so. I'm getting off topic here but w/e.

Similarly, don't settle for working for assholes. I know everyone's financial situation/security is different, and I know I'm privileged in saying this, but I'm just never doing that again. To me, it's just not worth it. (I mean, unless someone is pouring an obscene amount of cash into my bank account.)

Don't focus too much on closed deals. It's basically never the junior guy's fault that a deal dies. In interviewing for corporate roles, I was basically never asked about deals either. You probably will if you try to lateral to another PE firm though.

Treat that metaphorical pot of gold as just that - it's a metaphor and it's not real. If you were to view yourself as a company that is a potential acquisition target, and you were analyzing Grindtime Inc's income projections as a PE associate, would you give substantial credit to this pot of gold in your projections? Fuck no! So treat it the same way when you think about your career path.

"I've realized, outside of the money, I really dislike this line of work." So get out now. There's minimal upside to staying since you can likely get a corporate role now, and the real money in PE is at the partner level many years down the road.

"However, if I do either of the above, am I shooting my self in the foot considerably if I'd like to eventually get back into an investing role?" Are you really hesitating to peace out because some day down the road, you might put on rose tinted glasses and magically realize you actually like something that you hated in the moment?* I understand that up to now, a big part of the appeal of many jobs (IB, PE) is the flexibility offered in terms of exits. But there really is a point at which you ought to stop thinking about roles in terms of exit opps and start thinking about whether a given role is a good fit in itself.

. * To be fair, you probably would be generally happier at a firm with a healthier environment, but keep in mind that this is finance - there are going to be a lot of assholes no matter where you are.

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May 8, 2019

@CHItizen - Really appreciate the thoughtful response buddy! Hit the nail on the head, completely, on a variety of observations. I think the biggest issue I've been having is that failure / rose-tinted glasses observation. Getting to whether or not a position is a good fit in itself has quite literally never been a criteria for me, and now that the standard path of finance is shaping up to a close, my next steps are completely uncertain... for the first time since college, I actually have no idea what I'd like to do (PE vs. Corp), and that cognitive dissonance is a bitch.

Honestly, I got more responses and help here then I ever expected to, and arguments for one way or the other are both logical (give PE another shot, see if culturally I can find a better fit...or just try my hand in something else and see if that route has greater dividends in lifestyle). Did you decide at a certain point that the comp potential down the road just wasn't as critical when you went to the corp side of things / took a breather?

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May 9, 2019

So when I quit, I also wasn't really sure what I wanted to do. I took some time off to chill and then talked to a bunch of college friends and ex analyst to see what they were up to before deciding to take a more operational route. At the time, I also figured getting some operational experience under my belt would still leave a lot of doors open (and there are certainly a lot of PE associates that work for a portco after their 2-3 years are up and kinda figure it out from there - some stay in operational roles but there are certainly some that go back to PE post MBA too).

Regarding comp, I think this is going to be much more dependent on your personal situation, preferences, and wants. I was fortunate to be able to save a decent nest egg and had no intention of getting an MBA, plus I live in a city with a relatively low COL so taking a pay cut wasn't as big of a deal. Frankly my immediate standard of living hasn't changed at all, as I never had expensive tastes to begin with.

Comp down the road certainly does start to diverge a lot as you hit the peak of your career (say, in your 40s), but the path to getting there (i.e. PE partner) requires a ton of sacrifice in your 20s and 30s. I am personally not willing to sacrifice any more of my young (ish), childless, relatively responsibility free years for the chance at being rich in my 40s (as opposed to being "just" upper middle class ). Everyone is different though - I have friends on the buyside who really like it and that's great for them. I also have friends who hate it but are grinding toward a walkaway number (hint: it's a mirage. no matter what your walkaway number is today, it'll keep going up). So yeah, for me, it was worth it since I already had money saved, knew my quality of life would stay the same (if anything, it's better since I have more free time), and still have a good job with interesting projects and cooler coworkers.

Also, you can definitely do well in the corporate world and make a lot of money, so there's that too. Like if you're mid to senior level manager with equity at a PE/VC backed firm that has a good exit, you can certainly see a windfall. Probably not enough to retire on, but still.

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Funniest
May 5, 2019

(1) Get a lateral job.

(2) Take the longest vacation possible from your current job, starting day one of your lateral job. Tell the lateral job you already quit when you start. Tell the old job nothing.

(3) At the end of the vacation decide which (if either) job you want. Resign from your current job, the lateral job, or both, accordingly.

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May 6, 2019
username2222:

(1) Get a lateral job.

(2) Take the longest vacation possible from your current job, starting day one of your lateral job. Tell the lateral job you already quit when you start. Tell the old job nothing.

(3) At the end of the vacation decide which (if either) job you want. Resign from your current job, the lateral job, or both, accordingly.

LMAO

May 7, 2019

Plenty of good comments on your job options, so nothing to add there. I'm still stunned / stuck on the fact that your fund has tried 10 times to be cute in exclusivity, gotten burned on it 10 times, and keeps at it.

It's no excuse, but no wonder everyone is intolerable. They raised a fund and haven't put any/enough of it to work. The LPs are probably growing angrier by the day.

May 9, 2019

Maybe go to MBA and then start a new career?

May 14, 2019
Comment
Nov 15, 2019