Hi All,
The WSO forum has always been one of my go-to’s for career info. While most of what I have picked up is from other threads, I’m hoping to get some more specific career advice. I’ve networked like crazy to unravel an opportunity that sits in front of me but I figured it couldn’t hurt to throw this one to the monkeys.
I have an opportunity to join a LMM Private Equity fund in a second-tier finance city. Think Denver, Austin, Atlanta, etc
Characteristics of the fund/role:
-Low AUM MM
-Associate role with decent base, low bonus, but opportunity for carry day one
-Deal team is a mix of past PE professionals/Operators
My major concerns/questions:
-Is there an opportunity to lateral to another PE fund after 2-3 years?
-How does this experience look when applying to a top MBA program?
-Would it serve me better to take a MM IB offer and transition after a few years to a larger fund?
PE has always been the goal but I’m wondering if this opportunity is selling out too early or if it has legs to provide additional PE opportunities down the road.
For context I have IB and big 4 transaction experience.
Any thoughts are much appreciated!
Totally depends on what your long term goals are.
If you're trying to make good money and live in a city where you can raise a family, second tier finance cities provide a great balance of earnings potential and family environments.
Also, if you haven't researched it a lot, LMM firms have the largest opportunities for proprietary deals that will sell for mid single digit multiples. Last metric I saw from Forbes said there was something like 300,000+ companies with less than 100M in revenue in the United States, so there is not a shortage of opportunities. I think that is important to note if you are getting carry.
What is the background of the founders/partners?
Thanks for chiming in.
Mix will be 80% deal work in the beginning, leveling out with deal sourcing in the next 2-3 years. Ideally it would be about 50/50.
I don’t necessarily have the desire to join a large fund but I also don’t want to close the door to that opportunity down the road. The MM IB opportunity I have wouldn’t blow this name out of the water but definitely has a bit more recognition. I would bucket the larger fund and MBA into the same category. I don’t want to close any doors at this point in my career and my current role has decent brand recognition.
Agreed.
What I’m wrestling with is the long-term implications of taking this role. The opportunity for investment in the LMM is extremely attractive but I don’t want close any doors for future PE opportunities by jumping into LMM too early.
Happy to chat over private message about founders.
Is it a buyout fund? I would say look at the people running it and what kind of people are they like. I always like to have very experienced and talented people around me to learn from. I would say the skill set you will develop will be comparable but still different from at a MF where they look at considerably bigger companies.
What are your long term goals?
Do you have aspirations to go to a larger fund or go to H/S for business school? I think it would be tougher to get to a H/S type of MBA from a no name PE shop, but because you're always going to get outgunned by the megafund candidates. With that being said you probably have a good shot at the rest of the MBA business schools">M7 with proper execution. In terms of lateraling, as long as the firm has decent deal flow and you get good experience, a move up to a bigger fund shouldn't be too tough. Megafunds will be tough but if you really wanted to move, I think you could probably do it. I'm in tech PE and I get inbound interest from bigger funds all the time. These aren't the brand name ones, but I feel like if I hustled hard and really wanted to move I probably could.
I made the same decision a few years ago. Joined a lower MM firm(but had 1.5 experience going in) and it was one of the best decisions I've ever made. The firm has continued to grow, I've moved up the ranks, the work is interesting, and overall I think the lower MM and MM private equity space is a great place to be.
Couple of things I would be thinking about if I were you. From a job opportunity perspective
Has the firm invested in any deals so far? What is the profile of those deals? How are they performing? How did they source those deals? What is the sourcing process? Have they had any exits? How did those do? What is the background of the partners? Are there at least a few experienced dealmakers?(This is a big one for me, operators are great for operating a company, but you'll want a senior banker/PE guy to teach you how to become a good investor) How easy was it for them to raise funds? Who are the LPs? How much have the cornerstone LPs committed?
I'd definitely take this over a MM IB Associate role. It's really tough to make it from a banking associate to PE. If you're joining the MM IB as a senior analyst or something like that. You could always do that for a year and recruit heavily for PE. Best of luck with the decision and feel free to PM me if you have specific questions.
I actually have a remarkably similar background although I estimate I am ~2 years behind you... mind if I send you a direct to pick your brain on a couple things?
Pm me.
Sure thing
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