Making Partner at a Megafund

I am not at a megafund. Here is my perspective on how it works at a senior level.

1) It depends entirely on the fund you're at. Political climates vary from firm to firm.

Blackstone, for instance, offers a slower promotion scheme but very attractive pay (albeit on a longer-term carry disbursement schedule), crème de la crème dealflow and 'prestige', and a decent-enough level of collegiality that you don't want to kill yourself.

Apollo is a dog-eat-world place. Notice that I didn't say dog-eat-dog; there isn't internal warfare, but everyone there knows that it's an eat-what-you-kill model, so people really put in the hours to try to drag the biggest prizes back to the castle. It can be sweatshoppy simply due to the self-perpetuating phenomenon where everyone tries to work harder than the guy next to him.

Catterton (not a megafund, obviously) is really relaxed. Their bread and butter is consumer, it used to be a super WASP-y place where where you were from mattered, and good luck finding anyone senior anywhere in the office between Thursday lunch and Monday lunch from May-August. I'm not sure how it is there since the L Capital merger and rebrand as L Catterton, but before I can say that it was a pretty cushy job.

I could go on with anecdotal insights, but the point is that you'll see some mobility at the post-MBA but pre-partner level where guys are putting real thought into identifying the shop where they want to sit for the long term. Here's an excerpt from a comment I made in another thread:

APAE:

Even within the megafund bracket, I've heard various comments to the effect that they're frustrated finding good partner-track talent the past five years, so they're treating the associate class as more of a disposable talent pool and looking to the MBA or experienced hire scheme to get what they want. (Some of these conversations steered toward relatively explicit asks for me to sign onto their team.)

That confirms something I'd noticed anecdotally, where guys I knew who were happy in well-comped roles at good shops were jumping to another place after two or three years to collect a title boost and (what felt like) generous carry economics.

The smart guys are making sure that the culture of the place they're going to sit at is enough of a fit to compensate them adequately for the constant pressure you accurately mention you're under in these type of roles.

2) This boils down to how bullish you are on yourself. Assuming your user industry status is up-to-date and I can talk to you as a soon-to-be private equity associate, if you have all the right formula components (strong undergraduate institution, strong grades, strong banking analyst position), you can map out a hypothetical trajectory for yourself where you get a decent associate placement, good b-school placement, and are able to return to the industry.

If all that goes to plan, you ought to be able to make it to partner somewhere, assuming you're operating with your eyes open as to how important it is to invest in all the soft skills that are the real driver of your success as an investment professional.

I'll quote myself again from a different comment in that same other thread:

APAE:

The transition from doer-of-work to part-doer/part-reviewer is really bumpy. News flash: this is the real thing that people never clue into when they wonder where the soft-skills feedback they get as a PE associate comes from. It's the partners being indirect about saying the associate demonstrates no or too few indicators of being a good future manager.

News flash: Being a good manager is absolutely imperative to your success as an investment professional. It allows you to leverage your time effectively (delegating work components to more junior members of your team), streamline processes with service providers like counsel, bankers, and consultants to their peak efficiency (because you're managing the humans inside those service providers who interact with you on your deal), and also maximize what you get out of your portfolio executives.

In private market investment firms, the soft skills are the ultimate determinant of your success. It's therefore a bit incomplete to pay lip service to how "fierce" the competition for promotion to the partnership is. People who can make it, make it: full stop.

What that looks like in practice is the founders or managing partners pulling you aside to have a conversation about your "long-term interests" or "how you're thinking about the future." It's often coded and may have some plausible deniability to it, but it may end up being pretty explicit, particularly if it dovetails with your year-end comp conversation. They want to know whether you're thinking about sticking around, and if you make that commitment, you can start to sleep easier with a verbal commitment from them that the seat is yours and will come within the next few years.

(Side note, this is why you see on the team pages of a fund that one Principal [or Vice President or whatever that firm calls its pre-partner title] with three board seats while everyone else at the same title level has none. That's the guy that the partners want to add to the partnership, so they're grooming him with more leadership experience.)

So, you're correct that there are very, very few partner seats. What you're missing though is an understanding of how few capable people there are for those seats.

3) No, it wouldn't make sense to try to promote vertically within a bank and use that as a stepping stool to transition to PE. The overwhelming majority of senior bankers could not cut it as a senior investment professional. Yes, there's an element of transferable skill-set in terms of deal structure, negotiation expertise, and sourcing ability. Ultimately though, the banker exits stage left when the deal closes, while for the investor, that's where the work actually begins. A banker jumps in at the end of the ownership cycle when an owner is ready to sell and acquaints himself with as much of the strategic or operational nuance that led the business to its current position, but that's the equivalent of reading someone else's study guide for a final exam as opposed to the investor who's the equivalent of the guy that wrote the study guide himself across the whole semester.

You're better off getting directly into private equity and developing your skill-set there as early as possible in order to gain datapoints on whether you have what it takes to succeed in the field. For more on that, read through all the comments LostInTheStreet asked in his thread that I replied to.

Good luck.