MBB -> PE Operating Group
Hi!
I'm starting at McK/BCG next year at the Analyst/Associate level. I'm in a Canadian city (Not Toronto). I've always been fascinated by Private Equity Operating Groups (KKR Capstone etc.)
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How does the work at PE Operating teams differ from MBB?
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Does having ownership give you more control?
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What is the comp like at these PE groups?
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How do I best position myself to land one of these roles? Would they be easier to land post-MBA or during my tenure at MBB?
interested in this also. more so for an operating role at a firm such as Insight Partners/Vista/Silver Lake. how do you best transition your MBB experience & what are in MBB should you focus on to land those roles as an exit?
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Bump! Anyone?!
My MM-UMM fund has a group like this - its super interesting work and you get to grow companies with some "training wheels." Note I am not on this team so this is mainly from conversations I have had with the consulting group / when I was thinking about trying to move there.
Our consulting group's task portfolio is: 1. Involved with the investment team for sector specific diligence from the outset, still use MBB for industry, investment diligence, but involved for a "house view" on the subject matter 2. Work on projects at portfolio companies ranging from optimizing cost strategies and new business lines to ensuring worker safety is in place. 3. Swap in and out of roles at a portfolio company. XXX company lost its CMO? Lets send Jim from the consulting group to hold that position until a new CMO can be found 4. Heavily involved with board level projects.
Most of the team comes with both industry and consulting backgrounds. Other than firm name (which basically means the entire team is from MBB), there is no preference between strategy and implementation consultants.
Note that firms do the "Consulting group" differently where for some funds the consulting group is a part of the firm, while others (KKR Capstone) the consulting group is a separate entity that is paid by KKR funds.
When thinking about joining a group, there will be extremely different experiences based on what types of companies your fund buys.
If you are at a MM - UMM fund that buys from alot of other sponsors, you will have to develop a full fledged business plan, and strategy for the company prior to bidding to do something "better" than the prior sponsor. The in-place leadership team might be ex-PE, could be their third or fourth PE backed company, so you tend to work with extremely sophisticated people who are likely as rich/sophisticated as alot of your MDs/Partners. Think division VPs from like General Electric.
The most interesting I've heard is if you invest in large family owned businesses where the founder is still significantly involved. You get alot of ego-maniacs who aren't used to being told what to do so you get a lot of "interesting" situations.
Wow! Thank you for the high-quality post.
At what stage of their career did people move from MBB to your firm? Did they move at an Analyst level or post-MBA/Associate level?
Largely engagement manager/associate level. Note that most were either (a) recruited from industry but were engagement managers prior or (b) got their MBB roles as experienced hires from industry.
Note the team doesn't seem to be super interested in people who have only been in MBB their entire careers. This is a function of the fact we occasionally use the team to drop in/out of portfolio companies so operating experience is a huge plus.
We have had MBB folk come in without operational experience but in pure investment seats.
PE firms expect that they hire people who are well trained, have worked on many different engagements or deal due diligences across different industry verticals, can be put in front of C-level management to perform the role as a trusted advisor, understand the financials/accounting/valuation concepts in the same way as the investment team and have a lot of experience on how to create value from a revenue and cost perspective. This implies that MBB Engagement Manager level and M7 MBA are usually required. Please feel free to browse LinkedIn profiles of these people at firms such as KKR Capstone, American Securities, Vista Equity, Cerberus, TPG, etc. for reference.
Here is an (expired) job posting that describes the requirements very well. https://www.linkedin.com/jobs/view/1569741978/
Compensation is on par with MBB with the additional upside to receive carry points at VP level and above (at some firms).
It is highly recommended that you work for at least 2 years in the private equity focused group at the MBB. The other years at the MBB can be spent in an industry group or functional group.
Work is similar to MBB work with the main difference that you will be responsible to help formulate business strategy, understand investment thesis/financial model (capital structure, growth forecasts, cash flow requirements, etc.), identify value creation levers AND then implement the strategy together with management team. At MBB you usually produce the report/findings and then you move on to the next engagement (vs. staying on and help to implement it). Nowadays MBBs are moving more into implementation therefore this primary difference might go away over time.
Thank you for sharing the very detailed post. I've been looking at profiles as you suggested and it's been helpful to find patterns.
How about compensation compared to the investment team?
I only have one data point at Associate level in an UMM fund in Europe, where comp was the same as the investment team. Is this the norm or perhaps the gap widens at more senior levels?
It is slightly lower at my firm I believe.
Long-term, the goal for the consulting side often may be CEO/CFO/COO of a couple of successful portfolio companies rather than a member of the investment committee at the fund.
I don't know if you have seen any of the portfolio company compensation arrangements/management ownership plans for C- Level execs that perform well, but lets say they do extremely well, often times better than non-founder partners.
I have seen only one example of one of our clients, a €600m revenue EU portofolio company of a MF. They have a bonus pool of like €10m for 10-12 people, mostly the board/C-levels and a handful of senior Directors, once the exit this company.
Not sure if this the norm or an outlier, but I have started to see more and more vacancies where even so-called "Transformation Managers" get some carry, so maybe it's not uncommon.
Reviewing the following two compensation reports side by side should provide you all the answers:
Investment professional compensation trends in North America: 2019
Operating professional compensation trends in North America: 2019
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