Options after Pre-MBA Program

All,

I'm currently in my 2nd year in a pre-MBA Associate program at a MegaFund in NYC that doesn't offer VP promotions without business school. I already decided that I don't want to go to business school for several reasons and am looking for advice on my next career move. I want to stay in finance long-term, given I love investing and can't think of too many other industries with the same pay.

There are 3 very different options I'm looking at that I would like to get your advice on:

1) Recruit for senior associate lateral hire opportunities at other upper middle-market / mega funds in the US; PRO: attractive from a long-term experience and pay structure; natural transition of my current role; network in place with PE shops, bankers, recruiters, etc.; CON: Would likely have to transition as a senior Associate and prove myself for 1-2 years before being promoted (if at all); if I don't get promoted I would be in the same situation in 2 years

2) Recruit for VP opportunities at smaller middle market funds in the US; PRO: May be able to get VP role without MBA; more deals; more autonomy; CON: Not as interested in operational work (despite MBB background); lower long term pay; somewhat of a 'perceived' step-down

3) Move to Asia (HK/Singapore/KL/Jakarta), as I believe regional markets offer more opportunity long-term (see my other threat); understanding that it would be hard to get a local PE role, I talked to my current fund and they could offer me a role as Head of M&A (sounds cool, but it is really a business development role) for a smaller portfolio company in the region (they don't offer transfers to their deal team, as they are looking for local talent); thought is to stay in the role if it works out and it is attractive, or move to a fund, which may be easier, as I'm already in the region; PRO: Move to Asia long-term w/ option to recruit in the region once there; potentially very interesting and attractive role; 'easy' internal transfer; CON: Afraid that joining a portfolio company is a 1-way street (i.e., hard to go back to PE); difficulties to find a job in the region afterwards; lower pay at portfolio company (some equity upside).

I understand that these options (esp #3) are quite different and appreciate your feedback. Regarding Asia, note that lived in HK for a couple of years and still have a small network here (not PE though); I'd only be interested in the larger cities in the region (HK/Singapore/KL/Jakarta).

Thanks for your advice.

Comments (6)

 
Aug 30, 2016 - 7:23pm

If it helps, I am at the exact same spot as you are - megafund, I don't want to pursue an MBA. I even have MBB background - but I am in a different geography.

I have been talking with three funds for the past months (no final offers yet though):

  • Senior associate at a sovereign fund direct PE arm
  • Associate at a local large PE fund (US$10+ Bn AuM)
  • VP at a middle market European PE fund

One big challenge I have been facing (and maybe you will as well) is selling myself as a Senior (or experienced) Associate. Some funds have their own way of doing things and want me to stay a couple (2 possibly 3) years as an associate before being considered for a direct promotion, which means my 2 year mega fund stint meant nothing.

I think sovereign funds direct investment arms are an alternative you did not mention. Compensation is good (lower than mega fund though) but there is a career path without an MBA. This is my #1 option.

Since you seem to really like investing, I would cross-out option #3 (I did). It really is a 1-way street from my experience and it is a really large pay downgrade - not worth the equity risk.

My peer who joined the MF I work for together with me in 2014 managed to pull a lateral move as a senior associate at an European MF that does not require an MBA to progress. Kudos to him.

Should you want to further discuss any of this points, I would be willing to help.

Best

 
Aug 31, 2016 - 9:41am

Thanks for the response. I've heard of several ppl switching to another fund as a senior associate with the potential to move up within 1-2 years. That said, often the recruiting deal is not as pretty as it seems - there is no guarantee you will actually get promoted, the 1-2 years may lag into 2-3 years, and several funds don't have a formal senior associate role which may lead to an undifferentiated view of you vs. peers within the firm. Do you have any examples of funds with good lateral hire opportunities?

Why are you interested in the PE arm of a sovereign fund? Would you mostly be doing co-investments as LP without being involved in the full deal process (e.g., no sourcing, no financing)? Also, do you have a sense of what the pay gap is near-term and long term?

Regarding the M&A portfolio role, I would see it as a 1-2 year 'secondment' and way to move to Asia, before transitioning back on the buy-side. I know a couple of ppl who transitioned to a portfolio company and came back, though it doesn't seem to be the common path.

 
Aug 31, 2016 - 12:45pm

This specific opportunity at the sovereign fund is at their direct investments arm, to act as a GP. Yes, they also co-invest but the senior (and junior) people at this group have come from traditional PE shops so they developed a pretty solid track record and reputation as direct minority investors. I sense there may be some other groups like this in other SWF, but I agree the majority of them take a pretty passive approach to PE (more LP-co-investment-like).

Regarding the pay gap, I expect a ~25-30% pay cut until VP and I believe this gap gets larger as your seniority increases, since there is no carried interest. On the other hand, volatility in total comp is really low, dependant of 20-year rolling average returns. It is still good bucks though (~$220-250k as an associate) and from what I've heard from a friend who works there, culture is pretty laid back and competition to climb the ranks is somewhat lower, so that balances it a bit. I'll take that any time over burying $200k and 2 years of my life pursuing a degree I don't want.

 
Best Response
Sep 20, 2016 - 10:24am
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