Hi all,
For some background, I'm currently coming up on my 1 year mark as an Associate at a MM PE Firm (~$1-5bn fund). Over the last year, there were 2-3 auction processes where I was on deals that went to LOI, where we ended up being the runner-up bid. Now, with the impact of COVID-19, deals have slowed / paused and it doesn't seem like we'll have as many opportunities to close deals due to deal flow / the leverage environment / the fact we can't meet management teams in-person. I'm worried that there is a very real possibility where I'm at my firm for another 1-2 years and don't close a deal.
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How detrimental would it be to be an Associate with 2-3 years of experience with no PE deals closed, in regards to exit opps (e.g., lateral PE/buy-side recruiting, industry recruiting, b-school)?
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How common / uncommon would it be to add deals where we got to LOI but did not close to my resume? I feel like we conducted most of our due diligence (e.g., completed business diligence, QoE analysis, purchase agreement mark-up, leverage reads and terms) and talk about these deals fairly well.
Thanks!
Many UMM and MF associates don't close a deal in their 2-3 year stint even prior to COVID, so you can definitely put LOI experiences on your resume and make sure to emphasize the execution experience you got.
Thanks for the advice! Just to clarify, what do you mean by "execution experience"?
Anything related to leading parts of DD, financing discussions, early SPA negotiations, etc.
When it comes to your next job, closing a deal isn’t relevant from an experience standpoint, it is relevant in that generally the best associates get the best assignments and if you didn’t close anything your next employer is worried you weren’t viewed as a top performer. It isn’t fair and most people know that what you close is luck of the draw, but that doesn’t totally make the concern go away.
Bump, any additional thoughts on this?
You can get through operational and financial due diligence, get to the legals stage and have the deal blow up last minute (speaking from personal sell-side experience). The number of deals you have closed does not provide any indication on how good of an associate you are.
I'd imagine an employer would rather have an associate with 0 closed deals, who can think critically about an investment thesis, highlight investment risks and has some portco operational experience (to help increase portco value) vs. an associate who doesn't have the above but has "closed" numerous deals.
On the buy-side it's not about the number of deals you close. It's about how to identify good investments, as well as the subsequent performance of said investment...
I think these are all fair points. I think I'm trying to understand how much what you said holds in practice, especially when lateral recruiting / b-school. And also if its worth including deals you don't close on your resume.
Not too sure about b-school.
Anyone can close deals (given the right variables). Just slap on a big fat multiple and roll up your sleeves and you can get it done. In all seriousness, I would want someone who can close 1 / 100 deals (obviously ignoring transaction costs, i.e. diligence & time wasted) that will generate my target IRR, rather than someone who closes 50/100 of which those are poor investments. Re: transaction costs - obviously no one wants to keep paying fees without any outcome.
It's definitely worth it to list non-closed deals. I think deals is experience is hugely under recognized on this form. You always hear stories of Partners at a fund estimating the IRR on a deal given certain metrics, right off the top of their head. Doesn't come without being around the block.
Your best experience and knowledge may come from those deals that didn't' close for whatever reason - be it price, points of negotiation, diligence finds, unforeseen changes in industry dynamics during a process. You can carry that forward indefinitely.
I worked on a deal in the Trucking & Logistics space - shitty sell-side that had literally had no chance of closing (first round in market did a broad auction). Half a year later, someone got interested in it, then another 6 months go buy and the deal closed. Learnt a lot about the industry, learned fuck from a deal perspective.
Good luck!
[Edit for spelling]
Fully agree.
Did you lose the auctions because you weren't willing to overpay? The market for good assets has been incredibly competitive; if you can explain why you think the price was too high, and how that would have impacted your returns, it would make you look more valuable than someone who just executes deals blindly.
Yes, I can definitely talk through this but this then assumes I put those deals where we got to LOI and didn't close on my resume, correct?
Correct. Put them on resume highlighting what your role was (and be prepared to expand further on your responsibilities during interviews): taking the lead in coordinating advisors, taking part in legal workstreams, being responsible for the model are the capabilities your interviewer wants to see evidence of.
Bump...any other thoughts or responses here? Specifically if anyone thinks headhunters / firms discount lateral candidates with no deals.
In my experience they won’t discount it based on closing, but they’ll absolutely press you on whatever deals you have on there
I don't think any firm will ding you for not closing a deal. Those of us in this world know how difficult it is to get a deal done in the first place. Also, associates have almost no impact on whether or not a deal closes.
Hate to be negative, but I saw several individuals struggle in post-MBA recruiting. If a firm is hiring a single VP (maybe not even every year), there's a higher barrier to selecting an individual who hasn't seen the last stages of a deal since there's typically other similarly qualified individuals with full deal experience.
There's literally zero that can be done about it, strictly my view.
Supporting the view above, understand it’s not in your control and unfortunately a lot luck is involved in your fund closing a deal and you being on the deal team.
While you could talk about deal evaluation skills you have developed, unless you have gotten some portfolio management or exit experience with other portcos, there is a lot of work / value creation that comes after closing (even including mechanical things like NWC/completion accounts, purchase price allocation etc).
If it is an option then suggest trying to gain some experience with existing portfolio companies so you can stitch together end-to-end deal experience.
As you mentioned, closing deals can be a lot of luck just dependent on staffing. That being said, I've gotten could experience in portfolio management and the sale of a company - do you think I should lean more on that experience in my resume / interviewing? Or would it be better to highlight the dead deals I've done where I got more experience in due diligence / thinking as an investor?
I assume the answer is a little of both but trying to get a sense of how other people would handle my situation.
I have seen the Wharton MBA resume book.
What some people did was list:
- deals that were fully IC approved,
- deals that were the cover bid,
- PortCo work.
Where did you get the book
Bump...just wondering how headhunters react to this / if anyone else had this issue with headhunters in terms of opportunities you may get.
Can’t you just pretend to have been on a deal team for a deal your firm closed lol. I’m sure you can dig up the materials and model and just pretend you worked on it... are they gonna check with your MD to confirm you’re on the deal team or something?
Other than just not knowing the inner workings of the deal as well, what you mentioned last would be my worry - informal back-channeling / reference checks with MDs / VPs at the firm that would catch me in a lie.
Have multiple Associate colleagues at UMM and MF who are wrapping up their 2-years and didn't even get that close to closing (i.e., IC dinged deal before LOIs or LOI bid wasn't even in range). Those who applied to bschool got into their top choices (all non-minority candidates entering GSB/HBS this year) albeit I'm assuming competition was more lax this cycle given COVID (?). Others who decided to lateral (typically into senior associate roles at MM/LMM firms) just talked in-depth about deal dynamics and investment thesis. Talking through portfolio experience was a big plus as well.
So much of this is luck of countless variables going correctly and closing a deal during your Associate years should not be an expectation.
Bump! Also in a similar situation. About to wrap up my 2 years and have not closed a platform deal, only add-ons. 3 in-depth deals that died (1 post LOI pre-closing, 2 prior to LOI that I have essentially built out the whole operating model and got 90% of IC memo done). Would be curious to hear thoughts on how this is perceived.
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