PE Fund-of-funds......exit ops?

Given the state of the economy, like many other recent MBA grads I find myself considering alternate career paths. I currently have an offer at a PE Fund-of-funds. The position involves investing in different GPs across the PE industry along with co-investments in portfolio companies. My main question/concern is: what kind of long-term career prospects can I expect and what are the exit ops? Would I be better off doing something else (e.g.: Corp Strategy division of a F100)?

My main goal is to get into the direct PE industry, though I would like to keep my options open and possibly go into Hedge Funds or traditional IM. In terms of my background: management consulting and BB investment banking. Went to top-tier b-school (H/S/W).

In short, I feel like I have a solid enough background/foundation to reach my goals, I just picked a really bad time to graduate. I just want to make sure that the choices I make now will not "de-rail" my career path.

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Comments (105)

Oct 8, 2009 - 1:31am

congrats on the offer- are you '09? I can sympathize- it was (is?) an absolutely terrible time to graduate.

I think the exit ops of a PE FoF are probably pretty good if you want to work at a public pension fund or university endowment. These are really great jobs but hard to get (e.g. the University of Chicago investments office has a total staff of like 15). Another option would be a corporate pension fund like Boeing or GM or DuPont. Senior officers are very marketable and tend to resurface at the large AM firms as SVPs.

Corporate strategy in a F100 would obviously be great- but I don't know if they're taking too many junior (i.e. recent MBA) employees right now. If you're interested in IM and HF down the road, a job in treasury would be cool, especially a company like Pepsi or McDonalds that does a lot of foreign exchange hedging and advanced capital allocation work across international operations.

Working directly in PE is always tough to break into, and it's a notoriously snobby industry- but I would think most normal people wouldn't look down on you for not getting a PE job right of b-school in this market. It might make sense to network with some alums in a year or two when the dust settles and the credit markets get back to some degree of normalcy.

Oct 8, 2009 - 12:40pm

Appreciate the insight. Yes, I am a '09 grad.

Actually in my situation I seem to get a lot of headhunter calls about Corp Strat at a F100 as the bulk of my work experience is in management consulting. However, I've been apprehensive about pursuing such options for two reasons:

1) I've already done strategy-type work. I am not sure doing more of it adds to my resume.

2) I've done some research and I don't see many people going from F100 Corp Strat to alternative investments. Granted my research is no where near comprehensive and there could be self-selection reasons as to there being little movement from one field to the other.

Am I correct in assuming that a PE Fund-of-Funds would be a better route to take or should I actively be pursuing internal corp strat positions?

Oct 11, 2009 - 4:37pm

From someone currently in PE, I wouldn't say that a FofFs gig is necessarily 'looked down upon', but it doesn't really carry a lot of weight to people on the direct side. For instance, if you ever sat through the process that most FofF's go through with the prospective GP's, it's pretty comical. I experienced this process during my firm's last fund raising and it was a joke. That's no disrespect to anyone currently at a FofFs - I actually think it's an awfully cush job. Just trying to give you real feedback. Of course, given the current economic times, you have to do what you have to do... I think you'd be much better off going the BD route, or even the corporate strategy route. The work would be much more relevant to the buy-side than what fund-of-funds peeps do. Good luck.

Oct 11, 2009 - 5:23pm

unless there is significant co-investment or secondary platform (find out exactly what the investment mandate is, what %FoF, %Co-Inv, %Sec), its not very relevant to the direct side.

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Oct 11, 2009 - 10:55pm

The two main positions I was recently called for were similiar in nature to post-MBA jobs at any top-tier strategy firm (at least according to the headhunters). One was at a very large technology company doing general strat work and the the other was doing international expansion for a "top global financial institution" (headhunter's words, not mine).

Not sure about pay, but would guess it to be on-par with consulting firm salaries. Not sure about progression either, but would assume it to be similiar to most post-MBA corporate positions in that they expect you to stay there long-term and have the practice of heavily promoting from within.

Oct 11, 2009 - 11:06pm

Private Equity FoF - Career and Exit Opps (Originally Posted: 03/08/2011)

Okay everyone, first time poster but a long time reader. Graduated undergrad in May 2009 from a reputable business program and took a position in a well known corporate finance training program. I am currently a 2nd year analyst in semi-support role which supports the Capital Markets function of the firm. I find my work to be very unrewarding, boring and fear that this experience has done little for my career development (the pains of graduating in 2009 I guess). I started looking externally for exit opps from where I am now, but it has not been very easy as I do not have the pedigree of a 2nd year IB analyst.

However, I just got an offer from an established PE FoF to come on as a pre-mba analyst. Ideally, at the end of 2-3 years, I will be able to leave the FoF and go back to get my MBA (got a 740 on my GMATs, not sure if thats high enough or not) or pursue a career in PE with one of the funds we service (a stretch). The fund does some co-investments and secondaries, which will get me some quality experience.

My question is that should I consider this FoF position? What kind of exit opps would I be looking at? Do top tier b-schools respect FoF at all? Will this experience help me transition to something post-MBA that would be worth while?

While I am good as the quant stuff of my current job, I am a very qualitative person by nature and feel like this FoF position may be a decent middle ground for a few years.

Oct 11, 2009 - 11:21pm

Exit opps for fund-of-funds (Originally Posted: 05/09/2014)

I will be interning this summer at a fund-of-funds that invests in asia and EM managers. My work will be split between both hedge fund managers and PE managers. Curious to know what type of jobs this internship could set me up for when I go through full-time recruiting in the fall? As of now, I plan to target fund-of-funds, alternative Asset Management divisions within banks, and global market rotational programs at banks.

Oct 11, 2009 - 11:28pm

PE FoF Exit Opps? (Originally Posted: 06/17/2015)

Hi Guys,

I'm sitting on an offer at a PE FoF for an Associate position. I'm coming from a few years as an Analyst at a smaller mid-market growth equity firm. I've read a lot of great posts here about the difference between a FoF role and a straight PE direct investing role, and whether you can switch back to a normal PE shop. However I think what I ultimately want to do down the road is Corp Dev (at least part of an in-house M&A/CVC team).

As background, FoF team does have some co-invests and plans to ramp this up going forward, which I know would be helpful for experience. The job is seeming really attractive for other reasons (salary, hours, team, etc.) but would it be a career path killer? Concerned it'll take me way further away from the evaluating companies skillset that I would need in order to be marketable in the Corp Dev world.

Any insight as to how difficult this would be? Either current/former FoF or current Corp Dev (& what backgrounds you came from).

Thanks! Much appreciated.

Oct 11, 2009 - 11:34pm

Hedge FOF--am I doomed? exit opps (Originally Posted: 12/18/2012)

Hello all,

I am currently a college senior going to a BB Hedge FOF next year. Did not know much about finance originally and became a summer at this FOF. this fall i recruited but did not have much luck getting other jobs (many firms thought my fof summer experience was not good enough for full-time work in i-bank, pe, hf, etc), so i just signed w/ the bb fof since i didnt want to be unemployed.

It seems that I would not be developing any transferable skill set in a hedge fof. Does this mean that I am doomed for the future if I want to move to banking/pe/hf?

what should i do to help me move out of the fof industry quickly into some other kind of financial work that is more analytical or valuation-based? thinking again banking/pe/hf/trading.

Oct 11, 2009 - 11:37pm

I have a friend who started off at a FoF and is now at a value fund. He's a brilliant guy. You can most certainly make the jump if you demonstrate passion and interest in wherever you want to wind up.

Oct 11, 2009 - 11:39pm

Value Sleuth:
I have a friend who started off at a FoF and is now at a value fund. He's a brilliant guy. You can most certainly make the jump if you demonstrate passion and interest in wherever you want to wind up.

You are never doomed. I agree with Value Sleuth. Work your tail off in the FOF role and network network network. That is the only way you'll really get to where you want to go if you're in the FoF position.

What is the position at the FoF entail?

Fear is the greatest motivator. Motivation is what it takes to find profit.
  • 1
Oct 11, 2009 - 11:40pm

Research on hedge funds. I meet with hedge fund managers and talk to them. Then I keep up with them every month and do some market research to figure out which strategies worked that month. Very little quantitative or valuation work. Most of it is to talk to different funds and be aware of how different asset classes and strategies are performing each month. Every quarter we reallocate assets to different strategies.

Oct 11, 2009 - 11:41pm

GoodElevators:
Research on hedge funds. I meet with hedge fund managers and talk to them. Then I keep up with them every month and do some market research to figure out which strategies worked that month. Very little quantitative or valuation work. Most of it is to talk to different funds and be aware of how different asset classes and strategies are performing each month. Every quarter we reallocate assets to different strategies.

It sounds like you're getting paid to network.

"The way to make money is to buy when blood is running in the streets." -John D. Rockefeller
  • 1
Oct 11, 2009 - 11:42pm

GoodElevators:
Research on hedge funds. I meet with hedge fund managers and talk to them. Then I keep up with them every month and do some market research to figure out which strategies worked that month. Very little quantitative or valuation work. Most of it is to talk to different funds and be aware of how different asset classes and strategies are performing each month. Every quarter we reallocate assets to different strategies.

It sounds like you're getting paid to network.

"The way to make money is to buy when blood is running in the streets." -John D. Rockefeller
  • 1
Best Response
Oct 11, 2009 - 11:46pm

I think people under-rate HF FOF jobs. I'm a couple years out of school and at one, and making as much as friends at top HFs. The money won't grow as fast as you get more senior, but you can still make $1mm/year in your 30s with a very chill lifestyle. Given that your job is to hear the best ideas of all the best HF managers on a daily basis, you can "learn" a fair amount too for what that's worth.

But maybe I'm biased, and I've also heard of some other FOFs that pay terribly. And to answer your original question, the transition out of FOF to HF would be difficult unless you take an entry-level job at HF (and a pay cut).

Oct 11, 2009 - 11:47pm

CashCow:
I think people under-rate HF FOF jobs. I'm a couple years out of school and at one, and making as much as friends at top HFs. The money won't grow as fast as you get more senior, but you can still make $1mm/year in your 30s with a very chill lifestyle. Given that your job is to hear the best ideas of all the best HF managers on a daily basis, you can "learn" a fair amount too for what that's worth.

But maybe I'm biased, and I've also heard of some other FOFs that pay terribly. And to answer your original question, the transition out of FOF to HF would be difficult unless you take an entry-level job at HF (and a pay cut).

What does your day to day entail? I got a recent offer from a credit HFoF for the summer.

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  • 2
Oct 11, 2009 - 11:48pm

FoHFs would be all about asset-allocation among different HFs, which basically means you'd get to analyze different funds and their performance, their PMs and meet them as well etc. Which is definitely a nice position to be in, especially when you're a summer analyst and not a FT hire, a lot of perks involved - being able to better understand what strategy you'd personally prefer if a HF is your end goal, the chance to meet a lot of different PMs and HF representatives as essentially the HFs want YOU to direct the capital towards their funds so it's almost like the managers would want to please you versus it being the other way round. In London at least, I saw quite a few people jump to AM firms/HFs and IBs from FoFs and FoHFs like Liongate Capital Management etc.

Oct 11, 2009 - 11:50pm

PE FoF - Coinvestment exit opps? (Originally Posted: 07/20/2014)

Hey all,

I'm currently considering a PE FoF analyst offer. I've noticed a bunch of threads on here suggesting that the exit opps with a FoF role can be a bit limited, only really allowing movement into other FoF type roles. However, what are the exit opps like for a FoF role with a large component (50%) of coinvestment work?

I've also been told anecdotally that the diligence that the firm does is usually quite thorough. Would this make any difference to the exit opps, or are all FoFs viewed as pretty similar?

Oct 11, 2009 - 11:59pm

BB FOF PE exit opps (Originally Posted: 01/22/2012)

Hi,
i'm graduating this year and have accepted an offer to work in a BB's FOF for PE...the interview was very intense and unlike most FOF conventions, by far one of the most technical interviews i have ever seen...

i know the traditional exit opps is B-school or small PE shops but I am trying to understand that as an investment analyst with such a grp, how competitive would one be to get into the bigger place (Carlyle,TPG etc)...i know these guys love getting i-bankers but given my familiarity with PE overall, would i be considered a candidate with a similar level of caliber ?

any comments appreciated!!!

“I worship individuals for their highest possibilities as individuals and I loathe humanity for its failure to live up to these possibilities.”
  • 2
Oct 12, 2009 - 12:14am

Fund of Funds VS IB (exit opps) (Originally Posted: 09/11/2010)

Hi,

I don't know if this has been discussed before. I did a search for it and didn't find a lot of info.

I was wonderimg which of of the above would be better for exit into PE. When I say fund of funds think BAAM/GS FoF etc, and bulge bracket for IB.

Thanks.

Jan 14, 2018 - 12:40am

fund of funds question (Originally Posted: 09/25/2007)

Question to those of you who work at PE shops...

It's clear for me that moving from fund of funds to PE shop is difficult. However does it change the situation if FoF does also secondaries and co-investments? In other words do you see it more doable to move to PE shop after working in PE fund of funds secondaries and co-investments (as opposed to primaries which 'standard' FoF does)?

Jan 14, 2018 - 12:43am

other fund of funds. i was considering working for a fund of hedge funds (~$1B AUM), but i decided against it and will stick with IBD. I got the feeling that taking the funds of funds job would be somewhat of a career limiting move.

Jan 14, 2018 - 12:48am

To elaborate on what i said above, i've talked with numerous hedge fund analysts, and they all shared the view that it would be somewhat hard to jump from a FOF to an individual fund. The experience you gain working for a FOF isn't usually applicable to actually working for an individual fund. Rather than analyzing financial securities or investment opportunities, you spend your time checking in individual HF managers and analyzing the returns of various HF strategies in order to find the optimal asset allocations for each strategy.

Jan 14, 2018 - 12:49am

Prospects for PE FoFs? (Originally Posted: 03/06/2017)

I know this is a IB-heavy forum, but just would like to tap on the vast expertise of the people here. Is a PE FoF internship considered good buy-side experience, and would it be helpful for future recruiting be it in IB/PE/AM?

Jan 14, 2018 - 12:50am

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