Private Equity Hierarchy

Buyside's picture
Rank: Baboon | 160

I've used the search function and no quality thread answering this question came up so I'll just ask it. What's the hierarchy like? I know most of the time you start at Pre-MBA Associate(or analyst straight out of UG) but what's after that?
Pre-MBA associate 2 years
MBA 2 years
Post MBA asscoiate? 3 years ?
VP ?? 4 years ??
SVP ?? 4 years ??
Partner ??

After MBA, the picture is unclear for me. Do most PE firms have an "up or out" system like banking? Can you please also list the years the typical guy would spend at each position?

Understanding the Private Equity Hierarchy

This has been formatted and edited. It was originally posted by certified user @PEguy2011, a private equity partner.

It varies firm by firm so much that it's almost impossible to say there's one set path. Like someone mentioned, 99% of PE funds have a two and out program and promotions past the associate level are extremely difficult to nab. If you do manage to impress the right people and make it past the associate level, then the tracks can vary.

Here are a couple of examples I've seen:

Ex. 1

  1. Analyst - 2 years
  2. Associate (pre-mba) - 3 years
  3. Senior Associate (post mba) - 2 years
  4. Vice President - 3 years
  5. Director - 3-4 years
  6. MD/Partner

Ex. 2

  1. Associate (pre-mba) - 2 years
  2. Vice President - 3 years
  3. Principal - 3-4 years
  4. MD/Partner

Ex. 3

  1. Analyst - 3 years
  2. Associate (pre-mba) - 3 years
  3. Senior Associate - 1 year
  4. Vice President - 3-4 years
  5. Prinicipal 3-4 years
  6. MD/Partner

What is a Senior Associate in PE?

Most firms will have a senior associate. Which is essentially a post-MBA associate position between associate and VP. The length of that position varies widely, from one to three years. Also, those lucky few firms that don't have a senior associate position, an associate can be promoted directly to vice president.

In addition, for those firms with analysts, some will require two years before promotion to associate while others will require 3 years.

After the vice president level, almost all firms are the same with a director/principal level, then a partner level. It's usually 3-4 years but completely discretionary and based on performance.


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Comments (10)

Oct 15, 2011

Depends on the firm. I don't think you will find one set pattern.

Oct 15, 2011

@ ANT:
Yeah I know that but what's "the norm". Don't the majority of the firms share some sort of pattern but w/ probably diff names?

Learn Programming, Lectures by Professor Mehran Sahami for the Stanford Computer Science Department

http://www.youtube.com/watch?v=KkMDCCdjyW8

Oct 15, 2011

My understanding, and I'm no genius, is there is typically two paths post MBA. One is a "2 and out" type in which you stay for a few years and are expected to leave because they don't need/want to promote you to a more senior level and then the other will be a partner track in which they intend to have you rise through the ranks and become a partner eventually. As far as I know, the one you are on is typically determined or known when the job is offered, so you sorta have an idea of what the expectations are before you accept. Maybe someone with some more experience can confirm or deny this.

Regards

Oct 16, 2011

Lots of PE firms have "principals" as well for post- MBAAssociate non-MD/partner people.

Oct 19, 2011

It varies firm by firm so much that it's almost impossible to say there's one set path. Like someone mentioned, 99% of PE funds have a 2 and out program and promotions past the associate level are extremely difficult to nab. If you do manage to impress the right people and make it past the associate level, then the tracks can vary.

Here are a couple i've seen:

1)
analyst - 2 years
associate (pre-mba) - 3 years
senior associate (post mba) - 2 years
vp - 3 years
director - 3-4 years
MD/partner

2)
associate (pre-mba) - 2 years
vp - 3-4 years
principal - 3-4 years
MD/partner

3)
analyst - 3 years
associate (pre-mba) - 3 years
sr associate - 1 year
vp - 3-4 years
prinicipal 3-4 years
MD/partner

Most firms will have a senior associate (which is essentially a post mba associate position) in between associate and VP. The length of that position varies widely, from 1-3 years. Also, those lucky few firms that don't have a sr. associate position, an associate can be promoted directly to VP.

In addition, for those firms with analysts, some will require 2 years before promotion to associate while others will require 3 years.

After the VP level, almost all firms are the same with a director/principal level, then a partner level. It's usually 3-4 years but completely discretionary based on performance.

    • 1
Oct 23, 2011
PEguy2011:

It varies firm by firm so much that it's almost impossible to say there's one set path. Like someone mentioned, 99% of PE funds have a 2 and out program and promotions past the associate level are extremely difficult to nab. If you do manage to impress the right people and make it past the associate level, then the tracks can vary.

Here are a couple i've seen:

1)
analyst - 2 years
associate (pre-mba) - 3 years
senior associate (post mba) - 2 years
vp - 3 years
director - 3-4 years
MD/partner

2)
associate (pre-mba) - 2 years
vp - 3-4 years
principal - 3-4 years
MD/partner

3)
analyst - 3 years
associate (pre-mba) - 3 years
sr associate - 1 year
vp - 3-4 years
prinicipal 3-4 years
MD/partner

Most firms will have a senior associate (which is essentially a post mba associate position) in between associate and VP. The length of that position varies widely, from 1-3 years. Also, those lucky few firms that don't have a sr. associate position, an associate can be promoted directly to VP.

In addition, for those firms with analysts, some will require 2 years before promotion to associate while others will require 3 years.

After the VP level, almost all firms are the same with a director/principal level, then a partner level. It's usually 3-4 years but completely discretionary based on performance.

Thank you. If it's so difficult to make it up to the top ranks, VP/MD/Partner, why do people leave banking for megafunds? Megafund hours almost = banking hours so what's the bonus besides pay being higher for 2-3 years even though you can make it up later? What I mean by that is, what's the point of going to PE if the hours are basically the same but chances are you won't move up to VP/MD/Partner while in banking you can definitely become a VP and maybe an MD?

Learn Programming, Lectures by Professor Mehran Sahami for the Stanford Computer Science Department

http://www.youtube.com/watch?v=KkMDCCdjyW8

Oct 23, 2011
Buyside:
PEguy2011:

It varies firm by firm so much that it's almost impossible to say there's one set path. Like someone mentioned, 99% of PE funds have a 2 and out program and promotions past the associate level are extremely difficult to nab. If you do manage to impress the right people and make it past the associate level, then the tracks can vary.

Here are a couple i've seen:

1)
analyst - 2 years
associate (pre-mba) - 3 years
senior associate (post mba) - 2 years
vp - 3 years
director - 3-4 years
MD/partner

2)
associate (pre-mba) - 2 years
vp - 3-4 years
principal - 3-4 years
MD/partner

3)
analyst - 3 years
associate (pre-mba) - 3 years
sr associate - 1 year
vp - 3-4 years
prinicipal 3-4 years
MD/partner

Most firms will have a senior associate (which is essentially a post mba associate position) in between associate and VP. The length of that position varies widely, from 1-3 years. Also, those lucky few firms that don't have a sr. associate position, an associate can be promoted directly to VP.

In addition, for those firms with analysts, some will require 2 years before promotion to associate while others will require 3 years.

After the VP level, almost all firms are the same with a director/principal level, then a partner level. It's usually 3-4 years but completely discretionary based on performance.

Thank you. If it's so difficult to make it up to the top ranks, VP/MD/Partner, why do people leave banking for megafunds? Megafund hours almost = banking hours so what's the bonus besides pay being higher for 2-3 years even though you can make it up later? What I mean by that is, what's the point of going to PE if the hours are basically the same but chances are you won't move up to VP/MD/Partner while in banking you can definitely become a VP and maybe an MD?

because in banking, even if you did survive to become a VP, chances are you won't be able to make it to MD due to competition and luck

also, if you are a senior associate or VP who unfortunately gets laid off, you are pretty much toast, which is exactly what's happening right now
'
Finally, think about the sacrifice you will have to make to make it to VP in banking. I have not seen one person so far who was a direct promote from analyst -> associate -> VP and have some sort of life. Most people I see age badly compared to other peers at the same time. You are 24/7 on call, be your client's bitch, and your only self-gratification is to abuse your analyst. I still see this happening to several MDs where they have to cancel their anniversary trips/family trips due to work and they are head of the group.

If you are in a mega fund, chances are you won't be able to move up to the post MBA level, but you can always move to a "less prestigious" MM fund without much trouble. You usually know your schedule well unless the deal blows up in front of your face or the target is demanding some unrealistic stuff.

In the end of the day, if you can't spend the money in your bank, they aren't money but just pieces of paper where you can't take to your grave.

Oct 23, 2011

Cause banking sucks.

Oct 26, 2011

a good buddy of mine (graduate from a top undergrad program) started working for a LARGE buyout firm out of undergrad. Moved to a smaller shop and is a 3rd year associate. He is looking at top b schools and as of now, has hopes of coming back in as an SA. Most of the kids he started with are on the same path

Mar 26, 2012
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