Looking for knowledge about Lower MM, the current deal flow of that segment, general compensation, and working on lean teams. Any input?
Recent Startup firm:
-Revenues of $50-250M
-EBITDA $10-50M
-10 Person Firm
-2-4 Analysts/Associates
Healthcare/Industrials/Manufacturing
Comp: varies from shop to shop but $150k-$225k seems to be the range for lower mm. at $200m AUM, probably closer to $150-$175k all in for first year associate
deal flow: strong deal flow at a reputable firm
lean teams: this is one of the BEST selling points about working in a lower mm fund. you get to see everything, i really mean everything. from signing CAs to leading deal calls with partners to working with VP of operations at a manufacturing portfolio co to layout new plant floor plans, capex planning, etc etc.
Great insight, thanks for the reply. Any thoughts on what to expect from an interview prospective? Simple 40min model, or more towards a full 3 statement model build out? Chances of working towards VP higher at a lean firm?
Be prepared for both a quick model and a full build out. Lower MM is a crap shoot. It's possible you won't see either or you might get drilled. It will depend on the firm you're interviewing with and your background. I've been around the block and as a more senior person I expect junior hires to be able to model any and every thing because over the years I've typically hired people who had to do that previously (i.e. if you're an IB analyst who someone recommended to me, I figure that more senior recommending banker isn't giving me a person who can't model) and it becomes much more fit. If you don't come from an IB background (or maybe consulting depending on the specifics) my junior people may have been asking more technical/modeling questions before I talk to you. I can also ask a few questions to ascertain if you know what you're talking about and don't need an excel test, but at my point I'm basically an idiot in the machinations of excel and haven't been an excel wiz since a good percentage of people on WSO were in preschool.
Regarding a move to a VP position, it entirely depends on the firm/fund. Obviously most big funds are IB->2 yrsPE->bschool->back to PE (?) but lower MM's are all over the place. I can tell you my philosophy but it will be completely different from a colleague's opinion.
Agreed with the other reply - lower MM funds run the gamut from simple cash flow models to complex 3 statement models. You really should be prepared for anything.
Something you should keep in mind for promotions is that it's a lot more random at the smaller funds. There often isn't a set promotion schedule because people at the VP/Director level tend not to leave and they don't have a need for a lot of people at that level. A lot of the time the opportunity for promotion comes up when people get promoted to partner or MD or leave - otherwise there isn't much room for advancement because there isn't as much need for mid-level guys
I would guess that comp is on the lower end of the $150-$200k range, but you might possibly get some carry or some other form of incentive comp
Regarding the last point: that happens everywhere including at the biggest megafunds. I know multiple people from the biggest funds and leading diligence calls, working with the CFO one on one, being the only associate on a deal team, are all just parts of the associate job.
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