PE Operating Roles & Exits

Currently working as a VP in a PE backed company that in the next 12-18 months has plans to sell to another, larger well-known PE shop. As I think about my career and future, I do not believe I'd like to stay in my current business development position but move towards something more mentally stimulating.

With that, is it possible/common for a VP in a portco to join the PE firm proper and work in an operating role, assuming making the transition to the investment team is almost impossible? How common is this and would one come in as a VP as well or at a different level? Once on board, what is that type of work one would be doing and what would be some potential exit opps? Would you move up the ranks eventually making partner or just end up jumping from portco to portco? 

From a career standpoint, is working in a PE operating role even worth it or would one be better doing business development/sales for a VC-backed company that has more equity upside and growth potential?

Have found the comp structure (link below), but other than that, I am not to familiar with exit opps, titles, what you would actually do day-to-day within the role, etc. 

Understand these are a ton of questions. Would appreciate any insight or information as this would be extremely helpful.

 https://www.heidrick.com/Knowledge-Center/Publica…  

Comments (11)

 
Jan 9, 2021 - 6:14pm

I am an Operating Partner at a MM PE firm.  Been there for 5 years.  Came from industry.  Some thoughts on your questions:

"is it possible/common for a VP in a portco to join the PE firm proper and work in an operating role, assuming making the transition to the investment team is almost impossible?"  Yes, it is definitely possible.   The 2 most common routes to Operating Partner are 1) work for MBB consulting for 5-10 years,  2) Working as Senior (sometimes middle) management at a porfolio company.    That being said, its still not an easy gig to get.   The most likely way for someone in a portfolio company is to work with the IPs at the PE firm and to get a great reputation with them someone that can make things happen.   Then - if they are ever looking to expand their Ops Team they may think of you.  

"How common is this and would one come in as a VP as well or at a different level?"   As you know every firm is different so it is case by case.  If you are asking if a VP role in a portfolio company means you would be a VP (like an investment professional VP) then you are thinking about it wrong.  It is largely based on your experience level as well as how much they think you bring to the table.  Many firms (most even) do not use Associate/VP/Principal titles for their Operating team.  It can be confusing to people outside the firm.

"Once on board, what is that type of work one would be doing and what would be some potential exit opps?"  Sounds like I am much later in my career than you because PE IS my exit opp :)  I have been in the post undergrad work world for 20+ years.   However, if you are younger, exit opps are things like - going back to a portfolio company...but at a senior exec role, going into consulting (but not likely MBB firms unless you go back and get a top flight MBA), starting your own consulting company.  Many other possibilities though.

"From a career standpoint, is working in a PE operating role even worth it or would one be better doing business development/sales for a VC-backed company that has more equity upside and growth potential?"   It is probably different for every person depending on their needs/wants/personality/stage of career as well as the culture of the PE firm.  

Probably did not answer all your questions, let me know if you want any other specifics.

*Note on "Operating Partner" - it is broad term.  Some firms have older guys (think 50s,60s,70s) who have been CEOs of past portfolio companies and still want to work SOME.  So they come in, sit on some boards, do some projects, etc.  but don't work that many hours.  The type of operating partner I am talking about above is someone who is still younger - ends up work on many companies and inside them (sometimes as acting CEO/CFO/COO) and still works every bit as many hours as the investment professionals.

 
Jan 9, 2021 - 7:10pm

Thanks so much for the reply and great info!

My end goal would be to become a CEO or CRO within the tech industry. What would be helpful to better understand is would working on a PE operating team better my chances of earning a role like that or would staying in industry, jumping from company to company to work my way up be better?

Understand that all PE firms are different and the career paths, roles, etc, vary but given I am only 6-8 years into my career, I want to ensure each step I am making is moving me closer towards my end goal. With the upcoming sale of my current company to a larger PE firm that has a decently built out operating team, I am faced with the potential to get close and demonstrate my skillset with the potential to move onto their team or leave post sale and join a earlier stage company and start working up the ranks. Understand that none one can truly answer this but would be curious to better understand from someone in the operating role, what they have seen from individuals.

Also, what is some of the type of work an individual at my experience level can expect to do if they were to join a PE operating team, having 6-8 years of experience in sales/BD/revenue generation?

Thanks!

 
Jan 10, 2021 - 8:35am

To answer your question about whether it is easier to make it as a CEO or CRO by going to PE Portfolio Ops or by staying in industry and working your way up.  Hard to tell.  Given you are 6-8 years into your career, you may want more industry experience (either before or after going to PE) before trying to get CEO roles.   Jumping into a CRO role coming out of PE is possible but only if you have a history of high sales performance both in your roles prior to PE as well as the work you have done to jumpstart sales for some of the portfolio companies.  However, if I was hiring a CRO for one of our companies I would want someone who is currently a highly performing sales leader in industry.

The kind of work you might do in PE Ops given your background include things like - building quota, pipeline programs, and sales comp plans for portfolio companies.  It is surprisingly common for this to be missing from MM and LMM companies.  Additionally, if the portcos are in the same industry that you have worked in, you might be tasked with helping them re-tool their product strategy or their GTM plan (mix of different types of marketing, sales team structure, etc.)

 
Jan 9, 2021 - 9:31pm

Near impossible that you could go from portco VP in Business Development to any investing role, definitely not as a VP, probably not even as an Associate just given your skillset. If you really wanted to make that transition, you'd have to think much more strategically about how you could get into that seat. You'd likely have to go back for an MBA.

VP Biz Dev to PE operating makes more sense, I think that it would largely be a networking exercise. The way I've seen this happen is if you have a close relationship with the senior operating folks at your company and hopefully the PE firm as well, that you could build a relationship with both and get the CEO of your company to recommend you as well as have the PE folks really excited about bringing you on board. For example, if you're killing it as a sales leader and the current PE firm acknowledges that you're great, you could start a dialogue around moving over to PE ops and dropping into another portfolio company or working on their internal ops team. We had a few exceptional operators within the portfolio that we earmarked as people that we wanted to hire or retain even when we transacted. We would have conversations with them and make it known that there would be a future for them either at our company or within another portco and that we wanted to keep the dialogue going. If you don't have this level of connection yet, you should leverage your relationship with the C-suite and try to start getting higher visibility projects, perhaps working directly with the PE firm on certain things, or presenting in Board Meetings.

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