Recently was hit up by a head hunter for a PE Operations (non-buy side role). Coming from MBB this sounds interesting and I like their mix of portfolio companies. However, in looking at the Operating Partners, most of them tend to be ex MBB Partners or C-level execs. This begs the question, where do most of the Associates exit into (considering you won't make Operating Partner without other expierence)
Trending Content
Career Resources
Curious about this as well. Also know that these guys get comped well but at my fund get absolutely crushed and have really shitty work/life balance - seems like they get the worst of consulting and private equity combined in terms of lifestyle. Is that the case across the board or is that more so just because I work at a turnaround/distressed fund?
Typically the program is structured in a way where you can exit to the / a portfolio company in a more active operational role. If successful, you may become an exec at the portco, exit to another portco in a higher role, or get onto an Operating Partner track at a PE (depending on your track record and demand from the PE).
Any ideas if these roles would be open to hiring out of Corp Dev./Strategy groups or do they typically go MBB exclusively?
Operations or valuations? Would have to be a decent size fund to spilt duties from the traditional associate role
I know of KKR Capstone but which other funds have operating roles at the associate level? Is it only the mega funds in NY? What does comp look like?
You are right to be concerned about a career-track operating partner position. For most funds, operating partners essentially act as shadow directors for portfolio companies. They sometimes step into the businesses in a senior executive role, but most of the time, they are senior advisers/consultants to the C-suite and BoD. The guys at KKR Capstone don't really want 'strategy' experience as much as they want operational expertise. I interviewed there years ago with the head of the group, and he really focused on the operational improvements I had made to any companies I had worked with as a consultant. As that wasn't really my background, we parted ways amicably. In their case, they have a structured progression through the ranks to eventually make partner. That's not the case for a lot of other firms.
Vista Equity Partners has a consulting group that works with their portfolio companies, but I believe they also do external client work as well. I think that model is interesting, but I can't think of another firm that utilizes it, so I'm not sure it's worth explaining.
Most firms have no use for junior staff in an operating capacity. You'd be too junior to take a leading position within a portfolio company of any meaningful size. Even if the portfolio companies were small(ish), dropping a 25-year-old into the executive ranks would rankle the staff. The reason for doing so can't be, "This kid is smarter and better pedigreed than you are, so we're going to have him look over your shoulder and report back to us when you fuck up." If you're in your early 30s and worked on half a dozen major projects, with some real bona fides under your belt, you might still be seen as a kid by the C-suite, but they're not going to dismiss you and your advice immediately if you're already proven yourself.
At a fund I know well, the operating partners are all quite senior, but not C-suite talent themselves. They tend to be turnaround experts given the nature of the fund. They split the equity pool between the upper management of the acquired firm and the operating partners at the fund (with the equity pool being between 2% and 12% or so of the overall equity in the firm depending on the size and value of the company).
At some firms, operating partners only participate in the upside of individual deals. At others, they participate in the wider carry pool. It really just depends on the firm, though I think the former arrangement is more common. I sincerely doubt that anyone below the principal level at a place like KKR Capstone receives any carry, though I'd be happy to be proven wrong.
As someone who has been in this role for a few years, I think there were a lot of good points made here. With that said, there are some items I would want to clarify. Since most funds are still building this role out, I think it comes in many different forms - so people should really try to understand what it is they will be doing. Many funds are still figuring it out, so probably not ideal for someone that is not good with ambiguity / uncertainty.
In regards to the senior management role, it is a tough one and something I struggle with currently. However, it does take a certain type of personality to get past it. I have been in this role for 3+ years and have both advised / partnered with C-level execs and have had the interim c-level title a few times myself (yes, I am under 30). It is tough, but very doable to pass that hurdle and be respected in that role.
To answer the OP, I think the career path here is very ambiguous. If you’re good enough, then you stay in this long term. As you interact with management teams and other c-level roles, a lot of them want to be in your seat - so this is the exit. I think it is also highly likely that you can land yourself in a VP or c-level role at a portco after a long stint. I have to assume you will be looked upon favorably for operational / strategy roles at big companies, but I think many will struggle to give up the autonomy for a more political / structured position.
Most people will pre-select themselves out of staying though. Similar to consulting, you are on the road constantly. I have actually travelled more in the past few years than I did in my RX consulting days. You also have a lot more pressure / stress since you are actually responsible for performance of the business and need to make actual decisions rather than recommendations.
If you want to gain operational experience and are interested in being a leader at a company one day, this would be a great opportunity.
If you're in the right situation, I can easily see someone in this role for 4-5 years and then becoming COO / Head of Strategy / etc. at an exciting start up that awards equity. That's where the real money is made anyway.
Not sure if relevant for you, but Bschools love this kind of experience too.
Jobs within PE operational groups (Originally Posted: 04/15/2013)
Can anyone can speak to whether PE firms ever bring in-house marketing talent in to advise on and help streamline marketing w/in portfolio companies? I know some of the larger firms have operational committees, don't know if this is typically part of that practice. any replies greatly appreciated.
i bring this up because there is a TON of inefficiency in traditional mktg models, and i think the nature of PE investments gives them the opportunity to potentially wring a lot more value out of that particular resource.
Yes I've seen it done. I work with a growth equity focused MM PE firm and we are highly involved with our portfolio companies. We run very lean and sometimes the scope of the marketing efforts required are outside the capabilities of our investment team members.
Interesting, thanks for bouncing back. When you need bring on outside help, can I ask where you typically look for it? And as a quick follow-up, do you know whether some of the bigger firms staff this capability in-house (some sort of marketing consultant role, i suppose)? thanks again.
Yup
External advisors are brought in on an ad-hoc basis through various channels. Most of the time, however, would be through a connection within the firm; i.e. knowing the Principal or VP. The senior management where I'm at have insane networks (and I really mean insane) which makes it really easy for us to bring in consultants whenever we need to.
Networking is key here but it's definitely easier said than done. Perhaps reaching out to firms that invest in industries that have the masses as a client-focus (like duff's example) would be most appropriate.
Would it be at all realistic from a cost perspective for a firm to hire on permanent marketing/strategy talent to help as needed across the portfolio (brand building, promotional, social mgmt, etc.)? Could dedicated in-house creative/strategic capability be touted by the firm as a competitive advantage when courting deals? From what i've observed it would be an unusual move, but not, i don't think, all that ridiculous for a firm with a serious commitment to value creation beyond financial engineering. That is, of course, from the outside looking in.
PE Ops Questions (Originally Posted: 05/20/2010)
Hi,
I've tried searching for this topic, but haven't really found a solid answer in regards to PE shops
I understand the difficulty in moving from BO to FO, but how about PE ops? I'm not talking about large shops but mainly funds that specialize in middle market deals
Is it more difficult than trying to transition in from another firm?
Most middle market funds run fairly lean. I am not sure what kind of operations that you are thinking of doing, but on the finance/accounting side there is usually a CFO. There might be another person under the CFO, depends on the firm.
private equity portfolio management position (Originally Posted: 03/16/2011)
Hey, I'm a strategy consultant interviewing for a job at a small "consulting" firm next week. Apparently they arent actually consultants though. They literally go in and take over management responsibility for portfolio companies. Anyone ever had an interview with a shop like this before? Any idea what kinds of questions they will ask? I'm assuming standard case questions possibly with less emphasis on communication...
Thanks
What's your background? This seems like a really interesting position...
I'd consider it similar to an Alvarez interview, if that helps.
Sunt molestias atque sed. Ad aspernatur nam asperiores eum quos. Odio odio quia minus sed fugiat qui quam voluptatem. Illo et itaque cum minima. Et quis rerum et ut numquam repellendus repudiandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Et ipsa dolorem explicabo voluptatibus et aperiam. Sint saepe omnis molestiae doloribus. Est recusandae quis architecto. Delectus qui et dolor eveniet deserunt. Nulla et in et laborum et.