Recently rediscovered my WSO account and thought I'd offer my experiences to the community. Not sure how much interest there is in this career path, but here it goes. #### Background * 3.7 GPA target school * Lower BB IBD analyst * LMM/MM industry-specific PE associate * Exited to a newly acquired portfolio company and will be promoted to Head of Strategy and Business Development at the two year mark in July. Most of my work up until now has been focused on strategy, but I will be assessing and making tack-on acquisitions in the future ####Current Goals Current goal is to bring the company to a strategic exit in the next three to five years. We are a < 30 employee company generating > $75M in revenue so my experiences are almost more in line with that of a start up. Feel free to ask away!
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Thanks for the AMA!
What has been the timeline for the transition between your PE firm and the portco? Also, what made you decide to make that transition instead of staying in PE?
So the PE firm I was at was a strict two year program. We acquired the Portco I transitioned to in March while my two years was about to end end of July. I expressed interest in transitioning to corporate and my firm was great. The hard part about transitioning to a Portco was they didn't really know what to do with someone with my skill set. I don't sit in Marketing, Ops, or Sales, but I have the analytical power.
Since Portco had to essentially create a role for me, PE firm let me start working on a project basis while I was finishing up my stint so senior management could truly see for themselves what I was capable of doing and how I could be helpful. That was the hardest thing--proving that my finance skill set would be valuable in a corporate environment.
So my last couple months in PE had overlap where I was jumping between companies. Luckily Portco happens to also be local so I could juggle between the jobs. Then immediately when my PE gig ended I transitioned over.
I interviewed at a couple other PE firms to see if I wanted to lateral, but I really did want to learn how to become an operator and build brands. That's what's exciting to me, getting in the nitty gritty instead of seeing things from afar.
HOW MUCH DO YOU GET PAID - no more seriously, how do you plan on executing the business plan that your fund has forecasted? Do you think targets are achievable? Do you get equity with an increased multiple as an incentive? Would you consider moving/would it be possible to move back to your PE fund after exit if you have been successful in your growth plan?
I do already have equity and will (hopefully) be negotiating the equity piece next week so that there is a step ladder incentive with our exit multiple, given my updated Head of Strat / BD role. Right now our company doesn't have a structure like that, so it may end up being a broader discussion about whether or not the entire option pool should transition to that type of structure.
I think there definitely would be the ability to move back to PE in general after exit, particularly in the industry I am in, but I don't think I would want to do so unless it is in an operating partner role. My goal, assuming we have a successful exit, would be to find another up and coming company similar to the one I am at now and join as a COO, build that company for an acquisition, exit, then rinse and repeat the process.
The company I am at has a lot of great momentum and I do think the targets are achievable. There's a lot of work that needs to be done to get there--growing and getting to the first $100M is much different than getting to that next $100M. Tack-on acquisitions and proving that we can be a strong platform within our industry is one of the ways we plan on getting there!
For future acquisitions at the port co, do you think your role will be mostly BD focused, or will the PE firm lean on you for industry insight / modeling, or both?
I think all of the above, though the acquisition portion will honestly be a smaller part of my role. It's something we want to do, but we won't be making a lot of acquisitions. I foresee maybe two to three in the next three to five years.
Right now I currently manage our entire budgeting and financial modeling process, along with a lot of other things that broadly fell in the "strategy" bucket since no one else handled the responsibilities before. When I joined Portco there were less than 20 people at the company, so I got broad exposure to all aspects of the business. Even now I manage our entire digital media / paid advertising budget and strategy, even though I'm not a marketer by any means, simply because no one else was doing it before and we had no director or VP of marketing.
I sit in on all of our Board meetings so I still interact with the PE firm a lot and they know they can always call me when they have deeper questions about the company. With the future exit, I will also likely do most of the heavy lifting when we hire bankers and need to pull together materials for that process, given my background and experiences already.
Thanks - good stuff!
What exactly does managing the budgeting process entail / how did you learn to run that process? I had to help setting up a budgeting process during one of my deals but never got too involved myself, just checked that the inputs made sense
How did you go about exiting to portco? Was there a need and the management team / your partner came to the conclusion that you'd be a good fit or did you voice your desire to join the business and you made your own position?
What has been your experience on the operational side? Would you do it again? If so, do you wish you did anything differently (i.e. more diligence on what your day to day would look like, etc.).
How did Comp work when you moved to portco?
What are your future plans after exit? B school? PE?
Note: I'm a PE associate and may be interested in a similar path so any advice is appreciated
I mentioned in another comment how I went about the exit so I'll do some copy / pasting and expand a bit here.
The PE firm I was at was a strict two year program. We acquired the Portco I transitioned to in March while my two years was about to end end of July. I expressed interest in transitioning to corporate to the partner who was on the deal originally (I was not on the deal team) and he was extremely receptive. It was helpful I think that at the time Portco only had about 15 employees and they needed to team build anyway.
The hard part about transitioning to a Portco was they didn't really know what to do with someone with my skill set. I don't sit in Marketing, Ops, or Sales, but I have the analytical power. A lot of my friends who transitioned into corporate after PE go for the "Chief of Staff" title. Given how small Portco was, I don't think they really knew what that meant.
Portco essentially had to create a role for me and PE firm let me work on a project basis while I was finishing up my stint so that senior management could see for themselves what I was capable of doing and how I could be helpful. I overlapped and jumped between PE firm and Portco (luckily Portco was local) for the last couple months when I was an associate, and then I started immediately at the Portco.
I won't lie, to get my foot in the door I took a huge paycut. About 50% (so essentially my PE base without the bonus), given the size of the company and them still assessing my skill set. After six months my title changed to Manager I am at about 75% of what I was paid my second year of PE. And finally with the bump to Head of Strat / BD, I will be over what I made in PE. 40 hours a week, never work weekends, completely flexible when I want to work from home, I wear flip flops and shorts to work, etc. Just such a great culture and great work life balance. If I had to go back I probably would have negotiated comp in retrospect. Luckily my bosses are great and know how I took a large pay cut and want me to be compensated fairly.
I love being on the operational side and this is what I want to do. I didn't want to go to bschool after PE and now I would like to think I don't need it. My goal is to bring this company to a successful exit, then find another high growth company and join as a COO, build that company up, exit, then rinse and repeat with other high growth companies.
My situation is a bit unique in that I have been able to gain a lot of knowledge in this jack of all trades role. I run our financial budget and our long range financial model which is all expected given the finance background, but I also am in charge of our paid advertising and digital media strategy / budget. I also have spent a lot of time crafting sales materials and learning the ins and outs of how to sell our products to our customers.
It gets a bit exhausting at times, getting pulled in all directions and also not having a set list of responsibilities, but I've definitely learned a lot about how to operate a business. My role has allowed me to be a sponge and just learn and absorb these past couple years.
Very helpful - thanks. How did you go about "proving" yourself to the management team? Obviously you didn't have any operating experience but perhaps helped legitimize the forecasting / budgeting process?
Would love to connect if you still lurk on here. If you are, I'll PM you.
How long did you work at the Portco from the 'Manager' role until promotion to 'Head of Strat'? What do you think you were able to contribute to the company that resulted in you getting that promotion/raise?
Also, how did you feel about taking a 50% paycut heading into this and probably not knowing the certainty of your future pay given the small company etc?
Technically my initial offer was for a business analyst role but they changed that to Strategy Manager in six months with the first pay bump that got me to the 75% of PE pay mark. I was told around two months ago about Head of Strat, so a little over a year as a Manager and the new title will kick in officially after a year and a half as Manager.
A friend from our IB days who also exited from PE to corporate joined as a manager at their company around the same time I transitioned, then at the six month mark became a director, and was made Chief of Staff after a year as a director.
We both got to similar places in terms of seniority on the same timeline, but in retrospect I should have pushed to join as a Manager or something. Everyone involved was very aware that I was underpaid and my title was wrong from the start. I never had to bring up my comp or title, it just naturally happened over time.
PortCo when I joined didn't have any managers or much senior leadership, so I have had to have my role right-sized and adjusted in a way. When I took the 50% paycut to join the company I was one of the higher paid employees not in sales. Then we started team building and hiring directors and VPs so my comp was low relative to the new hires.
Making myself valuable helped position myself for the promotions. I essentially did act as a "Chief of Staff" since I joined. If anything was needed, CEO knew they could come to me because I was quick and the work would be returned with no mistakes. I advised them on the key strategic decisions, backing up my positions with data. Since I didn't sit in any of the functional departments I also got to understand how the entire company runs, rather than just seeing a small piece of it.
Having the time and freedom to pursue my passions outside of work is important to me. Given I was making the same as my PE base, taking that paycut allowed me to still live my normal month to month lifestyle without constraints. I didn't get to build my net worth up as much these last two years, but I rarely feel stressed about my actual responsibilities and the work I'm doing is interesting to me. That trade off was worth it to me at the time I made the decision.
This upcoming pay raise getting me above my PE pay was honestly not something I thought I would achieve so soon--I used to joke my career peaked at age 25. The friend I mentioned in the Chief of Staff position is being comped $175K all in, which given the PE position they held previously, I'm sure is much lower.
I do think companies, particularly high-growth ones that have an exit in the horizon, are quick to reward strong performances. They have a vested interest in the people who will help take the business to the next level and want to keep these people motivated.
Sorry this response ended up so lengthy!
What responsibilities had the steepest learning curve on the corporate side? What skills would you say are most important to have when looking to transition from a buyside role to the corporate side of things? Thanks.
My analytical skills have proven to be the most valuable in corporate. I'm able to bang out analyses at a much quicker rate and also tease out what the results mean for our business. Being able to assess the company on a whole and pinpoint opportunities in order to generate efficiencies is another skill that proves to be valuable.
Gaining an understanding of the industry's inner workings has definitely been my greatest learning. The way I looked at our business from the PE side is much different than how I look at our business today. Learning how to sell our product to retailers who will be carrying our product and to consumers who will be buying our product are two different challenges. Trying to find the different levers to drive growth and executing on these levers is much harder than modeling out growth drivers in an operations model as a PE associate.
From your experience, is this an achievable path for most LMM PE Associates? Or was it more dependent on your situation / industry focus / personal skill set?
Also, in terms of industry focus, are there certain ones where this type of role would be more common? Obviously, tech comes to mind first, but would be curious to hear about some others.
I know quite a few people who exited from PE and joined either portfolio companies or other corporations as a mix of Chief of Staff, Strategy, Strategic Finance, and the likes. Tech and CPG from what I've seen are the most common industries for this to occur. I've also had friends that exit to VP of Operations roles at tech firms, though exiting to a functional department in my industry (CPG) is more challenging without the industry-specific operational experience.
It definitely is situation dependent, but I think most PE firms are open to having associates join a portco if there is mutual interest.
Very helpful, thanks for the insight. At this size company in CPG, is there really only one "strategic finance" role? Or is there room for an analyst role plus a more senior role?
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