I was promoted to Sr. Associate at LMM PE fund that I worked at in December 2019 and then quit in March of 2020 without having another role lined up. I did a Q&A right after I accepted what at the time was my dream position as a PE Associate and I thought it might help some people to do one now to talk about what I have learned in the last 3 years and why I am leaving.
I had known for a while this role wasn't right for me but I had spent years trying to get into this seat so it took my mental health deteriorating to a pretty bad point for me to finally decide to leave the role. I was actually at a firm with relatively good work-life balance for the most part but going to any job each day that your not passionate about will eventually took its toll. Also, I have had a pretty big shift this year in what my life goals are as relates to accumulating wealth, doing something that I find meaningful and spending time with my family so it was actually not only a necessary but somewhat easy decision.
I left my job right before COVID ramped up to a global pandemic so that has hindered my search plus I took things slow for the first few weeks as I focused on improving my health so I am still trying to figure out what will be next. I am looking at a fairly wide range of paths including corporate strategy and development roles, various types of positions at startups or going back to school for my PhD in Management.
I think last time that I did a Q&A my post was way too long so I am going to keep this first post a little shorter and willing to answer questions on almost any topic so we will see where this goes.
Thanks for doing the Q&A!
1) You mention work life balance not having been too bad at the LMM fund you worked at. One of the common reasons people quote for moving from IB to PE is better hours (assuming it’s not MF PE). Just curious, what were your typical hours per week during “regular” times and then in the heat of a deal?
2) As a first year PE associate who has started to question the longevity of the career path, is there anything you think you could have done differently looking back to avoid burnout?
Live deal hours can steadily ramp up from what I wrote above to 100+ hours/ week for a month or so especially if you are pushing towards a short close.
Some additional thoughts - I was always checking my email when I was away from the office to make sure I didn't miss anything especially when there was a lot of activity (good or bad) going on at the portfolio companies that I covered and when on a live deal. Whenever I was reading news or talking to colleagues, I was constantly thinking about how developments could impact my portfolio companies. This also doesn't include the weekly networking/ happy hours events, coffee chats, etc. At the end of the day, this isn't a 9-5 where you can just shut everything off at any point so there is a lot of variability. Commuting is dead time at the junior level because you really have to be in front of a computer to do ~95% of the job.
Thank you for doing this Q&A. The decision you made to leave your PE role really resonates me, as I am facing what seems to be a very similar challenge at my own firm.
When did you know the role was not right for you? What about the job or firm made it not the right fit? Other than the sunk cost of time to get into the job in the first place, was there anything else that made it difficult for you to pull the trigger on quitting (e.g. leaving money on the table from bonus or carry, not knowing what to do next)?
Any further color you could provide on the environment and decision process to leave would be super helpful!
Reasons the role wasn't right for me:
Didn't want to spend 12 Hrs+ staring at a computer screen for the next 10-20 years until I maybe made partner one day - along these lines got really tired of excel and building / updating models that were solely to CYA in case something went wrong with an investment and LPs needed proof that we did our diligence
Looked at those more senior deal team members that were just below the partner level and realized that unlike IB the role didn't seem to change dramatically as you move up the chain
Wanted more interactions with people on a daily basis and a role were I can manage people
Increasingly wanted to get more involved in building something myself instead of sitting back and watching how our portfolio companies were performing
Seemed like every deal has an advisor these days and processes almost always came down to an auction decided by price. Bigger funds keep seem to keep pushing down into smaller deals and are willing to stroke a check so it was tough to win deals.
Due to lack of scale my role became very hybrid between investor, jr. resource, admin, etc. - examples: building legal schedules, printing and distributing data room docs, IT support, and lots of other tasks that a bigger firm would support with more resources.
Reasons it was difficult to leave
I am in a small market and believed that if I left now I likely would never get another PE role in the same market - after thinking this was my dream role for a number of years this was a tough pill to swallow so wanted to be 100% on the decision
I just received a raise and carry so would go back and forth on whether it was worth it to suck it up and stay for a few more years
Really didn't know what I wanted to do next - still figuring that out
This is a great post / response. Coming from a very similar position I can confirm all of the above points. Ultimately I joined a port co in a Chief role and have enjoyed this overall much more as you get rid of a lot of the admin BS you have to deal with as a junior to mid level employee at a private equity fund, specifically in the MM / LMM.
I think one day I may want to get back to PE investing but very happy with the move.
Posting mostly to just follow.
I’ve decided to not pursue PE as I think I’ll find myself in your position 2-3 years down the road. I just don’t like deals / the investment process. Feel like I’m a much better fit on the operational side but what that means in terms of next steps is still TBD.
Also, maybe it’s just me but it feels like there have been a lot more of these posts lately, or maybe I just never noticed them when I was in school as I was so focused on breaking in to begin with. Either way, it’s been helpful to see more of these as most people around me outside of the forum seem to be still drunk by the PE dream.
Do you think you want to stay in an investing role, or go to Corp Dev / FP&A / something else? Have you ever considered a BD / originations role? Might give you a bit of the personal interaction you're looking for without all the modelling work you dislike.
In the immediate future, I want to move away from a purely investing role where getting deals done is the only measure of success. I think a Corp Dev role that allowed me to take on more strategy projects and eventually transition to a BU leader type position would be interesting but a purely M&A role would likely still have a lot of the same components that I didn't like about PE. I think using the skillset I've gained in PE to help build a platform through operational improvement, strategy, and acquisitions would be way more fun.
BD/origination is one potential path that I have thought about but from what I have seen at least at my former shop was a much lower value placed on BD than the deal teams. There also doesn't seem to be many seats available in these roles so I haven't spent a ton of time going down this path.
One type of role that I have been thinking about more recently is trying to find a Chief of Staff type role at a startup that allows me to gain more startup experience, use the experience that I have gained professionalizing businesses, and wearing lots of different hats.
I resonate with a lot of what you said. The problem these days for people who don't want to stare at a computer screen all day (myself included) is that there aren't a lot of alternatives. Most careers involve that to a large degree. I was a math major who was on the math team in both high school and college and genuinely hate Excel modeling. I always sort of hated it. It's boring as fuck and it's not real math, so it's not intellectually challenging in any way. Sadly, people are willing to pay more for that mindless skill than they are for anything I can do which takes any real brilliance.
In any case, I've been where you are before and chose a different path than most kids on this forum. It's difficult to be introspective at 22 and see that money isn't everything for everyone. That's especially true once you have some money. If you take a few years to find yourself and try a few different things, you'll probably be a more interesting person in the long run.
Best of luck to you, sir!
It is amazing how many jobs require you to be on a computer all day. This has been a major hurdle but I think I wouldn't mind it as much if I could have more interaction with people (this could even be just working somewhere with a bigger junior team), travel (I realize this a double-edge sword), etc. just to break up the monotony that I was experiencing in PE.
Admittedly, this might be a grass is not actually greener situation where I realize that I had it pretty good and do a 180 in a few years but this felt like the right time to learn that for myself or find something that I really enjoy. This has also forced me to start thinking of careers further off the beaten path like going back for my PhD to become a professor, join a startup, or something totally different. However, getting someone to take a chance on me to do something that I have never done before when everyone is working remotely has proved very challenging.
I have also realized during this time off that some of what I am looking for can be supplemental to my career and not necessarily come directly from a job - e.g., volunteering, non-profit boards, volunteer coach, forcing myself to learn a new hobby like kiteboarding, etc.
Almost 6 months after leaving the firm, and having some time to reflect on your decision to quit without another job lined up, future job options, your personal life and priorities - do you think it was important for your self-reflection to have quit without anything lined up? And do you have any regrets about quitting without anything lined up thus far (for example to your point about getting someone to take a chance has been challenging)?
I personally wish PE was more forgiving towards people taking a career sabbatical (i.e., quit without anything lined up including not going to b-school) and then wanting to come back to PE after to reflect or decompress. I think almost everyone would agree that throughout a 30-40yr career, people will inevitably have doubts about their jobs and/or need time to reset and reflect.
And yet, unless you go to get your MBA, you're essentially being punished for wanting to distance yourself from the job for a period of time, to be able to reflect without being biased by sitting in the seat everyday. Let's not kid ourselves in thinking people aren't getting their MBAs because at least in some part, they just want a 2 year vacation. There are plenty of legitimate reasons why someone may not want to spend $250k to get their MBA, for many people it's just a poor ROI financially or qualitatively.
A math major too. I'm still early in my career, and after thinking hard about what I want to do next after getting laid off during covid-19, I have decided to take a route where I can build something and apply more (real) critical thinking into my daily job. I didn't like Excel modeling either. People in IB or similar transactions like to say "you need to be good at math". It's basic plus, minus, multiplication, and division, sometimes square root. That is middle school algebra. In fact it's not even algebra, which is something totally different. I still crave for the $ that IB brings, but as sometime who studied math, not because of $ when I went for that major, I have peace with myself as I choose someting I find to be truly meaningful.
Sorry for the rant, best of luck to the OP.
I am a little confused by your last sentence - are you saying that you would choose meaningful work over $$ or you still want to make IB $$? I get that these certainly do not need to be mutually exclusive but curious what your prioritization is at this point in your career?
For me, money beyond a certain threshold has become significantly less important to me over the last year or so. I would still like to live fairly comfortable and have the opportunity to make $2-300k per year but it is no longer my main motivation and I don't need a job that necessarily has the upside where I can bust my @ss and make $1M per year ever. I would be OK renting a vacation home for a week rather than owning that vacation property. It would be great if I can find something I am passionate about and make great money one day but I would rather make $150k doing work that I find meaningful and be able to go to 90% of my future kids' little league games
Would you mind sharing the carried interest for Associates / Senior Associates / AVP level at your firm?
If possible, could I PM you please?
Thanks.
Feel free to PM for any personal questions that wouldn't benefit the broader group.
Carry will very greatly by firm but at my for Analyst - VP you could probably expect from 1%-5% of carry depending on your years with the firm.
Looking back at my career, all of my roles provided long term paths (IB: A->A promote with decent lifestyle and PE: carry, co-invest at the fund level; relatively decent lifestyle; partner path) but I sacrificed upfront comp. One of my biggest suggestions is that if you aren't sure whether you will be at a firm for 5+ years (this is almost always the case when you are joining a new firm) then focus more on the upfront cash component because this will give you more flexibility. Obviously, there are exceptions if taking a short-term pay cut will give you a ton more career options, the ability to gain valuable experience regardless if you stay or leave, or just a role that will likely lead to greater happiness.
How did the Partners take the news that you were leaving after such a short tenure? Did they offer any assistance to help in your next steps or even financial assistance like a severance? Just curious, because even senior analysts / junior associates get severance at my bank if they had to leave for health reasons (assuming they didn't piss too many people off).
Just to make sure we are on the same page, I had been with the firm for a few years but had just recently been promoted. I wrote it that way to point out that everything was going well from a progression standpoint when I decided it was time to leave the firm.
I don't want to get into too many specifics of the terms of my departure but the partners were supportive. I was treated fairly and they offered to help in any way they could. However, this was more like if you need a reference or find anyone in our networks that we can introduce you to let me know. Part of me wishes they were more proactive but I think that is wishful thinking for our size fund and the market. Also, people have more on their plates right now juggling family, wfh, and the work that I left behind that had to be picked up by the rest of the team so not sure if things would be different under more normal circumstances.
I am curious - what types of health reasons does your bank pay severance for?
Health reasons could really vary, but HR doesn't seem to be very thorough in checking from what I've heard. The conditions ranged from depression to back issues to other things that could be life-threatening. I think the idea is the bank rather not deal with a lawsuit and just give people some financial support to go away.
Have you considered acquisition entrepreneurship?
Like buying my own business and growing it?
yup. Put 10% down with SBA financing, Could set up a search fund if you need some help with the equity or want to acquire something a bit bigger than you can afford on your own. Would need to get through one more deal (maybe more in the future if you want to treat it as a platform and grow it via acquisition), but then can focus on the things you seem more interested in. May be a good fit for your background and what you are looking for and can still be pretty lucrative for wealth creation. Buying a smaller business for ~3x multiple - grow it over ~5-7 years to something that can get into that LMM range and benefit from some multiple expansion.
Also commenting to follow.
I actually just started a Sr. Asso role at a new firm about a month ago and have been having second thoughts about my decision, basically for the same reasons as you. The more I think about this career path, I really don't want to be digging through data rooms, putting together 100+ page IC decks and building excel models the rest of my career. I don't envy the lifestyles of the partners I work for. Part of me took this job because I wanted to avoid bschool and this was just the best option I had at the time. Beginning to think i may have made the wrong choice, but we'll see.
It's helpful to hear your perspective, sounds like you made the right decision for you. I wish you the best of luck in your search, I'm sure you'll end up somewhere much better.
Why was the IC deck 100+ pages? I've rarely heard of 100-page anything in banking, since most people aren't going to read it anyways. Are a lot of pages just copied and pasted?
Over 100 is high, but most of mine are 60-100 pages. 15 pages exec summary, 15 pages of business diligence conclusions, 10 pages of advisor work, 15 pages of transaction/model, 15-50 pages of backup (analysis, suppliers, customers, markets, precedents, etc.). If you work for value shop, also add 10 pages for value creation initiatives
What kind of fund were you before and are you at now? I’m going through the senior associate recruiting process to skip MBA (from UMM to UMM/MM) and while I enjoy many aspects of PE I often wonder if I am just convincing myself as I project a lot of enthusiasm during interviews.
My question is, what were you expecting a senior associate role to be like and how is it the same/different than what you expected?
do you mind giving comp ranges at both aso and senior aso steps? Also roughly what was the fund size and was this in ny/sf or a smaller market? Looking for some LMM pe data points and they're not as easy to find
Learned that if you put a less than sign in your post everything after including the sign doesn't show up
wish i got to see the reply before it was deleted lol
Less than $200M fund in smaller market - assoc all-in comp was in the ~$120k ballpark and senior assoc ~$160k w/ some carry
Appreciate this as I am looking at similar funds in my hometown.
As a 1st analyst who got significantly burnt out recently, I am seriously reconsidering PE as my next career step. I wanted to ask how things have played out for you over the past ~1 year. Would love to hear your updates as well as some words of wisdom you have gathered in this unprecedented time.
First, winter of the 1st year of your IB analyst stint is the worst. I can't imagine what it is like right now during COVID when you can't go out and blow off steam. I got crushed winter of my first year and it was miserable. Private equity had a lot of similarities to IB but also a ton of differences at least at the firm that I was at. It was a way better lifestyle even if it was still more hours than I eventually wanted to work. In retrospect, I think the biggest issues were that I didn't feel valued and didn't really see a path to taking that next step in my career - part of that was where the firm was at in its lifecycle and not being industry focused.
I ended up in a corporate development role at a public tech company focused on M&A and corporate partnerships. I am also trying to get more involved with the firm's start up investments / partnership. So far, I really enjoy the new role. Base pay is a little higher, bonus is about half, and the upside stock vs. carry is way lower. The role will be majority remote even when the office opens back up in a few months and that's a huge plus in my book. Also, I think there is real value in jumping around a few times early in your career so you aren't remembered as the junior person you were when you joined. I think both my IB and PE experience have set me up really well though. The corp dev group is really small and almost no one in the firm has PE experience so I have been able to really show my value early on in the role. I might make a new post as I think a learned a ton since stepping into this new role. Happy to answer any specific questions.
Thanks for this post, and glad to hear things have worked out well. Will you be making an update post? Would love to see what you’ve learned and hear more about how things are going
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