Retooling to move out of distressed.
Third year at a special situations investor. Investing in both debt and equity and getting great experience and I really like the job. We own some portfolio companies outright. That being said we have all seen the inevitable “right-sizing” that happens when distressed dries ups. As I get more senior and senior at my firm, can definitely see becoming a body in 2-3 years especially as my firm is almost exclusively distressed.
Hence - looking for some advice on re-tooling, so that I can be competitive at that point to move to a vanilla LBO fund or growth equity focused. My ideal role would be at a flexible investment mandate fund so that my distressed background would be valued but also does non-distressed. For example a centerbridge / Clearlake / crestview type of firm
Any idea of (i) focusing work and skill set so I can retool in the inevitable right size of distressed funds (ii) any firms I should look at that have a flexible cross capital structure mandate? I’m ok to do just vanilla LBOs but don’t want to take a significant seniority hit - will likely be around VP / principal level then.
PE is the same at its core; distressed/vanilla/growth/vc is all pretty much the same, with a few twists.
An associate at one is more or less interchangeable at the others.
The biggest issue you're going to face is that retooling is a short-term solution. Mastering the technicals in another discipline will last you maybe 2-3 years. 5 if you're good at bullshitting.
VP+ is all soft skills; the best lower rung grunts are usually terrible at the higher rungs, and wash out. Too many years spent thinking of deals in terms of numbers and technicals, pigeon hole's you into being unable to see the bigger picture -- let alone know how to sell.
I'll give you the advice I would give someone that wanted to end up as a partner (bless your heart):
Rinse and repeat 2-3 years of that, and if the MDs / partners whose lives -- and bonuses -- you've just enriched don't connect you with one of their contacts for a job offer, then you'll still have the track record and sales skills needed to convince any smaller shop to set you up as a principal.
If you share my impatience, you can do it in 1 year at most.
Any suggestions for other sales-related books? Starting to sell more in my role. Thanks.
"Successful Telephone Selling in the '90s." This one's more geared towards cold calling, and has mirrored a lot of what I've picked up on my own.
Besides that, no. It's not something you can teach in a book. Only practice can build the instinct/intuition/pattern recognition.
Belfort is an absolutely obnoxious individual, but his book is the only one that cuts past the bullshit and gives you all the tools you need to figure it out on your own.
Stopped reading here. Imagine thinking sourcing is similar to LBO modeling. Or that market evaluation of early stage is similar to going through credit documents. +1 MS
It's almost as if I have a prophetic ability to bullshit -- or perhaps it comes from first-hand experience.
I want you to know that your betters make decisions solely based on what seems like a good idea after 3 dry martinis.
I feel like transitioning from distressed/spec sits to vanilla would be pretty straightforward unless you're super specialized/LMM?
As someone at a MF, we always looked at lateral candidates at the sr. associate level who came from shops with flexible mandates / special sits backgrounds. At the end of the day, I do believe that special sits guys tend to have great investing perspectives and can handle the rain of work / excel diarrhea MF PE requires. Point being you'd be fine as long as you make the appropriate contacts at the recruiting firms which hit the teams you are targeting.
Hey OP, could you DM me (I'd start the convo but post is anon)? Would greatly appreciate learning more from your perspective for making a shift as somebody who is currently pursuing distressed / special sits.
What makes you so sure that a firm focusing on vanilla buyouts is going to be any different than special sits turning into a "body shop", whatever that means.
Is the irony of calling something "vanilla" while also presuming that it is somehow a more differentiated and inimitable mousetrap lost on you?
The fact of the matter is, it's much easier being a junior professional. You're basically just semi-skilled labor and that's what you're paid for -- there's a reason they call it 'heavy lifting' or 'grunt work'.
As you move up in your career, you're actually paid to create/make things happen. That's very difficult to do, especially in our business where what you create is quantitatively measured in objective terms (investment performance). The struggle to figure out how to do that in a differentiated way within an incredibly efficient and competitive market is not a dynamic unique to special sits, or vanilla buyouts, or anything else for that matter. That's just the level the game is played at when the prize is large enough.
There is no easy way to get paid millions of dollars a year. In fact, it's largely only in finance that you can make that sort of money without creating real equity value / building something. So if you are lucky enough to have a seat at a place where the prize in a given year is in that order of magnitude, you have to earn it -- it doesn't matter what sub-strategy you're in. There's no $3mm a year participation ribbon in this world.
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