Small Private Equity
All,
I am currently in Big 4 TS trying to transition careers in a mid-market. I have been approached about working for a very small PE shop. The targeted revenue for investment $10-100 million.
Has anyone made a similar jump? I feel like it is a no-brainer to move to PE to get out of accounting and into finance but I was hoping someone could walk through the pros/cons with me on making such a switch (i.e., LT prospects, money, work life balance, etc.).
TIA!
Go for it - you won't have any regrets so long as the PE firm is not a start up and has a track record of success. Good luck!
There seems to be all this bashing of start-up funds... I don't know why. Surely if the calibre of the individuals at the fund is high enough & they have appropriate backing it can be a godsend to start on the ground floor?
What you have to look out for more so in a fund that's just been established is if they have committed capital or not-have they raised their fund and are deploying capital or are they still raising and will you be sitting around making pitchbooks to LP's instead of investing and closing acquisitions. The latter would kind of suck if you weren't at a principal or greater level because I doubt you'd get a piece of the action (either at the GP or carry in the portfolio) and you'd be chasing after LP's. But I know plenty of well established funds who invest in the lower MM range and have been around for years.
OP, if you have an offer from KKR or Silver Lake then turn down the smaller fund. If you want to be in PE and don't have another offer, take it. Pay, culture, work/life balance, etc will be pretty fund dependent, although you can expect pay to be less than if you worked at KKR simply because it won't have as much fee income and carry floating around, but you should still get paid decently well because the team will be pretty small. LT prospects-do you mean for bschools, direct promotes skipping bschool, partner tracks, exit opps, etc? That will depend on the fund also. Some smaller funds will be more flexible on not needing and MBA and others will be just like Blackstone and force you out. Some may seem like a no-name for bschool apps and others may have pull. I know a guy who runs a smaller fund but he sits on some board at Wharton (and I have no idea what the board is) and can basically get any kid in who hits their GMATs.
Thanks everyone! This has been very helpful. I do wish to get into PE and if it is on the ground floor of a very small PE then so be it.
I had one more follow up question and I know that it is very fund dependent but just wanted to see if I could get a few opinions on work life balance. Obviously, I am aware that there will be longer days than others but what do you all think the typical work environment is like at one of these shops? Does all the work get pushed down to the analyst to where they are the only one cranking in the office every day? And on the other end, if it is 5 pm and there is no work to be done how important is face time? My first inclination is that it would be less important but curious to hear what others think.
Thanks again!
Probably no face time but work life balance shouldnt be a concern if you want to work in PE
You're correct, it's completely firm dependent. If you're the only associate level person, yes, most work will be pushed down to only you but if there are other people between associate and MD (Sr. Ass, VP's, Directors, whatever they call them) roles and duties will most likely be blurred a lot more than they are at more established and/or larger firms, especially when you're really busy and closing deals. Most likely everyone will pitch in, not so you can go home at 5 but because the work can't be accomplished by one person by the deadline even if they worked around the clock. When you're talking to this firm I'd ask how they manage work flow, deal teams, etc.
Same with time in the office-if you're running lean there will nearly always be work to do but if you can leave at 5 when you're done what's on your plate at that moment will largely depend on the senior guys/founders. I work in the lower MM and I'm of the opinion that once you're done your work, get the fuck out of the office because at other times (most of the time) we're very to ridiculously busy and when we're closing deals it could be weeks/months of incredibly long hours so on the random Friday afternoon in the summer when you don't have work to do after lunch, you're all caught up and everything's in order I say go find a place to have drinks outdoors or head to the beach. That doesn't happen often but on a more regular and recurring basis, I'm of the opinion that there's no point sitting in the office even until 8/9 pm just to be there if you can take off at 6. I know guys who run other firms and don't think that way at all and will either find things for lower level people to do or expect them to sit in the office (although I wouldn't recommend popping out early if you're working for me until you've been there a while, know the culture and have established yourself even if it may ok to leave). One thing about PE compared to banking (and I'd suppose Big 4) is that you can much more easily predict work flow because you don't have clients calling you up last minute asking for something. I may see that through the rose colored glasses of someone sitting high on the totem pole but if you have good people managing you that should trickle to lower level people as well. You generally know when you're closing, exiting, financing, etc and when work flow will be high and that doesn't normally pop up on Friday at 4 so you have a little more visibility on when things are going to be busy weeks or months out (doesn't mean something will never pop up at 4 pm on Fridays though, just much less likely).
Sorry for the diatribe, but tl:dr, it's pretty firm dependent and I'd ask when you're talking to them.
Curious to see if anyone has any more thoughts! Thanks.
Any day PE over Big4.. Though Big4 gives you the stepping stone to move forward. Good Luck
I made a similar transition to a well-established lower mm firm similar to what Dingdong08 mentions above. I definitely think the jump is worth it, working at a small shop allows exposure to so many different areas and in my experience involvement in all phases of the deal process.
As far as work life balance, in my experience its generally been 50-60 hours in the office and working remotely at nights/weekends when there is work to do. I'm generally the last one to the leave the office every night, but I don't worry about leaving early if I have something outside of work going on. LT prospects and pay are strong judging from the history of my firm.
Thanks everybody!
I did a case study and am awaiting results. Just like an old test in college, I am finding a few things I wish I did differently for my model. Any advice? How perfect are the interviewers usually looking for in these models?
What fund are they on? How many investment professionals? (Pedigree?) Where are the previous people that held your position? What are the fund economics? (90/10 with 1% on Invested/Comm.?) Where are they in the investing period for said fund? Investing timeline? Who are the LP's? (HNW, institutions) A lot of questions need to be answered before i'd be inclined to make the move.
What GP ever lets anyone in on 1 and 10 except participants in the first close on their first fund? Jesus.
This is very helpful. Can you elaborate as to what answers to some of these questions may mean about the prospects of the firm? Most notably on what fund they are on, # of investment professionals, fund economics, investing period/timeline and LPs. Thank you.
At a small firm such as this, how long would it typically take to get carry? Is it fair to assume the money wouldn't be great until this happens?
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