Strategy at Private Equity Firm
What are your thoughts on a buy-side move to the corporate strategy group of a private equity shop (Apollo, Ares, Carlyle, etc.).
If you are using their balance sheet to invest, how much different is this than the typical PE route?
What type of work do they do. Also very curious about the fit that they look for and the pay scale.
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I'd confirm that corporate strategy at the said firm is actually doing the investments and not providing supporting analytical work to the team that actually does it (i.e. corporate development).
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Corporate strategy guys at a shop (MF) I worked as in intern were responsible for helping managers in our porfolio companies to implement best practices in terms of operations, sales, digitisation and productivity. They were typically called right after the investment was done and were very active following the companies in the first couple of years after the investment. Their input was rarely asked during the investment phase other than to quantify if the amount of productivity gains that could be achieved was substantial.
These guys mostly came from management consulting firms or portfolio companies formerly owned by our fund. Can't really help on pay but would expect similar to management consulting (lower than investment professionals).
This is wrong. You are talking about the operational side of private equity. This is different from corporate strategy at a PE firm
I believe most people are misunderstanding what the role is (which is quite understandable given how little detail was provided).
'Corporate strategy' at firms of the scale mentioned usually means the group of people reporting to the CEO and COO who are making business decisions about how to direct the firm itself. This is not a portfolio operations role where the team supports the management of each company the fund has invested in on strategic initiatives and acts effectively like an in-house McKinsey, nor is it a balance-sheet driven investment group like OP asks.
This is the equivalent of Firmwide Strategy at Goldman. You figure out what the smartest moves for the firm to make are.
These are big strategic decisions.
For example, "Should we divest our fixed income asset management business?" Fortress recently sold Logan Circle. The sale took Fortress' AUM from $70+b to ~$33b, but overall its fee income barely fell at all. Why? Because the asset management business generated only management fees, no performance fees, so the $250m sale price was attractive, and while they have 50% of the former overall AUM, they're still earning 90%+ of the revenue they were before.
"Vista and Warburg are both raising $10b+ funds only 12 months after raising a previous one that same size. Are we missing an opportunity to grow AUM dramatically while the fundraising market is hot for blue-chip names?" That would be why Thoma Bravo is targeting $10b for Fund XIII after raising $7.6b a year and a half ago.
"We're getting hammered because our CEO is known to be a good friend and decent fundraiser for Trump. What digital marketing initiatives can we do to actively manage our firm's brand in the public eye?" That would be why you see Blackstone advertising with that God-awful "#susty" hashtag on Instagram and LinkedIn with their micro-videos on how and why energy efficiency matters so much across their portfolio, or the recap videos of what they do with the Blackstone Launchpad to support young university-age founders with their first businesses.
You basically do a bunch of strategic analysis on behalf of the C-suite of the firm to figure out the projected revenues of existing or new businesses, competitive dynamics or industry developments that affect you, and the best options to get done whatever the Board or executive leadership is focused on accomplishing that quarter or year.
Unless I'm strongly mistaken, this is the role that gets termed 'corporate strategy' for a giant firm like Ares or Apollo. Unsurprisingly, there's little info about it publicly, because no firm is listing it as its own group under the 'Our Business' tab on their site.
They tend to be small groups (10-40 people total). I have zero hard datapoints on comp. Base seemed to always be fairly in line with what you'd make at the same title in a different group, but bonuses are predictably smaller since you're not in a revenue-generating function. Carry doesn't exist because you're not an investment professional.
Fit would be people who came from a banking background (are you used to 80+ hour weeks, do you have independent research skills, can you format things well). Often it's people with a FIG background (think about it, you're effectively the internal steering group for a large financial entity).
Good luck.
APAE, this is great as is everything you write. Please check your PMs!!!
PE Strategy Experience? (Originally Posted: 02/14/2018)
Does PE give you experience with business strategy? If so, could you give an example of what kind of strategic experience I'd receive with this kind of role? Also, what positions/groups/divisions etc. within finance, give you the best strategic experience?
PE - yes. I knew a guy who was ex-PE and his company pretty much created a head of strategy position just for him, but he was definitely unusual. Given the narrowing of the "funnel" at the VP level in PE, you'll sometimes see those guys in corporate development, corporate strategy, etc. I'm not sure how common they are in consulting.
In finance more generally, there's tons of optionality you get from an IB analyst stint, including for strategy roles and consulting. VC is also a good background for strategy.
Not sure why you would prefer to move into strat from PE, though... In PE, you get to do a lot of the same work, plus you get to earn carry.
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