MM PE Associate. Seems like some people find these useful.
Experience: Non-target undergrad; MM non-NYC banking role (2 years); now MM PE Associate (starting third year) (non-NYC). I think these are less useful than IB analyst AMAs because the job is so much more variable based on conversations I've had with other associates. But I have some time.
What is your compensation like, and what do you plan to do after your third year? Thanks for doing this!
Similar to an IB Analyst ($140K - $170K, slightly above my year 2 comp, lower than my year 3 comp would have been).
After my third year I will be going to business school. Also considered staying but think MBA is the best route to a role with carry.
How would you say that your role has changed as you start your 3rd year compared to say your first year as an associate? For instance, how different are your everyday responsibilities? I know this is something that definitely depends on the firm you work at, but I'm curious to hear if you can note any significant changes in role/responsibility as you have spent more time at your firm.
Thanks!
Great question. It definitely varies from fund-to-fund, but my responsibilities are very different than they were when I walked in the door. I used to read CIMs all day and hope we got management visits. I also did some minor portfolio work, but I was added to existing teams, so they knew how to function without me and kind of had to find work for me.
I still read CIMs, but because I cover several portfolio companies, a lot of my time is spent a) executing add-ons (which is cool because I typically only work with one other person so I get a lot more exposure to the important parts of the deal), b) working with portfolio companies (lots of talking to consultants, looking at reporting packages, and working the CFOs on performance), and c) working on platforms. Platforms and add-ons both take more time later on because you're keeping track of many more things. I now have to pay real attention to financial, market, and legal diligence, which I only kept vague track of before (I read the reports but did not provide comments).
I'd say that when I started I was probably 60% new deals, 30% deal execution, 10% portfolio. Now it's probably 50% deal execution, 35% portfolio and 15% new deals.
All of that is to say the job has changed a ton. I still do what I did before, but a lot had been added.
Promote to VP possible?
Nominally. But uncertain when I’d get in carry.
Looking at your post history, presumably this is a product of not updating your job title, but I found it funny: Third Year MM Associate Taking Questions (1)
(1) AUTHORED BY: Certified Investment Banking Professional - 1st Year Analyst
Yeah I haven’t updated my profile in like three years and I don’t really know how.
I was much more excited to let WSO know I got a job when I was right out of college.
Edit: I made the change so future users are not confused (was tempted to leave it because it was pretty funny)
What is your work/life balance like? Has it changed at all from year 1 to year 3?
On average probably work 8:00 to 7:00. This can be better or worse depending on staffing and what I’m working on.
Year one was better because I wasn’t as busy and deadlines weren’t as clear.
You said you opted for MBA rather than trying to advance without one, can you talk a little more about the thought process?
If the plan was an MBA did you think about going after year 2? Was the extra year helpful for your applications?
As a third year, what’s something you look back on during your first year and wish you did differently as you were establishing yourself at the firm?
When we talk about deal experience for your MBA recruiting, how much importance was put on # of closed deals vs. number of opportunities you saw vs. any other metric to evaluate the quality of your deal experience?
What did you feel needed the most improvement in your skill set when you started vs. where you are now? How did you improve on it?
I’ll answer all of these today but I think a really good question was about deal flow. I think in banking we get really focused on the number of deals you complete because your role is similar and the value of an analyst position is understanding the structure of a deal (along with the analytical skills you gain).
The real value of the deal in PE is the experience you get and it all builds towards whether could you run the deal yourself and, if you can, do it such that you can maximize value. So it’s less about the raw number of deals is and more about what you are actually doing on those deals.
Because I believe the above is true, staying for my third year is worthwhile. By the end of this year I do think I’ll be able to lead a transaction from start to finish, which would not have been the case had I’d left this year.
What aspects/steps/responsibilities about/within a deal process (or, "running a deal") do you feel like most 1st/2nd year analysts should improve their focus on if they wish to be able to quarterback deals all on their own in the future?
Asked a different way, what parts of the deal process do you think analysts not place enough importance on learning/not develop as much (due to either not stepping up and taking responsibility or just not much exposure in general) that should be?
Re MBA: MBAs are still pretty highly valued. Probably less than they used to be, but it's still important. I hear it a lot in recruiting and not just at my fund. I think it will give me more flexibility. I also wanted to change funds/geographies eventually and it gives me a natural way to do that.
I did think about going MBA after year 2, but did not for personal reasons. The extra year was very helpful, however. My experience was so much better and I actually do stuff now.
In terms of skill set, the biggest difference was how much "initiative" I was supposed to take. I read about this a lot prior to coming to PE, but I didn't appreciate how different it is. In banking, you were constantly told what to do and in most cases, how to do it. In PE, it's much more frequent to just get a problem and be expected to solve it, often without a clear template.
The second biggest difference was the level of engagement needed. To be a good associate, you need to be really plugged in, even when not working on something specifically. In banking I could definitely get away with dividing and conquering a lot more.
Can you talk about your recruiting process? I'd be interested to hear given your background (non-target / MM / non-NYC). What can other analysts in this situation do to best position themselves for successfully recruiting?
I tried the whole networking thing, but really it was a matter of hitting the headhunters hard, which ultimately worked out.
If I could go back and do one thing better, I would have been a stronger analyst. I focused too much on private equity recruiting to the detriment of my work--I thought about everything in terms of how it got me to PE.
Can you shed some light to what industry your fund invests in and location? 10 year plan? Also, when looking at IB candidates for associate roles, would you rather hire someone who came from a reputable bank but small amount of deals closed, or someone from a slightly less reputable bank with very strong deal flow?
Between the two options, a slightly less reputable bank with very strong deal flow.
More importantly than either of those two traits is the ability to talk about their deals as investments, though, and speak about them at a granular level.
I realize that you said that you wished you were a better analyst at your bank - but can you elaborate more on how you approached convos with headhunters and what you were looking for in a fund?
What's the strangest route to PE you've come across? What was the biggest misconception you had coming from banking about the job? What skill/characteristic do you wish you had more of? Least favorable traits of folks at your fund?
Nothing really that strange. I’ve seen people take circuitous routes but normally have a grounding in deal-driven finance.
I didn’t realize how much more responsibility I would have. As an analyst I mostly felt hidden. Not that way as an associate.
I wish I worked harder. And wish I was a faster reader.
When did you hear about the offer to stay on as a 3rd year associate?
Have you seen associates from larger funds come on as VP / Senior Associate roles come at your fund?
Thanks for doing this. You mentioned even as a direct VP promote, the path to carry isn't clear. Did you find this out recently / was that a surprise?
Interested in how / if you approached those kinds of discussions with the partners before you made the decision to go get an MBA, as I made the move from a larger MM industry-focused fund to a much smaller / newer LMM within the same industry as an experienced associate with the hope of earlier carry (and am getting to the point where I need to begin those discussions ahead of Fall applications).
Thanks very much for doing this. Are there any specific skills you wish you had focused on developing while you were still in banking? What are you expected to know how to do right away and what do you have some time to catch up on when you hit the desk in PE?
did you ever consider going to work for a portfolio company for your 3rd year? is that an option?
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