Top fund placement vs boutique

Hi,

I'm a third year IBD Analyst. Decided I didn't like the hours of banking/buyside and also the stress so wanted a change where I'd have a better work-life balance without taking too much of a paycut. I though PE funds of funds could have been a great option but i had no luck with recruitment which is when a recruiter introduced me to fund placement, offering a better work life balance with a small paycut.

So now im interviewing with one of the large/top fund placement agents i.e. park hill, campbell lutyens, rede partners etc.. and also a tiny unknown boutique fund placement agent.

I'm unsure which I would prefer to take as i really like the people i've met so far in both and would be happy in either

Pay: at the analyst and associate levels the boutique is offering a better base/bonus potential than the large fund placement agent (although both are still a paycut from IBD) unsure how the pay would look at the senior levels tho.
Hours: boutique offering better working hours (boutique aim to finish by 7.30pm whereas the large placement agent aim to finish by 8.30pm)
Dealflow: large fund placement has better deal flow
Size: large fund placement ofc has the bigger deals often in the $billions working with some of the top pe funds where as the boutique is working on small cap funds often below $100m size but this can still be interesting and cool working with small cap funds
Structure: the large fund placement will ofc have better structure, procedures and infrastructure as well as better training so my development/learning will be better
Responsibility: despite the structure point above the boutique will most likely offer more responsibility on transactions
level: the top pe fund placement wants me to do another 12 - 18 months as an analyst before associate promo, where as boutique is offering a review every 4 months to review me for a possible associate promo (i'm a third year IBD analyst so i'm due to be associate asap)
Exit ops: unsure on where i see myself in 10 years but if i wanted to leave the large pe fund placement could offer me exit ops to fund of funds PE later down the line as it has the brand, deal flow, deal size etc.. where as the boutique won't be able to offer this
Other: social aspect the large cap has more people and arrange social events

Unsure what to do really, any thoughts/advice?

Comments (25)

 
Jul 16, 2020 - 10:34pm

Firstly, I think FoF may offer you a better work life balance, but it may not be the case for PAs. Afterall, placement role is a sell-side role, you need to constantly find clients and broker the whole process. That said, depending on the firm/culture, some PAs have a better work life balance than others.

Pay: PAs pay better than FoFs (except large FoFs may be on par). I know for fact Evercore (might be highest), Campbell, Lazard pays their staff handsome bonuses (some 6-12 months) but they are mostly understaffed and work their juniors like crazy. Don't expect non-banking hours here, for example, I know for a fact Evercore hours are insane, Campbell's turnover has been quite high and their hours are very tough (12ams), Eaton is also reputed for tough hours too.

Hours: As above. PA is a very cyclical and market-dependent business. Like for now, COVID, their hours are pretty OK because fundraising environment is tough (unless they are understaffed), basically whole fundraising environment is on pause: US LPs can't travel to Asia or Europe to meet GPs (vice versa) so most new funds can't raise new capital (making PA's job very tough). The only ones that can raise capital are funds with established LP base, usually oversubscribed with LPs re-up'ing in auto-pilot mode, in which case, a PA's job is quite limited anyway (if they even engage a PA). When its peak market, with multiple mandates on hand, PA's hours can be real tough.

Dealflow: Not necessarily, some boutiques have extremely good reputation and connections too.

Size: You can feel like a baller raising for Blackstone/Appollo but remember, they are oversubscribed with a giant IR team, there isn't really much for you to earn and 'sell'. Whereas if you take on an emerging manager in a boutique PA, this will truly train and test your skills as a PA, to sell and convince prospective LPs to invest.

Structure: Yes agree

Responsibility: Yes agree, highly depend on type of bosses too.

Level: Yeah that would be a drag.

Exit ops: TBH, rarely do I see placement folks ending up in FoF, people normally go for IR in big brands (pays well and hours are great too), or moving laterally to another PA, or even setting up PA shops themselves. Not much 'exit' tbh. This also depends on your role at the PA, if you are in distribution team then you won't get much exposure to selecting GPs, if you are in origination then you won't get much exposure selling to LPs. It would be great if you get exposure to both which is more common in boutique shops.

Few other things:
- Most shops are small, make very sure the team is not toxic and bosses treat juniors well.
- Find out the number of mandates they take on per year vs how many they actually close (some take on too many mandates and can't close many of them, resulting in damage reputation and wasted efforts)
- Check their reputation with people in the industry, what are they reputed for? Strong relationships with certain region/type of LPs? What is so good about them? Any senior level turnover? If they are a foriegn shop in another country, what are their long-term regional plans/strategy? Who are the bosses close/good friends with?
- Generally, I'd go for boutiques over large PAs, simply because exposure and learning curve could be higher.

 
  • Analyst 3+ in IB - Ind
Jul 17, 2020 - 6:05pm

Thanks for the reply, this is very informative.

a) I really did not know the hours were that bad at PAs, the main reason I was recruiting for these roles was for the improved work life balance. I knew it would still be tough given it is a sell side role but I kinda got the impression it would be less intense and closer to market hours given it is pretty much a sales role that deals with investors. Surprises me too that despite the hours being that bad the pay is still still on average slightly below IBD.

b) I wasn't aware PAs pay better than FoF, I assume this is pre-carry? I.e. at the senior levels once carry kicks in FoF pay would be greater than PA pay?
Do you have any idea what pay could look like at the senior levels in PAs vs IBD?

c) On your point on learning curve potentially being higher at the boutique, would the structure/training/learning at the larger PA not prove to be better in the long term for developing skills? similar to how learning and development at a BB would be better than a regional boutique M&A shop, despite the regional boutique offering greater responsibility/less hierachy

Thanks

 
  • Analyst 3+ in IB - Ind
Jul 18, 2020 - 3:34pm

Also interested in views on the outlook of this role, whether it is a growing role and a good time to move into the fund placement industry or if its hit its a dying field with more funds raising capital themselves/internal IR/Fund manager contacts etc.

 
Jul 20, 2020 - 9:10pm

Used to work at at a large/top placement agent, and now work at a large LP doing FoF investing, so I know where you're coming from.

I feel the answer really depends on your priorities, but I would say the large/top placement agent is the better bet (maybe I'm biased).

Again, the industry is small and I don't want to go into the details of how each placement agent differs, but even the names you mentioned (Park Hill, Rede, Campbell Lutyens, Eaton) are all significantly different in culture, compensation etc. What I would say they share is dealflow and the overall training/fundraising experience. As a junior what's most important is your training/skillset/exposure in terms of career growth, and unless you want to stay at the boutique forever, the larger house will give you more opportunities in the long run.

In terms of exiting to PE FoF, I would say that most people usually go from PE FoF to placement agents - the other way is much rarer. I have seen cases where people go from secondary advisory to secondary funds, which I think is a good exit, but the reason people usually go from FoF to agents is because the overall pay potential/pay is better, especially if you are at a place like Evercore/Park Hill. FoF quite frankly is a difficult industry because of fee compression, and minimal carried interest (if any).

Happy to answer any more questions, but my two cents

 
Most Helpful
  • Associate 1 in IB-M&A
Aug 30, 2020 - 7:38am

A little late to the thread here, but just going to throw in my two cents for what it is worth. Not long ago, I made the switch myself from M&A banking (A-to-A promote) over to a PA for lifestyle reasons (joined a secondary advisory team). I was considering a few different shops and have other friends in the industry, so can offer some color on the sector. Sounds like you are likely joining a primary fundraising team, so will try to focus my advice on that side of the business.

Pay is going to be very different from the Private Fund Groups (PFGs) housed within traditional investment banks (be it CS, UBS, Citi, Lazard, Evercore, Park Hill) and PAs that are independent (Eaton, Campbell, Rede, MVision, Mercury, Monument, Triago, etc.). In the former, base pay is in line with traditional investment banking groups, but bonus will be around 10-20% less for junior roles, while the independents generally pay much less (~30-40% discount to IB pay, but can be subject to negotiation), both on the base and bonus (at the junior levels, at least). The gap will start to narrow at the senior levels (VP and above) as you take on more sourcing and selling responsibilities, and your pay becomes more tied to your ability to bring in business. Generally, secondary advisory teams will get paid better than the primary fundraising teams, unless the primary guys have an outsized year raising capital.

Hours are, in fact, much better. You are coming from investment banking as a third year analyst, so you have all of the fundamentals in place to breeze through everything PAs do. You will also find that most people in the independent PAs (which, it seems, are your options at the moment), unless they are coming from a banking and / or traditional PE investing background, are generally underwhelming in terms of ability and efficiency. At the traditional banking PFGs, you will see more people from traditional IB groups switch over internally for the same lifestyle reasons that you are looking for, so they are generally a little more impressive. I honestly work 60 hours a week as an associate right now (little to no weekends, other than replying to emails), and we are busier than normal right now with lots of activity in the secondaries space. 40-50 is probably more the norm for me (that being said, I do get to delegate quite a bit, but I do not see my analysts working much more than I do, maybe an additional 5 hours a week on average). Of course, I will have a few days where I work to midnight or close to it, but those are really few and far between (

There just is not that much to do, even if you are juggling multiple transactions / fundraises, unless you are working for a sadistic senior who loves constant, pointless turns on materials. Materials are all generally pretty standardized, especially on the primary side, and you can usually leverage the client to help out. As long as this is not the client's first rodeo, they all have existing PPMs and presentations, along with existing documentation on their internal processes and their track record. You will work with them to fine-tune everything. Once the process launches, you will fulfill basically the role that syndicate guys have in placing equity / debt: organize roadshows / meetings / calls, and keep your distribution / sales guys organized and focused.

Even work on the secondary side is pretty light. Secondary models are very simple, and if you have had any experience working on M&A analyses, this will be a walk in the park. As a rule, sale processes and buyer due diligence are quicker and much less demanding than M&A processes. Generally, investors are looking at a portfolio of investments, which (a) negates some of the investment risk and (b) the GP already has a lot of existing DD and internal materials on their investments, so investors do not need to do anything from scratch. Also, end of the day, secondary investors are still only along for the ride, as opposed to being control investors that can directly affect the outcome of their portcos., so their work is primarily just trying to understand whether they can hit their minimum returns in a worst-case scenario. Even when we are running a GP secondaries or asset recap (i.e. selling a GP's position in a portco.), these are almost always minority stakes and / or venture investments, so investor underwriting is still pretty simple compared to traditional buyout PE.

Dealflow goes without saying. Even the larger independents have many more legacy relationships than the smaller players. Especially since you are just starting out in the space, unless you had a lot of sponsor coverage relationships before back in banking that you can leverage going forward, much better to go to the bigger platform first. A lot of GPs and LPs will come to your firm directly (given the PA space is much smaller than traditional IB), and you will be able to get a headstart on building your Rolodex, as opposed to likely having to hit the pavement yourself at the boutique. Perhaps even more so than IB, the PA space is very relationship-driven, both on the GP and LP side. The PFGs, especially the BBs, actually have the easiest time: lots of legacy relationships, but also lots of GP referrals from the IB side, and lots of LP referrals / cross-coverage from S&T. Senior guys there generally do not need to worry about hitting their minimum fee requirements for the year, even without having to go out and pound the pavement looking for deals.

Size is where the boutique might actually have the edge in terms of more interesting work. Smaller funds need more handholding, and you will likely have to work closely with them to craft their story and plan their fundraise (a lot more work preparing materials as well). At the PFGs and large independents, you generally work with reasonably sized MM funds and megafunds' non-flagship funds (they do not need help raising their flagships), and the partners there are almost always fundraising machines with full-fledged IR teams behind them. All of the materials are ready and immaculate, and all they want from your firm are your LP relationships - so you will reduced to a largely administrative role in coordinating their roadshows and helping your distribution team set up meetings with LPs. The work will be a lot more mindless and process-driven (similar to underwriting and syndicating for a large active issuer in DCM), but that is also a lot less work for you and higher likelihood of success, as well as the promise of consistent repeat business every 4-5 years when they come back to market.

Structure is also where it goes without saying. While I maintain that the work done by PAs is much easier than that in traditional IB, there is still a bit of a learning curve. Also given the process-driven nature of the business, it would be much better to be dropped into a system that works efficiently.

You actually will get more responsibility across the board at a PA. Teams are much leaner (i.e. only 2-3 people max on a fundraise / transaction, not counting the sales guys, but they really only handle the LPs), so you will get a lot more client responsibilities pretty early on, as long as you show that you are capable. I am currently the point person on nearly all of my transactions right now. Heavily dependent on the person, but I would say, from my own experience and from that of my friends, most senior people in PAs are more hands-off than in IB, where you might find a lot of execution MDs / Ds wanting to throw their weight around day-to-day. Most senior people on the GP or deal origination side only provide some light air cover when needed after they bring in the business, which is definitely a huge perk that I am looking forward to down the line. That being said, they still hop on plenty of late night calls given that capital raising is a global business (plenty of LPs everywhere around the world in all sorts of time zones).

Level is a tough one, but I would caution to be wary of any unwritten promises made by the boutique, either on promotion or on pay. That being said, promotions at PAs can be fairly unstructured (less so at the BB PFGs), and people can often get promoted well ahead of time depending on their performance, especially since everyone gets more responsibility at a more junior level. I have seen people make VP in 1-2 years, and VPs make Director in the same amount of time, even at the PFGs at Park Hill, etc. The flipside is also going to be true. You will see VPs and Directors that have stayed at their position for many years, whereas in banking, they would just be let go.

Exit ops are fewer than in IB, but not completely hopeless. For primary guys, FoFs, pensions, (re)insurers' investment teams, family offices, and other LPs are all fair game, where

On the secondaries side, you will get a little more diversity of opportunities. FoFs and all of those mentioned above are possible, as well as secondary investment teams (either dedicated secondary PEs or secondary teams at FoFs / family offices / pensions / SWFs). I have seen some head into corporate development / strategy, and some at the junior level head back into IB. Pay at secondary investors is also heavily firm-dependent. None of them will pay close to UMM or megafund PE levels (even if you join the secondaries team at a megafund), but the larger ones will pay similar to some MM PE funds: ~$120-150k base for an associate with 30-70% bonus; $180-240k base for a VP, with 50-100% bonus. Also unlike traditional PE, you can often make the switch even at senior levels (i.e. VP or above) to equivalent rank at a secondary investor.

For myself, this is already the exit option. I have a pretty clear promotion track and good rapport with my team. Overall pay is only a slight haircut to IB, while my hours are significantly improved, as mentioned above. I am building a good network with my GP clients and am familiar with pretty much most of the secondary buyers (not that many to begin with). Might consider jumping to a secondary investor if a good opportunity presented itself with a familiar client, but nothing set in stone here.

In conclusion, I would recommend you go to the larger firm. If you are concerned about the paycut, try to make a jump to a PFG at a traditional IB down the road. Reputation is everything in this space. Even though you will get more hands-on experience with smaller clients at the boutique, you will have a massive uphill battle to raise them money. This is not M&A where you run a process for a diamond-in-the-rough company and are able to attract the right buyers who are able to either turn it around or optimize the business. If institutional LPs are not familiar with the GP or the founders (especially if their fund is

End of the day, great job finding out about this space (i.e. PAs, LPs, secondaries, etc.) - it is very under-publicized, but a fantastic place to build a long-term career without the stress of IB / PE. Comp is going to be lower (at some places more so than others), but the lifestyle is a huge step-up. Genuinely curious as to what sort of experience these other posters had - I highly doubt any reasonable person will work IB hours for less pay, and PAs would not be able to keep anyone around. IBs already have trouble keeping people around despite the high pay.

 
  • Analyst 1 in CorpFin
Sep 27, 2020 - 6:23am

Hey, thanks so much for this! It is indeed under-publicized, but the space seems great for the work/life balance it provides and a great alternative to build a long-term career.

I am recruiting for PAs (think Lazard, Moelis, PJT Park Hill, Evercore), on the primary fundraising side. Final round at one, will be a case study (2-hour long), would you know what to expect / how to prepare for it? I am struggling finding information online and any advice is highly appreciated! 

 
  • Associate 1 in IB-M&A
Sep 29, 2020 - 2:27am

I did not recruit for the primary team, so I am just speculating here, but in my mind, they would likely provide you with an array of GP materials (track record, presentation, DDQ, etc.) and ask you to form an investment thesis on the hypothetical GP. Otherwise, they would give you a bunch of raw materials and ask you to put together a marketing presentation, but 2 hours seems a little short for that, so the former seems more likely to me.

 
  • Analyst 1 in PE - Other
Oct 14, 2020 - 5:58pm

Hey, super late to this thread but thought I could provide some color for whenever someone searches it up in the future. Contradictory to what you wrote, I'm a 1st year analyst out of school at an independent PA shop and comp is very comparable to the bank PFGs. 65k salary and a bonus that will range from .6 to 1.1 * salary, so 100-140k TC. Otherwise, super informative post.

I think when it comes down to it the operational structure of each placement business is what makes the difference. That is, complete separation between distribution and project management or a hybrid model where there is a natural progression from project management to distribution. From my experience in networking and interviewing, PFGs tend to have a much more silo'd structure between project management and distribution while independent shops are typically more integrated. This was the biggest selling point for me and why I chose an independent PA over a PFG. The industry is tight knit but growing so its quite easy to lateral if you are unhappy where you are

 
  • Associate 1 in IB-M&A
Sep 29, 2020 - 3:17am

It is going to be similar to traditional banking - hard to say what is consistent at the senior levels. Good MDs that can bring in business and sell consistently will make $1mm+ or even $5mm a year consistently, but everyone will have off years. In general, average pay at the senior levels (including at the independent PAs) is going to be consistent with that of other senior capital markets roles (ECM / DCM). Unfortunately, there are no placement industry equivalents to $10B+ M&A transactions, so the biggest placement agent rainmaker will never make what the biggest industry M&A rainmakers do.

Just some additional color, primary fundraising teams are usually split between origination / execution and distribution. The origination / execution guys fill a hybrid role that is a combination of capital markets origination and syndicate (i.e. they interface with the GP and manage the book), while the distribution guys are your salesmen. The credit for capital raised is going to be split fairly evenly between origination / execution and distribution. That being said, it is easier to sell several funds than it is to originate and manage the fundraising processes for several funds. So good distribution MDs in their best year will make more than good origination MDs in their best year, but they are also more subject to inconsistencies between years depending on the accounts that they cover.

Secondary teams are usually more origination / execution presence-heavy, in that a lot of them will work with both the client and the secondary investor(s). Sometimes, they will tap into the distribution team to make certain introductions, but they usually handle the "selling" process because they will know the portfolio(s) / asset(s) the best. So that is why secondary advisory teams usually make more than primary teams, because they do not often share fee credit with the distribution team.

Senior guys at the largest secondary PE shops will make similar to what principals / partners make at MM PE shops. Management fees are generally lower in the secondary space, so $10B+ secondary funds will not pay as well as equivalent PE UMM or megafunds, but they will pay similar to the next rung down of MMPE funds. Carry is usually the same, but the nature of secondary investing, which focuses on de-risked or lower risk underwriting, just usually yields lower returns than traditional PE.

Say one of your portcos. way outperforms at a buyout shop, and you get a 100%+ IRR at exit - you are looking at a nice bonus and chunk of carry coming your way. If the same event happened at a secondaries shop, it gets muted because you hold that portco. position as part of an investment into a larger portfolio of assets (which may not perform as well) - the payout is smaller. The flipside is also true, if, as a senior guy, one of your larger portcos. completely goes under with nothing left to salvage and nothing to show for it, you can be pretty sure you will likely be shown the door soon unless you had a previously impeccable track record. That is rarely going to happen at a secondaries shop - maybe one of your portcos. that you bought into as part of a larger portfolio investment goes under, but the rest of the portfolio performs well, you can still end up doing well.

So you can still make lower-to-mid 7 figures pretty consistently in secondaries PE as a senior guy (and it really is probably more consistent than in traditional banking or traditional PE, given the lower risk and less concentrated nature of secondaries investing), but you will never have the huge paydays that the buyout PE ballers at megafunds have.

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