What does a "research analyst" do at a PE firm?

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As stated in the title? What does a research analyst do at a PE firm. The job description to me essentially sounds like market research in support of potential investments whether sourcing or post-investment execution. Anybody familiar with such a role? Is there any feasible path to the investment team (highly unlikely, I know)?

Comments (9)

 
Jan 15, 2020 - 4:49pm

Whether it's a feasible path to the investment team is highly dependent on the specific firm. So if you're interviewing them, you should certainly ask about the career path with the firm.

Research analysts usually support some sort of direct sourcing program in my experience. Like finding the proper contact to reach out to or screening all the companies within a specific thesis/industry and picking out the ones that appear on the surface to fit whatever the firm is looking for.

 
  • Associate 2 in ER
Jan 15, 2020 - 5:26pm

Yea this definitely sounds like what I was thinking. Kind of a business development role it seems. What is the typical career path with these roles? Obviously getting a spot on the investment team would be wonderful but is not something I would count on.

It definitely seems radically different than what I am doing now (fundamental equity research).

Array
 
Jan 15, 2020 - 9:39pm

I'm not exactly sure (I've been at 2 direct sourcing shops and none had research analysts but i have seen shops that do have them). I think it goes something like research analyst to sourcing associate and then after that it'll vary based on the firm. It could get more cross functional where you're starting to lead deals/diligence or you could just end up as a pure BD guy.

 
Most Helpful
Jan 16, 2020 - 12:56pm

My shop has both research analysts and BD / sourcing people and they do a very different job. The research group usually handles more long-form type research to develop thesis around investments in new verticals / industry / geographies as well as supporting diligence efforts. While their research will lead to the identifications of targets, reaching out and actually sourcing deals falls to our BD people. To be fair, I feel like a significant portion of their time is spent doing analysis to make us appear smart / ahead of the curve to our LPs / potential investors and the remaining is spent producing bedtime reading for partners to help them understand or get up to speed on certain verticals, industries, etc. Sample size is small, but our research analysts have generally come from either market research, consulting or equity research. Since they don't really get real exposure to the deal process, I don't see how can a research analyst make the switch to an investment role, but other shops might have a different view.

 
  • Associate 2 in ER
Jan 16, 2020 - 2:15pm

Any clues on career progression/comp? Definitely not surprised that they don't typically transition to the investment team.

Array
 
Jan 16, 2020 - 2:37pm

Career progression is a an interesting one and I think opportunities will be closely correlated with fund size as bigger funds can support bigger research team with a varying level of seniority which would obviously create more room to grow. We only have 2 ppl doing research so we hire them knowing that they will hit a ceiling at some point and will likely look for other opportunities. One guy left last year to join a good AM shop and it's our only "exit" so far, the guy had ER experience before he came FYI. Not sure about exact comp, but think its in the mid-high 100s all-in range for candidate with 2-5 years experience.

 
  • Associate 2 in ER
Jan 16, 2020 - 4:07pm

Interesting, thanks for the color. Comp doesn't seem too bad. Was the role in AM a fundamental research role? What are the hours like? Currently in ER and this doesn't seem like a bad next step for me. Just want to make sure I have my bases covered.

Array
 
Jan 16, 2020 - 4:15pm

Yes fundamental research. I'm not 100% sure about the hours to be honest, they generally are still there when I leave, but until when, I can't really say. I think this will be very fund specific and probably tied to comp to some extent (ie. the higher the comp, the higher the expectations in terms of output).

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