Why Work for an LMM Firm?

A few questions for LMM guys.

  1. Why LMM?
  2. What made you apply for the current firm you work for?
  3. What do you like the most about the firm you work for?
  4. What do you dislike about the firm you work for?
  5. What kinds of perks/benefits would you take in exchange for lower cash comp? Equity/options? 
  6. If you were going to work for a new fund, what would you want to see before applying? Does possible instability scare you?
 

Not in LMM PE, but I own a company that operates in a niche LMM industrials space so I'm familiar with the buy-out guys trying to do roll-ups

At junior level I think there's sometiems opp for carry (to compensate for lower cash comp up front). At senior levels it's a combination of moving downstream from MM or MF for various reasons (think family etc). That's what I've seen to be most common

 
Most Helpful

I'll bite. I'll try to cover your questions in aggregate instead of line-by-line.

My big thing is autonomy. I gave up comp to come to my current role and gained flexibility in how I structure my time and what opportunities I pursue. I'm a natural skeptic / truth-seeker, so I have a high bar for convincing myself that an opportunity makes sense; once I'm convinced, I hate having to convince someone else (a partner, investment committee, LP) of the same. [Side note - I used to love this part, and I've just become jaded by years of disappointing conversations with people who ought to be able to ask better questions.] In my role now, there's a lot of trust put in me by our IC and investor base to just sort of do my thing, and that carries a lot of value to me personally.

There are plenty of people who have a similar freedom setup that aren't in LMM PE, so for others looking for the same, YMMV - but for me, the pathway to get to that autonomy faster was to go smaller / niche-ier.

I also felt that LMM is somewhere that I could be successful finding returns. We have some sourcing strategies and niche criteria that allow us to look at deals that are pretty off-market, and since I'm rarely the smartest guy in a room, deal pricing and structure is pretty much my dominant strategy for setting up returns in excess of risk. I can't buy a $25MM EBITDA business at the top of an auction and operate it better than the other 12 groups that bid on it, so I don't have any business playing in that arena.

I'd take equity/options in exchange for lower cash comp. I don't need a ton of cash comp - I have an inexpensive lifestyle and I get some piece of mind out of having enough monthly cash to cover my expenses, but that's about it. I think it's fun to live a comfortable, quiet life and occasionally (at bonus time or distribution time) get giant checks.

Instability isn't in and of itself bad - sometimes opportunity hides behind it. But I'd want to know the driver behind the instability. It would only scare me if I could get locked in a position that would be difficult to extricate myself from.

"Son, life is hard. But it's harder if you're stupid." - my dad
 

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