Am I being greedy? LMM to MBA
I'm wrapping up two years at a new fund (joined as fund I was raised, $100K plus giving up shadow equity), hoping to see an accelerated track to VP and potentially near-term path to a bit of carry.
Fast forward two years and the learning experience / culture has been great. However, I've been frustrated at how opaque the messaging on trajectory has been. I understand being a new fund and having to "figure it out", but given we are nearly done raising another fund, I tend to believe they have to have a sense of the fees they'll be working with over the next 4-7 years, and therefore have a sense of team structure, comp package, etc.. I've been consistently told that they'd like me to stay, but now the latest guidance is for another 2 years as senior associate (they've made it clear that carry is a VP-level form of compensation). That would mean I would be getting essentially no credit for my year from my prior fund, on top of going through a pretty hierarchical 4-year associate program all while getting lower cash comp, no carry, and no coinvest. Given the lean team, I've spent two years managing the processes of several deals with no to minimal mid-level support, driven thesis development work / sourcing, attended industry conferences, and helped with fundraising (material creation, speaking to LPs, etc.). That's all been an amazing experience that I'm grateful to have had, but also a lot of sweat equity and rough hours that has added to the pains of not being given an accelerated track or any economics.
I've been fortunate enough to have been accepted into Wharton's MBA program. Originally, I had no intention of going to b-school, but applied last minute to HSW as I saw the above play out. I'm preparing for a discussion with the partners soon and want to explore the idea of coming back with a guaranteed title and carry. In the event that's not a possibility (they'd have to make an immediate hire, and have also started doing on-cycle recruiting for new associates so that they will have an actual backlog of talent 1-2 years out), I was wondering if the risk to breaking back into PE after coming from a true LMM is just too much. Am I being greedy and asking for more than my share here / would be stupid to chance it by going to b-school? Given I'd be looking to recruit back into the same sector afterwards and that I also have the benefit of an H/S undergrad, I feel a bit conflicted as to whether I'm being a bit too unrighteous in leaving my seat because of my dissatisfaction with the career track timing. Any advice would be much appreciated!
Assuming you have made material contributions across several deals, at a fund of that size you should be receiving at least some carry to offset what we can assume is below-market cash comp even at a SA position...
Can you give us some more information?
How many Partners / Principal / VP do they have to feed with the $250M?
How many other A/SA are at the firm? Do you have any leverage in the situation or is there already a next man up waiting in the wings?
How many years out of school are you?
Tier 1 city?
Thanks - it’s a Tier 1 city (SF/NY). Team is 2 partners, 1 VP, and 4 associates. I am the most senior having 2 years of BB IBD experience, 1 year of MM PE experience, and ~1.5 years at this fund. Two associates have 1 year less experience than me (both did PE before), and one fresh associate from IBD.
I think I’ll have some leverage, although I’m a bit of a guinea pig in that they haven’t done a real promotion cycle yet, so hard to say. They’ve done well with our current hires (all the associates other than the first year come from UMM funds and joined with some experience, although I know we all were expecting some carry and certainly not a 4 year program), and so hard to say if my discussion will cause the partners to consider that they may have to give up some economics, or if they hold firm and believe they can continue retaining solid talent.
As I was looking into Business School I had the same question as you. Coming from a no-name LMM/MM fund to a non H/S MBA program, would it be possible to make it back into PE if that's what you want to do.
I talked to students with Pre-MBA PE experience at all of the MBA business schools">M7 programs (sans H/S) and the anecdotal feedback I received was that:
and
and
that you will be able to find some job in PE, post-MBA, but most likely at a MM fund.
I feel like there's a lot of literature out there that talks a lot of about how impossible it is to find a Post-MBA seat in PE/VC, and I referenced that on nearly all of my calls. Every student I spoke to (all of whom had PE or some type of investing background and were aspiring to make it back into PE/VC) said that almost all of their classmates had found jobs or were confident in finding something post-MBA and that only a few struck out. They all did say that without Pre-MBA PE experience, that it was nearly impossible, but for those with experience, they had a significant leg up. They also said that the big cutoff is for Megafunds, which are mostly closed off unless you're at HSW.
Again, I haven't gone through the process, but this was the anecdotal info I received from Wharton, Kellogg, Booth, and Columbia students. Take it with a grain of salt.
Given you're accepted to Wharton, it might help if you did some digging on your own. Reach out to member of the PE club and see what they have to say.
On your situation in general, they know you have B-school in your back pocket right? They had to have written your recs. Have you had a conversation with them? I feel like now is the time to have an honest conversation about how you've been with the firm since the beginning, have done everything they've wanted, and would like to stay at the firm, but if you're just going to be slotted into the standard associate track and not given credit for both your prior PE experience and the risk you took by joining the firm early (and grinding it out in the early stages) that it makes more sense for you to do an MBA, especially going into a recessionary market.
I feel like if you position it as "I want to stay, but I need to know what the future is going to look like and it needs to be something along the lines of xxx for me to be excited" then you could push them on it without making it as much of a promote me or I quit type of thing.
Balance being grateful for the experience/opportunity with making sure you're looking out for yourself. To me, you should be an equity holding Senior Associate at this point and if not now, the promotion should come in the next year, at the latest. You're at 3 years of PE experience and 2 with the current fund, where you've presumably been one of the few juniors that has helped them build the firm. If they want you to stay, it shouldn't be hard for them to give you the SA title as a token of your hard work as well as equity to compensate for what I assume is a below market pay structure given the size of the firm. From Senior Associate, they should have a path for you to be a VP in the next ~2 years, which would make the B-school decision more difficult.
As it stands now, you could go to business school, get a post-MBA VP role with carry in two years and actually be ahead of where you would be if you stayed at the firm.
Thanks for the feedback, and glad to hear that it sounds like the bloodbath of breaking back into PE is a little bit exaggerated depending on your goals. Best of luck with your situation as well!
I totally agree with your assessment and that’s probably how I’ll position it. They do know I’ve got the acceptance but candidly, when I had spoken to them about applying it was more from the framework of thinking there could be value in going to get an MBA and coming back, but that I was truly undecided. At the time, I would have said that unless I got into H/S, an MBA probably wouldn’t make sense as I was in a role and career track that I genuinely enjoy. However, after yearend comp / track discussions, that has changed. It’s been a bit rough because I feel a little slighted - the culture, experience, work has all been exactly what I wanted in a career track and otherwise fulfilled what I wanted when taking the gamble to leave my last fund, but obviously both pay and title are a big part of that that I can’t easily ignore.
The only undeniably bad thing I can see in their behavior is putting you on a four-year associate schedule when you already did one year at another firm.
This is the telling factor to me. You are getting every single hard-to-get thing. Good people shaping a good environment which lets you do good work. It's really crummy that you aren't getting the easy-to-get things.I have a straightforward suggestion. Have an honest conversation with them using those words verbatim after your hyphen. Praise them for the things you love, and paint it as a challenge you're grappling with. Use explicit or emotion-laden words to make them feel things. "I'm not heedless or rash, I have been wrestling for a few months with a rational assessment of the risks I accepted leaving my prior role for this one. It's been so gratifying seeing so much of what I hoped for prove to be true, and at the same time confusing to see wartime service get no credit."
See if you can get them to agree to giving you the title promotion after three years' total there. Be direct: ask what areas you have failed to demonstrate that level of performance in. An ideal outcome might be highlighting that they're not judging you on your merits as much as on a dogmatic notion of progression. If you can help them to that realization gracefully, you may be able to steer them away from that mistake.
Your goal outcome should be a Vice President title after four years in private equity. If they won't give it to you, you can get it elsewhere.
People have begun discussing a bit more candidly on these forums the growing gap in perception Wharton is facing relative to HBS and GSB. I always take pains to laud the school for its excellence. I think it's possible to do that and also state the fact that a lot of candidates are skipping enrollment altogether if they can't get into the other two and several of the very loftiest firms narrow the pool they like to pluck from.
I think you skip a lot of that given your undergrad degree, but I'll reiterate that to maximize your success in recruiting you want to be at one of the other two.
I would not recommend matriculating at business school this fall.
The biggest value the whole thing offers is the deep camaraderie and connection you'll enjoy with all your classmates. If school is remote the first semester or year (who knows how they'll do it until there's a vaccine), you lose a lot of that.
Secondly, you'll probably agree with me that if your application weren't rushed you'd probably have fared better with the other schools. Most essays that personal (where I am now, how I got here, where I hope to go later - based on the common drivers I choose to highlight for you now plus the unique factors available through the school) benefit from a long bake time.
All in all, I think you should have the conversation you're planning for.
You aren't unreasonable, but speaking frankly, it's a reach. It's defensible and you aren't crazy for asking for it, but getting the title you want now is unlikely. Vice President is quite uncommon after five years of total experience / three in the industry.
A good outcome would be them agreeing to one further year as an associate. If they won't give you Vice President after three years at the firm and are adamant about two further years, I'd recommend re-applying in R1 this fall.
You'll know your admission decisions over the holidays. You can then decide whether wherever you got in is attractive enough or whether you want to begin interviewing for a Vice President role elsewhere.
Good luck. I'm sorry for how dogmatically they're approaching this. It's not surprising. A lot of guys get so hungry to really eat on their own for once yet somehow forget that anyone who joins them on that quest subscribes to the very same logic.
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