bhill020 Wrote: ------------------------------------------------------- > Gouman Wrote: > -------------------------------------------------- > ----- > > Is it not true that a lot of PE guys recruited > > from industry as well? For example, a fund that > > focuses on tech firms hiring a VP of finance > from > > a tech company. I was reading the The Deal, it > > mentioned a lot of PE guys get picked up in > this > > manner. > > > These people are recruited to senior levels (i.e. > VP, Director or higher), not Analyst / Associate > levels that people on this forum are gunning for. > > > Executives are recruited to (A) source new deals > through their vast network and/or (B) add value > and knowledge to existing portfolio companies in > their realm of expertise. Thanks, bhill020. I suspected this to be true. IMO this seems like as good way as any to break into PE. First off, there is far less barriers to entry gaining corporate general management and finance positions in the early years. Achieving VP or Director status is relatively easy, assuming your a hard worker, and have your MBA and or other credentials such as CFA. Lastly, your value added will be your successful experience in the trenches, putting out fires, managing cash through down cycles, forecasting demand, executing operating/expansion plans, and developing strategies. Particularly, if your not in a rush to break into the industry, the above mentioned entry route is probably makes the most sense for folks who don’t have the Top 10 university pedigree. Takes longer, but end up in the same place after every one figures out that sh!t doesn’t matter after 10+ years, or less. Anyhow, the hiring processes in competitive careers does not always make that much sense. Nevertheless, it is what it is.
Dont get it in your mind that it is too easy to become a VP anywhere…MBA, CFA, CPA, whatever, companies still prefer experience for the most part.
kevinf12 Wrote: ------------------------------------------------------- > Dont get it in your mind that it is too easy to > become a VP anywhere…MBA, CFA, CPA, whatever, > companies still prefer experience for the most > part. Don’t get it twisted, I’m well aware that senior corporate management jobs are competitive, and senior corporate executive jobs are even more competitive. Also, I agree, credentials with no experience means “jack”. However, the key word in my passage was “relatively”. Compared to PE or IB, breaking in, staying in and moving up the ladder is generally much easier in industry. IMO, credentials also have more value added in industry because less folks have them. With the exception of accounting departments CPAs, most corporate types I’ve come across don’t have any letters behind their names and are far less likely to have gone to grad school. In fact, every B-Schools placement numbers that I’ve ever looked (small sample bias – I know), about 40% of the grads went to financial services. This is probably a function, as you stated earlier, of financial services firms requiring an MBA as opposed to firms preferring experience over credentials on average. In closing, my original thesis is clear. The corporate environment is slightly less competitive than financial services (particularly IB, PE i.e. LBO, VC ) and this may be a severe understatement depending on who you ask. However, industry folks with their specific industry experience have been and will likely continue to be a feeder into IB/PE firms that focus on the industries which these people are drawn. The downside IMO, you might in your late thirties or early forties before you break out. But of your in no rush who cares. Again, I’m not saying the scenario above is easy, but surely realistic. Likely much more realistic than coming out of a less than top 5-10 undergrad or MBA with no transaction experience, paltry overall experience and severely limited or no connections.
I understand what you are saying…just in industry jobs it is more typical to stay put at the level you came in for long periods of time than not. Mostly, this is because you have much less turnover than professional services and other finance jobs. I agree though that it would take a little bit of time before moving over. The good thing is you could do this both from a finance role or an operational role (if you are moving to PE, VC, etc in a role where your operational experience could give them significant help on a target). This is actually something I think about as a possibility long down the road. I was considering to move to TS at the big 4 but got a promotion to be in charge of our Central/South America companies and quite like it much more than I expected. So for now I am content to stay in industry even when I thought only 1 year ago I wanted to move more towards the transaction based experience. But consistent with your timeline, I am 27 so for me to be a VP even in best case it would be 30 years old, and then I would need significant experience there to count for anything. Again, I actually like my job far more than expected so no rush for me. CPA though is in a lot of companies a requirement for the upper level finance roles. At least, most of the ones I have seen. I think age and custom plays more a role in less of the higher ups not having a grad degree or just MBA in general. Since my thoughts are experience is a premium in industry, a lot of the people at the top are much older and it was much less common in their time to get MBA or grad degree.
Agreed, most senior managers in industry today are from a time when MBAs were less of a “must have” credential. CPA is the dominant certification in corporate finance. Fortunately as the financial landscape becomes more dynamic there is more distinction between finance and accounting — making finance credentials like CFA, MSF, MBA fin, more substitutable, and sometimes more relevant in industry than CPA e.g treasury, M&A, and FP&A roles. Still, on a side note, I don’t see why there is such a bias favoring CPAs as CFOs. Since I refuse to do CPA, I will likely never be in competition for more than a senior FP&A or other senior finance role if I stay industry. Back to our discussion. Like yourself, I’m 26 (27 in August), doing CFA obviously and applying to a couple of joint MBA/MSF programs. None are top five, two (UCLA, USC) are solid however. Nevertheless, there is no guarantees I will break out anytime soon. Nevertheless, I realize as time passes the rules of the game change, what matters to employers will change, and if one is positioned correctly, making the transition is highly plausible. At this point, thats my game plan coming from the non traditional background of Top 5 undergrad—>Two years IB/PE---->Ivy MBA …you know the sequence. Anyhow, for the time being I’m focused on positioning, networking, and credentialing. So far so good. I have the equivalent of a front office role in corporate finance, except I focus solely on one company, hopefully passed CFA and the kicker — My mentor, who has the above mentioned traditional background, and has been wildly successful, has said if I pass level one and stay in my current post for at least a year he will start shopping me around to his contacts which include among others a SoCal based PE shop and a bunch of asset management firms. So I’m keeping my fingers crossed for that.
Sounds like you are in a good position as is though, so it makes it easier to be in a spot you can live with and/or enjoy. I think you are on the right track. I do the same in that I stay in contact with my friends in M&A and consulting jobs as they are networked all-over. So I am doing similar to you in the networking sense, with the mindset of I never know where I may want to end up down the road (and what my choices will be). I have a masters in finance (from run-of-mill school) and am not likely to do an MBA as I have a hard time to justify it for myself. I have a lot of stuff on the side I do (I have my own business, do some contract M&A work, and tutor MBA students for finance and accounting…so I like having a job that gives me this time) and I cant see making things makes sense, as long as I somewhat enjoy my work. But the networking is easy…go to lunch, ask questions, send emails, get gifts, etc. So from a job point of view I will just keep on doing that and working on CFA (level 1 completed past Dec) and hope that down the road that, experience, and CPA, will help if I need a change! Best of luck to you. Seems like you have put a good deal of thought into your plans.
Hi All, I have a career related question as well, but instead of starting a new thread I might as well just ask here since it is somewhat related. I am currently working as an analyst in a fairly new and small VC fund (pre-MBA education wise), but I am not very certain where my career path will lead in the future. I know that i want to either continue in the VC field at a larger, well-known fund, or move onto the buy-out PE stage. Is it possible to break into larger funds without bulge-bracket banking experience, or will I need atleast a good MBA to make the switch (though I would like to avoid going back to school if possible)? Another question is how long should I stay with my current firm for future employers to perceive that I have enough transaction experience?
One thing should be clarified in that people tend to overestimate the number of people that move from industry into private equity. First off, you really have to be a leader in your field with a couple of decades of versatile industry-leading experience, and also have to have had some experience in developing and growing companies. Then, within this class of people that have outstanding industry experience, most of them join PE firms as operating partners as opposed to transacting partners. The vast majority of investment/transaction professionals came from a finance background, most of which hailed from investment banking - probably close to 95% of them. So yes, while people do move from industry into PE, it’s not that easy, and most of them end up staying on the operating side (i.e. dealing with portfolio companies, advising on potential acquisition targets in a pre-LOI or exclusivity phase, and so forth) rather than the transacting side. It’s important to differentiate between the two sides of PE because the roles are quite different and can be quite divergent as well, especially post-close. The other thing I’d want to highlight is that while PE professionals care a lot about “industry expertise,” there are plenty of ways for us to get smart on a business or industry without having to hire someone. Some of these things include tapping into our existing networks of buy-side and sell-side contacts, speaking with outside consultants, or finding industry experts through some independent research firm like GLG. True, it’s not the same as having someone on board full-time; but usually PE firms are keen to keep their headcount as lean as possible because the more people we hire, the smaller everyone’s slice of the pie gets, unless the new operating professional has such versatile industry experience that we really feel they’d be able to provide valuable insight on an ongoing, consistent basis (rather than just some niche business or product). Hope that clarifies things a little – I think there is a fair amount of speculation and misunderstanding about the career paths leading to PE as well as the different roles within a PE firm, and it’s important to understand these things accurately, especially if you are seriously thinking about wanting to move to PE at some point. In fact, the best advice I can possibly give you is that if you’re serious about PE, get into it as soon as you have the opportunity.
Numi, your becoming a rather predictable poster. Aside from knowing you’ll seize every chance to litter your post with reference to your past work in research and now PE, I knew you would be the one to downplay the plausibility of making the move to PE from industry and overemphasize the difficulty of getting in. I imagine this serves your need to separate yourself from “us common folk” who have not broken into our target careers. Not meaning to be rude, but your post doesn’t really clarify anything. It essentially re-iterates what has already been stated. Everyone knows the typical route into PE is not via industry, it has already been implied you’d have to be good i.e. achieved VP, Director Status), and nobody suggested making the transition would be easy, just a realistic alternative to the prototypical route. I disagree with your statement that one would have to be in industry for decades to make the transition, that’s a baseless exposition. I’m sure that is how the cookie crumbles for some folks, but it is no litmus test to transition. Obviously, a person drawn form industry will be less focused on the transaction side of the business, duh. That doesn’t mean there would not be any overlap or involvement. To suggest so is preposterous. Different shops have different protocols. Besides someone coming from industry could have been an M&Aofficer with plenty of transaction experience doing strategic deals as opposed to buyouts or private placements. Anyways, look, you said it yourself there are plenty of ways to “get smart” about an industry. I’ve concluded that based research and being a good friend with the chairman of a PE shop , that gaining entry can take many forms and none are “easy”. There are more and less traditional methods of entry. The larger the firm, and the more established the firms targets, the more likely a traditional method is required and vice versa. PE is a broad term encompassing VC, LBO etc. In the VC space your more likely to gain entry as a former industry manager. If the shop is focusing on more well established firms doing risk arb, or LBO type stuff, obviously, there will be more bankers. But, this is still a bit too general for reality in the trenches. For example, my firm, an industry leader, was just bought out a year ago by a four man team consisting of a lawyer, a former Lehman banker, a pro athlete, and a former .com executive, thats it. The firm I’m hoping to get an interview at was an LA bond shop that morphed itself into private equity shop. My mentors firm, is run by a bunch of former PMs and securities analyst who pooled their funds and milked their clients to get their PE biz up and running a decade or so ago. Many of the middle market firms I’ve profiled are basically former industry executives who set up shop and do deals. Of course, many are just guys who left IB “to do their own thing”. All of this just leads me to believe transitioning can be done many ways. Like most things in life, it’s who you know, not what you know that will be the edge you need to succeed. If you have the traditional pedigree, you’re typically grandfathered into a network. If not, you have to seek people out who are willing and able to help you. There is no easy way to get in, except maybe having a couple million to pitch in. But there is a plethora of hard ways excluding i-banking. Frankly, Numi, you of all people should know this since you didn’t even transition from banking. I suspect equal or more folks are drawn to PE from industry than equity research in any given year. So, kudos to you for pulling it off. Okay, that’s it; I’m burnt out on this thread. Numi, you can proceed to tell me about myself, and/or how off I am in your usual passive aggressive writing style if you wish. For the sake of argument, as O’Reilly would say “I’ll let you have the last word”. I’m done with this thread. Late.
I’ve always been in the habit of telling things like the way they are, which is why you probably find my style to be “predictable”. On that line, I think there was a fair amount of speculation on this board about what PE is and what it isn’t, and I felt that certain things that were not accurate. However, my comments were not directed at you, though perhaps you felt it was “passive aggressive” because they were somehow asynchronous with whatever you wrote – but to be frank, I didn’t have time to read all or even most of your posts so I can’t say I’m exactly up-to-date on your life story, who your mentors are, where you work, or whatever. I think most people who read my posts would agree that I try to be supportive and encouraging of whatever their career goals are – and while I’m pretty up front about what the challenges are, I try to provide useful feedback wherever possible to help others achieve their career aspirations. My post wasn’t meant to offend anyone much less yourself, and I don’t really see how it could even be taken that way. However, you can take it however you want. Some people find what I say constructive and helpful, and I feel that most people can appreciate that I’m perfectly able to speak about both my accomplishments and shortcomings equally in painting a “real life” picture of what working in finance is like. Still, others like yourself seem to take them personally. But again, that’s entirely your prerogative – you’re free to ignore posts if you find them so objectionable.
I found numi’s post informative. As well as you several posts preceding it.
Hi CFAAtlanta, nice to see you on this board again. Been a while – how’s everything going? How was Level III?
I work on the sell-side and found numi’s post to be absolutely spot on with what I observe in the PE side on a daily basis, especially the Northeast U.S. shops. There will always be the small shops set up by a few guys with cash “going out on their own”, but numi’s comments accurately reflect the >$1b shops that I have dealt with.