Private Equity Exit Opportunities: What to Do After Private Equity
This article explores the various career paths available after working in private equity, including pursuing an MBA, joining hedge funds or growth equity firms, or starting your own company. Each path offers unique challenges and opportunities for professional growth.
Private equity offers a unique career path, but there are various reasons why individuals choose to leave the field. It could be due to the demanding nature of the work, the desire for a new challenge, or simply wanting to explore other industries. Whatever the reason, this article will delve into the next steps you can take to continue your professional journey.
From pursuing an MBA to exploring hedge funds, growth equity firms, or even starting your own company, there are a myriad of opportunities waiting for you. Each option presents its own set of advantages and challenges, providing you with the chance to grow and expand your skillset.
So, if you're ready to take the next leap in your career and explore what lies beyond private equity, read on to discover the potential paths and possibilities that await you.
Key Takeaways:
- Leaving private equity offers the opportunity for new challenges and growth.
- Exploring various exit options can help you find the right career path.
- Pursuing an MBA and returning to private equity is a common choice for many professionals.
- Joining a hedge fund, growth equity firm, or venturing into credit can offer new perspectives.
- Consider exploring family offices, fund of funds, or corporate development roles in portfolio companies.
Why Leave Private Equity?
Despite the allure of private equity and average salary of $250-400k for Senior Associates, many professionals choose to leave the industry and explore other career opportunities. There are various reasons why individuals decide to move on from private equity, including factors such as personal preferences, career advancement prospects, and the work environment.
Private equity can be demanding and intensive, requiring long hours and a high level of commitment. Some individuals may find that they are not able to maintain a healthy work-life balance or that the job does not align with their long-term career goals. In such cases, they may choose to explore alternative career paths that provide a different work environment and better work-life integration.
An individual's experiences and preferences may also play a significant role in their decision to leave private equity. While some professionals thrive in the fast-paced and high-pressure environment of private equity, others may find it stressful or unfulfilling. They may seek careers that offer more flexibility, creativity, or a broader range of responsibilities.
Furthermore, private equity is known for its unique work culture, which can differ from other industries. The hierarchical structure, focus on financial performance, and emphasis on short-term financial gains may not align with the values and interests of all professionals. Some individuals may find that they are better suited to work in industries that prioritize different values such as innovation, social impact, or collaboration.
It is essential to recognize that leaving private equity does not imply a failure or lack of success. It is simply a personal choice that reflects an individual's desire for a different career path or work environment. Exploring other opportunities can lead to new challenges, professional growth, and increased job satisfaction.
Private Equity Exit Opportunity #1: Do an MBA and Return to Private Equity
For professionals seeking private equity exit opportunities and a chance to switch industries, pursuing a Master of Business Administration (MBA) can be a strategic move. While it may not be an entirely new career path, an MBA can provide a platform to return to a private equity career with enhanced skills, knowledge, and a broader network.
Individuals with prior private equity experience have a unique advantage when pursuing an MBA. The combination of practical experience in the field and a comprehensive business education equips them with a strong foundation for success in the private equity industry.
Returning to private equity after completing an MBA can offer several advantages. Firstly, it provides an opportunity to switch industries or firms within the private equity field. The diverse coursework and exposure to different business functions during an MBA program can open doors to new sectors and roles within the private equity landscape.
Moreover, an MBA can help individuals develop essential skills such as financial analysis, strategic thinking, and leadership, which are highly valued in the private equity industry. These skills can enhance decision-making capabilities, deal evaluation, and portfolio management, contributing to a competitive advantage in the field.
However, it is essential to consider the potential drawbacks of pursuing an MBA as a path to return to private equity. One significant consideration is the high cost associated with obtaining an MBA degree. For example, the average MBA program costs $63,000 but top-tier programs may cost around $125,000 a year. Fees, living expenses, and the opportunity cost of not working for a couple of years can result in a substantial financial burden.
Additionally, the return on investment (ROI) of an MBA needs to be evaluated carefully. While an MBA can open up new opportunities and lead to higher-paying positions, it may not guarantee immediate or substantial returns. It is crucial to weigh the long-term benefits of an MBA against the short-term financial sacrifices.
Private Equity Exit Opportunity #2: Join a Hedge Fund
Joining a hedge fund is a popular choice for individuals seeking to transition out of private equity and explore new opportunities. This career move allows professionals to shift their focus from the administrative aspects of private equity to a more hands-on approach in investment management.
Hedge funds offer a dynamic and fast-paced environment, providing the chance to work with various asset classes and investment strategies. By joining a hedge fund, individuals can leverage their private equity experience and apply their investment banking skills to generate substantial returns for investors.
One of the key advantages of joining a hedge fund is the ability to see real-time results of investment decisions. Unlike private equity, where the outcome of investments may take several years to materialize, hedge funds offer the opportunity to witness the impact of investment decisions on a more immediate basis.
It is important to note, however, that not all hedge fund types may align with an individual's career goals or skill set. Specializing in specific investment strategies may limit future exit options, so choosing a hedge fund that aligns with long-term career aspirations is crucial.
| Aspect | Private Equity | Hedge Funds |
|---|---|---|
| Investment Focus | Long-term investments in private companies | Short-term investments in various asset classes |
| Investment Horizon | 3-7 years | Short-term, ranging from hours to several months |
| Risk/Return Profile | High risk, high potential return | Varies based on investment strategy |
| Investment Strategy | Value creation through operational improvements | Diverse investment strategies, including long/short, event-driven, and global macro |
By carefully evaluating the benefits and considering one's long-term career objectives, joining a hedge fund can be an excellent private equity exit opportunity. It allows individuals to apply their investment banking skills in a new context, work with different asset classes, and experience real-time results of investment decisions.
Private Equity Exit Opportunity #3: Join a Growth Equity or Venture Capital Firm
Joining a growth equity or venture capital firm can open up new private equity exit opportunities for individuals looking for a more qualitative direction while still working on deals. These types of firms focus on investing in growth industries such as technology and healthcare, creating exciting prospects for those interested in these sectors.
When you join a growth equity or venture capital firm, you have the opportunity to invest in companies based on extensive market research and the qualities of the company founders. This qualitative approach allows you to not only analyze financials but also evaluate the potential of visionary entrepreneurs and disruptive technologies.
One of the benefits of joining a venture capital firm or growth equity is a potentially lighter workload compared to private equity. While compensation may be lower, the hours are typically more manageable, allowing for a better work-life balance. This can be particularly appealing for those seeking a change from the demanding nature of private equity.
It's essential to consider the nuances of the growth equity and venture capital industries before making a decision. Understanding the key differences between these sectors and private equity is crucial to aligning your career goals and interests. Additionally, researching and targeting firms that specialize in the industries you are passionate about will increase your chances of finding the right fit for your next career move.
Private Equity Exit Opportunity #4: Move Into Credit, Such as a Mezzanine or Direct Lending Fund
Moving into credit, such as mezzanine or direct lending funds, can offer exciting private equity exit opportunities for individuals seeking a change in their career trajectory. These roles provide a unique blend of deal-oriented work and a focus on analyzing loan structures and making investment decisions.
Within mezzanine and direct lending funds, professionals have the opportunity to review financial documents, assess creditworthiness, and negotiate loan terms. This transition allows individuals to leverage their private equity experience while gaining exposure to a different aspect of the investment landscape.
Mezzanine funds typically offer a more flexible and creative approach to financing, as they provide subordinated debt with equity-like features. This allows professionals to participate in the growth potential of the companies they invest in. On the other hand, direct lending funds focus on providing senior secured loans, offering stability and consistent cash flows.
By making the move into credit, individuals can gain valuable experience in understanding the credit risk landscape, structuring loan deals, and actively managing a portfolio. These skills can be highly transferable and attractive to future employers, further expanding career opportunities.
It is important to note that while credit roles may involve a shift in responsibilities compared to private equity, they can still provide a dynamic and intellectually stimulating environment. The analytical skills honed in private equity can be highly valuable in assessing credit risk and making investment decisions.
However, individuals considering a move into credit should also take into account the potential limitations of specializing in credit investing. The exit opportunities from credit roles may differ from those within private equity, especially when considering moving to industries that may require a different skill set.
In conclusion, moving into credit, such as a mezzanine or direct lending fund, can offer enticing private equity exit opportunities. It allows professionals to leverage their deal experience while developing skills in credit analysis and investment decision-making. By carefully considering the potential limitations, individuals can make an informed decision about the next step in their career journey.
Private Equity Exit Opportunity #5: Join a Family Office or Fund of Funds
If you're looking for private equity exit opportunities that offer exposure to the industry without the demanding hours and stress, joining a family office or fund of funds could be an attractive option. These roles provide a unique opportunity to work closely with senior professionals in the private equity field while experiencing a more balanced work-life schedule.
Family offices are private wealth management firms that handle the financial affairs of affluent families. Many family offices not only invest in various asset classes but also have direct investment arms that participate in private equity deals. By joining a family office, you can gain valuable exposure to private equity investments and the larger financial ecosystem.
Fund of funds, on the other hand, are investment firms that pool capital from institutional investors and individuals to invest in a diversified portfolio of private equity funds. These funds analyze specific deals and may also participate in co-investments alongside the underlying funds. Joining a fund of funds can provide you with a comprehensive understanding of the private equity landscape.
One of the significant advantages of working in a family office or fund of funds is the reduced hours compared to traditional private equity roles. These positions often have a more relaxed work environment and offer a better work-life balance. This can be appealing if you prioritize personal time or want to pursue other interests outside of work.
Considerations
While joining a family office or fund of funds can be a great career move, it's essential to consider some factors before making a decision. First, it's important to note that these roles may offer reduced exit opportunities compared to traditional private equity firms. If your goal is to eventually join a portfolio company or start your own business, this may be a limitation.
Additionally, family offices and fund of funds may have different investment strategies and industry outlooks compared to dedicated private equity firms. It's crucial to evaluate whether their investment philosophy aligns with your long-term goals and interests in the private equity space.
In conclusion, joining a family office or fund of funds can provide exposure to private equity while offering reduced hours and stress compared to traditional private equity positions. However, it's crucial to consider the reduced exit opportunities and potential differences in investment strategies when evaluating these career options.
Private Equity Exit Opportunity #6: Join a Portfolio Company in a Corporate Development or Strategy Role
For those looking to transition out of private equity, joining a portfolio company in a corporate development or strategy role can offer exciting new challenges and opportunities. These roles involve working internally within the company to identify and execute strategic initiatives that drive growth and maximize shareholder value.
In a corporate development role, you will play a crucial part in evaluating potential acquisitions, joint ventures, and partnerships that align with the company's strategic objectives. By leveraging your private equity background, you can bring a unique perspective and valuable deal-making skills to the table.
Similarly, in a strategy role, you will be responsible for developing and implementing long-term plans to position the company for success in a dynamic market environment. Your ability to analyze market trends, identify growth opportunities, and formulate strategic initiatives will be instrumental in driving the company's performance.
While compensation in these roles may be lower compared to traditional private equity positions, they often offer a better work-life balance and reduced levels of stress. You may have the opportunity to work more closely with the executive team and have a direct impact on the company's strategic direction.
However, it's important to be aware of the limitations of these roles in terms of career advancement and potential future exit options. Moving back into private equity or transitioning to a different industry may not be as straightforward compared to other exit opportunities. Therefore, it's crucial to carefully evaluate your long-term career goals before pursuing a corporate development or strategy role in a portfolio company.
If you thrive on working in a dynamic and fast-paced environment and enjoy being deeply involved in shaping a company's future, joining a portfolio company in a corporate development or strategy role can be a fulfilling career move after private equity.
Private Equity Exit Opportunity #7: Start a Company
While relatively uncommon, some individuals do leave private equity to start their own companies. This path requires a significant amount of risk and may not be financially advantageous compared to staying in private equity. However, for those with a strong entrepreneurial spirit and industry expertise, starting a company can offer a unique career path.
Entrepreneurship holds the potential for greater autonomy and the ability to pursue one's passions. It allows individuals to build something from scratch, leveraging their experience and connections gained in private equity to create a successful venture. Moreover, starting a company can provide the opportunity to have a larger impact, not only on the business but also on the industry as a whole.
When considering entrepreneurship as an exit option, it is important to carefully weigh the potential risks and rewards. Starting a company requires extensive market research, strategic planning, and securing adequate funding. It also entails the responsibilities of managing operations, finances, and personnel.
90% of startups fail, however, for those willing to take on the challenges, starting a company can be highly rewarding. It offers the chance to steer the direction of the business, take calculated risks, and potentially create significant value.
Examples of Successful Entrepreneurs from Private Equity Backgrounds
There are several notable examples of individuals who successfully transitioned from private equity to entrepreneurship:
- Jeff Bezos: After working at D. E. Shaw & Co., Bezos founded Amazon and revolutionized the e-commerce industry.
- Bill Gurley: Gurley transitioned from private equity to become a venture capitalist, investing in successful start-ups such as Uber and Snapchat.
These examples highlight how private equity professionals can leverage their knowledge and expertise to create successful companies across various industries.
| Advantages | Disadvantages |
|---|---|
| Opportunity for greater autonomy and independence | Higher financial risk compared to staying in private equity |
| Potential to create significant value and have a larger impact | Requires extensive market research and strategic planning |
| Ability to pursue one's passions and build something from scratch | Responsibilities of managing operations, finances, and personnel |
Starting a company after leaving private equity is not a decision to be taken lightly. It requires careful consideration of personal goals, financial resources, and industry dynamics. However, for those with a strong entrepreneurial drive and a willingness to take on the challenges, starting a company can be a rewarding and fulfilling career move.
Before you go...
As you consider your next steps after private equity, it's vital to explore all available opportunities to find the path that best suits your career goals and personal aspirations. Dive deeper into each option, understand the specific advantages and challenges, and read success stories to inspire your journey. This comprehensive exploration will equip you with the knowledge to make informed decisions and set you on a path to continued success in the dynamic world of finance.
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- How To Get Into Venture Capital Without Experience
- How To Get Into Private Equity With No Experience
- How Much Does Private Equity Pay?
- Can You Go Straight Into Private Equity From College?
- Do You Need An MBA for Private Equity?
- Can You Go From Consulting to Private Equity?
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FAQ
What are some potential career paths after working in private equity?
Some potential career paths after working in private equity include pursuing an MBA and returning to private equity, joining a hedge fund, joining a growth equity or venture capital firm, moving into credit funds, joining a family office or fund of funds, joining a portfolio company in a corporate development or strategy role, or starting your own company.
Why do people leave private equity?
People leave private equity for various reasons such as not enjoying certain aspects of the job, finding it unfulfilling, or being forced out due to performance issues. Additionally, the work environment in private equity can differ from other industries, making some individuals seek alternative opportunities.
What are the benefits of joining a hedge fund after private equity?
Joining a hedge fund allows individuals to focus more on investing and less on the administrative aspects of private equity. Hedge funds offer opportunities to work with different asset classes and provide more real-time results. However, it is important to note that not all hedge fund types may be a good fit, and specializing in certain investment strategies may limit future exit options.
What are the advantages of joining a growth equity or venture capital firm after private equity?
Joining a growth equity or venture capital firm offers a more qualitative direction while still working on deals. These firms focus on industries such as technology and healthcare and offer opportunities to invest based on market research and company founder qualities. Compensation in these roles may be lower than in private equity, but the hours are typically better.
What are the considerations in moving into credit funds after private equity?
Moving into credit funds, such as mezzanine or direct lending funds, allows individuals to continue working on deals but with a different level of depth. These roles involve reviewing financial documents, analyzing loan structures, and making investment decisions. It is important to consider the potential limitations in moving to normal companies or more qualitative fields after specializing in credit investing.
What are the benefits of joining a family office or fund of funds after private equity?
Joining a family office or fund of funds provides exposure to senior professionals in the private equity industry. These roles offer reduced hours and stress compared to traditional private equity positions. However, it is important to consider the reduced exit opportunities and potential differences in industry outlook when pursuing these options.
What should I consider when deciding on my next career steps after private equity?
When deciding on your next career steps after private equity, it is important to consider your interests, skills, and long-term goals. Evaluate the potential benefits and drawbacks of each option and align them with your personal and professional aspirations.