Where Do You Sit In The Private Equity Waterfall?
When you feel you've mastered a skillset, it's time to learn something new
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Where Do You Sit In The Private Equity Waterfall?
Can you raise your own fund? If not, then...
Can you identify, source and broker deals (and delegate the execution)? If not, then...
Can you execute as a perfectionist deal captain? If not, then...
Can you build models and populate decks?
A successful private investing career requires you to consistently evolve your skillset. When you feel you've mastered a skillset, it's time to learn something new.
For those who make it to the principal/partner level and are expected to source deals, it can feel so daunting to make the Great Pivot from deal execution perfectionist, to creative salesperson. They are completely different skillsets, and require a 180 shift in psychology.
The decade of analyst -> associate ->VP tasks are heaven for controlling personalities who like to deliver perfection in every area. The fragile ego is coddled by the external feedback loop of compliments from senior colleagues and portco management.
In order to source effectively, one must learn to put the insecure needs of the ego aside, and learn to be truly of service to your clients: target management teams, sellers and your investment committee / LPs.
All of a sudden, you go from delivering excellence as instructed / following a learned process, to never knowing what's coming next?
It's nerve wracking to be one of 20+ bids in a process, and get told "no" over and over. This uncontrollable dynamic is fairly unsettling for the average professional.
Learning to "be of service" to target management teams, communicating their needs to your IC, and finding a market clearing price with the sellers is an art. Models don't really matter anymore. The decks are confirmatory documentation. It really becomes a velocity of reps * deal instinct game. It also requires you to be vulnerable with your Partner group -- to present a reasonable idea, and build consensus with the group as the process evolves.
Where do you sit in the private equity waterfall? Are you gravitating to the lower value-added activities because they feel familiar and safe? Does sourcing or fundraising feel daunting or hopeless?
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