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October 30, 2023

The Big Shift from Corporate Development to Private Equity 

Too often, corporate development practitioners want to change their scenery and end up switching to private equity. It’s a place where they can use their existing skills, and enjoy what they do, without certain restrictions present in a corporate setting. But what are the differences between the two industries? In this article, Joe Metzger, Managing Director at 777 Partners, shares his amazing journey shifting from corporate development to private equity.

“There’s no substitute for having deal experience. Because if you can speak intelligently about the deals that you’ve worked on, you can leverage that experience, and take up an hour of an interview.” – Joe Metzger

Corporate Development vs Private Equity

For someone who just wants to keep doing deals, Private Equity is the way to go. In corporate development, Joe felt constricted within the corporate strategy, and deals aren’t always constant. Whereas in Private Equity, he gets to handle various mandates, resulting in more opportunities for M&A. Here are other distinctions between Corporate Development and Private Equity.

  1. Resources Availability

In larger corporate environments, corporate development professionals have access to abundant shared services, with functional experts often eager to work on M&A deals. In private equity, businesses may lack linkages and shared services, so M&A professionals play a more hands-on role, requiring increased attention to operational matters.

  1. Program Development 

The private equity role involves program development across multiple companies, particularly in earlier stage investments or companies being developed from scratch. According to Joe, private equity professionals focus on scaling companies efficiently without building full departments, leveraging shared services where possible, but still requiring significant coordination. 

  1. Politics

In a corporate setting, politics are involved in decision-making which can sometimes slow down deal activity, which is not present in private equity. 

  1. Compensation

While cash compensation tends to be similar on both sides, private equity can provide greater upside potential, particularly through carry or capital appreciation over a deal's life cycle.

How to land a PE role

Shifting careers is always challenging, but having a good network can make it easier. Building and maintaining a strong network, particularly in the industry, is crucial for finding a new role. Attending industry conferences is easily one of the best ways to expand your network.  Knowing people who are well-informed about the market trends, strategy changes, and potential hiring opportunities will make this transition quick. 

Utilizing recruiters is also a great way to land new roles. Recruiters often have access to a wide range of roles, from entry-level positions to C-suite positions. It's also beneficial to start developing a dialogue with recruiters even if you are not currently looking to switch roles. Building relationships with them over time can keep you on their radar for future opportunities.

Negotiating employment agreements

When negotiating employment agreements, here are some things to consider:

  1. Ownership and Influence

Private equity professionals have greater ownership and influence over their portfolio companies, leading to more direct access to returns. Negotiating the upside or performance-based compensation in employee agreements is a common practice, including the provisions tied to the success of deals.

  1. Cost of Living Increases

When negotiating base salaries, it's crucial to take into account the cost of living increases due to the current inflation fluctuations. In Private Equity, cash bonuses are usually less deal-specific and more generic, similar to the target bonuses commonly found in corporate settings.

  1. Severance Package Structure

According to Joe, pre-negotiating severance provisions is crucial to be prepared for unexpected changes or exits. It's important to ensure that accrued bonuses are also paid in case of a severance.

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