M&A Exit Ops: PE vs. Strategic

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M&A Exit Ops: PE vs. Strategic

Postby Anonymous User » Fri Feb 08, 2019 10:24 am

Background: 3rd year M&A associate at a V10 in a major market. At the point where I've done a good mix of both PE and and strategic/public company M&A. As you get more senior, it's pretty clear at my firm that senior associates do mostly one or the other (with the occasional crossover for vacation coverage, random one-off deal, etc.)

I'm curious whether there's a real difference in exits ops if you're say a 5th/6th year M&A associate who mostly works on PE deals vs. a 5th/6th year associate who mostly works on strategic/public company deals. I enjoy PE work a bit more (call me odd), but I'm worried it would make me a less attractive candidate for an in-house role at XYZ Blue Chip, Inc. down the line. I also do not want to go in-house at a PE shop.

Any thoughts?


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Re: M&A Exit Ops: PE vs. Strategic

Postby v5junior » Fri Feb 08, 2019 12:24 pm

Assuming you mean doing M&A in house, I would say that 10-20% of the job postings I see (and I look pretty regularly) specifically ask for strategic/public company M&A experience. Then of course there are probably some jobs where it doesn't make the posting, but when comes time to interview, the interviewer will give extra "points" for experience that seems on its face to be more directly comparable.

But overall, the difference between the two is not so significant. Both because the meat of the work doesn't change too much from PE to strategic/private to public, and also because the dichotomy is not so clean-cut. Specifically, the following come to mind: (i) representing a portfolio company in an add-on acquisition and selling a portfolio company to a strategic buyer are both effectively strategic deals, even if for a PE client, (ii) there will be PE deals with more "public" implications than strategic deals, such as a take-private or PIPE investment by a PE client as compared to an all-cash acquisition by a strategic/public company that doesn't meet 8-K materiality thresholds, (iii) if you represent a strategic client, you will regularly be across the table from PE buyers/sellers (so it's particularly helpful to have insight into their negotiation strategy, which can seem more opaque to a strategic client who is more familiar with strategic company concerns).

The biggest difference probably comes in "sale of the company"/stock for stock deals, but (i) that's probably not what they are hiring for anyway given those transactions are just less common (and also probably not a job you want because it could very likely be short-lived once it comes time to realize "synergies") and (ii) you will be relying on outside counsel more heavily in those transactions anyway.

To me, I think the best looking resume would have a mix of both strategic and PE work--which sounds like you have, even if at a more junior level. But ultimately I think it comes down to luck of the draw (maybe your interviewer is a die-hard supporter of public company experience, or is not very informed about the benefits of PE experience) and your ability to sell your resume/deal sheet.

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