Exiting to a fund - PE M&A or fund formation? Forum

[Anonymous User]

Hey all, 1st/2nd year associate here that's angling to change practice areas in the near future.

My long term career goal is to end up as the top lawyer at a private investment fund. My question is which practice area would best situate me to achieve that goal: PE M&A or fund formation/investment management?

My ideal end scenario would be GC of a small or mid-sized fund that employs just a couple of lawyers. Of course I expect that the availability of such an exit would depend a lot on one's network, but all else being equal would such funds generally prefer to hire the M&A lawyer or the formation/IM lawyer to head up their legal?

As a secondary question, I'd also be interested in any thoughts on whether EC/VC work might set one up to be the head lawyer at a VC fund just as well as or better than PE M&A/fund formation would for other funds.

Many thanks!

[Anonymous User]

FWIW - I worked at a technology-focused venture capital and private equity fund prior to law school (~ $3b invested, ~ 18 investment professionals). We had one lawyer in-house who had worked for 5 or 6 years in M&A at Skadden.

[Anonymous User]

If you want to go to a small / mid size fund, M&A for sure. My fund wouldn’t hire a GC who wasn’t capable of sense checking external counsel’s advice / substitute in for external counsel in some instances.

You launch a fund every 3-4 years, transactions and day to day portfolio company events happen weekly.

Advice is different if you want to go to a large cap shop as there are less funds attorneys fighting for those seats.

[Anonymous User]

Funds attorney 100% - you get GC roles primarily through your network. Mid-level and senior funds associates have a lot of direct contact with founders at funds, unlike comparable M&A associates who will usually be working with one of the mid-level investment professionals at the client. You can parlay these relationships into the top lawyer positions you are looking for. The fact you don't know how to do an M&A deal isn't relevant if the founder thinks you are intelligent, trustworthy and capable.

[Anonymous User]

What’s the comp like on a small cap shop? And are lawyers from v10 PE focused shops a leg up here?

[Anonymous User]

If you want to go to a small / mid size fund, M&A for sure. My fund wouldn’t hire a GC who wasn’t capable of sense checking external counsel’s advice / substitute in for external counsel in some instances.

You launch a fund every 3-4 years, transactions and day to day portfolio company events happen weekly.

Advice is different if you want to go to a large cap shop as there are less funds attorneys fighting for those seats.

OP here. So do you think a fund formation/investment management attorney would be at a significant disadvantage compared to their M&A peer to land one of those #1 or #2 lawyer roles?

I ask because I would probably rather do fund formation/IM over M&A at a firm. I imagine it takes 5-7 years at a firm to become competitive for a #1 or #2 role at a fund, and it seems much more palatable a lifestyle to grind out those years in IM rather than in M&A where I imagine I'd be more susceptible to burn out.

[Anonymous User]

If you want to go to a small / mid size fund, M&A for sure. My fund wouldn’t hire a GC who wasn’t capable of sense checking external counsel’s advice / substitute in for external counsel in some instances.

You launch a fund every 3-4 years, transactions and day to day portfolio company events happen weekly.

Advice is different if you want to go to a large cap shop as there are less funds attorneys fighting for those seats.

OP here. So do you think a fund formation/investment management attorney would be at a significant disadvantage compared to their M&A peer to land one of those #1 or #2 lawyer roles?

I ask because I would probably rather do fund formation/IM over M&A at a firm. I imagine it takes 5-7 years at a firm to become competitive for a #1 or #2 role at a fund, and it seems much more palatable a lifestyle to grind out those years in IM rather than in M&A where I imagine I'd be more susceptible to burn out.

Yes do M&A if goal is land as #1 or #2 at a fund. Go look at the GC bios for PE Funds in the 1bn - 5bn AuM range.

Its largely all M&A, PE, and corporate. I'm sure you could zoom through 50 bios and find a few fund formation lawyers and maybe a few credit lawyers, but you could also find a few litigators and no-one is telling you to go to that.

A good GC needs to be dangerous across most issues a portfolio company might face in addition to having a good sense around transactions. You of course are still going to check with outside counsel, but you need to be able to issue spot and know what is going on and who to ask. Frankly drafting LPAs, advisory agreements, PPMs, other ancillary docs, negotiating side-letters, running MFN elections, etc. doesn't really get you there.

If you are at a smaller shop, the funds issues that come up are generally going to be shit a third year funds attorney could handle. Sure there are quite a few funds attorneys in PE funds, but they are generally concentrated in large cap shops that have a ton of funds / vehicles being launched.

Note this advice is slightly different if you are considering hedge funds or institutional investors (pensions or endowments that invest in funds), though alot of those places outsource their general counsel seats.

I think the best way, if you really think you will get burned out is do PE M&A group for 3-5 years, move in-house to a large PE fund as a transactional counsel for 3-5 more years and then move downstream.

[Anonymous User]

If you want to go to a small / mid size fund, M&A for sure. My fund wouldn’t hire a GC who wasn’t capable of sense checking external counsel’s advice / substitute in for external counsel in some instances.

You launch a fund every 3-4 years, transactions and day to day portfolio company events happen weekly.

Advice is different if you want to go to a large cap shop as there are less funds attorneys fighting for those seats.

OP here. So do you think a fund formation/investment management attorney would be at a significant disadvantage compared to their M&A peer to land one of those #1 or #2 lawyer roles?

I ask because I would probably rather do fund formation/IM over M&A at a firm. I imagine it takes 5-7 years at a firm to become competitive for a #1 or #2 role at a fund, and it seems much more palatable a lifestyle to grind out those years in IM rather than in M&A where I imagine I'd be more susceptible to burn out.

Yes do M&A if goal is land as #1 or #2 at a fund. Go look at the GC bios for PE Funds in the 1bn - 5bn AuM range.

Its largely all M&A, PE, and corporate. I'm sure you could zoom through 50 bios and find a few fund formation lawyers and maybe a few credit lawyers, but you could also find a few litigators and no-one is telling you to go to that.

A good GC needs to be dangerous across most issues a portfolio company might face in addition to having a good sense around transactions. You of course are still going to check with outside counsel, but you need to be able to issue spot and know what is going on and who to ask. Frankly drafting LPAs, advisory agreements, PPMs, other ancillary docs, negotiating side-letters, running MFN elections, etc. doesn't really get you there.

If you are at a smaller shop, the funds issues that come up are generally going to be shit a third year funds attorney could handle. Sure there are quite a few funds attorneys in PE funds, but they are generally concentrated in large cap shops that have a ton of funds / vehicles being launched.

Note this advice is slightly different if you are considering hedge funds or institutional investors (pensions or endowments that invest in funds), though alot of those places outsource their general counsel seats.

I think the best way, if you really think you will get burned out is do PE M&A group for 3-5 years, move in-house to a large PE fund as a transactional counsel for 3-5 more years and then move downstream.

OP again. Thanks a lot for the insight — very much appreciated.

So I suppose the move would be to do M&A at a PE-heavy shop like STB or K&E? Any thoughts on other firms that would also position one well for an exit to a small/mid-sized fund — and is STB still a good option even though they deal with a ton of KKR/Blackstone/etc mega-fund work?

Also on the hedge fund point, that’s probably the true dream fund GC job (I imagine a wonderful mix of great pay and low stress work) but my impression was the same as yours, that often hedge funds don’t carry a lawyer on staff and just out source their legal, making those GC positions very hard to come by.

[Anonymous User]

If you want to go to a small / mid size fund, M&A for sure. My fund wouldn’t hire a GC who wasn’t capable of sense checking external counsel’s advice / substitute in for external counsel in some instances.

You launch a fund every 3-4 years, transactions and day to day portfolio company events happen weekly.

Advice is different if you want to go to a large cap shop as there are less funds attorneys fighting for those seats.

OP here. So do you think a fund formation/investment management attorney would be at a significant disadvantage compared to their M&A peer to land one of those #1 or #2 lawyer roles?

I ask because I would probably rather do fund formation/IM over M&A at a firm. I imagine it takes 5-7 years at a firm to become competitive for a #1 or #2 role at a fund, and it seems much more palatable a lifestyle to grind out those years in IM rather than in M&A where I imagine I'd be more susceptible to burn out.

Yes do M&A if goal is land as #1 or #2 at a fund. Go look at the GC bios for PE Funds in the 1bn - 5bn AuM range.

Its largely all M&A, PE, and corporate. I'm sure you could zoom through 50 bios and find a few fund formation lawyers and maybe a few credit lawyers, but you could also find a few litigators and no-one is telling you to go to that.

A good GC needs to be dangerous across most issues a portfolio company might face in addition to having a good sense around transactions. You of course are still going to check with outside counsel, but you need to be able to issue spot and know what is going on and who to ask. Frankly drafting LPAs, advisory agreements, PPMs, other ancillary docs, negotiating side-letters, running MFN elections, etc. doesn't really get you there.

If you are at a smaller shop, the funds issues that come up are generally going to be shit a third year funds attorney could handle. Sure there are quite a few funds attorneys in PE funds, but they are generally concentrated in large cap shops that have a ton of funds / vehicles being launched.

Note this advice is slightly different if you are considering hedge funds or institutional investors (pensions or endowments that invest in funds), though alot of those places outsource their general counsel seats.

I think the best way, if you really think you will get burned out is do PE M&A group for 3-5 years, move in-house to a large PE fund as a transactional counsel for 3-5 more years and then move downstream.

OP again. Thanks a lot for the insight — very much appreciated.

So I suppose the move would be to do M&A at a PE-heavy shop like STB or K&E? Any thoughts on other firms that would also position one well for an exit to a small/mid-sized fund — and is STB still a good option even though they deal with a ton of KKR/Blackstone/etc mega-fund work?

Also on the hedge fund point, that’s probably the true dream fund GC job (I imagine a wonderful mix of great pay and low stress work) but my impression was the same as yours, that often hedge funds don’t carry a lawyer on staff and just out source their legal, making those GC positions very hard to come by.

I would find HFs depending on strategy could feel pretty stressful as GC since you probably cover CCO as well and you are inherently antagonistic with investment professionals.

For PE experience, look at the Pitchbook league tables. I'd look at shops that do volume for MM funds rather than just mega-cap PE deals. Ie; K&E, Ropes, Goodwin, Weil, Paul Weiss, and Latham are the ones that come to mind.

If you go down too far market into LMM (ie; McDermott, Honigman, McguireWoods) you run the risk of doing deals for funds that are focusing on add-ons / for firms that are too small to have a GC though if you get senior at either of those, you may get outside general counsel reps which is beneficial in its own right.

[Anonymous User]

I would find HFs depending on strategy could feel pretty stressful as GC since you probably cover CCO as well and you are inherently antagonistic with investment professionals.

For PE experience, look at the Pitchbook league tables. I'd look at shops that do volume for MM funds rather than just mega-cap PE deals. Ie; K&E, Ropes, Goodwin, Weil, Paul Weiss, and Latham are the ones that come to mind.

If you go down too far market into LMM (ie; McDermott, Honigman, McguireWoods) you run the risk of doing deals for funds that are focusing on add-ons / for firms that are too small to have a GC though if you get senior at either of those, you may get outside general counsel reps which is beneficial in its own right.

Thanks very much for this again.

Any thoughts from anyone on the secondary question -- whether EC/VC work at a place like Gunderson/Fenwick/Cooley would similarly set an associate up to exit to a VC fund / a fund investing in early stage companies? I imagine this is a different animal from PE, but admittedly don't know much about the in-house space in the VC world.

[attorney589753]

I would find HFs depending on strategy could feel pretty stressful as GC since you probably cover CCO as well and you are inherently antagonistic with investment professionals.

For PE experience, look at the Pitchbook league tables. I'd look at shops that do volume for MM funds rather than just mega-cap PE deals. Ie; K&E, Ropes, Goodwin, Weil, Paul Weiss, and Latham are the ones that come to mind.

If you go down too far market into LMM (ie; McDermott, Honigman, McguireWoods) you run the risk of doing deals for funds that are focusing on add-ons / for firms that are too small to have a GC though if you get senior at either of those, you may get outside general counsel reps which is beneficial in its own right.

Thanks very much for this again.

Any thoughts from anyone on the secondary question -- whether EC/VC work at a place like Gunderson/Fenwick/Cooley would similarly set an associate up to exit to a VC fund / a fund investing in early stage companies? I imagine this is a different animal from PE, but admittedly don't know much about the in-house space in the VC world.

At one of the EC/VC firms (you can add a few others, including WSGR, to that list) you'd want to do the "VC"-side of that work, which generally means representing funds in venture capital investments (rather than representing the startups themselves). An associate doing that full-time might be able to get ~50 reps/deals per year in it. The VC funds are going to hire that sort of associate although if you can squeeze in some fund formation exposure, that would obviously be a plus as well. I think the more typical path is to join a VC fund that is expanding and needs a second or third lawyer to do VC deals (so you'd be assistant to the GC) and maybe you pick up some of the fund formation stuff on the side, and then look for the GC title in your second or third in-house role. Feel free to DM me if you want to know more.

[Anonymous User]

I would find HFs depending on strategy could feel pretty stressful as GC since you probably cover CCO as well and you are inherently antagonistic with investment professionals.

For PE experience, look at the Pitchbook league tables. I'd look at shops that do volume for MM funds rather than just mega-cap PE deals. Ie; K&E, Ropes, Goodwin, Weil, Paul Weiss, and Latham are the ones that come to mind.

If you go down too far market into LMM (ie; McDermott, Honigman, McguireWoods) you run the risk of doing deals for funds that are focusing on add-ons / for firms that are too small to have a GC though if you get senior at either of those, you may get outside general counsel reps which is beneficial in its own right.

Thanks very much for this again.

Any thoughts from anyone on the secondary question -- whether EC/VC work at a place like Gunderson/Fenwick/Cooley would similarly set an associate up to exit to a VC fund / a fund investing in early stage companies? I imagine this is a different animal from PE, but admittedly don't know much about the in-house space in the VC world.

At one of the EC/VC firms (you can add a few others, including WSGR, to that list) you'd want to do the "VC"-side of that work, which generally means representing funds in venture capital investments (rather than representing the startups themselves). An associate doing that full-time might be able to get ~50 reps/deals per year in it. The VC funds are going to hire that sort of associate although if you can squeeze in some fund formation exposure, that would obviously be a plus as well. I think the more typical path is to join a VC fund that is expanding and needs a second or third lawyer to do VC deals (so you'd be assistant to the GC) and maybe you pick up some of the fund formation stuff on the side, and then look for the GC title in your second or third in-house role. Feel free to DM me if you want to know more.

Thanks very much for the thoughts!

Any insight on which of the big EC/VC firms have an edge in the NYC market these days for landing at a VC fund afterwards? Cooley seems most well established, followed by Gunderson particularly w/r/t repping VCs, but Fenwick's young and growing NYC office also seems intriguing. Don't know much about WSGR. Any thoughts on EC/VC in NYC in general would also be welcome.

[Anonymous User]

I would find HFs depending on strategy could feel pretty stressful as GC since you probably cover CCO as well and you are inherently antagonistic with investment professionals.

For PE experience, look at the Pitchbook league tables. I'd look at shops that do volume for MM funds rather than just mega-cap PE deals. Ie; K&E, Ropes, Goodwin, Weil, Paul Weiss, and Latham are the ones that come to mind.

If you go down too far market into LMM (ie; McDermott, Honigman, McguireWoods) you run the risk of doing deals for funds that are focusing on add-ons / for firms that are too small to have a GC though if you get senior at either of those, you may get outside general counsel reps which is beneficial in its own right.

Thanks very much for this again.

Any thoughts from anyone on the secondary question -- whether EC/VC work at a place like Gunderson/Fenwick/Cooley would similarly set an associate up to exit to a VC fund / a fund investing in early stage companies? I imagine this is a different animal from PE, but admittedly don't know much about the in-house space in the VC world.

At one of the EC/VC firms (you can add a few others, including WSGR, to that list) you'd want to do the "VC"-side of that work, which generally means representing funds in venture capital investments (rather than representing the startups themselves). An associate doing that full-time might be able to get ~50 reps/deals per year in it. The VC funds are going to hire that sort of associate although if you can squeeze in some fund formation exposure, that would obviously be a plus as well. I think the more typical path is to join a VC fund that is expanding and needs a second or third lawyer to do VC deals (so you'd be assistant to the GC) and maybe you pick up some of the fund formation stuff on the side, and then look for the GC title in your second or third in-house role. Feel free to DM me if you want to know more.

Thanks very much for the thoughts!

Any insight on which of the big EC/VC firms have an edge in the NYC market these days for landing at a VC fund afterwards? Cooley seems most well established, followed by Gunderson particularly w/r/t repping VCs, but Fenwick's young and growing NYC office also seems intriguing. Don't know much about WSGR. Any thoughts on EC/VC in NYC in general would also be welcome.

Also interested in an answer re the EC/VC landscape in NYC. Has the NYC market developed enough such that you aren't at a disadvantage working in NYC, or does it really just make the most sense to be in SF/SV for EC/VC work?

[attorney589753]

Thanks very much for the thoughts!

Any insight on which of the big EC/VC firms have an edge in the NYC market these days for landing at a VC fund afterwards? Cooley seems most well established, followed by Gunderson particularly w/r/t repping VCs, but Fenwick's young and growing NYC office also seems intriguing. Don't know much about WSGR. Any thoughts on EC/VC in NYC in general would also be welcome.

Also interested in an answer re the EC/VC landscape in NYC. Has the NYC market developed enough such that you aren't at a disadvantage working in NYC, or does it really just make the most sense to be in SF/SV for EC/VC work?

This is now getting pretty nuanced; would need to know a lot of specifics (year level, overall interest in EC v VC) to give my best answers. In terms of NYC v SF/SV generally: I think NYC has moved (solidly) into the second largest tech market - you can google this (such as number of unicorns, or funds, or deals, by city — take a look). However if you think of SV as one big region, I think there is still a pretty big gap between the size of that market and NYC. Can you get all of the same opportunities in NYC as you can in SV? I think yes. If you have an existing professional network in NYC are you better off staying there? Probably yes. If you were 100% maximizing for your career, and you are a junior associate who knows you want to be in EC/VC long term, would you pick NYC over SV? I think probably no, because the number of opportunities is still overall higher in SV. And on average you get more "true" early stage investors in SV than in NYC (where there can sometimes be overlap between VC and PE). The flip side is that tech is probably the most remote-forward industry, so if you are doing great work in one of those places, you can probably find opportunities in the other area too. Different firms on that list of have different levels of cross-office staffing, so that could also be a consideration.

In terms of the firms on your list, seems correct. Cooley is one of the larger ones in NYC, and I believe that came somewhat at the expense of WSGR (who was historically there earlier?), with Gunderson and Fenwick both growing very quickly and now firmly established as well. But I would take it one step back: Go look at the profits of these EC/VC firms. They are jumping up year over year. And they are hiring like crazy. Obviously if you get offers from all of these firms then you can dig into the nuances (and see who you liked at each), but I think there is plenty of opportunity across the board.

[Anonymous User]

Loving this thread, wanted to ask if anyone has thoughts about doing fund finance, primarily lender side, for going in house to a VC fund? I'm a third year at a firm doing strictly lender-side FF for one of the primary lenders in SV, doing a lot of VC and now crypto fund work. Any sense of whether in house is a feasible option in a couple years?

[M458]

Loving this thread, wanted to ask if anyone has thoughts about doing fund finance, primarily lender side, for going in house to a VC fund? I'm a third year at a firm doing strictly lender-side FF for one of the primary lenders in SV, doing a lot of VC and now crypto fund work. Any sense of whether in house is a feasible option in a couple years?

In-house at a bank, not at a fund.