With slightly less than ~180days, I have decided to move on to the next step. Here is a quick note on some thoughts behind the move- in short, it was a great learning experience, but the timeline (of work) did not quite fit what I’d be seeking at this stage of my life.
- Sound mix of consulting + corporate + finance works: Not sure if this is a common saying outside Japan, but many people here describe PE works as adult’s Mixed Martial Arts (MMA). You need to seek companies to invest in, analyze, craft presentation decks, and build a financial model to calculate returns. During the deal, obviously, with the help from external advisers, you need to oversee various aspects, including legal, accounting, tax, etc., in addition to the business aspect. Once the deal is done, that’s the actual start of portfolio company management. It typically takes 4-6yrs until the day you exit (IPO or sell to other investors). The experience of each person would differ enormously on what deals are available at that time & assignments. Still, if you experience all phases (investment, value-up, and exits), that’ll be substantial learning resources. I did not experience the entire process in that ~180 days timeframe but could see how the experience at consulting or corporate world came together. It was my first time in the finance industry, so how the people on this side view the companies (slightly different context from market analysis at consulting – more mechanic and trading comps focused) or creating a model (like integrated 3-statement LBO model) was stimulating.
- There is no magic behind it: Private equity firms (or might as well at consulting / IBDs) do not necessarily disclose much information and may come along with prestigious, exotic, or romantic images. People inside seem to have a beautiful resume, speak confidently, and make money (as a company and personally). I wondered what kind of magic they utilize to find a fantastic deal, improve companies, or eventually make money (generate returns). I won’t consider myself an expert at PE at all. Instead, it may be appropriate to phrase it as 6-months “internship.” From my perspective, there weren’t magic or crazy shortcuts that PE companies only know. Many insights or strategies are based on deep research and analysis based on publicly available information or internal information available to any investors participating in the deal (if it’s an auction deal). Yes, there may be a unique network or connection that some senior execs of PEs hold. But that is (at least here in Japan) based on numbers of networking (golfs&karaokes included) and relationships built over many years. So it may look a bit magical in the snapshot, but it did take time to build up. So to me – people inside the industry looked like a pile of sincere & hard-working people who spent days and nights to figure out better negotiation terms or cashflow sources instead of greedy gangs with some magic. If anything, six months is too short to find Platform 9¾, so there is that.
- Great place to learn: Likely an intense workload (and people) there, but it is undoubtedly a great place to learn how business works, gaining various aspects (incl. legal or tax) and transforming the companies. Also, communication with people at portfolio companies (not just management but people in operations) is a great learning resource.
What went wrong?
Nothing. It was a great six-ish month. I won’t regard myself as part of financy experts, but at least I was exposed to the people in the industry and got to learn how things generally work, how people see things, and what language they use. I worked on numbers of DD at consulting but feel I can relate much more with the finance gang now (as I learned their language). Perhaps, the most critical takeaway on a (very) personal level is that I don’t need to romanticize the PE world anymore.
It’s a sexy and exotic (& well paid) industry, and I certainly feel the value it could add to the economy (particularly in Japan – governance issues are all over). It just wasn’t for me, at least for now, which I could say as I touched it. Even just for a short time, I am grateful I did it. Every PE is different, and I worked at a PE arm of the government-affiliated fund so that the experience might have been a little unusual. Still, that experience brought me an offer from a top US PE fund, so I believe that was a somewhat typical experience.
Joining an early-stage tech company in the retail space. More to come!