I took that question to two sources, including someone who has done it in dramatically speedy fashion—the 45-year-old Terry Mullen, the Arsenal Capital partner who launched his buyout shop in 2000 following a brilliant career at Thomas H. Lee Partners.
I also spoke with Peggy Roberts, chief of staff of the Riverside Capital Appreciation Fund, the main fund family at the Riverside Company. Roberts joined the lower mid-market specialist as a senior associate in 2004 after getting her MBA at the Darden Graduate School of Business Administration at University of Virginia and a stint in investment banking. She spent six years leading organizational development and IT at Riverside Company during a period of rapid expansion before joining the Riverside Capital Appreciation Fund to help manage a 43-person team. Below are their top 5 tips, and you access all 10 over at buyoutsnews.com.
1. Develop your creative side
Nothing shouts future partner like the ability to come up with ways to justify paying enough for a company to persuade the owners to sell and to simultaneously beat back any rival bidders. In sifting through information from expert networks, trade associations, business executives, colleagues and countless other sources, can you find that potential add-on acquisition others might have missed? Can you find a way to super-charge organic growth? Find creative ways that your target companies can grow, and senior partners will be fighting to get you on their deal teams.
2. Be passionate about management teams
It’s a given you’re great at analyzing financial statements, making financial projections, and identifying red flags in the numbers. When it comes to crunch time, you can pull all-nighters with the best of them. But to really impress the partners, said Roberts of the Riverside Company, you have to get out in the field and spend time with management teams. Volunteer for as many on-site visits as you can, even if the company looks like a long shot. Ask smart questions and learn about the business and its industry. Show management teams and your partners that you have a passion for businesses—how they work, why sometimes they don’t, how you can help—and you’ll be on the path to promotion.
3. Develop deep industry expertise
While you want to constantly broaden your skill set, you also need to develop deep expertise in at least an industry or two. Don’t think of this as limiting. Many of the best-performing private equity firms specialize in a single field; even many historically generalist firms now channel their energies into just a handful of markets. At Arsenal Capital, which specializes in health care, specialty industrial and financial services, Mullen said the best way for junior professionals to have an impact is to really know their fields. Know the growth trends. Know how technological innovations are affecting companies. Think strategically and become that person in the room who’s really additive.
4. Don’t underestimate your influence on senior dealmakers
Do you think of the VPs, principals and partners at your firms as the only ones with the power to make or kill a deal? It’s just not so. Passion is contagious, even if you’re only in your late 20s and your title is senior associate. Develop a vision for a company, get smart about the industry, get excited about the deal, and explain to the lead partner why you’re so passionate. Said Roberts: When senior deal partners see they have someone with “fire in the belly” on their teams they’re much more likely to try to figure out a way to get the deal done. Make deals happen, and you’re well on your way to making partner.
5. Ask what limited partners would want you to do
Maybe you don’t give much thought to the pension funds, endowments, foundations and other investors that ultimately supply most of your capital. That’s for the senior partners to worry about, right? But in fact, just as you should dress like a partner if you want to be one, you should try to think like one too, even at the start of your career, according to the Riverside Company’s Roberts. Say you’ve got a letter of intent signed with a target company, and you’ve just spent the last three weeks of your life making sure the company is operating as advertised. But something doesn’t feel right. Rank-and-file employees are sending unmistakable hints of accounting problems. How well will you communicate these issues to the lead deal partner? How would your limited partners want you and your deal team to behave? “The sooner the senior associate gets into the mindset of our investors, the better,” said Roberts.