Private Placement Agent Jobs: Industry Overview and Recruiting

Private placement agent jobs: “investment banking lite,” or a solid career opportunity?

There’s a lot of debate over this question, but even discussing it is difficult because “private placement groups” vary so much.

For example, are you in a large bank’s private placement group? Or at an independent firm?

Do you focus on private placements for normal companies, or financial sponsors such as private equity firms?

And do you work on primary issuances or secondary deals?

Your experience in the group will vary significantly based on the answers to those questions.

To sort it out, I recently spoke with a reader who worked in the private placement group at a bank and then moved into investor relations in private equity:

Private Placement Agents: Industry Overview

Q: Before we get into the details, can you explain “private placements” at a high level?

A: Sure. Private placement agents help financial sponsors, such as private equity funds, credit funds, and real estate funds, raise capital.

They also help companies raise capital privately from accredited individuals and institutional investors.

The key difference vs. capital markets groups at banks (ECM, DCM, and Leveraged Finance) is that all the capital raised by private placement agents is private.

In other words, you can’t buy or sell the shares or bonds from these issuances on public exchanges such as the NYSE or Nasdaq.

The issuers may be public – as in the case of PIPEs (“private investments in public equity”) – but the securities themselves must be private.

Private placement agents span a wide range, from 1- or 2-person shops run by well-connected individuals to independent boutiques to elite boutique and bulge bracket banks that have private placement groups.

Beyond firm size, the basic divisions are:

• Client Type: Normal companies? Private equity firms? Credit funds? Real estate funds?
• Deal Type: Primary or secondary? Primary refers to buying new stakes in companies or funds via new issuances, and secondary refers to buying existing stakes in companies or funds from existing investors who want to sell.
• Role in Group: Sales or Transaction Management (TM)? Transaction Management is similar to “deal execution,” while Sales is more like “deal origination.”

Primary issuance volume has been higher historically, but secondary deal activity has been growing.

To make things confusing, many banks use different names for this group. A few examples:

• Equity Private Placements
• Private Fund Group
• Private Placements
• Strategic & Private Capital Solutions Group
• Private Capital Advisory

Despite the different names, they all advise on primary or secondary private capital deals, and they all earn fees based on a percentage of the capital raised or sold.

Q: OK, great. What is the day-to-day work like?

A: First, I should also clarify that I worked mostly with funds (private equity, credit, and real estate), so my description will be about them rather than normal companies.

On the Sales side, professionals spend their time calling Limited Partners (LPs) such as insurance firms, endowments, and pensions, and they pitch their client funds to the LPs.

Sales professionals conduct meetings with private equity fund clients, go on-site to meet the teams, and use these meetings to figure out the best matches.

They also spend time sourcing clients, i.e., new General Partners (GPs) that need to raise capital or that are planning to raise a new fund.

The Transaction Management side is all about managing the information flow from Sales; they respond to the document-based questions (DBQs) and requests for proposals (RFPs) that prospective LPs ask for.

It’s similar to the work that IB Analysts do when drafting CIMs and sales team memos, but they focus more on the fund economics, track record, competitive advantages, and risk factors.

If you look at the Primary vs. Secondary split, the Primary team is more like a traditional public markets group such as ECM or DCM: you write memos, send them to sponsors, and run auction-like processes.

Your hours roughly follow the public markets, so they’re fairly regular.

The Secondary team is closer to an M&A team or industry group because you sell existing stakes in funds to other investors.

These stakes are large and illiquid, so the process is closer to buying or selling a normal company.

There’s also more financial modeling involved because you may have to project the fund’s performance or create waterfall models to examine potential returns.

You might also have to evaluate a firm’s portfolio companies to value a stake you’re selling, similar to the work in private equity funds of funds.

The hours in the Secondary team are longer, more unpredictable, and more similar to traditional investment banking hours: sometimes 80+ per week vs. only 60-70 on the Primary side.

Q: Thanks for explaining that.

Who were your typical clients, and did you focus on specific types of LPs?

A: Almost all our clients were middle-market funds.

“Middle market” is a loose term, but it meant roughly $300 million to $3-5 billion in AUM when I was there.

The mega-funds like Blackstone, KKR, and Carlyle are so big and well-known that they do not need to hire external agents for fundraising.

We didn’t focus on specific types of LPs because PE firms generally wanted a diverse investor base.

However, some LPs do prefer certain types of funds (e.g., insurance firms and pensions often like credit funds because of the yield and payback visibility).

New funds need to do much more than “execute leveraged buyouts” because most of the easy financial engineering targets are gone.

LPs want to see differentiation and focus, so industry and geographic expertise, as well as synergies with portfolio companies, play a big role.

Compensation, Career Paths, and Exits

Q: What does the typical career path look like? Is it the same as the investment banking career path?

A: At the bigger private placement agents, such as the one at PJT (Park Hill), it’s pretty similar. You spend 2-3 years as an Analyst, get promoted to Associate, and keep advancing up the ladder.

One difference is that Analysts and Associates on the Transaction Management team do nearly the same work; there’s less of a distinction than in traditional investment banking.

The structure may be flatter at smaller firms, but I’m not 100% certain.

Q: What about compensation?

A: When I was there, the base salary was similar to base salaries in other investment banking groups, but the bonus was lower by about ~$10K on the Primary side.

The work is less intense and the hours are better, and your compensation reflects that – though I’d say a $10K bonus reduction for 10-20 fewer hours per week is a good trade.

On the Secondary side, compensation is closer to the standard numbers in IB.

There has been some “fee compression” in the placement agent world, but it’s less of an issue than it is for hedge funds and asset management firms.

Q: That makes sense.

What are the typical exit opportunities from this role?

A: On the Primary side, most people leave for other placement agent groups, investor relations jobs at funds, and sometimes other groups within investment banking.

However, it’s easier to join a product or industry group in IB if you’re in the Secondary team.

It’s also easier to get into private equity coming from the Secondaries side, but it’s still quite difficult because you won’t have the deal experience of Analysts in other groups.

The private placements group is not great preparation for investor relations at public companies because the skill set is different, and IR there is more about monitoring day-to-day market activities.

So, if you do move into investor relations, it will most likely be an IR role at a PE firm, credit fund, real estate fund, hedge fund, or other financial sponsor.

Private Placement Agent Recruiting: How to Break In

Q: I’m doing this interview in reverse order, so now that we’ve discussed what this group does, can you tell us how you got in and how the process works?

A: Sure. I don’t think my story is unique, but I went to a “semi-target” university in the U.S., did a lot of networking and self-study, and completed internships in equity research, real estate private equity, and at a REIT.

Then I joined a well-known bank as an Analyst in its private placements group, where I went through the standard training with Analysts in other teams.

I stayed there for two years and then accepted an investor relations role at a private equity firm that also does credit and growth equity deals, and I’ve been here ever since.

The recruiting process is similar to the one in investment banking, but you don’t necessarily need to start super-early, win an internship, and then convert it into a full-time offer.

I didn’t even complete an IB internship in the summer of my junior year, but I still won a full-time offer via networking and on-campus recruiting.

Hiring open up randomly as people leave and deal flow changes, so private placement groups don’t necessarily hire the same number of Analysts each year.

Mid- and senior-level bankers from other IB groups sometimes move into private placements as well, often in search of a better lifestyle as they get older.

Q: OK. Any thoughts about interviews?

A: They’re a mix between investment banking interviews and sales interviews.

You’ll still get the normal questions about accounting, valuation, and your attention to detail, but personality/fit is more important since it is more of a sales job.

If you interview specifically for Sales roles, they’ll evaluate you by asking questions like, “Can we put this person in front of a client? Can this person conduct himself properly and speak confidently?”

They’ll also ask you about potential client situations and your existing relationships with sponsors and LPs – so there is a strong preference for more senior hires.

On the Transaction Management side, they’ll ask you questions about private equity strategies, your understanding of the industry and the fundraising process, your Excel and PowerPoint skills, and all the normal technical topics in IB interviews.

Looking Back and Moving On

Q: Why did you decide to leave the private placement job?

A: I didn’t want to stay because the work didn’t allow me to understand investment strategies or portfolio companies at a deep level. My experience was a mile wide but an inch deep.

I also wanted to build something over the long term, and I had no interest in mega-funds. So, when a recruiter reached out to me about an up-and-coming fund that did a mix of private equity, credit, and growth equity deals, I was immediately interested.

Investor relations at a private equity fund is a very specialized job, but there are also fewer people who can do the job effectively – and that also attracted me.

I’m still not sure what I want to do in the long term, but I’ve been quite happy here so far.

Q: Great. Thinking about everything we’ve discussed, who would be a good fit for private placement agent jobs, and who would not be a good fit?

A: This group is best for someone who wants broad finance exposure, but who’s not sure they want to go the traditional investment banking route due to the hours, style of work, etc.

Private placement agents are somewhere in between M&A and wealth management; we used to call the role “investment banking lite.”

You do use analytical skills, but the job is more about communications and marketing – so you need to be more sales and relationship-oriented.

Q: Great. Thanks for your time!

A: My pleasure.