BDT & MSD Updated Views

Would you take over top eb/bb?

Another point to add is that the perks are below market compared to other UMM/MF PE firms. The main perks seem to be standard late night dinner/Uber, subsidized gym, and a $5k vacation stipend at 5 year anniversary. Pretty underwhelming (except the last one but realistically something more for VP+ since associates probably leave earlier) especially when you consider firms that offer catered breakfast/lunch in office, first class on all trips, and robust social budget for associates.

IMO, the most unusual non-perk is the lack of offsites. Of all my friends/acquaintances at various shops, every single firm has at least one if not several offsites at incredible 5 star resorts with the exception of BDTMSD. As an example, my firm flies everyone out to the annual LP meeting, firm wide offsite (including back office) at places like Palm Beach/Scottsdale, and then the investment team has two offsites (went to Aspen during winter and Hawaii for spring). Granted our firm may have more offsites than other shops but some other firms put on more luxurious ones like I heard Apax flew their entire team private to Mykonos.

At the end of the day, don’t think anyone should necessarily solve for a shop based on perks alone but it does raise a lot of questions when a shop offers materially below market. Especially the offsite because those are things to look forward to, bond with your associate class, and I’ve found a good way to connect with VPs and above bc everyone is a bit more relaxed

Don't know anything about them, but reg filings show the MSD side of the house as managing $16.3B, with 62 IPs. Wouldn't exactly call that lean.

BDT doesn’t recruit at the same time as MF PE though? 

Anon to be safe here even though I usually post publicly. My firm is an LP in BDT and none of this surprises me. Commitments to the BDT funds were made before I joined but every fund is below median (some by a lot). You're right there's a lot of family office support and the only reason why I think they've been able to raise so much, otherwise I would never put my own $ in.

Current employee here (joined as an analyst out of college). Unless you like the unique model at BDT, I wouldn’t recommend joining the firm for both seniors deciding between banks and for analysts thinking about different PE shops. I know there’s a lot of positive sentiment about the firm especially on here, but I think a lot of that is because there’s not a ton of info about the firm and things are very different now vs. 4-5 years ago. Also, the single fact that the firm actively encourages even analysts to take their full allotment of PTO makes it so that you can really tolerate a lot. But eventually, the combo of all the various issues piles up and it’s led to significant numbers of people leaving/actively looking to leave recently. 

The single biggest issue for analysts/associates is the firm’s model. When you recruit, they tell you its 50/50 advisory/investing model and the advisory part of that is mainly buyside M&A and no sellsides. The reality is as an analyst, the work is almost exclusive advisory (lately there’s been a ton of sellsides) and maybe if you stick around as an associate, the total split over the 4 years is 80% advisory / 20% investing. Also the advisory work is…bizarre. I’ve had projects where I had to interview various family members of a family owned business to help them resolve succession disputes and almost play a therapist type role. There are even situations where you’re advising both the sale while participating as a buyer. I’ve never gotten a good answer on how that isn’t a conflict of interest. Even the investing is not traditional because the firm will only invest in family owned businesses and almost exclusively via structured securities. So you can imagine the universe of potential investment opportunities is significantly smaller than any firm out there and with the sheer size of the analysts/associate pool (40+), there aren’t enough investing reps to go around (the firm doesn’t really take CIMs so you don’t even get the quick kill rep). Even on the portco side, they generally only allow VPs and above to attend the board meetings, associates/analysts aren’t even allowed to join by Zoom. At best, some VPs recognize how absurd this is and will call you on their cell to let you listen to the Zoom board meeting. The lack of reps doesn’t impact analysts as much (evidenced by the good placement at various MF shops), but I have to think it could hurt associates especially the ones who are looking to lateral or join shops as a VP after MBA if you’ve only 1 investment rep total in their 2 years as an associate compared to someone at TB/Vista that has seen 20+ deals. For a lot of analysts/associates, there’s a legit fear of not learning enough compared to peers at banks and traditional shops. You do see a big difference when you get staffed with a VP/P who used to work at a UMM/MF shop before vs. homegrown. 

The other big issue is related to the merger is the extent of cost cutting measures. I get that the economy is not amazing, but I don’t see any other firm going to the extreme lengths that BDT has especially since they just raised a $14bn fund. People often get questioned if they expense too many late night meals (even going to the step of checking people’s badge swipes to confirm that they were in the office late), analysts/associates no longer have EAs, reduced the level of luxury on travel, cut the social budget almost entirely (associates/analysts used to do a monthly happy hours), and even tried to cut the number of BamSEC licenses. Not a joke, they cut off some people’s access and they only got it back after extensive complaining. As one of the posts mentioned, we don’t have any offsites where the whole firm flies to a resort. 

Less relevant as an associate/analyst, but firm investment performance isn’t great. There’s an open secret that the firm doesn’t make great investments (firm allows 2nd year associates to coinvest in the fund and advice all the VPs give is to put in as little as possible and instead put more money in the credit funds) because the diligence isn’t very robust on company quality. Instead the firm relies on investing through structured securities to protect the downside, which is great in theory but not great if the company’s performance absolutely craters on industry factors that should be caught through diligence. I’ve heard of investments where the IC didn’t even discuss the commercial/industry diligence and only focused on the type of security that was being contemplated. You might ask how this squares with the fact that the firm is able to raise bigger and bigger funds. I honestly don’t know the answer, but I think it may be due to the fact that the investor base isn’t the traditional pension funds and instead it’s mostly wealthy individuals. 

Also less relevant for juniors is some of the politics/leadership dynamics. Never occurred to me how weird this is, but most of the partners have very little investing experience outside of the firm. You can look up press releases about some of the recent deals and you’ll find the lead partner’s experience is client coverage at a bank or advising family offices. Among partners that have some investing experience, they often end up leaving (there was a blackstone partner who joined BDT and left within a year). The back office teams have a ton of power and have a say over investment team promotions and if people are allowed to switch offices. The back office mid levels and above all get carry (yes, even HR, recruiting, and IT VPs all get carry). Last point is that there’s a bit of a cult-like/kiss the ring aspect to the founder. Maybe this is true at other firms, but the founder has a crazy degree of control. Even partners don’t seem to have much autonomy to even submit LOIs without his blessing and some leaders have been able to reduce promotion times by basically getting in front of him as much as possible.

Can you share some examples of the structured investments. Is it designed this way to avoid downside or is it because the needs of family businesses are easier to meet with some structuring?

What’s analyst recruiting process like? How do you prep for it? 

Would you take over other traditional UMMs (i.e GTCR / MDP)?

Given merger and fundraising growth, could this be a rocket ship firm where, if you join now, you could potentially outearn peers in UMM/MF PE? Obviously, it is riskier, but given your relationship with Gregg, do you have any insights/thoughts about the upside case here? 

Pussy galore Do you have any insights into the firm not reflected so far? What are your thoughts on the firm, and can you endorse joining? Is it as damaging as the responses are trending so far?

Curious as well. Is it actually “top of street” meaning around $375-$400k for Aso 1? What is analyst pay? Higher than EB?

I believe associate base is $225. Not sure on all in but believe it’s in the high 3s/low 4s

This is not accurate lol

Have a hard time believing $260K TC as ASO1. There is no way they would be able to pull the quality of Associates (good school + BB/EB) they do with that number... LMM/MM PE shops pay more than that. Multiple older threads confirm BDT (before the merger) was ~350 TC as ASO1

I think the confusion comes because the firm has a complicated pay schedule. Bonuses are paid year end, but base salary is reset in the summer.

Take the ASO class from 2023. Started in June/July to Dec 2023: 180 base + 40 stub is how you get to the 260 run rate. Then from Jan-Aug 2024, you get your base of 180 and you become ASO2 in Aug 2024, so from Aug-Dec 2024 you’ll get a base of 225 and bonus in Dec. The 350 number people quote is not really ASO1 comp and instead your TC in 2024 which is a mix of ASO1 and ASO2. 

Comp is very opaque and most people assume it’s good because of the high base but recruiting team never outlines what bonus looks like or explains comp clearly. You do wonder if the comp structure is complicated on purpose to make it really difficult to compare what you get versus other places. Also with the merger, they are trying to change comp so it’s closer to 50-50 on base-bonus so I’d imagine there will be even more variability than before on bonus payout

Could you comment on WLB?

reAlly helpful post. Can you clarify what you mean by "you can probably guess but certain associates aren't expected to do any work on teams"?

On average, hours are better than banking and probably most PE shops but it comes at the cost of very little deal experience and learning. Hours are bad and on par with banking if you’re staffed on a struggling portco or staffed on a team with minimal resources. Staffing model leaves a lot to be desired. Given how few deals the firm sees, expect staffing to be all advisory but you won’t get much leverage as an associate that you would in banking. Some sellside projects have been staffed where there are two associates and no analysts so you end up doing all the grunt work that analysts should be doing. Meanwhile if you stayed in your banking seat and made A2A, you would get a solid team of analysts to help out on all your projects. If you do get analysts and they aren’t great, associate is expected to pick up the slack because you won’t be allowed to re-staff with better analysts. It’s maddening and you can imagine how you can get burnt out, which has happened to a number of people who quit

What’re your thoughts on the associate program? Would imagine a lot of the same cons carry over but curious from the perspective of getting a more laid-back but decent experience coming out of the classic 2 and out of IB

My 2c: associate program is even worse than joining as analyst. As the person above mentioned, analysts can easily exit to a normal PE shop after 2 years but it becomes much harder to recruit laterally as an associate especially if you started at the firm as an analyst. Candidly, lateral interviews at UMM/MF PE shops are challenging because BDT doesn't train you to think about investing in the same way as other firms. From friends at other shops, they do a lot of work to identify interesting industries, dive deeper to find sub niches, create an investment thesis, look at dozens of companies within a space, refine thesis from diligencing these companies, and ultimately finding the right asset to buy. BDT does none of this and instead the investing philosophy is to buy assets that are large and family/founder owned. You also work exclusively on structured security deals so the modeling isn't fully transferrable because most UMM/MF shops invest via common equity and their models are more focused on operational drivers. A friend of mine at an UMM shop showed me her deal model that she had to build in a day and I can confidently say most BDT associates would struggle badly to build that kind of model quickly and accurately. Not because of intelligence but the lack of reps. Tell me, how can you stand out to an UMM/MF firm compared to your peers at Blackstone/KKR who know their industries cold, can talk about dozens of companies they diligenced (even if they didn't close any), and can take over the modeling workstream seamlessly.

It might be slightly better/chill than staying in banking or joining a sweatshop, but you won't get decent experience here that is transferrable. You should also consider the value of the brand and future. Firm's track record is terrible (investment performance is worse than SP500) so next fund is probably smaller, which means they won't need the current headcount to invest it. 

Very helpful. Do you have any insight into the MSD side?

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It’s a stretch to say most firms hiring lateral associates will cover unpaid bonus. The norm is PE firms will pay you a bonus in the summer when you finish your 2 years and leave. The only exception I’ve heard of is a firm insisted that my friend start earlier than the summer because they were short on staff and they paid the bonus to make sure my friend quit the firm to join early. Maybe other firms are lenient about enforcing non competes, but that’s definitely not true at BDT if you leave to join another PE firm. 

Why's BDT manage so much more assets than MSD?

When will the merger be complete internally, so to speak? Will the BDT and MSD sides come together? Or will they always operate as separate entities under the umbrella firm? Are there tensions between both sides?

Is it possible to jump from one side to the other? Say BDT to MSD.

How are exits from the MSD side? Better than BDT? Given their strategies, can you even exit to traditional UMM/MF PE if on the MSD side?

The merger is complete, but people still sometimes call the merchant banking team 'BDT team' because there was no overlap between the two firms on strategy. The NY team is split between the old MSD office and the old BDT office, but once they move into a new shared space, it'll probably feel more cohesive and similar to how the different teams are structured at places like Carlyle/KKR. 

There's some tension behind the scenes. It's an open secret that the credit team doesn't think very highly of the merchant banking team because the returns are so poor and it's due to poor diligence rather than some macro or unforeseeable issue. Plus, comp differs across teams - merchant banking gets paid much more. 

Theres a rotation program where people can work on a different team for 6 months. Funny enough, it's only gone one way where merchant banking people have gone to work on credit and RE and no one from those teams has volunteered to work on the merchant banking team. People have already pointed out that merchant banking work is very little investing and mostly advisory, but compared to banking, the advisory work is not great and you won't learn much. Despite the negatives, banking programs do a good job of giving you a foundation of skills that's transferrable to so many areas of finance and you'll get a variety of reps. BDT's model is to set up retainers with family businesses and you get staffed to a specific client so your experience is entirely dependent on what that client does. As a result, people will naturally have fewer reps, industries are going to be skewed towards the less sexy (there aren't a ton of tech companies that are family owned), and you'll do a lot of projects that aren't transferrable to the buyside like helping a family set up a FO or charity foundation. So even if you like doing more advisory than investing, it's probably better for your learning and development to stay at a EB/BB.