MF Credit vs. MS/GS SA 2023 Offer
Hi all, I have exploding offers from MS/GS and a top credit shop (think Blackstone GSO / Bain Capital Credit / KKR Private Credit / Oak Hill Advisors / Silver Point Capital) for SA 2023. I want to join a MF PE shop as an associate and was wondering how should I think about the 2 offers? Here's my thought process.
MF Credit's advantages are:
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it's an investing role so I think I'll learn more than I will from banking.
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there are less seats so I think the firm and the role are more prestigious.
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Far fewer menial tasks and have been told analysts get treated like associates after 3 to 6 months
The disadvantages are:
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I'll receive less inbound from HH due to the unorthodoxy of my role + HH conflicts
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There's not a lot of data regarding analyst exits (since the sample size is so small) but people seem to gravitate towards HF. My understanding is that they are skipping private equity as opposed to not being able to recruit for private equity, but would appreciate your thoughts.
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Worried about my ability to recruit on-cycle. Will it be offensive to my firm if I recruit for another role 3 to 6 months into my 2-year stint? Will I be fired if my firm/team finds out I'm looking for another job?
4. MS/GS is the tried and true path. Not sure what the incremental reward is for taking on the above risks
- I'll have a much smaller cohort at my shop to shoot the shit with.
I'm leaning MF Credit but would appreciate hearing from people who 1: are in MF PE (and preferably involved in recruiting), 2: work at S/M L/S Equity shops, 3: are presently in credit and work at one of the above shops (or a related shop), and 4: prospects/undergrads who were in a similar decision (would love to hear what you decided!).
If you're an incoming/current IB analyst, please refrain from sharing your perspective. Not to be rude, but almost all of the people I have spoken with who are in IB have told me to take the GS/MS offer despite not being familiar with any of the above credit teams and did not furnish a coherent reason for why. If you are familiar with the above shops, feel free to share your perspective, but if you're not, then I'm not sure your comment will add value since I'm comparing 2 things and you're unfamiliar with 1 of them.
Incoming analyst at one of the shops you listed and I think Credit offer is a no brainer. You're spot on with the advantages. Fewer seats + investing role + excellent firm reputation.
On Disadvantages
Headhunters: Yeah, you'll miss out on a few PE firms due to HH staffing conflicts. However, I would say you have higher quality shots on goal at the residual firms you recruit at so it should not be too much of an issue. You'll have some issues if you work at Oak Hill since they use CPI, but for the rest of the listed firms, you should have no problem. You could probably reach out to the recruiting teams directly at the firms they cover to get into their processes.
Analyst Exits: Think most of the analysts at the firms you listed go to HF/Special Sits/Buyout PE. I would look into the historic analyst exits of kids from Bain Capital Credit and Silver Point since you can filter for that quite easily. Former GSO/KKR Credit analysts don't typically specify their group due to being insecure about not being in Buyout PE. Have not looked into OHA exits.
Can't comment on on-cycle recruiting or small cohort size. Would say the incremental benefit is you are viewed as much sharper for having a buyside gig at a reputable firm + have the option to skip PE and go straight to a HF + being a more interesting commodity at the PE firms you do recruit at. And if you want to do something that is a hybrid between credit and PE (i.e. Blackstone Tac Opps, Apollo Hybrid Value, ASOF, KKR Special Sits, Sixth Street, Distressed/Activist HFs), you're an excellent candidate.
Edit: check this link out. If your offer is from OHA, would probably pass on it since you won't be able to recruit at Advent, Berkshire, CVC, EQT, H&F, Insight, Ares, New Mountain, Providence, or Silver Lake. Otherwise, would stick with the MF Credit offer.
https://www.wallstreetoasis.com/forum/private-equity/2022-private-equit…
As the above says, I would pass on OHA if you want to do MF PE. I've heard both from people who are close with the company, as well as two people from my investment club who work there that recruiting for MF PE is pretty hard.
what do your friends say about the liquid vs. illiquid split?
If you're trying to join PE then going to a MF credit group is completely moronic. Going to a top buyside seat has lots of merit, but settling for a seat no one from a top banking group would want is just being impatient.
incoming FT at one of the firms OP posted about above. Everyone in my SA class turned down top banking offers and I know multiple SAs in 2 other groups OP mentioned and they all did the same. I personally turned down an EB and mid-BB offer and withdrew from other processes.
Yes, PE is better than Credit. However, the debate is between Credit and IB. PC/Mezzanine/Preferred Equity Investing will teach you more than turning comments at a bank.
bump, any UMM/MF associates/principals care to share their perspective?
The firms you listed for MF vary tremendously. Would probably only take Silver Point (which is almost definitely not the offer you have).
can you share what you think of BX GSO/KKR PC/BCC and why you think they're inferior to GS/MS?
You're siloing yourself to work at a mediocre credit fund if you take any of those. Switching will be much more difficult than if at a top banking group.
The credit funds you listed are really different from each other. Silver point and oak hill are true credit funds that actively play in the distressed space. Analysts from these shops will regularly get inbound opportunities at top L/S managers. You'd have no trouble recruiting from there to any of the sharkier loan to own PE shops that play in the distressed space like Ares, Apollo, Centerbridge, Cerberus, Oaktree, etc. Honestly though that would be a pretty backwards step considering 90% of the associates at those funds would love to go work at Silver Point.
GSO, KKR, and Bain Cap are different animals -- all three have a ton of credit groups ranging from liquid performing stuff to special sits. The move from special sits / distressed credit to long / short is tried and true. A ton of people have done it, especially really young analysts. If you're doing direct lending (private credit), performing credit, CLO stuff, etc. honestly you're not gonna have many opportunities to go work at a top long short or PE fund.
Overall, if you're absolutely certain you want to be an associate at a MF PE shop in two years, it's really really hard to argue against the fact that GS / MS is the easiest, most visible, consistent path to get there.
I think you're off the mark regarding OHA. Pretty sure their analysts get almost no stressed/distressed exposure (despite being promised that) which makes OHA very different from SPC (which is a super sick shop).
Regarding GSO/KKR/BCC, see the most liked comment here: https://www.wallstreetoasis.com/forum/private-equity/blackstonekkrbain-…
1. seems like the jump to MF PE is not hard (even if you're mostly/only doing Direct Lending)
2. GSO and BCC have many pools of capital. Less familiar with GSO but I interviewed for FT with BCC and had a friend there who left last year. Apparently, the industry research analysts spend 1/3 to 1/2 of their time on distressed/special sits opportunities. In other words, analysts are not siloed into lower-yielding stuff and look at everything. Can't comment on GSO. I think for KKR you have 4 siloed pools of capital: leveraged credit (only public credit), private credit - credit solutions (MM Private Corporate Credit), Private Credit - asset finance (collateral-based lending i.e. aircraft, student loans, etc.), and their dislocation opps vehicle which stopped hiring SAs and FT analysts (not sure why) so not applicable to you.
For context, BCC participated in the buyout of Virgin Australia, did a PIPE investment in Icelandair, is investing $500 million in cold storage warehouses in the US, opportunistically investing in stressed/distressed real estate assets across Europe (with a focus on southern Europe), buying telecom fiber assets in the Midwest, underwriting minority investments in LMM/MM C&R businesses, providing mezz capital for LBOs, and so much more.
Check out their press releases and make sure you filter for Credit: https://www.baincapital.com/news?business=191
Unfortunately, I don't think GSO and KKR let you filter press releases by business unit but I'm guessing GSO does similar stuff (not sure which exact pool of capital does) and KKR's dislocation ops team which sits under credit does similar stuff as well.
Friend was in an industry research group at BCC (almost all of the analysts are) and spent 30-40% of his time on illiquid distressed/special situation opportunities and had no trouble exiting to a top notch L/S Equity Single Manager. If you go on LinkedIn and look at former employees of BCC, you'll see very strong exits to L/S Equity and Special Sits/Distressed Shops in addition to PE.
@ OP would say that Silver Point Capital and Bain Capital Credit are no-brainers. For KKR, make sure you're in PC - Credit Solutions and not leveraged credit or their asset-backed private credit group. Can't comment on GSO analyst experience since I'm not super familiar with them. If OHA analysts get good stressed/distressed experience, then take that. If not, then don't. The rule of thumb is basically you need Unitranche (L + 600), 2nd Lien (L+800), Mezzanine (10+%), Preferred/Structured Equity (15+%), Distressed (20+%), or buyout experience (25+%). The higher-yielding, the better (naturally). SPC, BCC, and KKR PC - Credit Solutions will get you that. Would do more reference checks w/ GSO/OHA analysts to figure out what the analyst experience is like and how much exposure they get to the above investment opps. See if GSO filters analysts by industry or product type and for OHA, ask how much time they spend on liquid vs. illiquids.
GSO has shifted their strategy quite a bit over the years and they do almost no distressed/special sits. Would be surprised if you got any exposure to that as an analyst vs. straightforward direct lending.
For what it's worth, Silver Point has recently started a private side of the firm that does deals more similar to the true credit shops that were listed. Different from their public side
Their private side has been around for a long time (well over 10 years). Historically only really the public side has taken interns. I don't believe the firm recruits undergrads at all any longer though.
For background, I went from a megafund credit role to a l/s equity role. If you want to do megafund PE, 100% do banking. You face an uphill battle convincing recruiters and interviewers to give you a chance. Regardless of reality, they will assume that you don't have the right skillset to do PE. Maybe you can convince them, maybe not. You'll definitely get MM PE looks, but megafund PE is extremely competitive as it is - you might as well give yourself the best chance of making it. I would not count on being able to transfer internally.
For l/s equity - if you're in a group that does stressed/distressed credit, it's very doable to move to l/s equity. Not to say it's not difficult - again, you have to convince people you have the right skillset to look at equities, but I've seen many other people do it. Personally, I found hedge fund recruiting to be much more meritocratic - once you convince recruiters to show you the roles, it's up to you to nail your pitches and case studies.
What HHs did you use for HF recruiting?
Dynamics and search one are the largest for hedge funds. I should emphasize that it's still not easy to move to a sm l/s hedge fund - there just aren't that many seats in these roles generally. Turnover is typically a lot lower, and you don't need near as many people compared to PE where you're executing transactions, working with companies operationally, etc.
do you mind sharing whether you were in a liquid or illiquid MF Credit group?
bump on this. Guessing you were in a liquids team but may be wrong. Also, were you a MF Credit analyst or a MF Credit Associate?
were you in liquid or illiquid credit and were you an analyst or associate?
The question you should be asking is if I joined as an analyst or as an associate. As long as you have, call it less than 4 years of experience, I don't think there's much of a difference in exit opportunities available for you as an analyst vs. once you're promoted. Entry level hedge fund roles often specify 1-3 or 2-4 years of experience (2 years banking + 2 years PE is also common). I've seen analysts and associates exit to very similar roles. Once you get to the 4 year mark and beyond, it gets harder to pivot (some people who don't want to do credit at this point get MBAs - to be fair megafunds typically position you well for this). I do think there's probably a difference for megafund credit associates who joined out of banking - the question is, why would you do that if you wanted to do MF PE in the first place?
I haven't seen a material difference in exit ops between liquid and illiquid credit. In both cases, recruiters just hear "credit." Certainly, it helps if you can point to specific experience that's relevant to the role you're recruiting for (maybe you got to do an LBO in your illiquid credit group, maybe you got to invest in public equities in your liquid credit group).
Congrats on Bain Credit
Thanks Randy Marsh
Del, caught a lot of MS for sharing exit data lmao.
I would caution you somewhat with this analysis - keep in mind some of those folks are in credit groups at those PE funds. Some of those folks also may have interned but then did something else in between. I'd recommend reaching out to people and asking them about their experience recruiting.
All of those listed PE exits are confirmed
I excluded other MF Credit exits which include opportunistic and illiquid capital pools at KKR, Carlyle, Cerberus, Ares, etc.
Yes, some people do hop to another shop for FT (which is an option available to OP as well)
The important takeaway is that these kids do fine and end up at incredible shops (often skipping PE and going straight to stellar HFs)
I don't think this list is accurate. Could you DM me?
which one do you want to see? will DM
Pale we bp
?
Take MF Credit and don't look back. Especially given your goals.
do you mind explaining why?
An additional point to note here is some nuance between illiquid and illiquid credit. Large cap, sponsor backed direct lending is illiquid but fairly vanilla in terms of process, terms, structure etc. Most of the time I hear "illiquid credit" in context of mezz and other special situations which can include anything from hairy deals, rescue financings, royalties, consumer lending, prefs, and straight buyouts. The latter of the two will provide much broader exit ops into distressed and PE (though maybe not MF) than vanilla sponsor direct lending. Some HHs won't consider vanilla direct lending candidates for special situations roles because the skill set really isn't there. Very important to know which of the two a strategy really is if a group is pitching themselves as illiquid credit.
Some other anecdotes. KKR Credit (leveraged finance) will ask you to your face if you are ok doing L+300 deals. I'm not so sure GSO is actively deploying new $ into distressed. Believe the remaining team is primarily a workout function which isn't necessarily the worst thing as you can put new $ to work in support of a RX, but not ideal. I've had friends interview for their "opportunistic" credit roles recently only to find out there is little true distressed involved. I am happy to be corrected on GSO. It was clear from the recent distressed panel at the milken conference that oak hill has a very different opinion on what distressed is vs someone like SVP, for example, which is probably what one cares about in that context. You can take a look at the recent Talen financing silver point and gtree did for an idea of the type of structurally interesting trades the private teams are doing, although that lien is being contested in BK and if avoided I'd expect many people to be fired.
I have a friend at BX, from what I know there are still a couple of funds that can do distressed / special situation investments. One I am most familiar with, is the energy fund which is opportunistic across distressed / special sits. Team can invest across credit spectrum (credit, hybrid, pref, common). Last few deals they did were an LNG deal last week resembles a normal private equity deal from the press release and growth deal a few months ago which was probably structured w a pref.
TLDR: Blackstone has been shifting more towards performing credit but a few funds (capital solutions fund and energy fund) can still do distressed investing. Market hasn’t been there for distressed as of late so have mostly been doing “special situation” deals which have been taking the form of structured equity deals. Have historically, at least on the energy side, done rescue financings in the past. Next few months will be interesting if more distressed hits the market.
ditto on this, they're also raising one of the largest mezz funds in the market
Hi, would you mind pming me? I’m an undergrad deciding between credit offers and interested in pursuing special sits in the long term. Would rly appreciate it, thanks.
Why don't you pick the skillset you want. Do you want to work in credit or nor?
Can anyone clarify if it’s easy or hard to move between performing/liquid credit and direct lending (or vice versa)
Bump, would like to know too. Am in similar sit.
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