MMPE analyst -> UMM/MF associate? Debating two offers
Curious what people think about the following options I have-
FT IB offer at a BB (not one of the top ones), but also got an offer from a MMPE firm with ~1B latest fund size. It's a newer shop, but the people I talked to seem really sharp and so far they seem to be performing well.
I'm leaning to taking the PE offer- I'm interested in PE at the end of the day, and for me IB was always just a path to get there. If I can skip the miserable 2 years in IB, why wouldn't I? I found the summer internship work mind numbingly dull and I think a PE role fits my skills and interests a lot better.
My fear is that I'm harming my long term career potential a little bit. While I'm not at a top BB or the best group at my bank, it's a solid team and there have been some MF placements in the past and lots of really solid UMM and MM PE exits. I think looking at the place I'm looking at for this analyst gig, it would probably be a 'worse' exit for someone from my group, as most go to larger funds (I'm not saying that I feel this way or that it is the right mindset, but just purely looking at fund size this is a smaller fund).
If I want to potentially make the move to UMM or MF PE for an associate role, or at least have the optionality to do so, is that possible from a MMPE fund? Can I talk to HHs, or will they not take me seriously because my fund doesn't have the brand power or someone at Goldman or the analyst program at KKR? I feel like the skills would be more applicable moving from PE->PE vs IB->PE, and I should be able to perform better in interview case studies and the like. I know modeling probably won't be as extensive, but I'm not worried about that and feel like I could learn that on my own. I'm most concerned about even being able to get my resume in front of someone at a larger fund.
One part of me, as I'm sure you can tell, is leaning towards the IB gig because its the safer option and the more trodden path, but at the end of the day, I have a really hard time wrapping my head around the concept that IB, not PE, is the best way to start a career in PE. I know that there's a good chance I go to this smaller fund, have a better chance at promotions/carry in the long run and stay there for the long haul, but I just want to keep my options open in case things go south or I don't like it for whatever reason.
If it matters, go to a target with a good GPA and standardized test scores and all that. Thanks in advance. Also searched around for previous threads on this topic and couldn't find any, but feel free to correct me if this has been discussed before.
bump
If this is USA related, note that my feedback is based on the European market:
I am assuming this is an upper tier IB - but in either case, I would strongly suggest going the IB route. Although the work is more "fun" in PE, you miss the fundamentals. How does a deal trajectory look like, what are the steps, who are involved, how does the sellside think, which types of DD do you do, how does a financial model work.
It will seem like relatively basic elements, but there's nothing like sharpening your teeth through a couple dozen deals in 2-3 years to learn the ropes and get a broad-sweeping view. In PE you will review 50 opportunities per year, of which only 10% in detail normally...maybe 1 deal a year if you get "lucky" (obviously depends per firm).
Beyond that, going MM -> UMM/MF is extremely difficult and uncommon (speaking from experience). I am finally getting -some- traction and the only reason is my geographically unique background (multi-lingual, experience in multiple EU countries, complex transactions even for mid market). It would help if you are a female + minority (sorry...truth - got declined for 2 MF's because they were only hiring females despite good fit and contact with a partner instead of via recruiter).
So decide for yourself: 1) Do you want a rapid career track into carry (i.e. carry payments within 10 years) in a mid-market where there's generally less structure (you can make a name for yourself); or 2) Do you want to go for UMM/MF where the brand name/prestige keeps options open past Associate level, but probably requiring MBA/switch to break into mid/senior level
If your choice is (2) definitely, 100% IB. If your choice is (1), still would consider IB - but if there's a great fit with the MM firm its a solid choice, which will remain difficult if you go IB and then want to go even MM.
It's a personal choice, no one can do that for you, but hopefully the above helps in your decision-making process. As a last reference perhaps, we have sent an analyst back into big4/IB (with recommendations etc) instead of promoting or keeping them on, to get the fundamentals up, as they could not crack it after 18 months...requirements too broad and not a good enough "sponge" for learning.
Let me know if you have further questions.
Super helpful, thanks.
Do you think there is a reason why HHs or UMM/MF PE firms don't like MMPE analysts? I get I'll have less deal experience (though this MMPE firm is very active, so I would hope to be on at least 1-2 deals a year), but I thought I'd be better versed in many other skills, so that would make up for it- instead of learning the ins and outs of PE like all the former banking analysts, I'd instead just need to work on the deal process a bit. It just seems counterintuitive to me to turn down a PE job to better my chances at a PE role later.
My other fear is that I know the PE world is basically a huge funnel- there are more banking analysts than there are associate roles, there's more PE associates than there are seats at top MBAs, and there are more PE associates getting MBAs then there are post MBA partner track positions. Basically, it's a constant rat race and there are plenty of opportunities to get cut. On top of that, landing in PE at all from IB can be tough, and I've heard that is never a guarantee, so I felt like breaking in now was a good way to lock in my seat. This whole process also scares me away from MF PE a little bit.
Last question- if I knew I were interested in MMPE, would you then recommend taking the MMPE role? Will I be a better MMPE associate with a banking background or a PE background? thanks a lot for the advice
Think of it like this: if you were a UMM/MF recruiter, would you prefer the safety of "established training grounds" with people from backgrounds they're most likely familiar with, or a wildcard PE analyst who may or may not have worked on a deal, and you KNOW will not have had structural training.
Associates tend to get taught how the philosophy of whatever firm you join works - done on top of what a recruiting manager will hope to be a solid foundation. If instead it clashes with how you used to do things at your no-name MM fund (active or not) they have to re-teach you "their ways".
Slightly overexaggerated but this broadly illustrates the thinking.
You're absolutely correct on the funnel. MBA's are deprioritising consultants and IB as profiles (and white males, again) so your likelihood is reduced, and MF's are setting up their own analyst pipelines to keep training/talent in-house as much as possible rather than to rely on IB.
So maybe to consider: headwinds for UMM/MF will get stronger to enter and the senior-level is fairly rigid so not a ton of upward movement in the bigger firms. If you believe you want to go mid-market, I would say go for the mid-market fund and take your bet with them longer-term. Moving lateral in mid-market is less of an issue than moving up in fundsize.
If your goal is to move into larger funds/MF, your mid-market bet is lower probability, I would suspect. Your quality of associate will depend, but in terms of learning curve - learning PROPERLY the ropes in PE out of uni will take you about 2 years. Learning it through IB you'll be a machine after 6-12mo and then its easier to become proficient from a solid base. If you manage to perform well at the MMPE after 2 years I suspect you'll be better WITHIN that given fund, and probably similar in a lateral MMPE move vs. a strong IB - but with a more unique profile.
Hope that helps?
ik you’re wondering why it’s better to go IB and why you’re better recruiting for associate seats in PE w a banking analyst background vs PE
So I hope that’s helpful in deciding. Just wanted to address that point as that was the answer I needed when I was recruiting for FT. FWIW, I ended up choosing a buyside analyst job, just at a very large firm with a built out analyst program
Super awesome comments btw.
Going to disagree with the volume part. And I don’t think IB do good DD on deals (thinking about assumptions) they just run with what management says and take something at face value to justify valuations. That’s not thinking about deals. Who cares what the sell side thinks (why is it important / they don’t have to think much do they? Correct this assumption, not trying to be arrogant). Also on the PE side you get pitched like a million times and have to evaluate who to choose. You probably get a better perspective of IB than thought of through that capacity of exposure and always looiiing at CIMS. IBanks are good info for market trends landscape comps etc. when nitty gritty of a company they don’t know shit and BS answers on the calls to refer to the owner on any valuable details. They just need to sell a vision, which is valuable, but I don’t think it’s fair to make your statements.
Friend works at 500mm-4B mm fund, with ~2000 deals evaluated per year and about ~500 getting an investment write up. As an analyst that’s ~15-20 platforms per year but also closing ~1 and 2-3 add ons based on portcos. You get way more volume at the MM. 2-4 years at a MF/UMM might never get to close anything lol
Depending on the actual 1B shop, comp, rep of the other associates and analysts, etc. take the BB offer and exit to a LMM or MM. should be easier competing with people from lower caliber banks.
Agree on your point regarding volume - although it does remain dependent on the shop, but if they have consistent execution every year its less of a concern I agree.
Also agree that BB do not do good DD - they learn how to sell...if you've not been there, how do you know what really is "banker fluff" and what is actionable? It helps having seen both sides in terms of rationalising an opportunity (from my perspective, I've written the CDD components and understand the gaps here well, translating this to inbound CIM's).
You do mention an important nuance @NotSarcastic" - if you do go IB, train yourself to think like an investor, instead of a salesman. This is extremely underrated/underprepared for many and a nuisance in our recruiting. Investor mindset, commercial, and operational accumen is rather limited from the admin/execution analysts coming from major banks. If you go IB - from day one think like an investor (in your limited off time) about each of your deals, in order to be ready to talk like one when your opportunity for an interview does come.
@Carolus Arkus covered it pretty well above. I think a few points to add is:
(1) Having a BB experience gives you a wide foundation of the broader financial market / how the financial system works. PE is a small sub-sector (but highly coveted esp on WSO) within finance. At a BB, you'd get peripheral knowledge on debt capital markets, equity capital markets, how S&T work, commodities which in my opinion gives you a better understanding of how money flows through on a macro level; there's a LOT more ways to raise capital outside of an LBO.
(2) Don't underestimate the network you will be exposed to at your time at a BB. if your MM PE fund is ~$1bn, I doubt there will be more than 3-4 associates in your class. I've made many life-long friends during my banking years and provided a much wider network. These friends made all the late nights worth it in retrospect; they are all crushing it in their respective industries, even if they left finance
Great points but 1) not hard to learn, and who’s really paying too much attention or cares? Also if you’re generally curious that peripheral info is peripherally important e.g. not important haha see what I did there. But someone could probably explain what you’re talking about in 5-20 minutes, most people know those things anyway, and what’s preventing any of us calling a banking friend and asking even it takes a few people a few hours collectively to get it explained? 2) when you need it, networking is a skill you need regardless. Having 5 friends who will pull for you somewhere in some specific context is great, but the skill of networking diminishes that value and is not a big deal considering you can reach out to Ex banking people through your associate/ex banking friends and get introduced.
I’d say going IB is a better idea tbh as well purely for optics. PE can wait, even though it’s better.
Your point two is extremely valid. Coming out of uni, going into a small PE team without relationships is daunting - my 20 person intake as strategy consultant has carried me through the first 2-3 years, and it was a shock moving into a 5 person LMM firm. If you're not from the area or went to school in that area, it is a very important point to take along in your consideration, even if its just from a personal/social perspective beyond the merrits of a high-earning, well positioned network.
I think there are 2 ways of looking at it. If you want to be in PE, then of course it makes most sense to jump directly in. IB is a great training ground, but nothing you learn is rocket science. Even at a junior level, the work in PE is significantly more intellectually stimulating. In general the work life balance will be better as well, and you likely aren't taking a hit on compensation. Once you are actually working in the industry you will likely start to care much less about rankings, MF, UMM, etc etc etc and understand the sector(s), strategy, personality type and other aspects you like and don't like.
In terms of moving from a MM PE fund into a MF / UMM fund, I think it is pretty difficult, assuming it isn't one of the usual suspect / brand name funds (Crestview, potentially Audax, few others). This is probably for a few reasons: 1) There is just a huge funnel of bankers / consultants to fill these spots, and the interview processes are tailored for these type of candidates. Recruiters approach all the banking groups / consulting firms and it is just easier for everyone involved. 2) Funds like bringing in fresh bankers who have never really evaluated deals before. I don't think either are particularly valid reasons, which means they can probably both be overcome, but it is more of an uphill battle.
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