Private Equity directly after Undergrad

I got to an HYP school, so this is uncommon but doable. I'm interviewing with a couple of middle-market PE firms that offer junior year summer analyst positions that hopefully lead into full-time analyst roles. Essentially skipping the 2-year IB analyst stint.

Is this ideal? Or is it worth it do BB IB for two-years and then go through a formal PE/VC recruiting process?

Considerations:
-What's it like to transition from middle-market PE to the KKRs, Blackstones, Sequoias, and Accel Partners of the world?
-Biz school prospects (HBS and Stanford GSB MBA) coming from these types of jobs?

P.S. I know I haven't even received an internship offer yet let alone graduated, but indulge me here for a bit.

 
Best Response

Depends on what you want to do. If you aren't sure yet, and you want to have as many options as possible, doing an IBD stint will prove worth your while, because you can reach out to recruiters and interview with anything from HFs to VC to PE to Corp Dev etc. There was a good post by someone on here recently, outlining how being in a bank as an Analyst will give you max flexibility for your future career.

If you are sure you want to be an investor, try to go directly for PE. You'll be able to go to business school, you may get directly promoted to a partner-track role etc. Depending on the place, you will miss out on Analyst training, having a class of 300 peers who did the training with you etc. If you can get directly into Blackstone for PE Analyst programs it's roughly the same as joining a BB though, they also have a month of training I believe. Class size will be much smaller, though, obviously.

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. See my Blog & AMA
 

I definitely wouldn't worry about turning down your I-bank offer, but I recommend being very careful in establishing what kind of job security and advancement prospects your position will have. There's often a danger in PE that you won't get on to a Principal/Partner track and will thus both miss out on carry and face a real risk of being made redundant in a down turn. This is partly why many people choose to enter PE/VC firms post-MBA or after spending some time in banking.

mba.tuck.dartmouth.edu/pages/clubs/peclub/pdfs/Private_Equity_Careers.pdf

Is a reasonably hlepful resource and expands on what I've been saying.

 

If you get this offer, and you want to be in PE then it's a no brainer. I wouldn't worry at all about job security or advancement prospects, if it doesn't happen you will be able to find something at another fund, and you might not have to go back for an MBA either. Don't worry about principal/partner track, you're just out of u-grad. This sounds like a great opportunity.

 

I would take the PE job if you get it. I don't think you should worry about either of your "concerns"

Finance isn't that small a world, and you are going to be an analyst at a BB, not exactly a position where you are flying on anyone important's radar. I wouldn't worry about your reputation being ruined by rescinding an offer. You are highly replaceable, and you won't be going to a direct competitor, so no one's ego is getting bruised.

You won't be doing exactly the same work as the people with 2-years of banking. Frankly, you don't have the same skills as those people, and it will take you time to acquire those skills. The type of work may be similar (running models, comps, diligence, etc), but you will have less responsibility and be given less scope, due to the fact that you haven't done a lot of these things before. That will change over time and you will be given more responsibility, so this shouldn't be a concern.

Overall, you should take the offer. Who knows if the PE market is going to be this hot in two years' time.

 

I wouldn't count you out of working at a BB just because there are a lot of 20 year old interns running around - your case is unusual, yes, but sometimes that's a good thing, and people tend to look favorably on military service. There were at least 2 analysts in my group that were nearing 30, and the big challenge for you is to convince others that you want the job, can deal with those who have more seniority but are younger than you, and that you're the man for the job.

As for your question about breaking into PE, unfortunately it's going to be about the same as most other undergrads where most firms just won't consider it. The reason is because these firms are looking not only for guys that have experience under their belts, but specifically guys that have IB experience. That being said, it's certainly not impossible, and being more mature and experienced may give you a leg up at those firms that do hire out of college relative to 20 year old kids. The hard part is going to be finding those firms since there's not really a comprehensive list. FWIW, I do remember meeting a guy who had done a few years in the Marines, then undergrad, then joined a PE firm out of undergrad. Another thought is that it may be helpful to reach out to ex-Army/military guys in PE because: 1) they might understand your situation better, 2) you never know what kinds of opportunities they might have their firms, 3) sometimes you'll come across firms with a cluster of ex military guys (check out Platte River Equity, for example) that might be more open to guys like you. Point is, you never know what doors will open until you knock. Also, if you go to a target/semitarget, don't forget to check the career postings.

 

Find smaller shops or places that have ex-military guys. Then you can build a sort of personal connection/rapport since those guys get it. You probably built up a ton skills and abilities that most people in life don't or take a long time to do so. It's also proven that you can or have worked in a team, under tons of pressure etc. Lots of people look highly upon it. So ask around (colleagues, friends, family, college, former folks you know from the military either way). You can definitely get a way in.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

I almost can't tell if this is a serious post. You're graduating from a non-target in 18 months with nothing but a PWM internship and you're too good for a BB banking job (that you don't even have, mind you) because you don't want to work with kids that are handful of years younger than you? And then you're weighing your likelihood of getting a PE gig right out of UG and among your considerations are the fact that you're supposedly attractive, type-A, and well traveled?

It sounds like a serious post, but there are parts that are unbelievable. I'll give you the benefit of the doubt and just assume you're clueless and need a bit of a wakeup call.

As far as UG->PE gigs go, I can't speak to every single position out there, but I can speak to the ones I've seen. The candidates hired into these seats are usually top 1-2% in their class among an elite cohort (eg Princeton, Harvard, Wharton M&T). They've been interning on Wall Street since freshman year with the last 1-2 internships being in a top bank within a top group. You'll never hear me say anything is impossible, but you can see where I'm going with this. To come from a non-target with PWM experience, is very very very difficult. I'd add to that if you do hustle your ass off and somehow get into a very small and unconventional PE shop that's willing to take you on, I'd query if that's the best seat for you right out of school... given what that says about the firm.

My advice would be to focus on getting a BB banking gig. Leverage whatever resources you can to get there, maybe ex-military bankers etc. If you can get to a BB banking gig, you'll be golden for a PE gig 2 years out. If you somehow get a PE gig directly out of UG, I'm willing to stake a huge sum of money on the fact that that seat for 3 years BB for 2 years and then to a solid PE shop.

You have a lot of things working against you including your age, your undergrad institution, your internship experience to date... and thats without knowing your GPA, interview skills, technical proficiency, financial market sophistication, etc.
If this is what you want to do, you're going to have to take some knocks along the way and not take anything for granted. If you get a BB banking gig, it'll be because you busted your ass and hustled beyond belief AND all the stars happened to line up in your favor. All the shit like working kids that younger than you should be the least of your worries. If this is really what you want to do, who gives a shit if they "usually hire older ex-military guys", they don't have to hire older ex-military guys, they just have to hire you. worry more about that and less about the age of your peers and how good looking and type-A you are less.

You've got an uphill battle but its by no means unimaginable for you to get a solid banking gig, followed by a really solid PE gig if you get your shit together and focus (a) what's important and (b) what you want, rather than what people want to give you.

 

On the above post - lots of truth. You have 18 months left in college. Why not just do both? Ie. try to interview and network at banks as well as as PE (or HFs). I think you really have to play up the military experience since that's like real life stuff (and don't let any "target school GS/JPM whatever" punks tell you otherwise - lot of it is massively overrated since most PE doesn't outperform anyway and most people don't become Stephen Schwartzman rich).

Network the bejesus out of things, be sociable, have a good story to tell (people LOVE a good story) and show that you are hungry. There are definitely smaller shops out there that will take you. If not pull time then why not start as an intern for 6 months or whatever. Lots of places like interns and are open to it, especially out of college. Once again the military experience, experiences gained, sacrifice etc, will definitely find a vibe somewhere. Meeting an HF guy? Why not skim a 10k about some company in an industry you are interested in and discuss it? Guys (esp on the HF side) love that. Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

Thanks again for the great responses/advice. I'm probably more worried about being older than my peers than I should be, appreciate the perspective.

Interested in hearing more about the smaller PE shops. Is there a stigma attached to being associated with a smaller-cap firm? Do I run the risk of pigeon-holing myself if I start out at a smaller place? Would the traditional route of BB summer analyst followed by a 2 year IBD stint be a better pathway into a solid PE firm?

Also, I think one of the best resources I have right now is the MD I work for. Do you think I should just outright ask him if he can put me in touch with someone in PE or maybe even pass along a good word to a PE fund we use? What's the best way to do that?

 

Its not so much as a negative stigma (although there is a distinct stigma with lesser known PE firms)... its more the fact that the PE space is so absurdly competitive and there is such little incentive for these firms to consider anyone but the absolute best of the best, for them to spend the time to humor a candidate that is anything less than stellar on paper, suggests they have a hard time getting top candidates or even mediocre banking candidates to see the value of working there for a few years vs. spending 2 years at JPM, Citi, Jeffreys, Harris Williams, etc.

And while yes as someone mentioned above the pedigree thing is pure nonsense it does exist for a few reasons. One of the most significant of which is pre-screening. But secondarily, the kids that would be attractive UG-->PE are candidates who have very substantial banking, modeling, due diligence etc. experience. You don't have any of those. So for a firm to hire you without those qualifications while there are other candidates who have those qualifications in spades suggests that (1) they can't get any of those candidates interested in them and (2) they most likely won't have you doing analysis, modeling, diligence, etc since they don't care that you're unable to do it.

In terms of you MD. You obviously need to gauge how receptive he would be yourself. But people tend to take it personally when you ask for a recommendation to leave their career track to pursue another (more promising one)... because implicit in that request is "what you've accomplished/done isn't adequate." Obviously that's a gross generalization, but it is human nature. There's no advice I can give you here. I've been in seats where I knew there was no way in hell that my bosses would help me get to PE, even though they loved me and I did a great job for them. And I was in seats where I knew my bosses would. It really comes down to your gut instinct.

 

You're an intern right? What is your relationship with the MD? Pull him aside and ask him to tell you his "story" how he got to where he is, what he did along the way, how lucky he got, what other careers he had along the way etc. After he finishes his story (this can be 2 minutes to 2 hours - the longer usually the better) He will probably be like, what are you thinking? (my current boss does not do that - oops). You should mention a bunch of things, including PE. Ie. keen to learn about them, what they are like, since well, I don't know you were in places like.. IRAQ and AFGHANISTAN and SERVING OUR NATION (definitely play all of this up without being arrogant - hence the all caps) and didn't have that exposure as a 20 year old like most people do. You'll have a different way of looking at things (ie investment opportunities, reading counterparts etc). And it shows that you can make sacrifices (ie. your early 20s in dangerous places doing real stuff rather than mucking around on these boards or getting hammered at a bar), which counts for a lot to some people.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

Yes it's possible - I did it from a similar background. Pm me and we can chat some more.

Marcus is right though. I was pretty lucky I would say. There are few legit opportunities and they are very competitive. If you are sure PE is something you want to do, I would focus all of your efforts on getting a banking job while pursuing PE as well, realizing you will probably fail.

 

Advantages: You are in PE right away, working your way up from the bottom, meaning you already have your foot in the door.

Disadvantages: You have a lot less training, but are expected to learn EXTREMELY quickly. You probably also won't have as many people in your analyst class, so you will have ALL the grunt work, and won't have as many people to make friends with that are your age.

 

Your biggest disadvantage (as mentioned above) will be the lack of a formal/comprehensive training program similar to what you would experience at a BB. Another disadvantage (or advantage depending on perspective) is the variability of the quality of your program, group and skill set when it comes to exiting. This applies more to middle market or lesser known shops. While you will start at the bottom and have grunt work you will also have the support of the investment bankers/lawyers/consultants/etc. that you are paying fees to so you will not be forced to spread comps and do other menial tasks as often as you would as an analyst in banking (again a lot of this is contingent upon your particular fund).

I would choose PE over IB (assuming comparable companies, i.e. not GS vs. No Name PE with $50 AUM) all day long. The work is generally more interesting, greater exposure to all aspects of the deal cycle, great networking opportunities, well-positioned for post MBA move to PE or opp to avoid MBA all together if there is chance to move up and participate in the carry.

 

I assume by regional you mean one of the smaller markets. If it's NYC or SF, then I'd say probably 70-80k total comp. If it's one of the smaller markets, then I'd say probably 60-70k total comp. Those are just educated guesses though. Without any other information, I would also take that position if I were you assuming you'll be doing investment analysis.

 

Even if it dips to 50k, I still wouldn't turn it down. I don't want to give away the market but it is certainly not a banking/finance center and at the same time a 21 year old making 50k+ is more than enough for rent, food, fun, potential b-school if I want to move to NYC or elsewhere, etc. Needless to say I'm pretty happy about this.

And yes, this would be for investment analysis and other modeling.

 

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