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11/26/10

In the spirit of thanksgiving, I have decided to host a thread where you can ask all you ever wanted about banking or PE. Please feel free to ask away.

Comments (251)

In reply to ixjunitxi
Best Response
11/25/10
ixjunitxi:

What is the compensation structure/salary like for 1st year PE Associates at mega funds particularly at KKR. There seems to be more transparency for IBD/S&T but not so much for PE? Additionally, did you have to do a case study or take a modeling test for your interview with KKR?

Basically compensation is comparable to that of a 1st year associate at an investment bank, maybe a little higher. KKR base is 100k which is along the same lines of some of the other comparable mega funds (BX, Carlyle, Bain, TPG). THL pays 125k, Apollo is known to pay 140k. Some other shops are all over the place (not confirmed but heard Crestview pays 150k). On the bonus side of things, it is fairly volatile, 400k a year may have happened once upon a time, but is certainly not realistic anymore. All-in comp is probably targeted somewhere in the 250kish range for the major shops. Regarding the case study, KKR does do a case study but it is not as rigorous as everyone makes out to be. It is basically a test where you will analyze a business using the information they provide you and you will be asked to put some materials together using excel, but then you will have a conversation with an associate or principal about what you put together. The modeling exam should really be the least of your worries because if the finance is not intuitive to you at that point, you will have an even more difficult time in the interview when you are expected to think on your feet.

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11/25/10

Are you familiar with MS's Firm Strategy & Execution group? Any idea on the exit ops for this group (or similar internal Corp Dev/Strategy at other large IBs) into PE? There doesn't seem to be a lot of info on such groups - quite curious.

11/25/10

I'm going to give it to you straight, if you want to maximize your shot at PE, you're going to want to stick to the traditional IBD groups where you get more of the analytical exposure that PE firms will want you to have. The firm strategy & execution group (or most internal corp dev groups at banks for that matter) will not provide you that background, even if you are gaining the MS brand. That said, I would pick an "inferior" bank where you can get better skills, perhaps M&A at a boutique. Of course, to the extent you can move into one of the more classic banking groups at MS (or a similar bank), that should be your first choice.

11/25/10

What is the compensation structure/salary like for 1st year PE Associates at mega funds particularly at KKR. There seems to be more transparency for IBD/S&T but not so much for PE? Additionally, did you have to do a case study or take a modeling test for your interview with KKR?

11/25/10

in your opinion, what are the major differentiators of candidates that are able to gain entry into and succeed in the upper echelon shops? obviously there are hundreds/thousands of junior bankers every year, but only a handful get top buyside gigs, and even fewer are able to keep progressing. similarly, what made you so successful?

also, could you share your general thoughts on the rat race? if you were to go back, would you change anything? and now that you're in a pretty enviable spot, do you see yourself working just as hard to keep climbing the ladder? Whether you plan on continuing or not, if you were to leave finance, what would you do?

11/25/10
In reply to greenapple
11/25/10
greenapple:

in your opinion, what are the major differentiators of candidates that are able to gain entry into and succeed in the upper echelon shops? obviously there are hundreds/thousands of junior bankers every year, but only a handful get top buyside gigs, and even fewer are able to keep progressing. similarly, what made you so successful?

also, could you share your general thoughts on the rat race? if you were to go back, would you change anything? and now that you're in a pretty enviable spot, do you see yourself working just as hard to keep climbing the ladder? Whether you plan on continuing or not, if you were to leave finance, what would you do?

I think personality is typically key, there are more than enough number crunching asian monkeys from wharton (pardon my language) that could fill the ranks of all the major mega funds. They key is to not only have those same number crunching skills, but also the other skills necessary to be the full package. I think as with anything else luck plays a large role in anything, but it is important to stay focused. Although you may not land your top choice whether that be in banking or PE, if you work very hard and have your stuff in order, you will likely be able to land a pretty good banking job, and a pretty good pe job (even if that means citi and madison dearborn, instead of gs/ms, kkr/bx etc.) At the end of the day, all this shit is more or less the same and the incremental difference between shops isn't as monumental as some people on this forum make it out to be. That said, for the most part brighter people will tend to be at better shops.

Regarding my thoughts on the rat race, it is what it is. I don't think I would change anything as I recognize that I am in a fortunate spot. That said, any kid who is 3-4 years out of school and thinks he has it made just because he works in PE is a bit delusional. A career in finance really starts in the junior MD role, everyone else is a glorified slave. As far as staying in PE, I don't think it is what it once was now that many of the premier PE funds have started to go public (KKR included). They aren't the nimble organizations (with the same upside potential) that might have existed a generation ago. To be fair though, there may not be as much upside in finance in this generation as in generations past.

In reply to Mzz
11/25/10
Mezz:

What are your hours like?

Contrary to popular belief, even for the so-called "New York sweatshops," the lifestyle is significantly better than in i-banking. There is a greater degree of dignity afforded to your time and quality of life in PE that certainly does not exist as a junior banker at a large investment bank. Yes, when you are on a deal, you are a slave again, but it is usually for a much better reason than a client-service pitch book. On average, you will probably get in a bit earlier (8:45 AM or so) than banking, but you will probably also leave around 9pm or so on average. The perks are also better, expensing policy is more lax, and you eat lunch in a dining hall. That said, when times are tough, they are tough, and that is finance afterall. Net net, definitely better than banking.

11/25/10

Sent you a PM

11/25/10

Hi, I like the spirit of your thread.

Is it still possible to transition into PE if you're a post-MBA IBD Associate, or is one perceived as more expensive than an analyst but also less open to being a grunt? Or is the post-MBA track a long-term career move that only gives you options once you reach MD level (where, as you say, you stop being a glorified slave and then your value is in your decision-making skills, network, etc)?

I believe I have the chance to get perhaps 6 months of pre-MBA PE experience at a small-ish fund, through networking. Would that make a significant difference during MBA recruitment, or would IBD still be the only option in the world of M&A?

Thanks! Enjoy the turkey and pumpkin pie.

11/25/10

Does KKR (and most mega-funds nowadays) have a 2-year and out program, or do they encourage you to stay for a while? If they do encourage you to stay for a while, do most people still go to B-school after two years?

11/25/10

Thanks for the thread -- it's refreshing to see something relevant on this forum. How well are the elite boutiques (GHL/EVR/LAZ/BX) represented in the top megafunds? Do you think they are overhyped on this forum?

11/25/10

Any advantage of M&A over Sponsors?

In reply to jtbbdxbnycmad
11/25/10
jtbbdxbnycmad:

Hi, I like the spirit of your thread.

Is it still possible to transition into PE if you're a post-MBA IBD Associate, or is one perceived as more expensive than an analyst but also less open to being a grunt? Or is the post-MBA track a long-term career move that only gives you options once you reach MD level (where, as you say, you stop being a glorified slave and then your value is in your decision-making skills, network, etc)?

I believe I have the chance to get perhaps 6 months of pre-MBA PE experience at a small-ish fund, through networking. Would that make a significant difference during MBA recruitment, or would IBD still be the only option in the world of M&A?

Thanks! Enjoy the turkey and pumpkin pie.

Appreciate the support. Regarding the transition into PE at the post-MBA IBD level, it is incredibly difficult to get into a megafund (especially in this market) if you are not from a traditional background. KKR will typically only really look at you if you did 2 years at a top bank, 2 years at top PE and then HBS. Are the only people in the world qualified enough to work in PE made of this mold? Absolutely not. Is life tough? Yeah, it can be. That said, absolutely do not make post-MBA decisions with an eye towards exit opps, this typically turns out badly. Associates in IBD do have exit opps, but they are not as clear and regimented as their analyst counterparts. In middle market shops it is probably not as regimented, but you will still absolutely need meaningful pre-mba experience that is hopefully related to finance. Exceptions to the rule always exist, but I am just generalizing here because generalizations are the easiest things to discuss.

Regarding the value of the MBA, it absolutely helps, but nobody is making promotion decisions based upon where somebody (or if) went to business school. However, a person may have a significantly better network because of their MBA contacts. That said, there are partners at KKR who skipped the MBA and are doing just fine. To each their own, and you really have to weigh the costs and benefits when you are faced with it. It is unlikely though that somebody will be a superior dealmaker solely because of the fact they have an MBA. Lately the trend seems to be that b-school for non career switchers is coming out of vogue, but that said, an MBA will still provide more career versatility down the road.

Regarding your plight, I would suggest you try and get that pre-mba PE experience as it will significantly boost your profile (and relevance) when you apply for those jobs post-MBA. You should not take a cut in pay or responsibility to get this position though as it will look weird on your resume or as you speak about it.

In reply to chiphifrat
11/25/10
chiphifrat:

Does KKR (and most mega-funds nowadays) have a 2-year and out program, or do they encourage you to stay for a while? If they do encourage you to stay for a while, do most people still go to B-school after two years?

Generally 2 year and out although this is becoming less so. You will see some superstars these days getting promoted to the post MBA level although there is still a preference for the MBA. Many kids also will leave to go to hedge funds (tiger cubs and the like) as the large PE funds are becoming more bureaucratic (it comes with the territory when you are publicly traded) and as such, harder to advance in. There isn't that much encouragement to stay, it's still a dog eat dog work place, so it's not like you're in a fund of 10 people where people are begging you to stay. You can still be replaced.

In reply to PennJamin
11/25/10
PennFranklin:

Thanks for the thread -- it's refreshing to see something relevant on this forum. How well are the elite boutiques (GHL/EVR/LAZ/BX) represented in the top megafunds? Do you think they are overhyped on this forum?

Appreciate it, god only knows how much filth is spewed in this forum. I've been a reader for quite some time and can't begin to explain how much misinformation is shared on this website. The elite boutiques are good for megafunds but the top groups are as follows:

GS TMT far and away #1
GS FIG / BX Restructuring
MS M&A

After that, it's good to be in any of the major M&A groups (or other industry groups at GS/MS), merrill's legacy m&a group which is now in BAML is pretty good, citi M&A is pretty good, the boutiques are also good (Lazard and BX M&A are terrific although Greenhill and evercore are a step behind in recruiting, moelis also does well since UBS LA had a strong track record of placement on the west coast at tpg and kkr west coast). The fact of the matter is, if you are not in one of these groups, it is an uphill battle. If you are in one of these main groups that I've mentioned, recruiters contact you, and all you do is submit your resume, and the rest is history. I never cold called a fund once, nor do they particularly want you to call them. They know what groups they generally want to reach out to, and they go back to them year after year. Again, is this fair? No. However, it is generally a good way to fill up a class if 8-10 people because on average the kids at GS are smarter than the kids at CS and so on. It's just a fact of life. Kids from non targets absolutely do occur, but they will need to do more networking through their own senior people, or through winning the ear of headhunters. Like anything else though, once you get an interview, the playing field is fairly flat. KKR's not going to take some bumbling fool from GS tmt over some stud in UBS just because he's from a better group.

In reply to Stringer Bell
11/25/10
Stringer Bell:

Any advantage of M&A over Sponsors?

Yes, M&A is better, you do real analysis there. Sponsors is more of a relationship manager for PE funds. Although you are exposed to PE funds, it doesn't matter much at the junior level since you aren't the real relationship manager. Be in M&A if you can. If you're in sponsors (especially at one of the better banks), it's not game over, but M&A is superior.

11/25/10

How is JPMorgan? Any specific groups that have good exit opps?

11/25/10

Hey 10xleverage, thanks a lot for your answers. Really appreciate them!

Do you know how things work in Europe? Is PE Megafund Recruiting significantly different compared to the US?

Thanks a lot in advance.

11/25/10

I guess I want to know is what you're up to now? You said you're a former MS/KKR, so I'm interested in why you left and do you see a lot of PE guys leaving like you did?

11/25/10
11/25/10

Thank you for the post, finally something I can dig my teeth deep into.

What I wanted to ask is: can you still get into a top PE shop if you work in a top IBD but in continental europe instead of london/US?

To make things clear: if one had an offer from Lazard or MS for a M&A place in Milan, would it erase completely every hope of making it to the buy-side? If not, what would be the steps to follow?

In reply to ss1000
11/25/10
ss1000:

How is JPMorgan? Any specific groups that have good exit opps?

Forgot about JPM, great firm. M&A is clearly the top group, but they are fairly strong across the board. JPM's rep has certainly improved post-crisis and has come closer to GS/MS in IBD than it was in years past. Amongst the bulge brackets they are probably in 3rd place, but would still choose some of the boutiques over them (Lazard, BX, maybe a few others).

In reply to mitchmcdeere
11/25/10
mitchmcdeere:

Hey 10xleverage, thanks a lot for your answers. Really appreciate them!

Do you know how things work in Europe? Is PE Megafund Recruiting significantly different compared to the US?

Thanks a lot in advance.

Don't know much about Europe so don't want to say anything with too much authority. That said, all the big shops have London offices so that is a start. However, the finance world is a bit different in Europe since there isn't as much focus on the MBA and it isn't as regimented as it is in the US (e.g. 2 years analyst, 2 years pre-mba assoc, mba, etc.). I imagine if you are in the U.S., you should recruit into a U.S. office, and then try to push for mobility to Europe.

In reply to eating926
11/25/10
eating926:

I guess I want to know is what you're up to now? You said you're a former MS/KKR, so I'm interested in why you left and do you see a lot of PE guys leaving like you did?

Don't want to out myself so will not tell you my whereabouts at the moment. That said, KKR and BX from what I've seen are a bit more open to promoting directly past the post-MBA level, although a decent amount will go to hedge funds and b-school too. Carlyle/TPG/Bain are extremely pro-business school and rarely if ever will directly promote. In fact, TPG and Bain try a lot to sell how great they are at sending people to HBS (although from what I've seen, placement amongst all the top funds is fairly excellent). The lure of the hedge fund scene is if you can get into a Greenlight or Pershing or the like, you will be making more and potentially have a more interesting job than continuing on the well trodden path of PE (which can feel crowded at times, despite how well-promising it is). Once you do the 2 and 2 thing, it is very important that you have an idea of what you truly want to do because you have more or less reached the end of the traditional path. Can't follow your peers forever.

11/25/10

What was the most fun you had working at both firms? (throwing footballs, volleyballs etc)

In reply to ametista
11/25/10
ametista:

Thank you for the post, finally something I can dig my teeth deep into.

What I wanted to ask is: can you still get into a top PE shop if you work in a top IBD but in continental europe instead of london/US?

To make things clear: if one had an offer from Lazard or MS for a M&A place in Milan, would it erase completely every hope of making it to the buy-side? If not, what would be the steps to follow?

Again, don't have much experience with the European scene but this sounds like it would be tough. The headhunters will traditionally look for candidates in their typical hunting grounds, and Europe (especially non-London europe) is not the first place to look on their list. If you were in Europe, I would look at some of the funds out there, I would imagine Permira (the best fund in Europe arguably) would probably be open to you. That said, when KKR is looking to pick up 10 kids, it just doesn't make sense to go looking for a diamond in the rough in the middle of Europe. Doors will still be open to you, but it will be on you to reach out pro-actively to headhunters to raise your hand ahead of time and make sure you are on their list when they start deciding who they want to put in front of the mega-funds.

In reply to 10xleverage
11/25/10
10xleverage:
PennFranklin:

Thanks for the thread -- it's refreshing to see something relevant on this forum. How well are the elite boutiques (GHL/EVR/LAZ/BX) represented in the top megafunds? Do you think they are overhyped on this forum?

Appreciate it, god only knows how much filth is spewed in this forum. I've been a reader for quite some time and can't begin to explain how much misinformation is shared on this website. The elite boutiques are good for megafunds but the top groups are as follows:

GS TMT far and away #1
GS FIG / BX Restructuring
MS M&A

After that, it's good to be in any of the major M&A groups (or other industry groups at GS/MS), merrill's legacy m&a group which is now in BAML is pretty good, citi M&A is pretty good, the boutiques are also good (Lazard and BX M&A are terrific although Greenhill and evercore are a step behind in recruiting, moelis also does well since UBS LA had a strong track record of placement on the west coast at tpg and kkr west coast). The fact of the matter is, if you are not in one of these groups, it is an uphill battle. If you are in one of these main groups that I've mentioned, recruiters contact you, and all you do is submit your resume, and the rest is history. I never cold called a fund once, nor do they particularly want you to call them. They know what groups they generally want to reach out to, and they go back to them year after year. Again, is this fair? No. However, it is generally a good way to fill up a class if 8-10 people because on average the kids at GS are smarter than the kids at CS and so on. It's just a fact of life. Kids from non targets absolutely do occur, but they will need to do more networking through their own senior people, or through winning the ear of headhunters. Like anything else though, once you get an interview, the playing field is fairly flat. KKR's not going to take some bumbling fool from GS tmt over some stud in UBS just because he's from a better group.

Just curious why GS FIG is ranked so highly...in terms of modelling skills FIG seems to be so different and less transferable than TMT or Healthcare...or it is just due to the increase deal flow in FIG?

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11/25/10

Can you explain what the culture is like among the different companies in the sell-side and buy-side (out of the ones you know)? I hear a lot of rhetoric about this but it'd be great to hear a more straight-forward interpretation.

11/25/10

can we drop the pm's and ask questions on board..very good chance someone else would like to know the same thing.

10xleverage...thanks for taking some time to provide some advice

In reply to blastoise
11/25/10
blastoise:

What was the most fun you had working at both firms? (throwing footballs, volleyballs etc)

I had a great time in banking, made some of my best friends in banking and will be in touch with them for many years to come as we all develop in our careers. In banking (especially as an analyst) there is this "us" vs. "them" (meaning everybody else, clients, associates, everybody), that makes for a truly fun experience. That said, I got worked very hard. We all had multiple experiences of pulling all-nighters on weekends, getting called back to the office, being miserably tired all the time, etc. In the end though, I would probably do it all over again (it's easy for me to say though because things worked out okay in the end, I'm sure it would be a tougher pill to swallow if things hadn't worked out as well). In PE, it is a more professional / less fun environment. We are business formal everyday, people are much older (even the really senior people like Kravis sit on the floor, albeit very far from the slaves), and there is less joking around. You don't really build the same friendships like you do in banking. Your relationships are more professional and are more business contacts. Overall though I had good times at both, and while neither experience was perfect, no job really is. Like any job, you get what you pay for, you might get worked, but usually you do it knowing you will be compensated (both financially and in terms of opportunities). No such thing as a free lunch.

11/25/10

Really appreciate that you're doing this!

I'm currently at a semi-target in Canada and trying to grab something for my last internship next summer.

My school offers a wide variety of positions in Toronto, but for the U.S. positions we're pretty much on our own. I'm finding it hard to network very much aside from a few contacts at my current internship who came from the U.S. Would you have any advice on what I should be doing to increase my chances? Even on places like linkedin most of my alum seem to work for unrelated groups at these firms (i.e. tech) or have restricted contact information.

Thanks again!

11/25/10

This is great, thanks for doing this (though of course we all still love CompBanker and the other PE guys here). Did KKR hire consultants when you were there? Obviously Bain is the most consultant-friendly megafund, but do the other ones ever go that route? And if so, is there anything particular that they're looking for in an MBB consultant?

One of those lights, slightly brighter than the rest, will be my wingtip passing over.

In reply to Olympus123
11/25/10
Olympus123:

Can you explain what the culture is like among the different companies in the sell-side and buy-side (out of the ones you know)? I hear a lot of rhetoric about this but it'd be great to hear a more straight-forward interpretation.

Like I said in my earlier post, banking was just more fun for a host of reasons. The shenanigans you can pull in banking just are unacceptable in PE. I would not be caught dead dozing off in PE but as an analyst in banking, there's nothing more comical than a banking analyst passed out in his seat. I will always look back at my banking experience fondly and still keep in touch with both junior and senior people that I have worked with there. The buy-side is a mixed bag, if you are working at sequoia it will be much different than KKR. Some buy-side joints are more laid back, KKR is the other extreme. The culture is more discernible when you have a group of 120 people instead of 12000 people like at a large investment bank. Although MS has a culture, it is not as cogent as KKR's. While there is a lot of cool factor with the KKR culture, it wears off fast when you realize the shit sandwich tastes the same on the buyside as the sellside. Overall though, would work at both places again in a heartbeat, the people I worked with at my times in both firms were top notch.

In reply to monty09
11/25/10
monty09:

can we drop the pm's and ask questions on board..very good chance someone else would like to know the same thing.

10xleverage...thanks for taking some time to provide some advice

Yes, please post in the forum as I'd prefer answering here. Thanks.

11/25/10

Excellent forum. It's nice to see people getting such sound, realistic advice. I'd certainly award a SB if I had one.

I particularly enjoyed reading this:

"KKR will typically only really look at you if you did 2 years at a top bank, 2 years at top PE and then HBS. Are the only people in the world qualified enough to work in PE made of this mold? Absolutely not. Is life tough? Yeah, it can be."

Fucking comedy... and also very true.

11/25/10

Sounds like basically all post-MBA hires have previous PE experience, what's the breakdown of previous megafund vs midmarket etc?

Do megafunds ever hire pre-MBA analysts from other buyside shops?

You mentioned people going to HFs and smaller shops after their two years-do you feel like it's a natural transition from PE to liquid markets?

Thanks for the insight.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

11/25/10

do people at either firm check wall street oasis other than you?

In reply to monkeyspells
11/25/10
monkeyspells:

Really appreciate that you're doing this!

I'm currently at a semi-target in Canada and trying to grab something for my last internship next summer.

My school offers a wide variety of positions in Toronto, but for the U.S. positions we're pretty much on our own. I'm finding it hard to network very much aside from a few contacts at my current internship who came from the U.S. Would you have any advice on what I should be doing to increase my chances? Even on places like linkedin most of my alum seem to work for unrelated groups at these firms (i.e. tech) or have restricted contact information.

Thanks again!

The main targets in Canada from what I've seen are Ivey (I believe this is at Queen's) and McGill, outside of those schools I am less familiar. I would continue doing what you're doing as far as networking with your American colleagues and be open to potentially interning for a summer in Canada and then using that as a spring board into a U.S. position. It will be an uphill battle, but you will have to be aggressive about utilizing whatever network you do have (and if you are at a semi-target, you should be able to find someone who can help you) into finding a lead. If you are only a sophomore, you will have plenty of time to get this process going, if you are a senior, time is not on your side. You should start now though as it will not be as easy as coming from a U.S. target.

In reply to 10xleverage
11/25/10
10xleverage:
ametista:

Thank you for the post, finally something I can dig my teeth deep into.

What I wanted to ask is: can you still get into a top PE shop if you work in a top IBD but in continental europe instead of london/US?

To make things clear: if one had an offer from Lazard or MS for a M&A place in Milan, would it erase completely every hope of making it to the buy-side? If not, what would be the steps to follow?

Again, don't have much experience with the European scene but this sounds like it would be tough. The headhunters will traditionally look for candidates in their typical hunting grounds, and Europe (especially non-London europe) is not the first place to look on their list. If you were in Europe, I would look at some of the funds out there, I would imagine Permira (the best fund in Europe arguably) would probably be open to you. That said, when KKR is looking to pick up 10 kids, it just doesn't make sense to go looking for a diamond in the rough in the middle of Europe. Doors will still be open to you, but it will be on you to reach out pro-actively to headhunters to raise your hand ahead of time and make sure you are on their list when they start deciding who they want to put in front of the mega-funds.

Thanks for the great answer.

One last thing: can you tell me some PE shops active in europe, aside from Permira? Even not top ones.

In reply to 2x2Matrix
11/25/10
2x2Matrix:

This is great, thanks for doing this (though of course we all still love CompBanker and the other PE guys here). Did KKR hire consultants when you were there? Obviously Bain is the most consultant-friendly megafund, but do the other ones ever go that route? And if so, is there anything particular that they're looking for in an MBB consultant?

Yeah KKR will hire consultants from time to time, really only McKinsey, not familiar with any BCG or Bain guys, and even the McKinsey guys will need to have a finance bent to them (think Wharton UG, or they were in McKinsey's corporate finance group which is a glorofied IBD group within Mck). If you want to do PE, do not go into consulting (even if it's McKinsey), you will have a much more linear path going to one of the main target banks. Bain is far and away the most consultant friendly, they hire about 10-12 people each year, with 6-8 having been consultants (they primarily only look at mckinsey and bain and maybe a little bcg). the other funds may take 1 consultant if that each in any given year. If you're a consultant, there's no question you will be able to do porter's 5 forces nonsense in your sleep, the main question is if you can do finance (which is why if you are some history major coming out of bcg, the odds will be heavily stacked against you since you will not know your finance as in depth as some wharton/gs nerd). If you are coming from consulting, your best bet is to sharpen your finance skill set independently or get assigned on projects with a corporate finance bent where you can get up to speed on these things. KKR will not have any patience though for some mckinsey kid who needs a year to get taught the basics, at this point in your career the time for handholding has stopped.

In reply to blastoise
11/25/10
blastoise:

do people at either firm check wall street oasis other than you?

Yes, everyone does, but a lot of people don't participate for fear of being exposed or because this place is filled with so much shitty information it is not even worthwhile trying to participate in a constructive manner.

11/25/10

Thanks for coming on here...

Do you have any advice for managing the PE recruiting process? Headhunters are starting to reach out to people now and I'd be interested to hear how you handled everything. Should we work with every search firm that contacts us? Only the "best" ones? Is there anything you can do to make sure you're at the top of their list when they're deciding who to put in front of clients?

11/25/10

For a first year analyst at good bank in Chicago (one that you mentioned in your list...with execution in Chicago), but a low GPA (3.5) from a solid regional school (Illinois/Indiana type), am I going to be at a severe disadvantage for PE recruiting? Do PE shops have a GPA cut-off and does that vary by school? I obviously don't expect to get into a megafund given my stats, but was wondering if you knew how solid MM PE shops may view someone with my background.

Also, do you think making a lateral switch to a NY office after my first year will help my cause? Thanks a lot for this thread.

In reply to Kenny_Powers_CFA
11/25/10
Kenny_Powers_CFA:

Sounds like basically all post-MBA hires have previous PE experience, what's the breakdown of previous megafund vs midmarket etc?

Do megafunds ever hire pre-MBA analysts from other buyside shops?

You mentioned people going to HFs and smaller shops after their two years-do you feel like it's a natural transition from PE to liquid markets?

Thanks for the insight.

First and foremost, nice handle, love eastbound and down, great show. Regarding hiring pre-mba people from other shops, it does happen, but again it is few and far in between. This will happen in more frothy times when the fund realizes they underhired and will need to find someone very quickly, this will not happen in the traditional course of recruiting. That said, KKR will not say "we need a class of pre-mba associates, let's recruit at GS/MS and TPG." In a frothier market though, KKR might in the middle of the year try to pick up a kid from TCV or some mid-market fund or something like that.

Regarding the transition to smaller shops, I think what happens is that kids just get fed up working in a bigger place and want to work in a smaller environment. One of the frustrations of PE is that it is a fairly slow environment, although the big funds will do large prominent deals, the odds of you working on one of the blockbuster deals are small because KKR might only do 3 deals a year, and there are 10 associates in a class, it's a numbers game. In the public markets, you may be putting on smaller positions, but they are shorter horizons and more frequent which (for some people) is more interesting. That said, it is certainly a lot of fun to have the things you work on be on the front page of every paper and blog (which absolutely happens when you work at a big fund, if you are lucky to be working on one of these deals). Not everyone goes the hedge fund route, I think it is actually a pretty good split between those who go back to b-school and stay in PE (at KKR or another fund), and those who go to hedge funds. A lot also comes down to the market. In worse markets, kids will go to b-school because there are not as many options, in better markets, the hedge fund opportunities are just to good to turn down so oftentimes people will bypass business school altogether. The decision oftentimes really comes down to the market environment you are in and what options you have on your plate.

In reply to 10xleverage
11/25/10
10xleverage:
2x2Matrix:

This is great, thanks for doing this (though of course we all still love CompBanker and the other PE guys here). Did KKR hire consultants when you were there? Obviously Bain is the most consultant-friendly megafund, but do the other ones ever go that route? And if so, is there anything particular that they're looking for in an MBB consultant?

Yeah KKR will hire consultants from time to time, really only McKinsey, not familiar with any BCG or Bain guys, and even the McKinsey guys will need to have a finance bent to them (think Wharton UG, or they were in McKinsey's corporate finance group which is a glorofied IBD group within Mck). If you want to do PE, do not go into consulting (even if it's McKinsey), you will have a much more linear path going to one of the main target banks. Bain is far and away the most consultant friendly, they hire about 10-12 people each year, with 6-8 having been consultants (they primarily only look at mckinsey and bain and maybe a little bcg). the other funds may take 1 consultant if that each in any given year. If you're a consultant, there's no question you will be able to do porter's 5 forces nonsense in your sleep, the main question is if you can do finance (which is why if you are some history major coming out of bcg, the odds will be heavily stacked against you since you will not know your finance as in depth as some wharton/gs nerd). If you are coming from consulting, your best bet is to sharpen your finance skill set independently or get assigned on projects with a corporate finance bent where you can get up to speed on these things. KKR will not have any patience though for some mckinsey kid who needs a year to get taught the basics, at this point in your career the time for handholding has stopped.

If you are a history major coming out of McKinsey/Bain and you're looking to prove your finance skills, would passing the CPA be helpful? Obviously it's an assload of work, but would the combination of that and McKinsey be enough to convince them that you can do the work?

One of those lights, slightly brighter than the rest, will be my wingtip passing over.

In reply to ametista
11/25/10
ametista:
10xleverage:
ametista:

Thank you for the post, finally something I can dig my teeth deep into.

What I wanted to ask is: can you still get into a top PE shop if you work in a top IBD but in continental europe instead of london/US?

To make things clear: if one had an offer from Lazard or MS for a M&A place in Milan, would it erase completely every hope of making it to the buy-side? If not, what would be the steps to follow?

Again, don't have much experience with the European scene but this sounds like it would be tough. The headhunters will traditionally look for candidates in their typical hunting grounds, and Europe (especially non-London europe) is not the first place to look on their list. If you were in Europe, I would look at some of the funds out there, I would imagine Permira (the best fund in Europe arguably) would probably be open to you. That said, when KKR is looking to pick up 10 kids, it just doesn't make sense to go looking for a diamond in the rough in the middle of Europe. Doors will still be open to you, but it will be on you to reach out pro-actively to headhunters to raise your hand ahead of time and make sure you are on their list when they start deciding who they want to put in front of the mega-funds.

Thanks for the great answer.

One last thing: can you tell me some PE shops active in europe, aside from Permira? Even not top ones.

To be honest, really don't know the scene for PE shops that just do Europe. All the big american funds have large and fairly autonomous operations in Europe, so you should really be looking at those. KKR/BX/Carlyle etc. all have offices abroad and large presences there. These days too with so much opportunity being overseas and with people pushing into emerging markets, the megafunds are still great places to work at since most of the opportunity in NYC has been captured by people higher in the food chain. Big American buyouts done by NYC firms is kind of a thing of the past, these firms aren't stupid though and are making a big push abroad. All in all, I would just look at a lot of the european offices of the firms that are already household names in america.

In reply to need_your_thoughts
11/25/10
need_your_thoughts:

For a first year analyst at good bank in Chicago (one that you mentioned in your list...with execution in Chicago), but a low GPA (3.5) from a solid regional school (Illinois/Indiana type), am I going to be at a severe disadvantage for PE recruiting? Do PE shops have a GPA cut-off and does that vary by school? I obviously don't expect to get into a megafund given my stats, but was wondering if you knew how solid MM PE shops may view someone with my background.

Also, do you think making a lateral switch to a NY office after my first year will help my cause? Thanks a lot for this thread.

PE shops don't necessarily have a gpa cutoff, but there is no question they like to see academic excellence (when you are only picking up 10 kids, you can have your cake and eat it too ). That said, if you are not focusing on the top tier of megafunds you will be fine, especially if you are coming from a good bank regardless of whether it is the Chicago office. Like anyone else coming from a semi-target bank, you will need to network hard (both with firms, but also with headhunters so that they can get you interviews), and when you are in the interviews, you will have to take care of business like anybody else. The MM PE shops are less of sticklers with focusing kids with a perfect resume. Like any other job, if you can display your intelligence and drive, you have as good of a shot as anybody. You will have to do more leg work though to get the same interviews your bulge bracket NY peers might take for granted though.

Regarding a switch to NY, yes, I would say to go for it if you could swing it. If it is a serious annoyance to your life, then don't, but everything else being equal, do it. More recruiting is done in NYC, more firms, more headhunters, more everything is in NY, it will just be straight up more helpful and make it easier to network by being in NY.

11/25/10

10xleverage, thank you so much for this thread. You are awesome!

You mentioned before that at some point you have to stop following the track and just mirroring your peers.

What are the common things that pre-MBA PE associates do following their two to three year stint? What percentage would you say stay in PE vs. do other things? What are those "other things" typically? And what are the reasons for doing them?

Thank you!

In reply to panther2k
11/25/10
panther2k:

Thanks for coming on here...

Do you have any advice for managing the PE recruiting process? Headhunters are starting to reach out to people now and I'd be interested to hear how you handled everything. Should we work with every search firm that contacts us? Only the "best" ones? Is there anything you can do to make sure you're at the top of their list when they're deciding who to put in front of clients?

There is no special strategy, it's like anything else in life, stay on top of your game and just crush ruthlessly. Do not turn down interviews or count your chickens before you hatch. Work with all the search firms and cast a wide net, but also make sure to be straightforward with them about what you want (do not say you are open to working in Chicago if you are not going to do this, it is a waste of everyone's time). That said, you should interview as much as you can as the practice is good for you, especially as you build up to the more difficult interviews at the megafunds. I interviewed at several megafunds an these interviews can be prepped for, but the more preparation the better. You cannot go in to one of these interviews cold and expect to hit it out of the park, that is why it is important to interview as much and as early as you can so that you get a hang of it. Regarding the headhunters, make sure to be likable. If you're an asshole and nobody likes you, that is a big problem and it will hold you down. I mean there is only so much you can do, if you are annoying and not likable, it doesn't matter how quickly you can compute WACC in your head. The headhunters function as gatekeepers, so it is important that they like you, or else they will not put you in front of the best firms. You will have preliminary interviews with the headhunters, and although they will not be as rigorous as the real deal, they are important for making it to the next step, so you should treat them with the same respect you would treat a final round with your top choice fund, because in some ways, it is just as important.

11/25/10

I know kids at bain and the reason they do place into PE over the other McK and BCG is that they have a 6month private equity rotation where you do an externship at a PE firm...alot of times they let (correct me if im wrong cuz im shaky on this last part) their kids, should they choose to, to continue at the firm where they were externing. So obviously that program allows for good PE networking and an opportunity to learn the finance needed.

Anyone by chance know where the Bain kids mostly do their rotations?....I feel like that might explain the Bainies at HF GG and Bain Cap if theyre externing there

In reply to ibanking101
11/25/10
ibanking101:

10xleverage, thank you so much for this thread. You are awesome!

You mentioned before that at some point you have to stop following the track and just mirroring your peers.

What are the common things that pre-MBA PE associates do following their two to three year stint? What percentage would you say stay in PE vs. do other things? What are those "other things" typically? And what are the reasons for doing them?

Thank you!

Business school is clearly the most common path, many kids are burnt out or want to take a break to find out what they "really" want to do in life. It's hard to quantify because like I said, every year is different given the state of the market. In 2006-2007, the hedge fund opportunities were just too attractive to turn down a 500k a year job at a tiger cub or tiger spin. In 09, there were no hedge fund opportunities, so business school was a bit of a safer bet; there's really no one size fits all. Like I also said, I think KKR/BX probably send a little more to hedge funds while TPG/Bain are very pro business school. Even at KKR/BX though, over half will go to business school in any given year. After business school many of them will go back into PE (not as many as you think though come back to the same firm) or go to a hedge fund or some other type of fund. It is rare I think for someone who has done 4 years of banking and PE to really do a 180 and start working at a non-profit, I don't really see that happening. If that happens, it generally happens after the 2 year banking period. I think right now PE has become as institutionalized as it has ever been (I mean look at how many people are posting on this thread right now), and it has become quite similar to banking in terms of how defined the path is. As such, it will be very interesting to see what the kids who are doing PE right now, or just left to go to business school, will be doing in 5 years since private equity isn't the elusive asset class that it might have been 10 (or really 20) years ago.

In reply to 2x2Matrix
11/25/10
2x2Matrix:
10xleverage:
2x2Matrix:

This is great, thanks for doing this (though of course we all still love CompBanker and the other PE guys here). Did KKR hire consultants when you were there? Obviously Bain is the most consultant-friendly megafund, but do the other ones ever go that route? And if so, is there anything particular that they're looking for in an MBB consultant?

Yeah KKR will hire consultants from time to time, really only McKinsey, not familiar with any BCG or Bain guys, and even the McKinsey guys will need to have a finance bent to them (think Wharton UG, or they were in McKinsey's corporate finance group which is a glorofied IBD group within Mck). If you want to do PE, do not go into consulting (even if it's McKinsey), you will have a much more linear path going to one of the main target banks. Bain is far and away the most consultant friendly, they hire about 10-12 people each year, with 6-8 having been consultants (they primarily only look at mckinsey and bain and maybe a little bcg). the other funds may take 1 consultant if that each in any given year. If you're a consultant, there's no question you will be able to do porter's 5 forces nonsense in your sleep, the main question is if you can do finance (which is why if you are some history major coming out of bcg, the odds will be heavily stacked against you since you will not know your finance as in depth as some wharton/gs nerd). If you are coming from consulting, your best bet is to sharpen your finance skill set independently or get assigned on projects with a corporate finance bent where you can get up to speed on these things. KKR will not have any patience though for some mckinsey kid who needs a year to get taught the basics, at this point in your career the time for handholding has stopped.

If you are a history major coming out of McKinsey/Bain and you're looking to prove your finance skills, would passing the CPA be helpful? Obviously it's an assload of work, but would the combination of that and McKinsey be enough to convince them that you can do the work?

It might be, but I really don't know anyone who was ever proud of passing the CPA. If someone tells me they have a CPA I tend to think that they are bald and middle aged and probably drive a used red convertible (yes, I'm obnoxious). I just don't have a precedent to judge whether that would work so I don't want to say anything, I can't imagine that it would hurt, but I imagine there might be better ways to channel your time and energy (maybe even just selfstudying corp. finance in your spare time).

In reply to 10xleverage
11/25/10
10xleverage:
ibanking101:

10xleverage, thank you so much for this thread. You are awesome!

You mentioned before that at some point you have to stop following the track and just mirroring your peers.

What are the common things that pre-MBA PE associates do following their two to three year stint? What percentage would you say stay in PE vs. do other things? What are those "other things" typically? And what are the reasons for doing them?

Thank you!

Business school is clearly the most common path, many kids are burnt out or want to take a break to find out what they "really" want to do in life. It's hard to quantify because like I said, every year is different given the state of the market. In 2006-2007, the hedge fund opportunities were just too attractive to turn down a 500k a year job at a tiger cub or tiger spin. In 09, there were no hedge fund opportunities, so business school was a bit of a safer bet; there's really no one size fits all. Like I also said, I think KKR/BX probably send a little more to hedge funds while TPG/Bain are very pro business school. Even at KKR/BX though, over half will go to business school in any given year. After business school many of them will go back into PE (not as many as you think though come back to the same firm) or go to a hedge fund or some other type of fund. It is rare I think for someone who has done 4 years of banking and PE to really do a 180 and start working at a non-profit, I don't really see that happening. If that happens, it generally happens after the 2 year banking period. I think right now PE has become as institutionalized as it has ever been (I mean look at how many people are posting on this thread right now), and it has become quite similar to banking in terms of how defined the path is. As such, it will be very interesting to see what the kids who are doing PE right now, or just left to go to business school, will be doing in 5 years since private equity isn't the elusive asset class that it might have been 10 (or really 20) years ago.

Great, thanks again. So post-MBA you would say the vast majority typically go back into PE? But typically with different firms? Is it pretty common for people at megas to end up at smaller firms post-MBA? There aren't nearly enough spots for everyone pre-MBA to continue at the megas, correct? So logically many people would have to trade down?

In reply to got_value
11/25/10
Gobears88:

I know kids at bain and the reason they do place into PE over the other McK and BCG is that they have a 6month private equity rotation where you do an externship at a PE firm...alot of times they let (correct me if im wrong cuz im shaky on this last part) their kids, should they choose to, to continue at the firm where they were externing. So obviously that program allows for good PE networking and an opportunity to learn the finance needed.

Anyone by chance know where the Bain kids mostly do their rotations?....I feel like that might explain the Bainies at HF GG and Bain Cap if theyre externing there

That is interesting, am not totally familiar with the externship program so that might be the case. I know more bain cap people than bain consulting people so I am not entirely sure where they do their rotations. Bain consulting is obviously a great offshoot into bain capital since they are sister firms (even though they are economically independent entities). Like I said though, if you want to do PE, don't mess around in consulting, it is an unnecessarily harder path.

In reply to ibanking101
11/25/10
ibanking101:
10xleverage:
ibanking101:

10xleverage, thank you so much for this thread. You are awesome!

You mentioned before that at some point you have to stop following the track and just mirroring your peers.

What are the common things that pre-MBA PE associates do following their two to three year stint? What percentage would you say stay in PE vs. do other things? What are those "other things" typically? And what are the reasons for doing them?

Thank you!

Business school is clearly the most common path, many kids are burnt out or want to take a break to find out what they "really" want to do in life. It's hard to quantify because like I said, every year is different given the state of the market. In 2006-2007, the hedge fund opportunities were just too attractive to turn down a 500k a year job at a tiger cub or tiger spin. In 09, there were no hedge fund opportunities, so business school was a bit of a safer bet; there's really no one size fits all. Like I also said, I think KKR/BX probably send a little more to hedge funds while TPG/Bain are very pro business school. Even at KKR/BX though, over half will go to business school in any given year. After business school many of them will go back into PE (not as many as you think though come back to the same firm) or go to a hedge fund or some other type of fund. It is rare I think for someone who has done 4 years of banking and PE to really do a 180 and start working at a non-profit, I don't really see that happening. If that happens, it generally happens after the 2 year banking period. I think right now PE has become as institutionalized as it has ever been (I mean look at how many people are posting on this thread right now), and it has become quite similar to banking in terms of how defined the path is. As such, it will be very interesting to see what the kids who are doing PE right now, or just left to go to business school, will be doing in 5 years since private equity isn't the elusive asset class that it might have been 10 (or really 20) years ago.

Great, thanks again. So post-MBA you would say the vast majority typically go back into PE? But typically with different firms? Is it pretty common for people at megas to end up at smaller firms post-MBA? There aren't nearly enough spots for everyone pre-MBA to continue at the megas, correct? So logically many people would have to trade down?

I don't necessarily know if it's trading down so much as there are compelling opportunities at places that might not have the same brand name. The problem with the larger firms is that a bottle neck starts to occur at the top end, and the bottleneck will get even more tight as time goes on (now that PE firms have started going public). Continuing at a mega fund is a safer path, but there is only one Henry Kravis at KKR, if you want to make a bunch of money, your best bet is to go somewhere smaller. Different strokes for different folks. I wouldn't necessarily think about it as spots available for people, it's a lot of self-selection. Like I said though, this whole 2+2 thing is still a very new concept, and I think it will be very interesting to see what happens to this generation 5-10 years from now, not enough time has really elapsed to make large generalizations. This is what I'm trying to say, it's about at this point you have to make a decision about what you want to do, you can't keep following your peers.

11/25/10

How influential can a very senior banker be on the PE interview process? I am debating whether or not to accept my return offer at a "lower" BB- according to consensus opinion of this site- and the reason why I'm considering it is bc. the group head has been a very helpful mentor. The group is great (top at the bank), and they do have a strong history of placing into PE (not a frequent occurrance, but have definitely placed at KKR, TPG, Carlyle before). I love the people in this group, so should do you think I should just go ahead and accept....considering I have an MD who will really support me?

or should I aim for GS/MS?

In reply to 10xleverage
11/25/10
10xleverage:
2x2Matrix:
10xleverage:
2x2Matrix:

This is great, thanks for doing this (though of course we all still love CompBanker and the other PE guys here). Did KKR hire consultants when you were there? Obviously Bain is the most consultant-friendly megafund, but do the other ones ever go that route? And if so, is there anything particular that they're looking for in an MBB consultant?

Yeah KKR will hire consultants from time to time, really only McKinsey, not familiar with any BCG or Bain guys, and even the McKinsey guys will need to have a finance bent to them (think Wharton UG, or they were in McKinsey's corporate finance group which is a glorofied IBD group within Mck). If you want to do PE, do not go into consulting (even if it's McKinsey), you will have a much more linear path going to one of the main target banks. Bain is far and away the most consultant friendly, they hire about 10-12 people each year, with 6-8 having been consultants (they primarily only look at mckinsey and bain and maybe a little bcg). the other funds may take 1 consultant if that each in any given year. If you're a consultant, there's no question you will be able to do porter's 5 forces nonsense in your sleep, the main question is if you can do finance (which is why if you are some history major coming out of bcg, the odds will be heavily stacked against you since you will not know your finance as in depth as some wharton/gs nerd). If you are coming from consulting, your best bet is to sharpen your finance skill set independently or get assigned on projects with a corporate finance bent where you can get up to speed on these things. KKR will not have any patience though for some mckinsey kid who needs a year to get taught the basics, at this point in your career the time for handholding has stopped.

If you are a history major coming out of McKinsey/Bain and you're looking to prove your finance skills, would passing the CPA be helpful? Obviously it's an assload of work, but would the combination of that and McKinsey be enough to convince them that you can do the work?

It might be, but I really don't know anyone who was ever proud of passing the CPA. If someone tells me they have a CPA I tend to think that they are bald and middle aged and probably drive a used red convertible (yes, I'm obnoxious). I just don't have a precedent to judge whether that would work so I don't want to say anything, I can't imagine that it would hurt, but I imagine there might be better ways to channel your time and energy (maybe even just selfstudying corp. finance in your spare time).

Thanks. SB for you.

One of those lights, slightly brighter than the rest, will be my wingtip passing over.

11/25/10

Can I ask your opinion of the MS Fin Sponsors group in terms of the type of deals they do (I know a few but limited knowledge) as well as your opinion of the group for exit opportunities/bschool. From talking to the people there it seems like some very interesting deals (generalist structure) and great culture but I wanna know if I will pigeonhole myself to that group or only to PE exits. While obviously those would be nice, I really value the option of learning about many sectors as a generalist and then learning what I want to do over the next two years (whether that'd be stay in banking or move to other jobs in or out of finance).

I know this has been asked before but I figure why not ask someone who actually worked at MS. Like you touched on earlier as well...does MS M&A handle all the analysis for Sponsors deals? I know that Sponsors works side by side with Lev Fin already.

11/25/10

Thanks again so much. I'm going to PM you something because it's a little more personal. I really appreciate your time.

11/25/10

Thanks for starting the thread-much appreciated.

Couple questions:

1. How well did your MS experience prepare you for buy-side recruiting?
2. What were some of the questions or case studies you got during your megafund interviews (if you remember)? Thanks in advance and thanks again for a great thread!

In reply to got_value
11/25/10
Gobears88:

I know kids at bain and the reason they do place into PE over the other McK and BCG is that they have a 6month private equity rotation where you do an externship at a PE firm...alot of times they let (correct me if im wrong cuz im shaky on this last part) their kids, should they choose to, to continue at the firm where they were externing. So obviously that program allows for good PE networking and an opportunity to learn the finance needed.

Anyone by chance know where the Bain kids mostly do their rotations?....I feel like that might explain the Bainies at HF GG and Bain Cap if theyre externing there

sorry to hijack... but:

I think golden gate / bain cap have the strongest history of hiring directly out of bain PEG. Bain PEG is frequently hired by the PE firms to do market due diligence (respected 3rd party opinion) as a "check" / resource (opposing roles) versus the GP's deal team.

I've never heard of a megafund taking a kid on, banker, consultant, or otherwise, on in an externship function.... seems like a big liability to me to have an outsider sitting inside your walls.

In reply to JohnWall
11/25/10
JohnWall:

How influential can a very senior banker be on the PE interview process? I am debating whether or not to accept my return offer at a "lower" BB- according to consensus opinion of this site- and the reason why I'm considering it is bc. the group head has been a very helpful mentor. The group is great (top at the bank), and they do have a strong history of placing into PE (not a frequent occurrance, but have definitely placed at KKR, TPG, Carlyle before). I love the people in this group, so should do you think I should just go ahead and accept....considering I have an MD who will really support me?

or should I aim for GS/MS?

Recommendations matter less than most people think. You are still so junior after a 2 year stint in banking that even a glowing reference will not overcome a weak interview performance. I would say to try for a classic ibd group at GS or one of the stronger groups at MS (such as m&a). If either one of those work out, take stock of your options and make a choice, at least you know you'll have tried. I don't know what exact group you are in right now, but if the main thing drawing you back is the prospect of a strong reference, I do not think that this is a good enough reason to pick it over GS or the like.

In reply to ibanking101
11/25/10
ibanking101:

Thanks again so much. I'm going to PM you something because it's a little more personal. I really appreciate your time.

Yes, a lot of people have sent me personal messages, I am too lazy to field them at the moment but will get to them eventually.

In reply to Bernanke23
11/25/10
Bernanke23:

Thanks for starting the thread-much appreciated.

Couple questions:

1. How well did your MS experience prepare you for buy-side recruiting?
2. What were some of the questions or case studies you got during your megafund interviews (if you remember)? Thanks in advance and thanks again for a great thread!

1. Getting my ass kicked on a weekly basis was terrific preparation. Seriously. Look, any one of these bulge bracket ibanking jobs will adequately train you to be the finest number crunching slave money can buy. MS or GS or JPM or whatever, they'll give you the experience you need.
2. Know how to discuss valuation in depth. By this point you should know the finance vault guide in your sleep, this is not the time anymore for you to be stuttering over how to calculate the unlevered FCFs that go into a DCF. Talk about the economics of an lbo, the drivers of value, be able to talk to the more qualitative elements of what make a good business. Be able to discuss a few good businesses that you know of and why they are good. Be able to do an lbo on excel and know what the logical sensitivities are that go along with them. Nobody is expecting you to debate the theoretical merits of using the APV method of valuation vs. WACC (although if you can, that's a pro). The shit that kids always mess up is that they don't even know their own story, these are the basic things anyone can prep for. If you can't articulate who you are and why you want to do PE in a succinct manner, it's the quickest way to get a ding.

In reply to got_value
11/25/10
Gobears88:

Can I ask your opinion of the MS Fin Sponsors group in terms of the type of deals they do (I know a few but limited knowledge) as well as your opinion of the group for exit opportunities/bschool. From talking to the people there it seems like some very interesting deals (generalist structure) and great culture but I wanna know if I will pigeonhole myself to that group or only to PE exits. While obviously those would be nice, I really value the option of learning about many sectors as a generalist and then learning what I want to do over the next two years (whether that'd be stay in banking or move to other jobs in or out of finance).

I know this has been asked before but I figure why not ask someone who actually worked at MS. Like you touched on earlier as well...does MS M&A handle all the analysis for Sponsors deals? I know that Sponsors works side by side with Lev Fin already.

MS fin sponsors is good, I don't know an incredible amount about them, but they are a solid group and will provide you exit opportunities. If you can move into M&A though you should try to do that as it will provide you better exit opps. Don't worry about being pigeonholed as sponsors won't do that to you. MS M&A doesn't do all the analysis on the sponsors deals, but depending on which MD is running the process or holding the relationships, M&A can have a more or less significant role in the transaction. For the most part though, as you'd expect, the M&A group will be doing the most analysis of any group in Morgan, so if you can get in the group, it's a good idea. Regarding learning, I admire your interest in learning new sectors, but you're a slave and your interest in learning will quickly subside when you are fat and pale from lack of sunlight 6 months into the job, you might as well make sure you get good exit opps.

11/25/10

Thank you very much, I really appreciate again. This is probably the most useful thread I have encountered on this forum after years of lurking, I hope you will maintain a dialogue. This is all great advice.

In reply to 10xleverage
11/25/10
10xleverage:
Olympus123:

Can you explain what the culture is like among the different companies in the sell-side and buy-side (out of the ones you know)? I hear a lot of rhetoric about this but it'd be great to hear a more straight-forward interpretation.

Like I said in my earlier post, banking was just more fun for a host of reasons. The shenanigans you can pull in banking just are unacceptable in PE. I would not be caught dead dozing off in PE but as an analyst in banking, there's nothing more comical than a banking analyst passed out in his seat. I will always look back at my banking experience fondly and still keep in touch with both junior and senior people that I have worked with there. The buy-side is a mixed bag, if you are working at sequoia it will be much different than KKR. Some buy-side joints are more laid back, KKR is the other extreme. The culture is more discernible when you have a group of 120 people instead of 12000 people like at a large investment bank. Although MS has a culture, it is not as cogent as KKR's. While there is a lot of cool factor with the KKR culture, it wears off fast when you realize the shit sandwich tastes the same on the buyside as the sellside. Overall though, would work at both places again in a heartbeat, the people I worked with at my times in both firms were top notch.

Thanks a lot for your response. It was very helpful. From your experience, did you notice a different culture among the industry/product groups in MS, as well as among different banks (i.e. Morgan vs Goldman vs CS, etc.)? ...or are there only differences in behavior between the sell-side and buy-side (the buyside being more business formal/professional)? The reason I ask is because every bank places so much importance on it but I can't find any information on this.

In reply to 10xleverage
11/25/10
10xleverage:
Bernanke23:

Thanks for starting the thread-much appreciated.

Couple questions:

1. How well did your MS experience prepare you for buy-side recruiting?
2. What were some of the questions or case studies you got during your megafund interviews (if you remember)? Thanks in advance and thanks again for a great thread!

1. Getting my ass kicked on a weekly basis was terrific preparation. Seriously. Look, any one of these bulge bracket ibanking jobs will adequately train you to be the finest number crunching slave money can buy. MS or GS or JPM or whatever, they'll give you the experience you need.
2. Know how to discuss valuation in depth. By this point you should know the finance vault guide in your sleep, this is not the time anymore for you to be stuttering over how to calculate the unlevered FCFs that go into a DCF. Talk about the economics of an lbo, the drivers of value, be able to talk to the more qualitative elements of what make a good business. Be able to discuss a few good businesses that you know of and why they are good. Be able to do an lbo on excel and know what the logical sensitivities are that go along with them. Nobody is expecting you to debate the theoretical merits of using the APV method of valuation vs. WACC (although if you can, that's a pro). The shit that kids always mess up is that they don't even know their own story, these are the basic things anyone can prep for. If you can't articulate who you are and why you want to do PE in a succinct manner, it's the quickest way to get a ding.

Thanks for the response. As a follow-up question, how important is deal experience? I understand that it's important to work on live deals but is it necessary for things to close or can one have "dead" transactions on their resume?

Also, I was wondering if you could give a brief run-down of a typical day for you while you were at KKR? Thanks again.

11/25/10

Wow this thread is as good as it gets, thanks 10xleverage. I have a couple of questions that I would really appreciate your answering.

1) How difficult is it to get to a top tier megafund out of H/S/W recruiting given you've only done 2-3 years of IBD alone? Assume that you did a good job at a reputable bb but chose not to do the additional 2 years of PE. pre-mba. Does post-mba opportunities exist for these kids? I'm not talking about bx/kkr or bust, but other top tiers like h&f, warburg, madison dearborne, thomas h lee...etc.

2) Do you have any idea of how merchant banking is viewed for megafund pre-mba recruiting? Rather than working at a traditional ibd group i'm working in the principal investing / p.e arm of a bank that essentially does smaller buyouts using its own balance sheet (100-500mm), though we will coinvest for larger deals. The exit ops are pretty unclear as it seems like p/e firms only hire pure bankers. Any insights on this?

Thanks again!

11/25/10

What is Henry Kravis like? Ever talk to him? Also, does KKR recruit at Columbia?

In reply to Olympus123
11/25/10
Olympus123:
10xleverage:
Olympus123:

Can you explain what the culture is like among the different companies in the sell-side and buy-side (out of the ones you know)? I hear a lot of rhetoric about this but it'd be great to hear a more straight-forward interpretation.

Like I said in my earlier post, banking was just more fun for a host of reasons. The shenanigans you can pull in banking just are unacceptable in PE. I would not be caught dead dozing off in PE but as an analyst in banking, there's nothing more comical than a banking analyst passed out in his seat. I will always look back at my banking experience fondly and still keep in touch with both junior and senior people that I have worked with there. The buy-side is a mixed bag, if you are working at sequoia it will be much different than KKR. Some buy-side joints are more laid back, KKR is the other extreme. The culture is more discernible when you have a group of 120 people instead of 12000 people like at a large investment bank. Although MS has a culture, it is not as cogent as KKR's. While there is a lot of cool factor with the KKR culture, it wears off fast when you realize the shit sandwich tastes the same on the buyside as the sellside. Overall though, would work at both places again in a heartbeat, the people I worked with at my times in both firms were top notch.

Thanks a lot for your response. It was very helpful. From your experience, did you notice a different culture among the industry/product groups in MS, as well as among different banks (i.e. Morgan vs Goldman vs CS, etc.)? ...or are there only differences in behavior between the sell-side and buy-side (the buyside being more business formal/professional)? The reason I ask is because every bank places so much importance on it but I can't find any information on this.

I can obviously speak the most for Morgan but from what I've seen most banks are generally the same. All banks have their share of nerds, drunken frat boys, beneficiaries of nepotism, etc. The reputations obviously are what they are with Goldman being the elite jewish firm, MS/JPM being more american and wasp oriented, Citi being a hodge podge of all of the above, and so on and so forth. Really though, at the junior end none of this shit matters. When you're working 100 hours a week, nobody cares if you are a "cultural" fit, a cultural fit when you're a slave is someone who eats shit with a smile. Now don't get me wrong, you still have to play the game. When you are in an interview with Goldman you should harp on how big of a team player you are, etc. Just read the vault guide and regurgitate it in a convincing manner (this is harder than you might think). I think on the buyside things are a bit different since again there are less people, KKR's global PE group is probably about 125 people or so, and I could certainly say that there are people who just wouldn't fit in, whereas MS has a broader selection of people. It just comes with the territory of a smaller firm. In general banks place emphasis on culture but it's all bullshit, if you want to see real culture, go to a silicon valley start-up with less than 20 people, that's culture. The one piece of advice I would say is that when you are junior, do not pick a job based on "culture." Go to the best place you possibly can as 9 times out of 10, when you are junior, this will provide you more opportunities going forward in your career.

In reply to Bernanke23
11/25/10
Bernanke23:
10xleverage:
Bernanke23:

Thanks for starting the thread-much appreciated.

Couple questions:

1. How well did your MS experience prepare you for buy-side recruiting?
2. What were some of the questions or case studies you got during your megafund interviews (if you remember)? Thanks in advance and thanks again for a great thread!

1. Getting my ass kicked on a weekly basis was terrific preparation. Seriously. Look, any one of these bulge bracket ibanking jobs will adequately train you to be the finest number crunching slave money can buy. MS or GS or JPM or whatever, they'll give you the experience you need.
2. Know how to discuss valuation in depth. By this point you should know the finance vault guide in your sleep, this is not the time anymore for you to be stuttering over how to calculate the unlevered FCFs that go into a DCF. Talk about the economics of an lbo, the drivers of value, be able to talk to the more qualitative elements of what make a good business. Be able to discuss a few good businesses that you know of and why they are good. Be able to do an lbo on excel and know what the logical sensitivities are that go along with them. Nobody is expecting you to debate the theoretical merits of using the APV method of valuation vs. WACC (although if you can, that's a pro). The shit that kids always mess up is that they don't even know their own story, these are the basic things anyone can prep for. If you can't articulate who you are and why you want to do PE in a succinct manner, it's the quickest way to get a ding.

Thanks for the response. As a follow-up question, how important is deal experience? I understand that it's important to work on live deals but is it necessary for things to close or can one have "dead" transactions on their resume?

Also, I was wondering if you could give a brief run-down of a typical day for you while you were at KKR? Thanks again.

Deal experience is not important to the extent that your excel models are the same whether or not a transaction is actually executed or not. Sure it's nice, but it's not unheard of (especially in a tough market) to land a good PE job without any meaningful deal experience. Of course you should still be competent on everything else, but just because you didn't have anything go through, you will not be held responsible. For the most part you will be interviewing for PE jobs a year into your first job, so the vast majority of people actually won't have probably finished an entire transaction from start to finish, if at all.

These typical day questions kind of suck because let's be honest, there is no typical day, i'll provide you two extremes

An easy day (think a day after a deal came to a screeching hault)
-I roll in at 10
-Facebook and gchat till noon
-Eat lunch in the dining room for an hour with my peers, talk about how much Brett Favre has been sucking this season
-Have a director ask me for some comps
-Call banker to spread my comps
-Go to gym
-Get comps from banker
-Send comps to director
-Go home by 430

A hard day (such as one leading to a memo deadline)
-Get in at 8 because my inbox is already exploding
-Modeling at my computer while i'm on a call
-Principal yells at me for being a retard, is trying to get analysis to a partner before a noon call, principal stands over my back while i'm trying to get numbers out
-I get numbers to partner late while call has started, he looks at me like i actually am a retard
-Attend a meeting the afternoon, am trying to take as much notes as I can because the more notes I take the less BS writing i'll have to do when i'm writing the memo
-Actively participate in the meeting but you can tell the mgmt team is annoyed because i am less than half the age of the youngest member of the team
-At 3 PM I check dining room to see if there are left overs, there are none, so go down the street to get food and eat at my desk
-Still have a lot of work to do, try to focus but i instead facebook for a little while i'm eating
-Keep working on the model and refining it getting new information from the bankers and company
-Evening comes, people relax I can calm down a little since the senior people have taken off
-Start working on the memo which can take several hours
-Work through the night, feel tired at about 4 AM, decide to go home and get in early again the next morning, I know I only have one more day of this because there is a hard stop on the memo deadline

-As you might expect, the good times are better, and the bad times are probably just as bad as banking. Although there is definitely nobody checking your stuff anymore, and more is expected of you.

In reply to Password_Is_Taco
11/25/10
Password_Is_Taco:

What is Henry Kravis like? Ever talk to him? Also, does KKR recruit at Columbia?

kravis is a douchebag as you would expect (and probably for good reason). i say hi to him in the hall way but he pretends to not know me (i would probably do the same). kkr doesn't really recruit at columbia even though kravis is an alum, mainly just HBS/stanford.

11/25/10

Just read your "day in the life above." When times were bad, did you feel more pressure in PE than in banking?

In reply to lolercoasterrr
11/26/10
lolercoasterrr:

Wow this thread is as good as it gets, thanks 10xleverage. I have a couple of questions that I would really appreciate your answering.

1) How difficult is it to get to a top tier megafund out of H/S/W recruiting given you've only done 2-3 years of IBD alone? Assume that you did a good job at a reputable bb but chose not to do the additional 2 years of PE. pre-mba. Does post-mba opportunities exist for these kids? I'm not talking about bx/kkr or bust, but other top tiers like h&f, warburg, madison dearborne, thomas h lee...etc.

2) Do you have any idea of how merchant banking is viewed for megafund pre-mba recruiting? Rather than working at a traditional ibd group i'm working in the principal investing / p.e arm of a bank that essentially does smaller buyouts using its own balance sheet (100-500mm), though we will coinvest for larger deals. The exit ops are pretty unclear as it seems like p/e firms only hire pure bankers. Any insights on this?

Thanks again!

1. Almost impossible without pre-mba megafund PE experience. Kids with IBD experience are dime a dozen, the PE experience will help you stand out a little more. Again, in frothier markets it may happen, in tougher markets or even okay markets like right now, it will be very hard to get a megafund job without pre-MBA experience. As you go down the food chain to madison dearborn/new mountain/ maybe warburg things will be a little easier for kids without pre-mba experience, but the top shops definitely prefer it.
2. Merchant banking experience is totally valid, it's just not a hot spot for recruiting for whatever reason. Like all my advice above for anyone not coming from a traditional target group, just proactively engage the headhunters and network and you will be fine. The merchant banking skillset is totally applicable and if you are doing it at a large bank you should be totally fine.

In reply to ibanking101
11/26/10
ibanking101:

Just read your "day in the life above." When times were bad, did you feel more pressure in PE than in banking?

Absolutely

11/26/10

Hey 10xlevergae, really appreciate what you are doing here for us young monkeys.

Anyway, can you add some color to the prospects of analyst coming from Leveraged Finance groups at banks like JPM and BAML trying to break into Megafunds?

11/26/10

10x Leverage -- this is incredibly helpful, really appreciate all the help!

1. How does Lazard's restructuring group compare vs the M&A groups? I know it's very busy but does restructuring work limit opportunities or open them?

2. Relatively, how important is deal experience vs. analyst ranking? In terms of deal experience, are you looking more for size of deals, number, complexity, or a very involved role?

11/26/10

Another thing I commonly hear: The meanest person you work for in IB is the nicest person in PE. Is that true? Where the senior people a lot more nasty toward you?

11/26/10
10xleverage:
Password_Is_Taco:

What is Henry Kravis like? Ever talk to him? Also, does KKR recruit at Columbia?

kravis is a douchebag as you would expect (and probably for good reason). i say hi to him in the hall way but he pretends to not know me (i would probably do the same). kkr doesn't really recruit at columbia even though kravis is an alum, mainly just HBS/stanford.

Do you call him Henry or Mr. Kravis?

In reply to Antsman
11/26/10
Antsman:

Hey 10xlevergae, really appreciate what you are doing here for us young monkeys.

Anyway, can you add some color to the prospects of analyst coming from Leveraged Finance groups at banks like JPM and BAML trying to break into Megafunds?

They're good, not great, they will do the job, but they are not GS TMT / MS M&A. You may not get interviews everywhere, but you will get some top notch interviews in the top tier (KKR/BX/Bain/Carlyle/TPG) and certainly get very good looks at the rest (THL, Apollo/Warburg/Providence, etc.). Like I said before, once you are in the interview, you got as good as a shot as anybody. I don't know how BAML has really placed post its merger, as I know it's legacy merrill groups were great, but don't know how the integration has panned out so far. My instinct though is that it still sends kids to top groups. Lev Fin in general is generally pretty good, not as good as m&a, but okay, because you will have exposure to HY instruments and other debt products. Your understanding of classic corporate valuation and corporate finance will probably not be as good as an M&A banker's though, however, you can self-study the details or try to enrich yourself on your spare time on things you think you might be missing out on. The fact of the matter is, everyone has a different skillset and everyone has to complement what they know, a lev fin banker could read a credit doc better than an m&a banker, but an m&a guy could do accretion/dilution irr math better. The latter is more desirable for PE firms, it is what it is. That said, lev fin places just fine.

11/26/10

So whether you are having a good day or bad, you are on facebook. Good to know.

looking for that pick-me-up to power through an all-nighter?
In reply to Password_Is_Taco
11/26/10
Password_Is_Taco:
10xleverage:
Password_Is_Taco:

What is Henry Kravis like? Ever talk to him? Also, does KKR recruit at Columbia?

kravis is a douchebag as you would expect (and probably for good reason). i say hi to him in the hall way but he pretends to not know me (i would probably do the same). kkr doesn't really recruit at columbia even though kravis is an alum, mainly just HBS/stanford.

Do you call him Henry or Mr. Kravis?

Henry. Assistants call him Mr. Kravis.

In reply to LIBOR
11/26/10

So whether you are having a good day or bad, you are on facebook. Good to know.

You wanted honest advice. If you don't go on facebook everyday you're just weird.

In reply to 10xleverage
11/26/10
10xleverage:

So whether you are having a good day or bad, you are on facebook. Good to know.

You wanted honest advice. If you don't go on facebook everyday you're just weird.

Totally agree.

looking for that pick-me-up to power through an all-nighter?
In reply to 10xleverage
11/26/10
10xleverage:
Antsman:

Hey 10xlevergae, really appreciate what you are doing here for us young monkeys.

Anyway, can you add some color to the prospects of analyst coming from Leveraged Finance groups at banks like JPM and BAML trying to break into Megafunds?

They're good, not great, they will do the job, but they are not GS TMT / MS M&A. You may not get interviews everywhere, but you will get some top notch interviews in the top tier (KKR/BX/Bain/Carlyle/TPG) and certainly get very good looks at the rest (THL, Apollo/Warburg/Providence, etc.). Like I said before, once you are in the interview, you got as good as a shot as anybody. I don't know how BAML has really placed post its merger, as I know it's legacy merrill groups were great, but don't know how the integration has panned out so far. My instinct though is that it still sends kids to top groups. Lev Fin in general is generally pretty good, not as good as m&a, but okay, because you will have exposure to HY instruments and other debt products. Your understanding of classic corporate valuation and corporate finance will probably not be as good as an M&A banker's though, however, you can self-study the details or try to enrich yourself on your spare time on things you think you might be missing out on. The fact of the matter is, everyone has a different skillset and everyone has to complement what they know, a lev fin banker could read a credit doc better than an m&a banker, but an m&a guy could do accretion/dilution irr math better. The latter is more desirable for PE firms, it is what it is. That said, lev fin places just fine.

Thanks a lot!

11/26/10
In reply to HappyThanksgiving
11/26/10
HappyThanksgiving:

10x Leverage -- this is incredibly helpful, really appreciate all the help!

1. How does Lazard's restructuring group compare vs the M&A groups? I know it's very busy but does restructuring work limit opportunities or open them?

2. Relatively, how important is deal experience vs. analyst ranking? In terms of deal experience, are you looking more for size of deals, number, complexity, or a very involved role?

1. This is a stupid question, the opportunities are generally the same. Both good groups. The restructuring group works with shitty companies that are probably bankrupt or about to go bankrupt, the M&A group is an M&A group. Both place just fine, restructuring will not close any doors and will even up doors to credit oriented hedge funds (think king street or centerbridge).
2. Deal experience is not that important for the reasons i mention above. so long as you were working on something and you can make it sound like you learned and grew from it you will be fine. Analyst ranking can be important but isn't everything, so long as you are generally top half of your class you will be fine (this isn't hard as about a year in, at least a quarter to a third of your analyst class will flame out). You're generally looking for any experience that you can show that you learned considerably from, so that could mean a complex deal where you were very involved. Nobody is impressed if you did a $10bn investment grade offering for a seasoned issuer, any retard could do that . A $500mm acquisition of a company involving a financing and some strategic element is way more interesting. All in all, you just need to be able to sell your experience.

11/26/10

Thanks for the reply. Really appreciate it!

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