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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)

11/27/10

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In reply to GutShot
11/27/10
GutShot:

1. I was wondering if you could comment at all the educational backgrounds of your peers in PE? I know that in VC, technical degrees are preferred (engineering is very common from what I've seen). For PE, is there a premium placed on such backgrounds, or is it your 'typical' (and I use the word loosely) Summa Cum Laude Ivy league econ majors?

2. Also second hand, but I've heard from friends that VC is by far the worst lot of the 3 (VC/PE/HFs), because you're literally just investing in dozens of companies that come through the door without any real valuation, and going off of "gut" or "entrepreneurial experience", in the hopes that 1/30 will turn into something real. Could you comment on this? I'm just curious what the "consensus" is, if any.

1. It's what you would expect, a lot of ivy leaguers with very good grades. When you are picking up a handful of kids, you can afford to take your pick. Outside of the ivy league, there are kids from wisconsin, michigan, texas, etc. but good grades is definitely a big plus especially as your school becomes less of a target. Nobody really has a technical degree like in VC, quite frankly nobody there is that academically inclined to get phds as might happen in VC, but there are plenty of MBAs and some law degrees (very rarely has anyone practiced, usually came directly to finance). You don't have to be a finance major from wharton, but it is helpful to have at least an econish or some background in something that might be a little quantitative (math might be overkill, but you don't see many philosophy majors running around). That said, nobody looks down on a harvard government major who can do all the work.
2. That's kind of true, I don't know if it's the worst, depends on your perspective and point of view I suppose. VC is interesting because often times you are meeting entrepreneurs and reading business models and are very close to the business at the grassroots level. You may be modeling to the extent that you need to look at scenario analysis and weight various scenarios with different probabilities, but it's not like fine tuning your coupon assumption by 50bps to change your IRR by 25bps which happens in PE. It is true that VC funds expect to lose all their principal on many of their investments while getting a 10x cash on cash return (or more) on a handful. That's just the nature of the business, it actually seems fairly exciting in some regards, but it is certainly a different type of investing. A lot of these VC guys though are former entrepreneurs, engineers, scientists, doctors, etc. (not typically the people running around wallstreetoasis .com). Look, if you are at kleiner perkins or sequoia, they are the kkr and blackstone of their field, but the types of people who would work at each are very different.

11/27/10

I love the blog idea!

What UG colleges were most represented at KKR besides Harvard and Wharton?

11/27/10

Great thread, I doubt Ill ever find my way into PE, but I absolutely appreciate the time and effort you put into this!

Blog: +1

"You stop being an asshole when it sucks to be you." -IlliniProgrammer
"Your grammar made me wish I'd been aborted." -happypantsmcgee

11/27/10

a blog would be awesome!

quick question:

Have you seen people who started in PE after just 1 year (add 2-3 months) of IBD? If recruiting takes place in spring/summer and you get an offer, whats the point in doing bitch work an extra year when you could start right away (assuming there's an open position). And assuming there's no position right away, what stops people travelling for a year (or anything really) and then start work - does your PE contract say anything about 2 years in IBD are mandatory

11/27/10

Thanks again for being so helpful.
I don't know if you'll have time to answer but:
How do headhunters find you?
In your opinion, what's the best way to make yourself available to them?
Should you have a linked-in?
I mean, it's not like MS M&A has a list of first-years that they forward along to headhunters right.

11/28/10

Thanks for taking the time to give detailed responses.
Look forward to reading your blog.

1- Do certain headhunters/firms focus on BB and others focus on MM? Or is it the same firms doing both?

2- Since headhunters contact the BB analysts they're interested in, how do headhunters find you if you're not at a BB, but a MM IBD, instead?

11/28/10

All this is accurate. I'd add a few things:

a) KKR and BX are better for hedge fund recruiting, the other places push you into B-school. Seems like a silly consideration now, but it's important. It creates optionality.

b) 250K all-in sounds pretty low. Pretty sure standard is 300k+ all-in (the + due to whatever phantom equity, associate carry etc program the fund has, 300k cash)

c) PE and Megafund PE are getting commoditized at an accelerating rate. Think about the long-term before you make that plunge. Still good places to start, but good places to stay? Hmm.

11/28/10

Thanks for all of your helpful answers so far.

I'm currently an IB analyst at a bb firm, and looking go transition into PE. I missed the first wave of recruiting and am now getting one-off interviews for off-cycle firms. I want to stay in NYC, but several people in PE have told me to be open to any location if I really want to do PE. If I were to go to a PE firm in a non-traditional PE city like Philadelphia or Baltimore, then go to bschool, I assume I'd still be able to come back to NYC if i want to do PE there. Would be great to get your thoughts on the pros/cons of doing a pre-MBA post outside of NYC.

Thanks

11/28/10
11/29/10

As many people have said, thanks a lot for the thread. What would KKR (or BX/TPG/Bain/Carlyle for that matter) think of an analyst from a tier 1b (pardon the tiering, but think CS, BarCap, BAML) in an industry group (think TMT, C&R, Consumer Retail)? Very strong technical skills and modeling experience, and very strong drive to succeed in finance with a passion for working at a mega fund. Are they super-aristocratic during interviews where your chances are strongly discounted if you did not graduate summa from an ivy and come from a pure M&A group? How do you suggest to angle the industry group experience (I have some thoughts but wanted to hear your ideas) to convey "I know the modeling/math just as well as any product guy, but I also know how to analyze an industry and understand a wide array of products"? Thanks.

11/29/10

Got a question for you... whats the relationship between quality of references versus brand name of bank? So what if you're at BNP Paribas with someone making calls on your behalf that is super hooked up? If you're at a less than stellar PE-sourcing bank, can you have access to the same top PE funds on account of an extremely hooked up senior banker making calls on your behalf?

11/29/10
11/29/10

+1 for blog.

11/29/10

+1 for blog. Thanks again for your help!

11/29/10
11/29/10

MS M&A 2005-2008 holla.

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11/29/10

Slaying -- what has been harder, getting into MS M&A from college, getting into PE from banking, or getting into hedge funds from PE

In reply to 10xleverage
11/29/10
10xleverage:
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.

I will be working at MS. Besides M&A, which group would you suggest I choose? Thanks in advance!

11/29/10

Guys, I don't think he's gonna answer anymore questions, that's why he asked us if we want him to start a blog.

12/1/10
12/5/10

The blog would be amazing. Let me know if I can help. Thank you again 10xleverage, best ever thread I have read on this or any related forum!

-ibanking101

12/11/10

any thoughts the pros and cons of staying at your bank as an associate vs. going the megafund route?

thanks a lot

6/16/11
1/1/12

Nominate: This was hands-down one of if not the best thread on this site in 2011.

Most people do things to add days to their life. I do things to add life to my days.

Browse my blog as a WSO contributing author

1/2/12

^^^ true true

I want a lady on the street, but a freak in the bed,

Go Bucks!!

In reply to APAE
1/2/12
A Posse Ad Esse:

Nominate: This was hands-down one of if not the best thread on this site in 2011.

Definitely.

1/2/12
1/2/12

Correct, but I would argue most people found it in 2011 since everyone would always say "search for 10xleverage's thread!" It really became the seminal thread for megafund PE.

Most people do things to add days to their life. I do things to add life to my days.

Browse my blog as a WSO contributing author

1/3/12

No doubt my favorite thread on WSO.

1/4/12
10xleverage:

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.

Just found this, I'm late to the party. Thought I'd ask a question in case you'll still see this.

I'm interested in getting into PE at one of the megafunds, and am from a non-trad background. Curious as to your thoughts on 1) worth trying? and 2) positioning experience Here's my deal:

Penn undergrad
GS TMT for 2 years
left to start a software company, which I've been doing for 4 years.

Interested in Tech PE.

Raised money for company from top investors, built strong network of senior folks who were mentors as I built co. Introduced successful products to market and innovated in a strong niche area. Company is still going forward, but I'm ready to move on w my stock and remain chairman. Interested in buying co's now:)

Would love your thoughts on your sense of my ability to position this to KKRs / BXs / etc etc. Thanks man!

In reply to starterup
1/4/12
starterup:
10xleverage:

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.

Just found this, I'm late to the party. Thought I'd ask a question in case you'll still see this.

I'm interested in getting into PE at one of the megafunds, and am from a non-trad background. Curious as to your thoughts on 1) worth trying? and 2) positioning experience Here's my deal:

Penn undergrad
GS TMT for 2 years
left to start a software company, which I've been doing for 4 years.

Interested in Tech PE.

Raised money for company from top investors, built strong network of senior folks who were mentors as I built co. Introduced successful products to market and innovated in a strong niche area. Company is still going forward, but I'm ready to move on w my stock and remain chairman. Interested in buying co's now:)

Would love your thoughts on your sense of my ability to position this to KKRs / BXs / etc etc. Thanks man!

Were you College or Wharton at Penn?

And you're far from 'non-traditional' actually.

In reply to seedy underbelly
1/5/12
seedy underbelly:
starterup:
10xleverage:

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.

Just found this, I'm late to the party. Thought I'd ask a question in case you'll still see this.

I'm interested in getting into PE at one of the megafunds, and am from a non-trad background. Curious as to your thoughts on 1) worth trying? and 2) positioning experience Here's my deal:

Penn undergrad
GS TMT for 2 years
left to start a software company, which I've been doing for 4 years.

Interested in Tech PE.

Raised money for company from top investors, built strong network of senior folks who were mentors as I built co. Introduced successful products to market and innovated in a strong niche area. Company is still going forward, but I'm ready to move on w my stock and remain chairman. Interested in buying co's now:)

Would love your thoughts on your sense of my ability to position this to KKRs / BXs / etc etc. Thanks man!

Were you College or Wharton at Penn?

And you're far from 'non-traditional' actually.

I was a political science major at Penn, so College, not Wharton. But one of about 3 lib. arts guys to go to GS my year, out of 37 total in my class (to all parts of GS).

And thank you for your point on not being as non-traditional as I was concerned about:) My worry was that I'd need to explain doing something other than investing right out of the analyst program.

In reply to 10xleverage
1/5/12
10xleverage:

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.

You mention M&A at a boutique.

What do you think Perella/Greenhill/Evercore are worth in terms of PE exit opps?

3/24/12

Bump. Also interested

Rich enough to have your own jet. ... A player. Or nothing

10/10/12

Best post I've ever read on here. Did you end up doing the blog?

In reply to manbearpig
12/17/12

everythingsucks:
I have a pretty solid lead at getting into the preMBA associate program at a place called Denham Capital. Any thoughts about this place, and would this open decent opportunities at a place like KKR after the MBA?

Denham is a solid fund. I'd take the job and worry about your megafund and HBS chances later.

12/18/12

I am currently a third yr analyst at a bulge bracket bank in NY. I have never thought about PE until now. What do you guys think are my chances? Are there limited upcoming opportunities? Any advice is really appreciated. Thanks.

12/18/12

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