Has anyone decided not to do PE in light of the industry turmoil?
I hope that many will be disillusioned with finance and less will decide not to make the transition to PE, reducing demand... and that the hanger-ons/money-grabbers will be weeded out and only the truly interested will move into this industry. Discuss.
Realize that most people aiming for PE are in IB -PE is still where their skillset is most transferable. Plus, since most of the banks are in a significantly worse situation than private equity firms, PE is a significant upgrade in terms of stability AND prestige.
Sure, they're not raising capital, but at least they're not disappearing, if only because L.P.s aren't allowed to withdraw immediately.
Most people came into banking because of the risk-return profile. They could come in with no real skills beforehand, and be assured lots of money and exit opportunities. People who had no idea what they wanted to do or what to do in general could still make 150k a year right out of school. While it's not as stable anymore, people still don't know what they want to do, and have no connections but the ones they made in banking. Their MDs or coworkers don't have relationships with anyone but people in finance, including private equity.
In the short term, meaning now, I only see the people applying to PE increasing. All the current full-time analysts, at least. Maybe SAs or younger people will consider other options.
Sort of. This was over a year ago, but I turned down an offer I had on the table because, among other reasons, I didn't think it would be a great place over the next few years. That proved to be a good decision for me personally, but obviously 99.9% of people don't have my story and didn't do what I did, so I am an outlier.
If you're curious about the # of people interested, though, if anything it's getting way more competitive. Yes, there are fewer people interested in finance in general these days, but the ones who are remaining are very serious and well-qualified.
Also keep in mind that there is a lot of turmoil at the mid-levels and many experienced people are moving around within IB/PE and transitioning between industries these days as well. So you're competing with a wider range of people across the spectrum as well.
As far as whether PE is more "stable" than banking, I suppose that is true to an extent, but obviously nothing in finance is great right now if you're after stability.
Please define "hanger-ons/money-grabbers" - there seems to be some connotation of golddigger and/or thieves and I'm really curious to hear what your definition is.
No... no connotations of thievery or illegalities...
what i am referring to is people who are doing it merely for the money or because it was the "sexy" thing to do. Just like how tech/vc was the "in thing" during the dotcom boom and every man and his dog wanted to go into VC or become a dotcompreneur! Hopefully there will be a new fad to emerge soon (maybe the government!!!) and these people will go chase it, diverting public attention from PE.
Now I could be totally wrong but I believe that the people who joined the industry in the 1990s (given that it wasn't really sexy then post junk bond era) were probably in it because they truly enjoyed being in the industry. But I am not sure about many of the current crop of associates. I could be wrong so happy to be corrected.
I think it depends on what type of firm you go to. If you are going to a big LBO place/megafund, then yes, it may not be as glamorous right now nor that interesting. However, if you are going to a smaller place with industry focus (power/energy sector is a great place right now) and doesn't traditionally use a ton of leverage, it would definitely be worth it especially if the firm in question has capital.
I think np99sky's logic is pretty sound. Bigger funds still get money from their management fees and honestly, as a more junior person, the majority of your salary and bonus is paid out from that anyway.
I knew I'd be getting into private equity (early 2008) during a downward-sloping economy, but am still happy I made the choice. It's a much better option than a lot of the other stuff I was looking at, plus I find the work to be very interesting. I figure if I enjoy what I do this much even when the economy is bad, I wonder how much cooler it'll be when the economy starts to turn around. Very happy with my decision to do PE, as I think it's the type of field where I've had to put just about every aspect of my finance and business know-how to use.
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