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I'm starting to try to narrow down what types of exits I want to focus on with head hunters next year.

Assuming one is in an M&A, Lev Fin, Sponsors, top Industry group, how would you guys rank the following exits from banking in terms of:
a) selectivity/difficulty of entry
b) desirability among analysts
c) foundation for long term career
d) compensation
e) whatever other criteria analysts value

Megafund PE
Middle-Market PE
Distressed Debt Hedge Funds
Merger Arbitrage/Event Driven Hedge Funds
Macro Hedge Funds
Megafund Credit Fund (like THL Credit, KKR Credit, etc)
Early Stage Venture Capital
Late Stage Venture Capital
Other?

How do people generally choose between the different options? What are the pros and cons? What are the criteria that people focus on when choosing? (I apologize if this has been covered before. I tried finding past forum posts but I couldn't find anything that fully answered this question and was also current)

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Comments (9)

  • FernandoTorres9's picture

    How about what you're interested in doing? Gotta stop following the pack at some point.

  • Determined's picture

    This question is so broad it makes the Pacific look like a puddle.

    Talent is hitting a target no one can hit.
    Genius is hitting a target no one can see.

  • oppcostofcapital's picture

    Figure out what you enjoy most about investment banking (what aspects of it) -- and then try to relate that to what you might want to do for the next few years (if not the next 20 years). Buyside jobs are different in that (although a lot of PE programs may be) -- it's not always a 2 years and out deal. Sometimes it's a career track position, and in that case, you should try to narrow down what you actually want to do. The best way to do that from your position is to think about what you like best about your job / finance in general.

    Before writing what important criteria to consider are -- all of the above exit opps you listed can provide you with selectivity, desirability, a foundation for a good long term career, compensation, and anything else you'd want from a buyside position. You'll have to judge that yourself when you meet with each firm and try to find one that is a good fit for you on the basis of the criteria, and more importantly, a good fit in terms of how you think you'll be able to work with the other professionals at the fund.

    Things to consider beforehand:
    - Do you like interacting with clients (email / in-person)? PE tends to be more of an interactive job in terms of working with potential targets, bankers, etc. HF tends to be a research driven job at the analyst level and can be more solitary on a daily basis -- although in both cases you'll be working with people and in both cases you'll generally have to do a lot of work by yourself.
    - Do you love modeling (LBO, for example, quite relevant for PE)? If you love building complicated financial models with scenarios contingent on financing etc -- PE may be better for you. At the entry level, while you'll be modeling in both, you'll probably be doing more valuation / modeling and evaluated on your ability to do so in PE -- whereas in HF, building a good operating model is helpful but generally the investment thesis and your support for your thesis is what's most important.
    - Do you enjoy thinking about business models and understanding drivers of a variety of businesses? Probably applies to all types of buyside jobs but you'll probably be most responsible for this at a HF as you'll have to look through the public filings of many companies and will be responsible for coming up with a sense for how each business works quickly and in an efficient matter in order to support your thesis.
    - Do you enjoy thinking more about established companies or new companies (start-ups)? Obviously PE / HF deal with more established companies, generally, while VC deals with earlier companies.
    - Are you more interested in fundamental analysis or do you like thinking more about macro issues in the global economy? PE / HF / VC will generally focus on fundamental analysis and valuation, whereas macro hf will rely more on macro issues.
    - Do you thrive more in a place that has an institutional structure / is larger in terms of headcount, or would you prefer to be at a smaller firm? Personal preference for you.
    - Do you enjoy thinking on the bright side or do you tend to think more about downside situations? If you want to understand how to think about where things go wrong in businesses, credit / distressed HF are definitely places you should consider.
    - In analyzing a company, would you prefer to have essentially most / all available information provided to you in a data room, or would you prefer to be dealing with limited information coming from a variety of public sources that you'd have to search for yourself? PE and VC (assuming you have signed confidentiality agreements) will generally provide you with all the information you could ever want in terms of making an investment, to a point, whereas HF investments are based on public information.

  • In reply to oppcostofcapital
    kidflash's picture

    oppcostofcapital wrote:
    Figure out what you enjoy most about investment banking (what aspects of it) -- and then try to relate that to what you might want to do for the next few years (if not the next 20 years). Buyside jobs are different in that (although a lot of PE programs may be) -- it's not always a 2 years and out deal. Sometimes it's a career track position, and in that case, you should try to narrow down what you actually want to do. The best way to do that from your position is to think about what you like best about your job / finance in general.

    Before writing what important criteria to consider are -- all of the above exit opps you listed can provide you with selectivity, desirability, a foundation for a good long term career, compensation, and anything else you'd want from a buyside position. You'll have to judge that yourself when you meet with each firm and try to find one that is a good fit for you on the basis of the criteria, and more importantly, a good fit in terms of how you think you'll be able to work with the other professionals at the fund.

    Things to consider beforehand:
    - Do you like interacting with clients (email / in-person)? PE tends to be more of an interactive job in terms of working with potential targets, bankers, etc. HF tends to be a research driven job at the analyst level and can be more solitary on a daily basis -- although in both cases you'll be working with people and in both cases you'll generally have to do a lot of work by yourself.
    - Do you love modeling (LBO, for example, quite relevant for PE)? If you love building complicated financial models with scenarios contingent on financing etc -- PE may be better for you. At the entry level, while you'll be modeling in both, you'll probably be doing more valuation / modeling and evaluated on your ability to do so in PE -- whereas in HF, building a good operating model is helpful but generally the investment thesis and your support for your thesis is what's most important.
    - Do you enjoy thinking about business models and understanding drivers of a variety of businesses? Probably applies to all types of buyside jobs but you'll probably be most responsible for this at a HF as you'll have to look through the public filings of many companies and will be responsible for coming up with a sense for how each business works quickly and in an efficient matter in order to support your thesis.
    - Do you enjoy thinking more about established companies or new companies (start-ups)? Obviously PE / HF deal with more established companies, generally, while VC deals with earlier companies.
    - Are you more interested in fundamental analysis or do you like thinking more about macro issues in the global economy? PE / HF / VC will generally focus on fundamental analysis and valuation, whereas macro hf will rely more on macro issues.
    - Do you thrive more in a place that has an institutional structure / is larger in terms of headcount, or would you prefer to be at a smaller firm? Personal preference for you.
    - Do you enjoy thinking on the bright side or do you tend to think more about downside situations? If you want to understand how to think about where things go wrong in businesses, credit / distressed HF are definitely places you should consider.
    - In analyzing a company, would you prefer to have essentially most / all available information provided to you in a data room, or would you prefer to be dealing with limited information coming from a variety of public sources that you'd have to search for yourself? PE and VC (assuming you have signed confidentiality agreements) will generally provide you with all the information you could ever want in terms of making an investment, to a point, whereas HF investments are based on public information.


    great post. really appreciate it!

  • In reply to oppcostofcapital
    Newspeak's picture

    oppcostofcapital wrote:
    Figure out what you enjoy most about investment banking (what aspects of it) -- and then try to relate that to what you might want to do for the next few years (if not the next 20 years). Buyside jobs are different in that (although a lot of PE programs may be) -- it's not always a 2 years and out deal. Sometimes it's a career track position, and in that case, you should try to narrow down what you actually want to do. The best way to do that from your position is to think about what you like best about your job / finance in general.

    Before writing what important criteria to consider are -- all of the above exit opps you listed can provide you with selectivity, desirability, a foundation for a good long term career, compensation, and anything else you'd want from a buyside position. You'll have to judge that yourself when you meet with each firm and try to find one that is a good fit for you on the basis of the criteria, and more importantly, a good fit in terms of how you think you'll be able to work with the other professionals at the fund.

    Things to consider beforehand:
    - Do you like interacting with clients (email / in-person)? PE tends to be more of an interactive job in terms of working with potential targets, bankers, etc. HF tends to be a research driven job at the analyst level and can be more solitary on a daily basis -- although in both cases you'll be working with people and in both cases you'll generally have to do a lot of work by yourself.
    - Do you love modeling (LBO, for example, quite relevant for PE)? If you love building complicated financial models with scenarios contingent on financing etc -- PE may be better for you. At the entry level, while you'll be modeling in both, you'll probably be doing more valuation / modeling and evaluated on your ability to do so in PE -- whereas in HF, building a good operating model is helpful but generally the investment thesis and your support for your thesis is what's most important.
    - Do you enjoy thinking about business models and understanding drivers of a variety of businesses? Probably applies to all types of buyside jobs but you'll probably be most responsible for this at a HF as you'll have to look through the public filings of many companies and will be responsible for coming up with a sense for how each business works quickly and in an efficient matter in order to support your thesis.
    - Do you enjoy thinking more about established companies or new companies (start-ups)? Obviously PE / HF deal with more established companies, generally, while VC deals with earlier companies.
    - Are you more interested in fundamental analysis or do you like thinking more about macro issues in the global economy? PE / HF / VC will generally focus on fundamental analysis and valuation, whereas macro hf will rely more on macro issues.
    - Do you thrive more in a place that has an institutional structure / is larger in terms of headcount, or would you prefer to be at a smaller firm? Personal preference for you.
    - Do you enjoy thinking on the bright side or do you tend to think more about downside situations? If you want to understand how to think about where things go wrong in businesses, credit / distressed HF are definitely places you should consider.
    - In analyzing a company, would you prefer to have essentially most / all available information provided to you in a data room, or would you prefer to be dealing with limited information coming from a variety of public sources that you'd have to search for yourself? PE and VC (assuming you have signed confidentiality agreements) will generally provide you with all the information you could ever want in terms of making an investment, to a point, whereas HF investments are based on public information.


    Thanks so much for this.

  • In reply to oppcostofcapital
    goldman in da house's picture

    oppcostofcapital wrote:
    Figure out what you enjoy most about investment banking (what aspects of it) -- and then try to relate that to what you might want to do for the next few years (if not the next 20 years). Buyside jobs are different in that (although a lot of PE programs may be) -- it's not always a 2 years and out deal. Sometimes it's a career track position, and in that case, you should try to narrow down what you actually want to do. The best way to do that from your position is to think about what you like best about your job / finance in general.

    Before writing what important criteria to consider are -- all of the above exit opps you listed can provide you with selectivity, desirability, a foundation for a good long term career, compensation, and anything else you'd want from a buyside position. You'll have to judge that yourself when you meet with each firm and try to find one that is a good fit for you on the basis of the criteria, and more importantly, a good fit in terms of how you think you'll be able to work with the other professionals at the fund.

    Things to consider beforehand:
    - Do you like interacting with clients (email / in-person)? PE tends to be more of an interactive job in terms of working with potential targets, bankers, etc. HF tends to be a research driven job at the analyst level and can be more solitary on a daily basis -- although in both cases you'll be working with people and in both cases you'll generally have to do a lot of work by yourself.
    - Do you love modeling (LBO, for example, quite relevant for PE)? If you love building complicated financial models with scenarios contingent on financing etc -- PE may be better for you. At the entry level, while you'll be modeling in both, you'll probably be doing more valuation / modeling and evaluated on your ability to do so in PE -- whereas in HF, building a good operating model is helpful but generally the investment thesis and your support for your thesis is what's most important.
    - Do you enjoy thinking about business models and understanding drivers of a variety of businesses? Probably applies to all types of buyside jobs but you'll probably be most responsible for this at a HF as you'll have to look through the public filings of many companies and will be responsible for coming up with a sense for how each business works quickly and in an efficient matter in order to support your thesis.
    - Do you enjoy thinking more about established companies or new companies (start-ups)? Obviously PE / HF deal with more established companies, generally, while VC deals with earlier companies.
    - Are you more interested in fundamental analysis or do you like thinking more about macro issues in the global economy? PE / HF / VC will generally focus on fundamental analysis and valuation, whereas macro hf will rely more on macro issues.
    - Do you thrive more in a place that has an institutional structure / is larger in terms of headcount, or would you prefer to be at a smaller firm? Personal preference for you.
    - Do you enjoy thinking on the bright side or do you tend to think more about downside situations? If you want to understand how to think about where things go wrong in businesses, credit / distressed HF are definitely places you should consider.
    - In analyzing a company, would you prefer to have essentially most / all available information provided to you in a data room, or would you prefer to be dealing with limited information coming from a variety of public sources that you'd have to search for yourself? PE and VC (assuming you have signed confidentiality agreements) will generally provide you with all the information you could ever want in terms of making an investment, to a point, whereas HF investments are based on public information.

    +1

  • TheFix's picture

    posting for future reference

  • In reply to oppcostofcapital
    Smartmoney's picture

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