Impact of PE Analyst Programs
Not sure if this has been addressed, but how are the rise of MF PE analyst classes (KKR/BX/Bain/Apollo/Vista/Warburg/Silver Lake/etc.) going to impact associate recruiting for those coming from banking? These firms already don’t take very many people so I’m worried that those of us that went the IB route now face an even harder battle, even more so than it previously was. These mostly started the last few years so in theory a lot of those analysts should be getting the associate to promote soon meaning the impact of them should just now be visible.
Are these analyst positions in addition to traditional associate spots or in place of? Is there something I’m missing?
My understanding is some of the firms are also making deal teams larger (especially with the MFs which have bigger funds than ever before --> more fees --> more employees) but not sure if that completely cancels out the impact of the analyst classes.
Worth noting that not all firms allow for A2A - SLP / WP / KKR do and encourage it, but BX doesn't to the same degree.
these analysts are so top-tier that they would have ended up in the same tier of MF either way...MFs only do this to snag talent early like WP taking a girl who did summer at PJT rssg who would have ended up at KKR if she recruited on cycle.
Unclear if she would have gone to KKR given her preferences but agree with your point
KKR was just a way to say "insert top fund here"
Damn, that's nuts haha.
Edit: Just checked, and she went to Wharton lmao. Now all she needs is an MBA from Stanford...
Two guys followed her too - good luck to the kids this summer at PJT who want to be the fourth
also wondering how big their analyst class is for each fund.. know that kkr takes 10-12 in total but not all are in PE. what about BX / WP?
BX takes 3, WP takes 4-5
Bain cap said 4-6 from undergrad each year
I think BX takes more than 3 because two kids from my school got offers, but one was for LATAM.
ares doing this too now
Is it just for Real Estate PE or other groups too now?
theyve been doing it
do you know how many analysts ares takes for each arm (I.e credit, real estate, PE)
Ares has been doing this for a few years. They take 4-5 analysts a year (usually all SA, though sometimes 0-1 FT recruiting). However, I have heard from friends that they are now prioritizing analyst recruiting and cutting down on the number of associate hires (this year they are hiring five new PE analysts and only three PE associates). This is similar to Bain Cap who before their program would take a class of 10-12 associates and they are now taking 5-6 as their analyst program has expanded so much.
Going back to the Ares question, this is the first year they’re taking FT analysts (from SA conversion) for credit and RE so your guess is as good as mine as to how many they’re taking.
Is the Ares Application open?
IB analysts feeling the pressure because there are increasingly few associate positions available due to these PE analyst programs will hopefully encourage more people to pursue what they want to out of school rather than settling for IB. MF PE is overrated anyways and there are plenty of MM and UMM places that pay well and offer excellent training... hope to see people taking analyst roles at these places and leaving the Top IB -> MF PE path in the rear view mirror
I agree with @ReallyJammedRn, with these large pe firms offering a viable path to pe out of undergrad I can't think of a good reason why anyone would want to go slave away in ib for two years. Its also likely in a few years that most of the other reputable firms across the spectrum (mm/umm/etc.) will start opting to do analyst classes opening up more spots for individuals to bypass ib and thus sucking the talent out of the industry. My prediction is that associate spots and recruiting decrease substantially as a result of this new phenomena and that direct promotes in pe increase (not forcing people out to school). Anyone else have thoughts on this?
Analysts programs have been around for a long time (Silver Lake and BX well over a decade). TPG tried and failed. KKR had one before, removed it, and now brought it back. It's not a new revolution.
Regardless, the hours for a PE analyst are comparable to banking (depending on the firm), the pay is less, and it reduces optionality to an extent.
Things are different. IB less and less attractive every year with fee compression on the M&A side, alternatives to IPO’s putting pressure on underwriting revenue, trading divisions losing ground (doesn’t affect IB directly but not good for BB’s), and talent seeking greener pastures.
IB is still a fine place to learn skills. But there are plenty of other industries to learn transferable skills and build networks... particularly important as other industries become increasingly relevant.
Don’t agree that PE limits optionality. Teaches analytical skills that are useful anywhere. And understanding the relationship between operating and financial profiles makes you valuable to many, many businesses.
Long story short - the days of going to GS/MS out of school being the slam-dunk best option are over. Many better options within finance and outside of it
Agreed - you have to like PE given they pay less with comparable hours.
Over time, people will pursue what they want directly rather than taking intermediate steps. Companies will do the same. People who want to invest will go directly into investing, whether it’s at KKR/Blackstone/Bain or something else. And companies won’t rely on banks to train their talent. They’ll get kids out of school and do it themselves. Hard at first but cheaper over time and creates more loyal employees
Funds want people with the banking experience also for the relationships they develop during banking... if you go straight into the buy side, you don’t develop “impartial” relationships because you’re always sitting at one side of the negotiation table. If you’re in banking, you get exposure to both sides and their teams. You have no idea how incrementally valuable that is when it comes to deal sourcing in PE.
One element this thread hasn't touched on is the social aspect. Working as a junior at a PE firm is very different from being an analyst at a bank. You generally have to wear a tie every day, your class will be very small (only a handful of analysts total) and you will almost never work with other analysts because deal teams tend to be one person at each level. PE and any investing role is far more solitary than banking. For some people, this fits their personality very well - after they graduate, they're ready to enter the "grown up" working world, and thrive in a place where they work alone a lot but have a lot of independence and know it's what they want to do.
On the other hand, having spoken with analysts at my EB who interned at top PE shops their junior summer, the solitude and lack of comraderie started getting to them after a while. You can't let your hair down as much or horse around in the bull pen, etc. and you'll rarely have a wild night out with colleagues. Again, just different, some people like a slower transition from college to the real world, others don't. The megafund PE analyst programs are for the people who go to top targets, knew they were doing finance from day one, and would have ended up at the same place anyway on cycle. However, a lot of kids who go into finance do it because they're smart and ambitious and go to a top school and aren't sure what they want to do long term. A bank offers a lot of benefits in that exits are broader, there's more hand holding, there's a bigger social element and in many cases the pay is better. Again, just tradeoffs.
I really don't think it's fair to say that just because KKR has an analyst program this year that all the analysts at GS, PJT, whatever are going to be shitty going forward. By and large there are vastly more competitive candidates than there are seats for both top buyside and top sellside opportunities. The other thing is, both banks and PE firms will make mistakes. These are kids fresh out of college; most people don't know what they want to do yet. As some of the posters above have pointed out, analyst programs at banks and PE firms are very fluid - people end up in all sorts of roles. The idea behind having an analyst program is to take some of the x factor out of the insane accelerated associate recruiting process, and hopefully snap up that one kid who might have ended up at KKR instead of BX (example). Hope this is some helpful perspective.
Similar argument as ---> "I'd rather go to Penn state than Yale since Penn state is more fun and Im not ready to grow up and enter the real world, I want to have fun and get messed up with my bros!"
Other than the wearing a tie part, I completely agree with this comment. The social aspect makes the transition from college more challenging as a PE analyst than in banking. I also think to your point - you are not working on teams with other analysts, so there is more pressure to be polished all the time. On top of the normal analyst struggles (long hours, struggling through models at the beginning, not knowing what you're doing), you are also interacting with more senior people (VP+) who expect you to have coherent investment opinions that you communicate well (more difficult when tired) and have little empathy for the fact that you just graduated college. It's not like you have a third-year analyst on the team to ask a dumb modeling question to because the next most junior person is likely a VP, so it's more of a struggle in solitude. That said, I do think it's much more valuable experience in a condensed time, and worth it if you know you want to work in investing long term.
I feel this (not MF, sector-focused firm, knew I wanted to focus on investing this sector as a career) - definitely sucked to not have a big class around me at first. Thankfully my current team is pretty chill and very cognizant of the fact I have IB internship.
FWIW, my IB experience was a complete 180 from my current job in terms of team size, culture, things like that. IB analysts on leaner and more collegial teams would likely have a better experience.
I know 0 people who wear a tie daily at a MF office. Maybe it’s a NY thing?
Not an NY thing - mostly just a BX thing
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