Hi all, am a current second year at a top group in an elite boutique. Though the lifestyle leaves something to be desired, I am pretty content with the job. I recruited for private equity off cycle and got an offer at a top MM. I brought the offer to the group head and to get me to stay he has offered me an early promotion to associate after I finish my second year and guaranteed comp in megafund territory. Pay wise, the top MM is pretty standard for its class, but the lifestyle would be a significant improvement and the group has great culture. My current group is a complete sweatshop, but I am top bucket and given a lot more responsibility and exposure than I think I would get elsewhere. I am leaning toward taking my MD's offer. What are your thoughts?
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If you don't see yourself being happy going through the PE and MBA route, just take the associate offer. In my opinion at some point in your career you need to decide when the grass isn't much greener and you're happy where you are. The traditional route would involve you going through the MBA application process and yet another recruiting process after that.
I think it can totally make sense to stay when you're getting strong senior support, which it seems you are. That's a factor a lot of people forget about when blinded by name/prestige but being under someone's wing can be a huge help.
Get the guaranteed comp in writing. It's easy for them to "forget" down the road.
Take the PE offer. Here's why:
1). Your EB is a sweatshop, and the PE is offering a better lifestyle
2). Your MD has to "guarantee" you comp to make the EB IB associate offer competitive. If the market enters a downturn, expect that "guarantee" to fly out the window.
Good luck with your decision.
As others have said, you'd need a hard guarantee to consider it, but if you genuinely like banking, I don't see any advantage to jumping to PE, not enjoying it, getting an MBA, and re-recruiting back into banking.
If you're having doubts about banking though, doing a PE stint would probably be much better (mainly due to the work/life).
Yes see if you can get it in writing. Nothing wrong with staying in banking. Lots of people jump to PE for two years getting kicked out can't find another job, get an MBA trying to recruit for PE again and end up with a Corp Dev role or they are back in banking.
With the banking option you know what your life will look like for the next 10 - 15 years so take it (but get it in writing first) without hesitation if that is what you want to do.
What's the pay differential? Youre saying the banking gig will pay megafund territory whereas your mm PE offer will pay "standard"?
Thanks everyone for the advice and feedback. It will definitely give me a lot to think about. I really like my banking job, but it's hard not to wonder if staying is the right decision when jumping to PE is considered the natural and obvious choice for most. I know at some point I do need to slow down and have a life. In response to rampagejackson, PE offer is 280 target (140+140) and banking offer is guaranteed 330. I did get this in writing, but I am fairly certain that if I accept it I'm going to get crushed for the next year. I've basically had no life for the past two years, but I do feel like the group really trusts and respects me. Recently I've been working with only senior associate or no associate and directly with the VP on most of my deals, so it seems like they're already grooming me for the position.
All of the above comments are great and I'd definitely see if you can get the guaranteed comp in writing but the big thing to consider is what you want to do for the long term and not the natural and obvious path. Do you like banking and could you see yourself being a career banker, which it seems like you could be on a path for if you stayed, and perhaps be able to skip an MBA? Have you always been interested in being an investor and PE? And if so, I'd assume you'd have to go back and get an MBA after ~2 years, then risk not getting back into PE and as others have said have to go through bschool in addition to PE recruiting, again. If you've always been dead set on getting an MBA then it's an easier answer. There's nothing wrong with getting an MBA for whatever your reasons.
Also consider that PE has been getting, and currently is, very difficult to get into that partner track and move all the way up the ladder so even if you did PE post MBA you may get pushed out after a couple of years. So after 2 years of pre-MBA PE, 2 years of bschool, then 3 years of post MBA PE you could be out and looking for a new position or career in your early to mid 30's (without getting into an entire discussion it's difficult, not impossible, to get into another PE fund on a partner track so you may be off to a mezz fund-gasp!-, corporate, etc) whereas consider where you could be career and comp wise in 7 years if you stayed in IB. It isn't easy to be a successful IB MD but there are a ton more spots than in PE and you could possibly not lose 2 years of salary and pay $200k all in for an MBA.
I'd also investigate the reality of the work life balance at the fund. There's often a grass is greener attitude and a lot of PE funds, especially top MM and MF's, work nearly as much as in IB. So I'd just realize that your hours aren't likely to go from 90/wk to 55, more like to 75-80, although maybe your fund is one of those that don't work a ton. Also consider what your EB hours would look like in 3-5 years to compare it to your life as a post MBA PE associate. Does life get better at your current bank and if not could you lateral to less of a sweatshop?
Long diatribe and I'm just throwing those thoughts out. I'm in PE so I have a preference but that's just my personal preference. I have plenty of friends and contacts in IB and they're just as happy as I am and comp is within the same relative area. I'd just look into what you think you'd like to do more and weigh the risks and rewards of each option.
Best of luck with the choice. There are far worse things to have to decide between.
Why do you want to go to PE? Money? experience? etc. The associate promotion in my view in the grand scheme of things is pretty useless. I usually talk people out of going to PE because all their friends are doing it. However, in your case, if you actually want to stay in banking, take the promotion. If this is take the associate job and you will quit / recruit again in 2 years, go to PE and diversify your resume.
Also I don't think you can commit to banking long term as an analyst. The associate and vp years are pretty cr@p or have potential to be quite annoying
Honestly, I recruited for PE because at one point I was seriously fed up with the banking lifestyle and wanted to switch to something equally interesting in finance without sacrificing future career prospects. Recently though I've come to appreciate just how much I've been learning and how much exposure I've gotten. I know people are advising me to go one way or another based on my interest in advisory or investment work, but it's been really tough for me to decide since I've only been in banking for a year and a half and I have no experience doing the work involved in private equity investment. Investing does sound interesting, but having worked in banking I know for certain that I am interested in advisory work.
I know I can't really commit to long term this early, but it does seem like the longer I wait to switch the more I pigeonhole myself into banking.
Just my opinion but I'd take the PE offer. Even if both were totally equal in hours/comp, you get optionality that you don't get if you stay in IB.
If you do PE, you can always come back to IB (either after MBA or potentially just after your PE stint). If you stay in IB, the door for PE is going to shut pretty quickly as you progress down the IB associate path.
Also PE style investing isn't for everyone so think that through as well. I assume you did but worth mentioning. Financial engineering may not be your thing - not to say there's no value in it but I've seen bad investments get saved by financial engineering or blind luck
I really appreciate all of the feedback guys. I'll decide by the end of the week, though I am feeling more confident now about my decision to stick with banking. Have definitely been suffering from the grass is greener mentality, but given that I could see myself sticking around in banking and that I like advisory work it seems like a good gig.
One thing I have been wondering about is future exit opportunities if I stay in banking. Dingdong or anyone else working in private equity, in your experience have you encountered people who have moved from banking at the senior level (vp / md) to a senior private equity position? I'm in an industry group, so my thought was that if I stay within the same industry for private equity the connections may be useful at a senior level despite the skill set not being as transferable. From what I've heard, it seems like the most common exit opportunities at that level are corporate development, CFO at a smaller firm, or moving to another bank.
pretty much never happens. Like you said it's almost always corp dev. My advice to you is actually to take the offer and try it for 1 or 2 years. PE is incredibly tough to break into at any level and it does teach you a lot, so I would value the opportunity. You can always go back to banking and the worst case is that you lose 1 or 2 years, and if anything your PE experience will make you a better banker in the long run if you do choose to go back. Going to PE->bschool->back to banking is another story
I disagree. I've seen many bankers VP+ go from IB to PE / HF. That said, it gets more difficult to move given the investing mentality takes a while to get ingrained and the older you are, the more "conservative" you get from banking. Corp dev, cfo, etc are always available but you're not pigeon holed.
Also PE is hard to break into but frankly it's no harder than being on a solid track on a bank. Do the math, if PE's the holy land then every PE analyst would be making partner, not the case. In fact, I think it's harder to do well at a bank and be on the right track than to get some entry level PE job.
When I was younger, the PE / HF exit was so appealing and I interviewed like mad to get those offers. I've been in your exact shoes and I've turned down countless opportunities on the buyside. That's not an indictment of the buyside but to each his own and every
Also dude you're a 2nd year, you could completely reinvent yourself if you want to peace after 2 more years. The ONLY merit of going to PE now is to get that notch on your resume and then you can figure it out. But I've had plenty of buddies go to PE, hate it, go to b school and do something else.
If you think you're going to regret not going to PE - then go. If you're doing it because all your friends are doing it and you feel like you have something to prove, don't
That may have been the case 10+ years ago but your post is just plain wrong on so many levels in today's environment. Please show me more than a single VP+ going from banking to PE / HF in the past 5 years. Associates are so hard to recruit these days in banking that the banks are begging you to stay. Analyst->Assos->VP is pretty much guaranteed at a bank. PE is tougher for the exact reason you're referencing, it's much harder to make it as a career track in PE than banking...not sure what you're trying to say
This is why I don't come onto these forums and I probably won't post anymore here but a few parting thoughts (and I've been on both sides of the table so I am speaking from experience, not making stuff up for the sake of it)
1) No one is begging assos to stay at any cost. Banks are trying to smooth out headcount and increase continuity - there's a difference. Plenty of VPs who are not performing are axed these days. Also how does the fact that people are begging associates to stay make PE any easier or harder to get into
2) My point was more and more analysts thinks they're god's gift to earth and end up leaving to go to PE / HF. Most don't make it. Otherwise you'll have a lot more people on the buy side. This statement is logically and factually accurate
3) Plenty of my friends have left at AS3+ to go to the buy side. There is also a fallacy here such that many VP-EDs I know don't really want to go to the buy side where they're forced to produce, etc vs. a pretty cushy gig on the sellside. Also the compensation these few years on the buy side has been unpredictable. I have friends making 1mm+ and some doing 1/3 of that. So a lot of it is self-selection
4) I don't think what we are saying are so different but the key distinction is I don't think OP should go do PE because it's so hard to find a job. It really isn't. And I don't mean a good PE job vs any banking job. He seems to be comparing an OK PE op vs a pretty good banking op
Look all I'm saying is many of your statements are outdated for what they are and you shouldn't give him a false sense of hope that he'll be able to pull off a career switch to PE later down the road. Again, I'm genuinely curious so actually show us a few linkedin's of these more senior bankers that are moving to the buyside, because I have not seen any at all in my experience in the recent years and I've been on both sides as well with friends across all the major banks+boutiques. And a "top mm" with that kind of compensation structure is not just an "OK" PE job.
I don't think my views are outdated at all. Not sure why you say that because we are probably around the same age so it's not either of us pre-date the other. I moved to the buyside as a VP FYI and had to take a slight pay cut (which is probably the biggest uphill battle). You get expensive as an Asso - VP so they would rather higher younger guys or older guys.
Also this guy's a 2nd year analyst ... you're effectively telling him that he can't wait 2 more years to be the equivalent of a 1st year asso to make a PE move? That's silly. It also doesn't sound like this PE gig is a great gig at a great shop. Sounds like he's just doing it for the sake of doing it.
Of course the tried and true method of AN -> PE -> BSchool will yield alot more people on the buy side and I"m not saying its super easy to get a PE gig as a VP / ED but its been done so why give up something you like just because you're worried you can't get a PE gig.
If you're a rockstar at a bank and are smart, driven and have a good network, you will make it to a PE shop. HFs are a bit harder in my view. (found this guy - https://www.linkedin.com/in/grant-lin-5516071). Also at the very senior level, bankers make the move to PE as well but that to me is a bit different.
Like others have said, he needs to do a bit of soul searching.
The OP needs to do some self evaluation here. Never forget that just because you are being groomed for a position doesn't mean you will actually like doing that work. I have no dog in the fight so to speak because I don't have a bias towards one camp or the other. But don't forget that a VP level gig in a bank has a pretty significant shift in what you will actually be doing. This goes for PE as well, but the one difference is that every level does this to some extent so its not quite as jarring of a change. I've met many great analysts that couldn't cope with the client sourcing work that begins to crop up once you hit the VP level. Nothing wrong with that, its just not everyone's forte. I would agree with a couple of the posts above, it is easier to change your career mindset as a younger person than it is as an older person. Even a couple of years makes a big difference.
I would just advise you really look at how you perceive your personal strengths and weaknesses. This self analysis might lead you to a career path that you would be most content in.
My one bit of advice for everyone who happens to read this, don't base your career choices on how happy you think they will make you. Pick the path you think you will be most content with. While it is great to be happy at your job, you don't want to tie your happiness to something that could have long ruts where you aren't feeling happy because your job factors so heavily into your happiness. Leave the happiness for areas in your life outside of your work.
Think to why they asked Why private equity, and ask yourself how strongly you feel now about the answer you gave back then.
I think having PE experience can make you a better banker. How about doing 2 years in PE and come back to the group as Senior Associate / VP 1?
1) You'll likely have to take a pay cut eventually either for better lifestyle or better/different experience. Wouldn't get hung up on comp too much since both are above market for banking and PE. Most people will end up making similar, if not more likely a paycut, when comparing banking Associate vs. PE Associate (considering your sign-on bonus, stub bonus, high base salaries these days, and if you're were an analyst to associate promote you're most likely going to be a top bucket associate, this is especially true for the banks or individual analysts that got promo'd after 2 years).
2) I'd highly caution you that lifestyle in PE isn't significantly better. If you're doing deals, your hours are going to suck. Given you're in upper MM, your deals are most likely going to be auctioned by a legitimate bank that won't let you just take your sweet time through diligence. Speed to closing is a legitimate factor these days.
3) Both jobs are stressful, just very different kinds of stress. I don't have the random MD/client request to see an analysis ASAP or the world is going to fall apart, but I do feel much more responsible for what I do (even something so simple as making sure consultants are asking the right questions). I've decided the cushiest job is an MD that does right bookruns on any type of capital markets transactions.
4) PE isn't necessarily a better job than banking.
5) You're most likely not going to make MD in banking or partner in PE. But it's much easier to make VP in banking than VP in PE.
I would take the PE offer. Not because I necessarily think PE is a better job than banking, but because it's something different. You're young, you're going to get comped great either way, there is something to trying new things in your career early on so you'll have a better idea of what you want to do later (which could likely be you don't want to do either one).
"I've decided the cushiest job is an MD that does right bookruns on any type of capital markets transactions."
Hahaha, this is greatness. So true. I swear those guys do absolutely dick and get paid for it.
Lot of really great advice here. I appreciate everyone's feedback. I know there was some tension up above, but DebunkingMyths I do hope you continue posting and don't leave the forum because I have found your posts to be really valuable.
Am pretty close to the MD, so I'm planning to talk to him tomorrow to address some of my thoughts and concerns. In any case, the decision has definitely been made a lot less stressful thanks to all of you. Will give you guys an update after tomorrow morning's conversation
Just read NeedToDecide's post and his comments are spot on. I see the skill sets converge at the senior levels a bit but in general, your job on the buyside as a principal (not the title but the role) is to be skeptical. Everything you do you gotta be paranoid about because its one more way you can lose money.
That kind of stress / way of thinking is not for everyone. Some people like services business that is project oriented, some don't.
Thanks again everyone. Just wanted to give an update on my situation. I talked to the MD this morning and explained my reservations. He was very supportive and told me he would reach out to a few of his friends in private equity if I wanted other options. Ultimately though I think I'm going to stay with the firm and with banking. He offered me another slight bump in pay, which together with his support honestly meant a lot to me. There are a number of senior people here willing to go to bat for me, and I think career wise I'll do just fine if I stay here. I like advisory work and I think that moving forward I'll like the work even more as it becomes increasingly client-facing. It seems like the most senior and best people at the group are doing as well as their PE counterparts, since it's a lean group, so I'm not really too worried about sacrificing future opportunities. Moreover, I definitely do not want to do an MBA and would prefer to just continue working. I hope I'm making the right decision, but I'm fortunate enough to be choosing between two great options, so I'm going to stop stressing about it.
..........
Congrats! Sounds like a very supportive boss. It's rare to find people who are willing to invest in you long term and that are genuinely good people. I think you're making the right choice.
To play devil's advocate, always look out for yourself. No senior guy is REALLY looking out for you. I learned that the hard way. Just do what's right for YOU and YOUR career.
Stay in Banking or Early Exit to Small PE Fund?!? (Originally Posted: 04/01/2009)
I'm currently finishing my first year as an IB analyst at a boutique/MM shop. I've had pretty good deal experience and am beginning to start recruiting for PE/VC gigs in summer 2010 and have gotten some positive feedback about potential employers from some reputable headhunters.
However, I have an interview coming up with a small PE shop (only about $300 AUM and less than 10 employees) and it could be a pretty attractive opportunity, especially with instability at my current bank and potentially more layoffs around the corner.
However, I would essentially be forgoing opportunities to interview and possibly work for larger and more reputable firms like TA, Battery Ventures, Golden Gate Capital, etc. for a slightly better pay and a slightly better lifestyle now.
Is it worth it, or should I just stay the course and see what other opportunities come my way in the coming weeks and months?
My group is very lean relative to our deal flow, so pay has always been above street and at most levels (aside from partner depending on the PE firm) pays above private equity. I don't want to give any details that might reveal where I work, but consider places like centerview, since their comp data seems to be more well known around these forums. They're definitely outliers. The expectation is that you stay with the group and the lifestyle is as I mentioned a sweatshop. I also feel like banking compensation is growing closer to pre recession levels. Not saying it will ever get back to where it was, but an offer like mine would be not considered that out of line during that time period to my knowledge.
Thank you! I appreciate your earlier comments. Recognizing that most of my doubts stemmed from a grass is greener mentality help me make my decision once I realized that I'm pretty happy about where I am right now.
This is definitely something to keep in mind. Thanks for all of your well-thought-out comments. I do feel like I'm getting a lot out of the firm now. If I ever felt like I was being taken advantage of or if I found an objectively better opportunity I would certain reevaluate my position and likely leave.
Stop acting like you already have the offer and keep your head down. I would be interested in what "pretty" good deal experience means in this market based on 1 year of work in this robust deal flow environment. Assuming the comp, culture and lifestyle are what you are looking for at the PE shop there is no reason to remain in banking esp. if you think your new group is actively working on deals and there is the potential for comp/title growth. Holding out for something better often leads one to go home alone.
Pros and Cons of staying in banking? (Originally Posted: 05/19/2013)
What do you think the benefits of staying in banking after an analyst stint as opposed to trying to break into PE/HF are?
As some on the board know, I've been a career banker and I've enjoyed it. I feel the decision comes down to long term career path and the truth is making MD in banking or partner in PE is harder than ever. Neither industry has seen a lot of growth lately.
That said, I want to highlight one thing based on my own personal experience. I was a lot like you as an analyst. Top ranked in a top group and working my ass off. I never recruited for PE (the process was different back in the day), but I had a few top firms (ironically, at least two of them Thomas E. Lee and Hicks Muse aren't even around) approach me (again, it was different back in the day). I didn't give it much consideration because I was working on a lot of interest deals, getting paid well and given a ton of responsibility. When I made associate, I found myself totally burned out and unable to put up with the same crap as before. Things I was willing to do, I just couldn't bring myself to do them. I wound up quitting, taking some off, realizing I enjoyed banking even though there were plenty of PE options, and joined another firm and have never looked back.
I'm not advocating one choice over another, but my only recommendation is that if you stay with banking, make sure you are committed to maintaining the same level of intensity for the next two years and make sure one of the things you negotiate is a proper (4-6 week) break before the next level. I didn't take one because I was so busy working on deals, and that really cost me 6 months later.
Structured credit, but yes I did, and failed miserably when my lead investor pulled out due to their own internal issues. But I also realized then how much I enjoyed banking.
THL Partners is definitely still around today
Also curious.
Its probably more stable and if you stick with it, im sure it pays pretty damn good once you're a MD/Partner.
haha PE is WAY more stable than IBD/HF. The IB/ECM are the first ones to get cut when economy goes down, ESPECIALLY at the middle level (VP, Director). However if you do reach MD, then yea pay is good - you'll definitely be earning more money than you could spend
a) you could never make more money than you could ever spend. very easy to spend a lot if you're interested in buying portfolios of real estate/gas stations/vacant land etc. etc.
b) pay is "good" is its liquid. MDs @BBs have bonus paid majority in stock so its still good but not great since it is vested equity that they cant touch for some time. I'd imagine being a MD at a private elite boutiqe (Ex- Moelis, PwC) or even top MM would be better in terms of pay and it being all cash than at a BB where they are in golden handcuffs.
Not having to get an MBA seems to be a huge pro of staying in banking.
Also I have heard recently that PE is going to get harder as time goes on and regulations get tougher. Not sure if there is any truth to that but if so it will make banking more attractive I'm sure
like mentioned above, a lot of MM PE shops expect you to get MBA after the associate level while IB shops do not
I think liquidity is something that is often overlooked. Granted you can get money locked-up in either scenario, but PE can be tough in some regards. If you want to get a significant portion of carry, assuming the fund you are at would entertain that, you will likely have to put up some cash. That cash is going to sit there for 5-10 years, maybe longer in some cases. In banking, especially private companies, your bonus is going to be cash deposited into your bank, so you'll have better access to it, if needed.
Regards
Really? This is interesting, as from what I understand (albeit not much), bankers' bonuses are very illiquid and this seems to be often noted as a downside to IBD's compensation?
THL also crushes it
They're a shadow of their former self (used to be seen as a Blackstone or TPG equivalent). Had real trouble raising a new fund.
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