2/15/11

Wondering about this. Is it just the prestige/pay? Seems like your experience would be quite limited at megafunds (type of work similar to banking, just modelling focused). Why don't more people pursue MM -- especially if it is less competitive?

Moderator note: This has turned into one of the most candid conversations about what working in PE is actually like that we've had on the site in a long time.

Comments (171)

2/10/11

My opinino is because there is the desire to be the best of the best in anything you do and it seems banking and finance seems to attract hard working motivated individuals who want to be number one in everything. Of course I may be wrong, but its what my take on the matter is. MM are still extremely competitive as well , but most consider BB the most prestigious job you could get.

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2/11/11

Risk aversion, prestige, pay, in that order.

2/13/11
surferdude867:

Risk aversion, prestige, pay, in that order.

If you find a MM PE shop that grants you carry right from the beginning I doubt that you make more money at a megafund during your first two years. Correct me if I am wrong though.

2/14/11
SaberRider:
surferdude867:

Risk aversion, prestige, pay, in that order.

If you find a MM PE shop that grants you carry right from the beginning I doubt that you make more money at a megafund during your first two years. Correct me if I am wrong though.

Also, if you find a MM PE firm that pays you $600K base, I doubt you'll make more at a megafund in your first two years. Correct me if I am wrong though.

2/11/11

Not sure what you think you'll be doing in MM that is so different. Seriously, how do you think it's different? I have a feeling you have a very skewed view as to what MM PE Associates do. I am a MM PE Associate and would like to hear what your thoughts are.

2/12/11

Correct me if I'm wrong but don't associates MM shops have a broader role in the investment process (i.e. not just modeling and writing memos but also working closer w/ portfolio companies and given greater responsibility to evaluate investments)? This seems to be something that is important to me -- even if the MM firm is not as well-known.

Also does the experience at growth equity shops (General Atlantic) differ much in terms of learning? I'd like to go somewhere it's not just like spending another 2 years in banking.

2/14/11
lurker22:

Correct me if I'm wrong but don't associates MM shops have a broader role in the investment process (i.e. not just modeling and writing memos but also working closer w/ portfolio companies and given greater responsibility to evaluate investments)? This seems to be something that is important to me -- even if the MM firm is not as well-known.

Also does the experience at growth equity shops (General Atlantic) differ much in terms of learning? I'd like to go somewhere it's not just like spending another 2 years in banking.

"working closely with portfolio companies and given greater responsibility to evaluate investments." What do you think this means? What do you honestly think you will be doing in PE?

Not trying to be a dick, just so sick of reading about people who want to do MM PE for "operational improvements" and "doing more than modeling and memos." These vague catchphrases that analysts jerk off too (I did once, as well) need to be thrown in the garbage. PE is a deal business, you work on transactions. That means modeling, research, presentations and memos. It means reading a bunch of shit for due diligence and a lot of the same kind of shit you did as an analyst in banking. Yes, your firm owns companies, and you monitor them, but you are not making decisions about how to improve them, if anything, you're analyzing add-ons that come along.

Contrary to what many seem to believe, when you join PE you are not going to become some important hot shot, taking an elevator to the top of a really tall building, sitting behind a desk, making decisions all day. No, you're going to be doing a shit-ton of modeling, memo writing, and due diligence crap that will often bore you to death. Furthermore, there is a shit ton of internal crap to do, just as at a bank. No, you don't get pitches staffed on Friday at 4pm, but it doensn't mean that the work is fundamentally different. At all.

2/14/11
TheKing:

No, you don't get pitches staffed on Friday at 4pm, but it doensn't mean that the work is fundamentally different. At all.

and...you might get staffed on some nonsense potential investment on Friday at 4pm (or 5 or 6 pm) that requires an indication of interest by end of day Monday. then your life isn't much better than the analyst starting on a pitch on a Friday evening...

PE is banking 2.0. slightly better hours. way bigger paychecks. same mind-numbing work.

1/3/13

TheKing:
lurker22:
Correct me if I'm wrong but don't associates MM shops have a broader role in the investment process (i.e. not just modeling and writing memos but also working closer w/ portfolio companies and given greater responsibility to evaluate investments)? This seems to be something that is important to me -- even if the MM firm is not as well-known.

Also does the experience at growth equity shops (General Atlantic) differ much in terms of learning? I'd like to go somewhere it's not just like spending another 2 years in banking.

"working closely with portfolio companies and given greater responsibility to evaluate investments." What do you think this means? What do you honestly think you will be doing in PE?

Not trying to be a dick, just so sick of reading about people who want to do MM PE for "operational improvements" and "doing more than modeling and memos." These vague catchphrases that analysts jerk off too (I did once, as well) need to be thrown in the garbage. PE is a deal business, you work on transactions. That means modeling, research, presentations and memos. It means reading a bunch of shit for due diligence and a lot of the same kind of shit you did as an analyst in banking. Yes, your firm owns companies, and you monitor them, but you are not making decisions about how to improve them, if anything, you're analyzing add-ons that come along.

Contrary to what many seem to believe, when you join PE you are not going to become some important hot shot, taking an elevator to the top of a really tall building, sitting behind a desk, making decisions all day. No, you're going to be doing a shit-ton of modeling, memo writing, and due diligence crap that will often bore you to death. Furthermore, there is a shit ton of internal crap to do, just as at a bank. No, you don't get pitches staffed on Friday at 4pm, but it doensn't mean that the work is fundamentally different. At all.

Solid answer. As someone interested in moving to that side eventually, can you talk a bit more about hours and work-life balance? Obviously it depends on the shop, time of year, etc., but the general consensus is that the hours are significantly better when a deal isn't in the process of being closed. If that stereotype is false, feel free to shred it apart.

Also would like to know what aspects of the deal-making process you were enlightened to or felt more comfortable with after doing some deals on the buy side.

1/3/13

peinvestor2012:
Solid answer. As someone interested in moving to that side eventually, can you talk a bit more about hours and work-life balance? Obviously it depends on the shop, time of year, etc., but the general consensus is that the hours are significantly better when a deal isn't in the process of being closed. If that stereotype is false, feel free to shred it apart.

Also would like to know what aspects of the deal-making process you were enlightened to or felt more comfortable with after doing some deals on the buy side.

In all seriousness, the work-life balance is better, but when you are working on a deal, it can get nuts. You will be pulling a ton of hours when things heat up and it can really get nuts as you get towards the close. Also, the stresses are, in many ways, far greater than they are as an Analyst in banking. There isn't anyone to hold your hands or check all of your work. People rely on you to get things right the first time, and to get them right consistently.

Looking back, the people who have made out best in finance are, generally, the ones who stayed at a bank instead of going to PE and got promoted. Not those in traditional M&A sweatshop groups, but in different roles within banks. Not every front office job is going to put you through the grinder for 10 straight years. I think it's most worthwhile to get into a group that doesn't break your back and has opportunities for promotion.

Of course, if you don't like banking at all, that won't work. Though, if you don't like banking work at all, you probably won't really like PE either.

1/7/13

TheKing:
Looking back, the people who have made out best in finance are, generally, the ones who stayed at a bank instead of going to PE and got promoted. Not those in traditional M&A sweatshop groups, but in different roles within banks. Not every front office job is going to put you through the grinder for 10 straight years. I think it's most worthwhile to get into a group that doesn't break your back and has opportunities for promotion.

Of course, if you don't like banking at all, that won't work. Though, if you don't like banking work at all, you probably won't really like PE either.

I think that is a 'path' often overlooked. Everyone wants to get into the hardest group to get the most experience to have the best exit opportunities. Another option is to get into a decent group, with better hours and then work your way up. I have a friend that initially planned on doing IB then going to PE. He got stuck in a group that was an absolute sweatshop and nearly bailed on IB entirely. Lucky he got wind of an opening in a slower capital markets group and made the switch. He still puts in more hours than the average Joe Schmo, but he also makes considerably more.

At this point in time, he's looking to get promoted to VP and then keep going in his group or potentially take on clients in a similar industry but with a slight different focus from that of his current MD. Talking to him now, he enjoys his actual work, isn't abused like he used to be and is really enjoying life.

Long term if he makes VP and D/MD he will be making $600k+ and $1.0mm+ working 60 or so hours a week in the South...which is stupid good money. Realistically he won't own a jet, but he will live in a literal mansion on a lake, drive a $100k+ car and fly first class. Seems okay to me, lol.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

1/7/13

cphbravo96:
I think that is a 'path' often overlooked. Everyone wants to get into the hardest group to get the most experience to have the best exit opportunities. Another option is to get into a decent group, with better hours and then work your way up. I have a friend that initially planned on doing IB then going to PE. He got stuck in a group that was an absolute sweatshop and nearly bailed on IB entirely. Lucky he got wind of an opening in a slower capital markets group and made the switch. He still puts in more hours than the average Joe Schmo, but he also makes considerably more.

At this point in time, he's looking to get promoted to VP and then keep going in his group or potentially take on clients in a similar industry but with a slight different focus from that of his current MD. Talking to him now, he enjoys his actual work, isn't abused like he used to be and is really enjoying life.

Long term if he makes VP and D/MD he will be making $600k+ and $1.0mm+ working 60 or so hours a week in the South...which is stupid good money. Realistically he won't own a jet, but he will live in a literal mansion on a lake, drive a $100k+ car and fly first class. Seems okay to me, lol.

Regards

Your friend is hooked up, that's seriously awesome. Everyone has this idea that they need to own a jet or some shit someday, such an unrealistic way of looking at life. If you can make that kind of money doing work that you legitimately enjoy, you've made it.

The focus should be as follows:

1.) Do something you enjoy spending your time doing
2.) Live within your means
3.) Find meaning and happiness outside of work in hobbies / friends / etc.
4.) Diversify your assets (indirectly through investments or directly through side-hustles)
5.) Don't give a fuck what other people think. As long as you're enjoying yourself and being responsible, who cares what others think?

Obviously, these are my views. But, everyone I know that is doing well and is legitimately happy seems to follow them.

1/10/13

TheKing:
cphbravo96:
I think that is a 'path' often overlooked. Everyone wants to get into the hardest group to get the most experience to have the best exit opportunities. Another option is to get into a decent group, with better hours and then work your way up. I have a friend that initially planned on doing IB then going to PE. He got stuck in a group that was an absolute sweatshop and nearly bailed on IB entirely. Lucky he got wind of an opening in a slower capital markets group and made the switch. He still puts in more hours than the average Joe Schmo, but he also makes considerably more.

At this point in time, he's looking to get promoted to VP and then keep going in his group or potentially take on clients in a similar industry but with a slight different focus from that of his current MD. Talking to him now, he enjoys his actual work, isn't abused like he used to be and is really enjoying life.

Long term if he makes VP and D/MD he will be making $600k+ and $1.0mm+ working 60 or so hours a week in the South...which is stupid good money. Realistically he won't own a jet, but he will live in a literal mansion on a lake, drive a $100k+ car and fly first class. Seems okay to me, lol.

Regards

Your friend is hooked up, that's seriously awesome. Everyone has this idea that they need to own a jet or some shit someday, such an unrealistic way of looking at life. If you can make that kind of money doing work that you legitimately enjoy, you've made it.

The focus should be as follows:

1.) Do something you enjoy spending your time doing
2.) Live within your means
3.) Find meaning and happiness outside of work in hobbies / friends / etc.
4.) Diversify your assets (indirectly through investments or directly through side-hustles)
5.) Don't give a fuck what other people think. As long as you're enjoying yourself and being responsible, who cares what others think?

Obviously, these are my views. But, everyone I know that is doing well and is legitimately happy seems to follow them.

Agree wholeheartedly. At some point, the difference between the next $100k or $1mm is tiny and I would care more about my interests outside of work. Unless you are getting some serious equity, I find no reason to absolutely kill yourself physically and mentally through your 20s.

3/29/16

I think a Jet is a dumb investment even if you can afford it. It's like buying a car except, you know, 300 times the cost. I suppose you could lease it through net jets or something but, if you're buying a jet, supposedly you fly a lot?

side note - my girlfriend is a nurse and she had a patient who wouldn't stop bragging about owning a jet and dating a playboy model. Said he turned every conversation into "I have my own jet, you know". Is owning a plane like being vegan? How do you know if someone owns a jet? Don't worry, they'll tell you.

"How much did your jet cost?"
"Actually, that's none of your business. But, I can assure you, it wasn't cheap."

2/12/11

You are wrong. The variance of work/life balance and investment process/style within megafunds and MM funds is greater than the differences between the two on average in my opinion.

don't overglamorize the associate role

2/14/11

bankbank, let's not mislead here. The paycheck is definitely not guaranteed to be much bigger, nor does it make up for the fact that it's banking 2.0 with a better sounding job description.

2/14/11

I was in no way saying that the paycheck makes up for the fact that my PE job is turning my once sharp mind into mush and that I still spend my days wishing I were working somewhere else and posting on WSO to distract myself from the stuff I'm supposed to be doing.

Regarding the pay, I am talking about moving from being an analyst at a BB to being an associate at a big PE fund. I am still the one getting shat on at the bottom of the totem pole, but my pay more than doubled when I switched. Had I stayed in banking for another year and then gotten the associate promote, I wouldn't be making nearly as much money. MM PE might pay a little less, but from the offers I saw it still paid way more than I would have received as an analyst/associate in banking. The difference in pay might not be as great once you start moving up in PE and more of your pay is dependent on your fund's performance, but I don't know.

2/14/11

to answer OP, I think prestige is the biggest motivator.

a lot of us in finance are type A. we want to be the best and work for the best and we want to do the big deals that make the front page of the journal (just like you told your interviewer for your summer analyst job...hah). we want to go to harvard and then we want to work for goldman and then we want to work for KKR. we hear people talk about these places being the best and that's what we go for. that's why there are 10 new "what's the best bank/group?" posts on this forum every day.

i had the choice between MM and MF. the guys at the MM were cool as shit and i'm sure it would have been a blast (well...a relative blast) to work with those guys. the pay was the same at the MM. in the end, and against advice from my parents about doing what would make me happier, I went with the bigger fund. I wasn't sure if I wanted to do PE forever and I figured it would look better on my resume if/when I looked to exit. All the senior guys had gone to HBS (as is the case at every MF) so I figured that would be good if I wanted to do Bschool. correct choice or not, i basically decided based on the fact that the MF was bigger and would look better on my resume.

2/14/11

TheKing and bankbank are 100% correct. You're still the lowest on the totem poll, and you'll be doing more than your fair share of mind-numbing, menial work most of the time. I'd say 75% of the time I'm doing similar tasks than what I did in banking. Not the exact same thing, but similar in terms of modeling, number crunching, "analysis", etc. The social aspect of work is far different as well, and don't underestimate that. The comradarie of banking is non-existant in PE. Most of my friends in PE believe all these things are true at their firms as well, so I don't feel I'm that much of an outlier.

That being said, the hours are better than in banking, which is fantastic. I also travel to meetings much more than in banking. I talk to the CEO and CFO of portfolio companies often, though the novelty of that wears off pretty quickly.

Remember in college when you all you wanted to do is banking, because even though you heard from your older friends in banking how much it sucked, you thought it actually sounded cool and exciting? Then you got there and your friends were right, it sucked. Then, when you're in banking, all you wanted to do is jump to PE because it sounded so cool to be on the buyside, even though older friends in PE said it was just like Banking 2.0? Same thing.

2/14/11

TexasIB: Remember in college when you all you wanted to do is banking, because even though you heard from your older friends in banking how much it sucked, you thought it actually sounded cool and exciting? Then you got there and your friends were right, it sucked. Then, when you're in banking, all you wanted to do is jump to PE because it sounded so cool to be on the buyside, even though older friends in PE said it was just like Banking 2.0? Same thing.

Wow. That's a reality-check moment. What the hell are we all doing?

2/14/11

I highly doubt that someone a few years out of college can add tangible operational value to a portfolio company who's management has probably been involved in the industry for decades. Just think about it.

2/14/11

I don't agree with that. It depends on the fund's focus. I work for a lower middle market fund, targeting companies with 50-150m revenue. More than a few of our port co's are family-run businesses with unprofessional mgmnt teams (I don't mean that disrespectfully) who make decisions on gut, never data. Most of our energy companies have CEOs with no more than a high-school education. I'm often assigned to think-through some quality metrics, develop some dashboards, bring data to bear on their decision-making. Forget whether I personally add value. The role of the associate in this case can add tangible value to a mgmnt team even if it HAS been in the industry that long. They bring experience. We peddle a really good tool kit.

Put it this way, the CEO of an oil and gas waste management company used to drive the service trucks himself. He doesn't know the first thing about managing his balance sheet. He's never (really) had to care before. Even if it is a $70m company. I'm no genius, but that's something I can bring to the table. I think it adds value.

2/14/11
apprentice7697:

More than a few of our port co's are family-run businesses with unprofessional mgmnt teams (I don't mean that disrespectfully)

Agree-we're not usually involved with the operations of companies whose debt we hold but sometimes a mezz debt or a loan to a small company ends up with us getting our hands dirty, and for a lot of small firms, even good companies with good businesses, the level of professionalism and organization is so lacking that even minor changes that are obvious to a moron excel jockey like myself can make a big difference.

We also perceive difference depending on the sponsor involved; I'd divide them into three categories:

1) Firms that put a lot of boots on the ground and make operational changes. These sponsors are often industry-focused; they also have a tendency to have a lot of operational partners, make bolt-on acquisitions or come in via restructuring.

2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

3) Firms that are mostly financial engineers.

Curious if people on the sponsor side agree?

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/15/11

This discussion is really great guys - thanks to everyone sharing their perspective. Definitely interested in hearing more about peoples' perspectives on MM vs. MF etc. I had a specific question, for anyone really to answer, but it was brought up by Kenny Powers:

Kenny_Powers_CFA:

2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

What's the work of these consultants like from a PE perspective? I hear consultants gripe a lot that they have to analyze very mundane operational problems for clients that don't want to hear that they're doing things wrong, and then the clients don't actually implement any of the consultant's suggestions. Is this very different if you're working with a sponsor's portfolio company?

I guess what I'm asking is - would working on a portfolio company for a sponsor that sees value in operational changes in a company be a lot more interesting and meaningful work experience because the company actually needs to change, rather than just doing an internal study for a F500 company when that company doesn't really care what the consultant has to say? Also, do the consultants work closely with the PE guys, or is it more like - here's the problem, come back to us when you've fixed it?

Hi, Eric Stratton, rush chairman, damn glad to meet you.

2/15/11
Otter.:

This discussion is really great guys - thanks to everyone sharing their perspective. Definitely interested in hearing more about peoples' perspectives on MM vs. MF etc. I had a specific question, for anyone really to answer, but it was brought up by Kenny Powers:

Kenny_Powers_CFA:

2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

What's the work of these consultants like from a PE perspective? I hear consultants gripe a lot that they have to analyze very mundane operational problems for clients that don't want to hear that they're doing things wrong, and then the clients don't actually implement any of the consultant's suggestions. Is this very different if you're working with a sponsor's portfolio company?

I guess what I'm asking is - would working on a portfolio company for a sponsor that sees value in operational changes in a company be a lot more interesting and meaningful work experience because the company actually needs to change, rather than just doing an internal study for a F500 company when that company doesn't really care what the consultant has to say? Also, do the consultants work closely with the PE guys, or is it more like - here's the problem, come back to us when you've fixed it?

In my experience, the consultants work more directly with the portfolio companies and produce reports that are then reviewed with the company and the PE firm. I'm not really sure what you are looking for here, to be honest. It isn't like that's some awesome and exciting work.

Again, people need to put this "operational improvements" shit to bed - it isn't some super exciting shit, it's a consultant's report that says "you need X salespeople with a focus on Y to attack market Z because of such and such reasons." Not gonna get your dick hard (no homo.) Let me be clear. If you want experience running a business, then join a business, not a financial services / consulting company. Or start a business. Obviously, the latter is tough, but people need to understand that there isn't some glamorous shit going on when you work in PE. It doesn't matter if it's MM or Mega Fund, you're going to be doing relatively the same shit just on different scales and the due diligence reports you get from consultants and shit will just be done by different firms that specialize in different deal sizes. And maybe your hours would be better at one place vs. another. As in, KKR will work you to death whereas some no-name MM fund will likely be a shit-ton better (though you can still expect to work a lot and stress about it.)

2/16/11
TheKing:
Otter.:

This discussion is really great guys - thanks to everyone sharing their perspective. Definitely interested in hearing more about peoples' perspectives on MM vs. MF etc. I had a specific question, for anyone really to answer, but it was brought up by Kenny Powers:

Kenny_Powers_CFA:

2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

What's the work of these consultants like from a PE perspective? I hear consultants gripe a lot that they have to analyze very mundane operational problems for clients that don't want to hear that they're doing things wrong, and then the clients don't actually implement any of the consultant's suggestions. Is this very different if you're working with a sponsor's portfolio company?

I guess what I'm asking is - would working on a portfolio company for a sponsor that sees value in operational changes in a company be a lot more interesting and meaningful work experience because the company actually needs to change, rather than just doing an internal study for a F500 company when that company doesn't really care what the consultant has to say? Also, do the consultants work closely with the PE guys, or is it more like - here's the problem, come back to us when you've fixed it?

In my experience, the consultants work more directly with the portfolio companies and produce reports that are then reviewed with the company and the PE firm. I'm not really sure what you are looking for here, to be honest. It isn't like that's some awesome and exciting work.

Again, people need to put this "operational improvements" shit to bed - it isn't some super exciting shit, it's a consultant's report that says "you need X salespeople with a focus on Y to attack market Z because of such and such reasons." Not gonna get your dick hard (no homo.) Let me be clear. If you want experience running a business, then join a business, not a financial services / consulting company. Or start a business. Obviously, the latter is tough, but people need to understand that there isn't some glamorous shit going on when you work in PE. It doesn't matter if it's MM or Mega Fund, you're going to be doing relatively the same shit just on different scales and the due diligence reports you get from consultants and shit will just be done by different firms that specialize in different deal sizes. And maybe your hours would be better at one place vs. another. As in, KKR will work you to death whereas some no-name MM fund will likely be a shit-ton better (though you can still expect to work a lot and stress about it.)

This.

I envisioned grand turnarounds predicated on operational improvements when I first started PE as well. What you learn is that most of the managers / owners have been in their given business most / all of their lives, their parents were in the business, and maybe their grandparents were in it as well. They live and breathe the business everyday and they also usually have some technical background or specific expertise that you will not be able to replicate or enhance (yes you may be able to help them get their DSO down but I'm referring to more core operational improvements).

Your value add to the situation is structuring transactions to (i) extract the most value out of the company, (ii) minimize tax consequences, and (iii) minimize legal exposure to your firm. Guys that know how to do these things inside and out are the most impressive in my opinion, as they can generate millions of dollars in additional shareholder value or bridge seemingly impossible valuation gaps to get deals done. I'm less and less impressed with "operational partners" or parters who claim to be "industry experts" (there are some good ones of course but I'm speaking generally) as their "skills" pale in comparison to guys that have been in the industry since day one.

2/14/11

That's a good question apprentice. Am finishing up year 4 in the banking ->PE track, and that question enters my mind way more now than it did in years 1-3. Of course it takes experience to learn this, as believe me I was the quintessential "M&A! PE!" guy for the longest time. If you aren't passionate about finance and the whole deal process, the day to day of this job can get beyond grueling. You might think are you now, but after a few years, took a look in the mirror. This has happened to more people that I know than I can count.

Do I regret doing this track at the beginning of my career? Of course not. I've learned a decent amount, and I've been compensated well. I've met a whole bunch of interesting people and made good contacts for the future. I've been able to live in New York during my 20's and have enough extra cash to really have a blast. But never forget that all comes with a price.

2/14/11

So the question is... how much better is the lifestyle in MM PE than in banking? I don't hate EVERYTHING I do in banking, though it is riddled with so much worthless, menial bullshit that I can't stand, and I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability, i.e. I won't be cancelling vacation plans for the second time in six months, or I won't have to worry about spending my life in the office on weekends. Am I on-target here or waaaaay off base?

2/15/11
jimbrowngoU:

So the question is... how much better is the lifestyle in MM PE than in banking? I don't hate EVERYTHING I do in banking, though it is riddled with so much worthless, menial bullshit that I can't stand, and I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability, i.e. I won't be cancelling vacation plans for the second time in six months, or I won't have to worry about spending my life in the office on weekends. Am I on-target here or waaaaay off base?

others chime in, but i think you're in the wrong industry if you want to work regular 50-60 hour weeks. there is just too much money at stake and too much competition for people to be working 50 hours a week. i'm at a bigger PE firm, so maybe my experience is a bit skewed, but our partners still work that many hours in a lot of cases. you make money by doing deals and getting AUM. you don't make money by relaxing at the end of the day and coaching your kid's soccer team. not that making money is the be all and end all in life, but in this industry, it kind of is.

to make money in finance you either take risk or you work your ass off. unless you're the GP at a PE firm and you have tens of millions or hundreds of millions invested in the fund, you aren't taking that much risk.

2/15/11
bankbank:

to make money in finance you either take risk or you work your ass off.

This is key. SB for you, sir.

Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

2/15/11
jimbrowngoU:

I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability.

I couldn't disagree more. At my fund, ($4B MM), I am still an investment banking bitch. My client is the MD or principal on the deal. And before he brings the powerpoint deck (to invest or not invest) to investment committee meetings, he will absolutely have you up until 4 in the morning fiddling with fonts, colors, formats, sizing, etc. And yes, the hours will be equally unpredictable. Like the partner screaming, "I don't CARE if it's your goddam honeymoon! We're getting a look at a company that's NOT going through an auction process! But the M&A broker wants our indication of interest by tomorrow or he'll take the deal to another firm! Become an expert in the market for machinery that makes dental crowns, NOW!"

Actually, though: I find I don't have the weekend facetime problem as much, though. So at least that's good.

2/15/11

Fair enough, and I appreciate the perspective. What size fund are you at? I'm more talking about the lower MM, where they're investing out of a $500 million fund and focus on writing much smaller checks. I would assume there is definitely some disconnect between the Advents and Riverside Partners of the world. And if you're at a fund bigger than Advent... Well, I again assume the experience is going to be a bit skewed. But you're insight is definitely appreciated.

Any other thoughts?

2/15/11

I am at a lower middle market fund (think $500M and below) and we are all about the "improving operations" type of thing. But, again, let me be clear, this rarely affects the work that you do as an associate. Have I been on calls with partners and our companies talking about operations? Yes. Do I monitor operations and go to board meetings? Yes. Do I really do analysis that affects decision making at the companies in any real way? Absolutely not. In all seriousness, the majority of the shit you do at a fund that is all about operational improvements is looking at add-ons.

When we want our companies to implement new go-to-market strategies or some such shit, we hire consultants to work with them and develop plans. Yes, we review these plans and work to understand them with the companies, but again, it's not really my role nor should it be as I'm a 25 year old who has spent his professional life working on excel models, PPT presentations, and long-winded Word documents.

Again, not to beat a dead horse, but this is a deal business. Do not get pulled in by lofty sounding crap and realize that it is still a process-oriented job in which you are building models, updating models, writing memos, and doing due diligence. It's not glamorous and will not turn you into a master of the universe.

2/15/11

The King is 100% correct from my personal experience. Also, apprentice hit the nail on the head; I had was on vacation after being very slow at work and sat in the hotel room updating my model for 3 days; I would fix a little spelling mistake, email it to the MD then wait. Then get yelled at for an incorrect cap table, fix it, mail it back and wait. You arent going all the time at 100% but if something needs to be done and you are not available then you are screwed...

2/15/11
HFFBALLfan123:

The King is 100% correct from my personal experience. Also, apprentice hit the nail on the head; I had was on vacation after being very slow at work and sat in the hotel room updating my model for 3 days; I would fix a little spelling mistake, email it to the MD then wait. Then get yelled at for an incorrect cap table, fix it, mail it back and wait. You arent going all the time at 100% but if something needs to be done and you are not available then you are screwed...

You sound like a real fucktard... spelling mistakes and fucking up cap tables... I'd get you transferred to another group.

2/15/11

Let me basically summarize all I've been saying with one sentence:

Private Equity is way more awesome on paper than it is in practice.

Until people realize the reality of it, they will continue to jack off to it and think it's the road to money and happiness in their professional lives.

2/15/11

One of the better threads on WSO in recent memory. Thanks guys.

Shit like this makes me realize I'm so caught up in this rat race and all the associated buzzwords.

What the hell am I going to do with my life....haha

Best Response
2/15/11

I came by this thread wanting to add my two cents, but then I realized that every bit of knowledge I wanted to add has already been dropped by TheKing, bankbank, Kenny Powers, and apprentice7697. I've scattered about 10 SBs throughout the thread agreeing with you guys.

TheKing summed it up best: Private Equity is way more awesome on paper than it is in practice.

I think a lot of people want to go into PE because they want to have an impact on a business right now and fast track paying their dues as much as possible (I absolutely include myself in this statement). I didn't want to climb the ladder at IBM for 30 years before anyone listened to what I have to say - private equity seemed like it would put me there in 4 years, so I was all about it. And here I am, still making excel models.

Of course it turns out that us type A folks don't really want to do private equity - what we all really want to do is be entrepreneurs. Unfortunately most of us don't figure it out until we've arrived in PE and seen it for ourselves. Just look at the number of PE associates that eventually bail and start their own businesses - those are the guys that climbed the ladder as quickly as possible, then realized that if you really want to call the shots as quickly as possible, you've got to be CEO. Not to mention that PE gives you a lot of great insight that makes starting a company a hell of a lot easier. You also figure out really quick in PE (and even banking) that while you're doing pretty well, the guy that's really getting paid is the entrepreneur that owns 40% of the $400MM deal you're working on.

Despite the excellent content in this thread, I know it's going to do absolutely zero to expunge the delusions any of the college seniors or bankers out there aspiring to private equity. To borrow a quote from Morpheus - "Unfortunately, no one can be told what the Matrix is. You have to see it for yourself."

- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

2/15/11

I agree with 2+2+2 being completely over-hyped... particularly if you think you'll be "rolling up your sleeves and digging into companies discussing corporate strategy with the CEO". I personally view the 2+2+2 track as a fast track to getting pretty much the quickest, most legitimate credentials one can acquire before turning 30.

2/15/11

Great discussion. While I agree that PE in general is over-hyped I do think the experience is highly contingent upon your actual shop as the diversity that exists between PE shops is significant whereas the banking spectrum is more normalized.

For example, I have experienced all of the things that people generally believe make PE exciting - great comp w/ carry, meetings with famous/powerful people, jet-setting, black-tie charity events, $B+ front page deals, exposure to operations and financial engineering, etc but beyond all this bullshit it is still all about updating models, drafting memos/presentations, culling info from data rooms and other mindless administrative BS.

Bottom line: It is still better than banking and I would rather be at the mercy of my principals and LPs than the mercy of a relentless client

2/15/11

Don't really recall the saying but goes something like "if you want to see capable people waste their time, add prestige blah blah"...

2/15/11
Inept Speculator:

Don't really recall the saying but goes something like "if you want to see capable people waste their time, add prestige blah blah"...

Gee, I wonder where you keep hearing that...

- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

2/15/11

I don't work in a PE firm but am on the buyside as well - I work in the utilities industry, and essentially for the holding company which holds a number of power generation assets.
I work in a regulated industry where most of the revenues and costs are contracted and thus predictable. The issues I get involved in are financial engineering related (refinancing, interest rate hedging etc). Also, for a couple of acquisitions we made, I am currently supporting the asset management team in identifying the areas where cost cutting can be done. this is primarily being done through benchmarking studies and liaising with technical advisers. So while I am not doing any actual "improvements" or "getting my hands dirty", I am assisting in the process.
While the investee company's management generally has tonnes of experience, do not underestimate the power of a fresh perspective. Also, sometimes they get so involved in the day to day activities that it takes an external guy to run these out of the ordinary improvement activities.
While I am not in the financial industry any more, let me add my 2 cents to the MM versus MF debate. Working with a small team, you will definitely handle more responsibility. However, now that I am looking to move on, I realise that the brand name of the previous company matters a lot while making the job switch. So while I know I will get a good gig eventually, it might take more time than initially expected

2/15/11

capk I will plead the fifth for now 6 get backto you on that one!!!

2/15/11

Vaguefunda, that is a good example of what I'm talking about in terms of funds that have a deep industry focus and can make big changes operationally. There are a number of utilities-focused funds that have their own asset-management groups (in the plant operation sense, not the investing sense). ArcLight Capital is one good example of a very successful, industry-focused PE sponsor that has a great consulting/operational group.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/15/11

This is an incredibly candid discussion I'm glad I have the opportunity to read.

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

2/15/11

ego
deal/valuation sophistication
brand name
work with people wel known in the industry

Actually MM gets boring sometimes...

2/15/11

Question for the employees of equity sponsors (CaptK, The King, et al):
Do any of you work for and/or have an opinion of the difference between working for a pure-play LBO/Financial Sponsor versus working for a "family office"-style conglomerate/sponsor like, say, Rank Group or Huntsman Gay, where the owner/founder is an industrialist/businessman rather than a life-long buyout artist?

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/15/11

Wow, active day. Really good posts here, thanks guys.

I agree with Marcus' 2+2+2 assessment. While I agree with CaptK, I think the experience one gains is invaluable in being able to properly run a business. While I'd love to run a business right now, I have no issues admitting I wouldn't have a clue -- I won't be an expert at the end of my two years in PE, but I'm having a tough time believing I won't be significantly better off.

After reading this, I've also realized what a shot-in-the-dark it is when placing at PE firms. Most of you guys seem to like it slightly better than banking, and while it hasn't exactly been stated explicitly, it seems as though most of you still put in 60-70 hours per week with similar levels of unpredictability to banking. Then, I go and chat with other MM PE associates, and they rave about how great it is, how they typically work somewhere between 45-60 hours per week, how they never work on weekends, etc. (CompBanker, this is to you). While they don't deny there is still some mundane and menial work involved, it's significantly less and lifestyle is just much better. Basically my point is that your experience is heavily dependent on the culture of the PE shop you place at.

Where do all of you work (city) and what size fund? If you all work in NY, I guess I understand -- most of my MM PE contacts are in Boston, and my guess is a big reason for the difference of lifestyle has to do with the senior-level guys.

I appreciate the inside info though guys. I try to escape the disillusion of PE as much as possible, but it can be tough sometimes.

2/15/11

Marcus, did i say i made the spelling mistake? I think not, correcting the mistakes of someone else and the cap table errors were a factor of not having the orignial loan docs. So i didn't know that interest was capitalized every quarter on the debt, nor did i know the conversion rate on the debt because the original loan doc was being amended to include a conversion rate (which had not yet been agreed upon). And this was key to the model so don't be so quick to judge.

The WSO Advantage - Private Equity

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2/15/11

It sounds like the most qualified people take themselves out of the competition pretty early on. Am I correct to guess this? I'm planning on MBA -> IBD associate -> try and take over the company

Get busy living

2/15/11

Fantastic thread guys.

People like Coldplay and voted for the Nazis, you can't trust people Jeremy

2/15/11

Bottom line: MM or Megafund, they're all just trying to do God's work.

2/15/11

I'll chime in with my experience:

I worked for 8 months as an analyst/intern at a MM PE shop. I did ride up to nearly the top of a nice building (ha, quoting someone who posted before me), the firm structure is very top heavy, there are a lot GPs relative to underlings. Three very successful GPs and a few VPs.

The quotes about it being a lot more fun on paper is very true, most of my time, when we were not working on a deal, was spent marking up CAs/NDAs, distilling CIMs into one/two pagers and doing research on whatever industry the VPs were interested in. Also, I would do research for portfolio companies, a few times I helped them out - the port comps - with excel stuff. We would also run a bare bones LBO analysis based on the information provided in the CIMs and how much debt (senior, junior, mez), just to get an rough idea of IRR/ Xs money.

Serious modeling work was only done once we submitted an LOI; I did tons on mundane deal room shit after this, extensive analysis on the company, sales trends, etc. It was exciting for me, and felt great to close.

As one poster mentioned, the direct sourced deal is the holy grail - in the lower middle market it is easier to side step auctions.

As for the VPs roles, they did everything from operational stuff with portfolio companies, to deals - running the deal: managing consultants, accountants ect.), depending on what needed to be done. They do get carry from what I understand.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

2/15/11

Great thread guys. Would love to see CompBanker comment on this as he seems to love working in MM PE.

2/15/11

I left my job at a MM PE fund to start my own small HF. My reasons were manifold but it basically resulted from realizing a few key things:

  1. I don't care what PE fund you work at, unless you are a Partner (which takes about 20 years, btw), you are not calling the shots at all, your superiors are. Your value add and compensation will always be limited by the level of control you have as far guiding the business forward. Everyone below this level just follows through on getting deals done. If you spend your entire day building an excel model, just how much value did you REALLY contribute? That's why the entrepreneurs of companies make so much more, they build companies, not excel models. One is worth more than the other...
  2. The hours are slightly better than banking, but the work is just as boring. Also, the work is often harder. Try doing a waterfall on a company that is on its Series F round and each round has different terms, liquidation preferences, dilution adjustments, etc. And it has to be perfect, btw. I worked tons of hours on stuff like that, but it's not really value add, at the end of the day it won't affect your IRR. Writing memos and portfolio company performance write-ups, same thing; worthless in the big scheme of things.
  3. If you own your own business, there is no cap to your compensation. If you are in PE, there is a cap to how much you can make, even if it's a very good living, there is a cap (huge turnoff for me). I'm not afraid of risk and most of you shouldn't be either; if you think you really are top notch, you shouldn't be killing yourself to go work in PE, you should be taking advantage of the fact that you're young and have virtually zero opportunity cost to breaking out on your own and doing something that could potentially be much more valuable. Worst case scenario, it doesn't work out and at least you have something unique on your resume that makes you an attractive candidate to prospective employers.

Consultant to a Fortune 50 Company

2/15/11
alexpasch:

I left my job at a MM PE fund to start my own small HF. My reasons were manifold but it basically resulted from realizing a few key things:

  1. I don't care what PE fund you work at, unless you are a Partner (which takes about 20 years, btw), you are not calling the shots at all, your superiors are. Your value add and compensation will always be limited by the level of control you have as far guiding the business forward. Everyone below this level just follows through on getting deals done. If you spend your entire day building an excel model, just how much value did you REALLY contribute? That's why the entrepreneurs of companies make so much more, they build companies, not excel models. One is worth more than the other...
  2. The hours are slightly better than banking, but the work is just as boring. Also, the work is often harder. Try doing a waterfall on a company that is on its Series F round and each round has different terms, liquidation preferences, dilution adjustments, etc. And it has to be perfect, btw. I worked tons of hours on stuff like that, but it's not really value add, at the end of the day it won't affect your IRR. Writing memos and portfolio company performance write-ups, same thing; worthless in the big scheme of things.
  3. If you own your own business, there is no cap to your compensation. If you are in PE, there is a cap to how much you can make, even if it's a very good living, there is a cap (huge turnoff for me). I'm not afraid of risk and most of you shouldn't be either; if you think you really are top notch, you shouldn't be killing yourself to go work in PE, you should be taking advantage of the fact that you're young and have virtually zero opportunity cost to breaking out on your own and doing something that could potentially be much more valuable. Worst case scenario, it doesn't work out and at least you have something unique on your resume that makes you an attractive candidate to prospective employers.

SB. Your second point adds a little more info on the really gritty crap.

2/16/11
alexpasch:

I left my job at a MM PE fund to start my own small HF. My reasons were manifold but it basically resulted from realizing a few key things:

  1. I don't care what PE fund you work at, unless you are a Partner (which takes about 20 years, btw), you are not calling the shots at all, your superiors are. Your value add and compensation will always be limited by the level of control you have as far guiding the business forward. Everyone below this level just follows through on getting deals done. If you spend your entire day building an excel model, just how much value did you REALLY contribute? That's why the entrepreneurs of companies make so much more, they build companies, not excel models. One is worth more than the other...
  2. The hours are slightly better than banking, but the work is just as boring. Also, the work is often harder. Try doing a waterfall on a company that is on its Series F round and each round has different terms, liquidation preferences, dilution adjustments, etc. And it has to be perfect, btw. I worked tons of hours on stuff like that, but it's not really value add, at the end of the day it won't affect your IRR. Writing memos and portfolio company performance write-ups, same thing; worthless in the big scheme of things.
  3. If you own your own business, there is no cap to your compensation. If you are in PE, there is a cap to how much you can make, even if it's a very good living, there is a cap (huge turnoff for me). I'm not afraid of risk and most of you shouldn't be either; if you think you really are top notch, you shouldn't be killing yourself to go work in PE, you should be taking advantage of the fact that you're young and have virtually zero opportunity cost to breaking out on your own and doing something that could potentially be much more valuable. Worst case scenario, it doesn't work out and at least you have something unique on your resume that makes you an attractive candidate to prospective employers.

lol @ number 2. equity cap tables are a pain in my ass. first time since college that i've actually needed to break out a paper and pencil and do algebra (and then i have to graph the f*cking thing and put on nice labels and put it in powerpoint).

2/17/11
alexpasch:

I left my job at a MM PE fund to start my own small HF. My reasons were manifold but it basically resulted from realizing a few key things:

  1. I don't care what PE fund you work at, unless you are a Partner (which takes about 20 years, btw), you are not calling the shots at all, your superiors are. Your value add and compensation will always be limited by the level of control you have as far guiding the business forward. Everyone below this level just follows through on getting deals done. If you spend your entire day building an excel model, just how much value did you REALLY contribute? That's why the entrepreneurs of companies make so much more, they build companies, not excel models. One is worth more than the other...
  2. The hours are slightly better than banking, but the work is just as boring. Also, the work is often harder. Try doing a waterfall on a company that is on its Series F round and each round has different terms, liquidation preferences, dilution adjustments, etc. And it has to be perfect, btw. I worked tons of hours on stuff like that, but it's not really value add, at the end of the day it won't affect your IRR. Writing memos and portfolio company performance write-ups, same thing; worthless in the big scheme of things.
  3. If you own your own business, there is no cap to your compensation. If you are in PE, there is a cap to how much you can make, even if it's a very good living, there is a cap (huge turnoff for me). I'm not afraid of risk and most of you shouldn't be either; if you think you really are top notch, you shouldn't be killing yourself to go work in PE, you should be taking advantage of the fact that you're young and have virtually zero opportunity cost to breaking out on your own and doing something that could potentially be much more valuable. Worst case scenario, it doesn't work out and at least you have something unique on your resume that makes you an attractive candidate to prospective employers.

As a kid looking in, this mirrors almost exactly what I feel (albeit with no experience of my own). I look at banking as a stepping-stone to buy-side or an entrepreneurial endeavor of my own, and simply from the amount of information I've been forced/able to absorb over the recruiting process, PE appeals to me less than HF for these reasons he listed. Granted, I haven't even started my SA gig, but this is how I feel now.

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

2/15/11

Really great stuff guys. I wish there was more conversations like this and less of the other crap that goes on here.

Personally, having worked in lower MM PE (loosely), I prefer it to the MF. Granted I haven't worked at a MF but I like working with smaller/growing companies. Doing some blockbuster deal doesn't really get my rocks off. As others have eluded, a lot of the lower MM companies are family business or shoe strap operations that have grown organically and they don't really have the perspective that bankers/consultants have and weren't trained for financial and operational optimization. I feel like if I was ever to become an entrepreneur these deals would be more relevant than working on mega deals.

To really be a PE or banker long term you really gotta be a deal junkie. If you aren't a deal junkie, PE and banking are all the same and you will eventually bore of them. However, they are great places to launch a career and gain insight into running a company and its financial and operational strategy. Even if your work is predominantly excel/research/memos, you still get access to the internal meetings and that is where you can really learn something.

2/15/11

There is a large amount of pessimism towards PE here, and it's very understandable as all have made great points. However, I would like to suggest that perhaps the feelings being expressed towards PE by those in the industry are not a reflection on the PE industry, itself, but, instead, a reflection of the fact that....work sucks.

Let's face it, work absolutely sucks. I don't care what job you have, sitting at a desk and doing the same thing everyday in somebody else's company is boring. Excel is boring. Powerpoint is boring. Paperwork is boring. And the things you do at every other job in the world are boring as well (save for some extreme cases such as what a basketball player does.) So to all of you who suggest that PE is mundane (which it is as is banking), I ask, what is the alternative?

Sure there are exciting careers in the CIA perhaps or something of that nature, but, realistically, what is an alternative that can provide PE's pay / lifestyle ratio? If one were willing to sacrifice some of that pay, what is the alternative for an exciting career that still pays well and provides a better quality of life? It doesn't exist. There's entrepreneurship, of course, but not everybody can be an entrepreneur (be it due to capital constraints, relationships, ability to sell a product or general lack of good ideas.) So, in the absence of entrepreneurship, what is the alternative to PE? There is none.

That's why you see what you see from people trying to get into the industry. It's not about having the most exciting life. I think people expect to be bored, expect to dread going into work. That's the sacrifice you make for any job, and PE just happens to be among the better paying of those jobs (for the most part.) Yeah, I see what people are saying here, it doesn't always pay the best, but, in working for somebody else, there's not much else out there that pays better.

2/15/11
rebelcross:

There is a large amount of pessimism towards PE here, and it's very understandable as all have made great points. However, I would like to suggest that perhaps the feelings being expressed towards PE by those in the industry are not a reflection on the PE industry, itself, but, instead, a reflection of the fact that....work sucks.

Let's face it, work absolutely sucks. I don't care what job you have, sitting at a desk and doing the same thing everyday in somebody else's company is boring. Excel is boring. Powerpoint is boring. Paperwork is boring. And the things you do at every other job in the world are boring as well (save for some extreme cases such as what a basketball player does.) So to all of you who suggest that PE is mundane (which it is as is banking), I ask, what is the alternative?

Sure there are exciting careers in the CIA perhaps or something of that nature, but, realistically, what is an alternative that can provide PE's pay / lifestyle ratio? If one were willing to sacrifice some of that pay, what is the alternative for an exciting career that still pays well and provides a better quality of life? It doesn't exist. There's entrepreneurship, of course, but not everybody can be an entrepreneur (be it due to capital constraints, relationships, ability to sell a product or general lack of good ideas.) So, in the absence of entrepreneurship, what is the alternative to PE? There is none. That's why you see what you see from people trying to get into the industry. It's not about having the most exciting life. I think people expect to be bored, expect to dread going into work. That's the sacrifice you make for any job, and PE just happens to be among the better paying of those jobs (for the most part.) Yeah, I see what people are saying here, it doesn't always pay the best, but, in working for somebody else, there's not much else out there that pays better.

Yes, this is true. I mean all of us work(ed) in PE for a reason. Still, doesn't mean you can't set your sights higher.

Personally, it was a hard lesson for me to learn, but I don't think money buys happiness at all. I didn't start my own fund for the money. If I make $100K a year for the rest of my life (in real terms) while managing my own fund, I'll die a much happier man than if I make millions a year slaving my way up through PE. I actually really enjoy waking up everyday and working in Excel and following the market and choosing how to allocate capital. And to be honest, I think that because I love what I'm doing I think I will actually (hopefully) end up being much more successful than if I had stayed in PE. It's really funny, because the work I'm doing isn't very dissimilar from PE, but being able to work your own hours and knowing that what you're working on is for your sweat equity and not someone else's, makes a world of difference. I guess the key words in your post was "somebody else's company". Even then, there are jobs that provide you a lot of independence/empowerment and are fun that still pay well; sales comes to mind. I know this chick who does medical supplies sales and she makes like 200K a year (and she's no genius). Sure, she travels a lot, but all she does is talk to clients, pitch the products, and book sales. She's not slaving away at an office and the work is not hard. Same thing with being a realtor (another sales job). You can go out and be a realtor and just drive people around town showing them houses. That's fun as hell and while it doesn't pay PE level salary, some realtors make a lot of money, like mid six figures (or even more - I knew a realtor in Nashville who was making about a mil a year). While I know that there are some people who genuinely love PE, I think most are in it for the money.

I just think you need to get off the mindset that work has to suck. Most of us went to some of the best universities in the world and have some of the brightest minds and possess a career/work skillset most people can only dream of. If there's one group of people for which work should suck the least, it's us. Think about it...

Consultant to a Fortune 50 Company

2/15/11

Alex, I dig what you're trying to say here, but a few points just to help elaborate on the discussion a bit (I'll take it piece by piece because these posts are getting long):

alexpasch:

Yes, this is true. I mean all of us work(ed) in PE for a reason. Still, doesn't mean you can't set your sights higher.

First of all, I think we can all agree on this without issue. I mean, sure, I'd like to set my sights higher than anybody. I'd like to achieve unbelievable things that would make you gasp in awe, but, like 99.999% of people who have ever lived, I have yet to figure it out yet. Do you know how many times I've wanted to start my own fund or start my own this or start my own that? I'm just not at a point where I can seem to make it work. So, this kind of path is really the best I can do for myself in the meantime.

alexpasch:

Personally, it was a hard lesson for me to learn, but I don't think money buys happiness at all. I didn't start my own fund for the money. If I make $100K a year for the rest of my life (in real terms) while managing my own fund, I'll die a much happier man than if I make millions a year slaving my way up through PE. I actually really enjoy waking up everyday and working in Excel and following the market and choosing how to allocate capital. And to be honest, I think that because I love what I'm doing I think I will actually (hopefully) end up being much more successful than if I had stayed in PE. It's really funny, because the work I'm doing isn't very dissimilar from PE, but being able to work your own hours and knowing that what you're working on is for your sweat equity and not someone else's, makes a world of difference. I guess the key words in your post was "somebody else's company". Even then, there are jobs that provide you a lot of independence/empowerment and are fun that still pay well; sales comes to mind. I know this chick who does medical supplies sales and she makes like 200K a year (and she's no genius). Sure, she travels a lot, but all she does is talk to clients, pitch the products, and book sales. She's not slaving away at an office and the work is not hard. Same thing with being a realtor (another sales job). You can go out and be a realtor and just drive people around town showing them houses. That's fun as hell and while it doesn't pay PE level salary, some realtors make a lot of money, like mid six figures (or even more - I knew a realtor in Nashville who was making about a mil a year). While I know that there are some people who genuinely love PE, I think most are in it for the money.

I have to, unfortunately, disagree a bit on this one. I mean, now we've reached a point where the conversation changes to what really matters in life. Honestly, I can't comment on the idea that money doesn't buy happiness, so I'll take your word for it. However, what I will say is this, I don't know where you are in life, but I would assume you've made enough money to be able to make this kind of a judgement, and it was after making that money that brought you to such a conclusion. While money has not brought you the kind of happiness once dreamed of, you are forgetting that before you reached a point where you had money, you had a burning desire to get that money. If by today, you had still not reached that point, you would still be striving for that money everyday, and it would pain you that you didn't have it. What I'm trying to say is, that the money did serve a purpose. While it did not buy happiness, it ended the burn that came with not having it. It filled that void, if you will. It's like a hot girl you want (we've all been there). Once you get it, it's not that great, it's like anything else, but before you get it, it sucks not to have it. Sure this may seem like a vicious cycle, but I'm not here to dabble in the existential, that's far beyond me. I just know that reaching that point of economic success certainly does have it's value, and it's much less painful to be in a position in life where you can say "money isn't all it's cracked up to be" than to not know what it's like at all.

So, yeah maybe that sales job you mentioned is great, and it pays alright (200k is nothing to scoff at, especially for somebody born in Appalachia like myself), but it's still not big time money. And we really wouldn't be on this website if that was good enough, we would have pursued very different careers, many of which can get us to that number. Among the bigger money careers, there still is no real alternative to PE. I don't think any of the other paths seem to be that great. Since you suggested sales perhaps institutional sales offers something near what you would consider to be ideal for that higher level of income? I wouldn't know. I just know that until one has reached that upper level, they really can't say that big money isn't enough for happiness, because the psychological problem is dealing with the absence of the money (in the company of so many that have achieved it and have access to better things.)

I mean if money were really that small of a consideration, then why settle for 100k doing what you do now? I'd rather be unemployed, collect welfare and simply pursue my own hobbies all day long (which are far from work related, and far from revenue generating.) Believe me, I'd be happy as a lark if money did not have any bearing on happiness. I get it, you're striving for that happy medium of some financial comfort and some freedom, but you really can't desire that until you've really fulfilled the big money desire.

alexpasch:

I just think you need to get off the mindset that work has to suck. Most of us went to some of the best universities in the world and have some of the brightest minds and possess a career/work skillset most people can only dream of. If there's one group of people for which work should suck the least, it's us. Think about it...

I don't know Alex, this question is bigger than me. Maybe the opposite is true, maybe society is below us? Maybe the so-called careers of average people just aren't enough for our over active minds, and, hence, we're not suited to enjoy work? Or maybe society is above us, maybe we think too highly of ourselves? Maybe we deserve nothing more than mundane tasks all day...I don't know. I don't think I buy the argument that because we've achieved decent things compared to most others our age that we should somehow have a greater appreciation for work. Sure, it "should" suck the least for us, I wish that it would, but, I don't think that the system was designed by the smartest among us. Believe me, I'd love to find a job that pays very well and doesn't just plain suck. You think I want it to suck? I have tried so hard to enjoy everything that I do, but for some reason, any job seems to suck when you look outside on an icy day and wish you were on the beach in Hawaii. I think you get what I'm trying to say, that no "job" can compare to what is actually enjoyable in real life, unless you were willing to sacrifice money in a big way and passionately chase some ideal (spend your life as a lifeguard in Waikiki.)

2/15/11
rebelcross:

Replying to rebelcross's long post

I still have a burning desire to get money, but not how you would think. My only desire to get money comes from the fact that I love finance and your IRR (i.e. money) is the only thing by which you can judge performance. Think of it like Peyton Manning. Do you think he would play for $1M instead of $20M? I think he would, because he loves the game. I used to dream about Ferraris, models and bottles, etc. but that type of shit doesn't really get me going anymore. I currently don't have the money to buy any of those things; I worked in PE for a couple years and that was it, so it's not like I was in a cushy position; what I did was risky in that sense. I took my savings and opened the fund with family money. It was the type of thing where I saw some mispricings so great that I knew if I didn't try I would regret it for the rest of my life. My parents believe in my idea and have given me a substantial portion of their retirement assets to manage. I don't like to talk about returns, but let's just say that at the current pace the capital gains are outpacing what I'd be earning in PE right now (and I'm working fewer hours). I'm hoping the returns will speak for themselves and money comes pouring into the fund, only time will tell. It was a measured career risk; I don't have kids, I'm not married, etc. I always thought, worst case scenario, I go back to work for someone else. You don't have to be swimming in money to get a sense that money isn't that important. Do you think Bill Gates lives in a perpetual state of bliss? I mean, c'mon.

I don't mean to denigrate PE or Banking whatsoever. They can be lucrative, fulfilling career paths for many people. I know there are people that genuinely love these jobs. I just would caution that you have to know what you're getting into and not be blinded by the money. This goes for any field. I've met lawyers, doctors, financiers, you name it, who seem so miserable at their jobs. I've also met people in all these fields who seem to love their jobs. I have met people in PE who genuinely love it, and people who don't. Guess which ones do better at it (and stay in it)?

All I was trying to say is that there are happy mediums to everything, and if you do what you truly love, you will be successful, if not monetarily at least fulfilled/loving your work. I think this concept is underappreciated. My mom would tell me when I was little, I don't care if you want to be a garbageman, just make sure you love it and the money will come. For example, per your lifeguard example; I saw this guy on tv that started his own surfing school in Florida, which he sold, and now he just lives off the capital gains. That guy did surfing for a living (and he was good, but it's not like he was a professional in competitions or shit like that). Do you think he woke up one day in his 20s and said "oh I want to retire at 40 with a couple mil?". Obviously not, he just did what he liked. Don't assume that there is a preset path to "wealth". There isn't. I bet there's quite a few guys who own plumbing companies or restaurant franchisees pulling in sums MDs can only dream of...

Consultant to a Fortune 50 Company

2/16/11
alexpasch:
rebelcross:

There is a large amount of pessimism towards PE here, and it's very understandable as all have made great points. However, I would like to suggest that perhaps the feelings being expressed towards PE by those in the industry are not a reflection on the PE industry, itself, but, instead, a reflection of the fact that....work sucks.

Let's face it, work absolutely sucks. I don't care what job you have, sitting at a desk and doing the same thing everyday in somebody else's company is boring. Excel is boring. Powerpoint is boring. Paperwork is boring. And the things you do at every other job in the world are boring as well (save for some extreme cases such as what a basketball player does.) So to all of you who suggest that PE is mundane (which it is as is banking), I ask, what is the alternative?

Sure there are exciting careers in the CIA perhaps or something of that nature, but, realistically, what is an alternative that can provide PE's pay / lifestyle ratio? If one were willing to sacrifice some of that pay, what is the alternative for an exciting career that still pays well and provides a better quality of life? It doesn't exist. There's entrepreneurship, of course, but not everybody can be an entrepreneur (be it due to capital constraints, relationships, ability to sell a product or general lack of good ideas.) So, in the absence of entrepreneurship, what is the alternative to PE? There is none. That's why you see what you see from people trying to get into the industry. It's not about having the most exciting life. I think people expect to be bored, expect to dread going into work. That's the sacrifice you make for any job, and PE just happens to be among the better paying of those jobs (for the most part.) Yeah, I see what people are saying here, it doesn't always pay the best, but, in working for somebody else, there's not much else out there that pays better.

Yes, this is true. I mean all of us work(ed) in PE for a reason. Still, doesn't mean you can't set your sights higher.

Personally, it was a hard lesson for me to learn, but I don't think money buys happiness at all. I didn't start my own fund for the money. If I make $100K a year for the rest of my life (in real terms) while managing my own fund, I'll die a much happier man than if I make millions a year slaving my way up through PE. I actually really enjoy waking up everyday and working in Excel and following the market and choosing how to allocate capital. And to be honest, I think that because I love what I'm doing I think I will actually (hopefully) end up being much more successful than if I had stayed in PE. It's really funny, because the work I'm doing isn't very dissimilar from PE, but being able to work your own hours and knowing that what you're working on is for your sweat equity and not someone else's, makes a world of difference. I guess the key words in your post was "somebody else's company". Even then, there are jobs that provide you a lot of independence/empowerment and are fun that still pay well; sales comes to mind. I know this chick who does medical supplies sales and she makes like 200K a year (and she's no genius). Sure, she travels a lot, but all she does is talk to clients, pitch the products, and book sales. She's not slaving away at an office and the work is not hard. Same thing with being a realtor (another sales job). You can go out and be a realtor and just drive people around town showing them houses. That's fun as hell and while it doesn't pay PE level salary, some realtors make a lot of money, like mid six figures (or even more - I knew a realtor in Nashville who was making about a mil a year). While I know that there are some people who genuinely love PE, I think most are in it for the money.

I just think you need to get off the mindset that work has to suck. Most of us went to some of the best universities in the world and have some of the brightest minds and possess a career/work skillset most people can only dream of. If there's one group of people for which work should suck the least, it's us. Think about it...

both examples of other job possibilities that you gave (medical supply sales, realty) are sales jobs. sure lots of money can be made in sales, but you have to be able to sell. this is a skill that a lot of people don't have (myself included) and it's something that isn't easy to develop/learn for a lot of people.

A junior role at a PE firm doesn't require much. Just a reasonable amount of intelligence and the ability/willingness to crank for hours on end when the job requires.

2/15/11

This whole thread has been a great read. I wish I had more SBs to throw around.

Quick question, do any of you personally known someone who has left banking / PE to start their own business?

2/15/11

Sales is the lowest of the low. Take it back, I know you didn't mean it pasch.

2/15/11

re: Rebelcross

That's basically what I'm getting at. PE isn't some golden ticket to fun times, it's a lot like banking and if you don't enjoy doing deals, you won't necessarily find what you are looking for in PE. I have found this out the hard way myself. My point wasn't to sound overly pessimistic, but to bring things into reality for prospective PE monkeys. I don't want to see others go into it expecting it to be something lofty when it simply isn't.

Also, what alexpasch said.

2/15/11

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

2/15/11
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

The worst part of the job is the LP Questionnaire. May they burn in hell along with their useless questions ;)

Consultant to a Fortune 50 Company

2/16/11
alexpasch:
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

The worst part of the job is the LP Questionnaire. May they burn in hell along with their useless questions ;)

No - the worst part is being an LP and having to wait 8 months for a fucking quarterly report, which then arrives has two lines on each portfolio company, no info on pipeline and some bullshit two page article from the MD on his ponderings on the global economy....

I also enjoy reading that a portfolio company is 'experiencing some operational slowdowns, however long term prospects remain excellent.' Next quarter - 'written-off'.

2/16/11
samoanboy:
alexpasch:
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

The worst part of the job is the LP Questionnaire. May they burn in hell along with their useless questions ;)

No - the worst part is being an LP and having to wait 8 months for a fucking quarterly report, which then arrives has two lines on each portfolio company, no info on pipeline and some bullshit two page article from the MD on his ponderings on the global economy....

I also enjoy reading that a portfolio company is 'experiencing some operational slowdowns, however long term prospects remain excellent.' Next quarter - 'written-off'.

put your money in a different fund?

2/16/11
bankbank:
samoanboy:
alexpasch:
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

The worst part of the job is the LP Questionnaire. May they burn in hell along with their useless questions ;)

No - the worst part is being an LP and having to wait 8 months for a fucking quarterly report, which then arrives has two lines on each portfolio company, no info on pipeline and some bullshit two page article from the MD on his ponderings on the global economy....

I also enjoy reading that a portfolio company is 'experiencing some operational slowdowns, however long term prospects remain excellent.' Next quarter - 'written-off'.

put your money in a different fund?

Private Equity is illiquid, once your money is in, you dont get it back for 10 years (unless its listed when it'll have a 50% discount and only trade twice a year!!)

2/16/11
samoanboy:
bankbank:
samoanboy:
alexpasch:
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

The worst part of the job is the LP Questionnaire. May they burn in hell along with their useless questions ;)

No - the worst part is being an LP and having to wait 8 months for a fucking quarterly report, which then arrives has two lines on each portfolio company, no info on pipeline and some bullshit two page article from the MD on his ponderings on the global economy....

I also enjoy reading that a portfolio company is 'experiencing some operational slowdowns, however long term prospects remain excellent.' Next quarter - 'written-off'.

put your money in a different fund?

Private Equity is illiquid, once your money is in, you dont get it back for 10 years (unless its listed when it'll have a 50% discount and only trade twice a year!!)

yeah, of course, i was implying that you should work with funds that are more investor friendly in the first place.

2/16/11
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

I actually think modeling is one of the more enjoyable aspects of the job. I like sitting down and working through a complex transaction structure, waterfall, or just putting together a basic model and trying to make it more efficient / clean.

Least favorite activity is probably industry research or listening to people talk about "where x industry is going." The former does not interest me as I do not care what industry a company is in and the latter is a waste of time given the staggeringly low success rate of these predictions.

2/17/11
labanker:
TheBenevolent:

for all the associates at MM PE firms, approximately what percent of your day do you spend creating or updating models? do you consider this the worst part of the job or something else?

I actually think modeling is one of the more enjoyable aspects of the job. I like sitting down and working through a complex transaction structure, waterfall, or just putting together a basic model and trying to make it more efficient / clean.

Least favorite activity is probably industry research or listening to people talk about "where x industry is going." The former does not interest me as I do not care what industry a company is in and the latter is a waste of time given the staggeringly low success rate of these predictions.

You and I are like total opposites as far as what we enjoy(ed) in PE...

Consultant to a Fortune 50 Company

2/15/11

^^^One really small lower middle market deal I looked at once (not with the PE firm I worked for but for some wealthy guys) was this printing company that was started by this lawyer. He told me that he woke up one day and just thought to himself "law isn't that fun anymore, I want to do something else; I like printing companies so let me start one of those" (I don't know why someone would love the printing industry but more power to him). Anyway, he built this company, ran it for like 20 years, would earn about a mil a year from it as far as net income and salary (that's when he sold it, I'm assuming it ramped up over time), and ended up selling it for something like 10 or 15M. He started it with some savings and some loans for buying the big printing equipment.

Consultant to a Fortune 50 Company

2/15/11
alexpasch:

^^^One really small lower middle market deal I looked at once (not with the PE firm I worked for but for some wealthy guys) was this printing company that was started by this lawyer. He told me that he woke up one day and just thought to himself "law isn't that fun anymore, I want to do something else; I like printing companies so let me start one of those" (I don't know why someone would love the printing industry but more power to him). Anyway, he built this company, ran it for like 20 years, would earn about a mil a year from it as far as net income and salary (that's when he sold it, I'm assuming it ramped up over time), and ended up selling it for something like 10 or 15M. He started it with some savings and some loans for buying the big printing equipment.

I know someone who did the exact same thing although he was never a lawyer but he loved the printing industry

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

2/15/11

Alex, I think we're in agreement here. I like your idealism, and I hope you make it big and you remember this conversation and I hope I make it big, etc...I have always believed one has the best chance of really making it work if you have a passion for what you do, that's just common sense. I would just caution you a bit. The cliche' does hold true, for every one example of somebody chasing their dreams and making it big, there are so many examples of...well you know... As per your Peyton Manning example, sure he'd play for a cool million a year, but a mil is pretty damn good, if the choice was more along the lines of play for $50k per year or make $150k as an engineer somewhere, the question becomes much trickier, and I think that's the way you have to look at this industry.

However, I'm certainly not as risk averse as you may think, in fact I'm quite the opposite. From my limited knowledge of your situation, if I were in your shoes I would have done the same as you. Especially at our age, I am big proponent of trying to do something on your own while you still have the chance. However, for those that don't have the chance or for those with passions that are a pretty long shot to make a lot of money (which is most people), you pretty much have to work for somebody else if you want to make money, and money tends to win the battle of priorities because it makes obtaining those other passions so much easier. Everybody in this industry has the same idea, get a big time day job down the road and make enough to get chase one's own passions. And that's just what the finance industry is...a day job. It feels like work and it's tedious just like most other people's day jobs. It just happens to be among the most well paying of those industries, and among the most exhausting. Within finance, PE is at or near the top, I don't think there's much of a question about that. It is what it is - a means to make money, let's not make it anything bigger than that. I know a lot of people wish their lives were more flexible, but in the absence of such things, I would just caution that there aren't many alternatives to PE for what it can provide in terms of compensation / hours. Sure there are better things to do in life, and some people have made it work doing awesome things, but there aren't many better "day jobs" - if you will.

2/16/11

Talking about pay /lifestyle ratio, would the ratio be worse or better being in a Hedge fund? Just curious.

I agree with the statement that once you've reached your goal it doesn't satisfy anymore. What if you would change your mindset and goals. Most goals are in the form of "I want to work in PE", once you get there, it's boring. What if you would make the goal more concrete "I want to work in PE, make X amount of money, and do this and that". I think this would change your mindset quite a bit.

2/16/11
Walkerr:

Talking about pay /lifestyle ratio, would the ratio be worse or better being in a Hedge fund? Just curious.

I agree with the statement that once you've reached your goal it doesn't satisfy anymore. What if you would change your mindset and goals. Most goals are in the form of "I want to work in PE", once you get there, it's boring. What if you would make the goal more concrete "I want to work in PE, make X amount of money, and do this and that". I think this would change your mindset quite a bit.

Depends on the HF and what you're doing for it. The other thing you said is important; your outcomes will match your goals more often than not. It's not enough to say I want to work in PE. It should be more like I want to work in PE and be Partner one day. When I was in college, my goal was just to go work on the buyside. Once I got there, I realized that a key part of that goal was being my own boss and being free to invest how I saw fit.

Consultant to a Fortune 50 Company

2/16/11

Great post and thanks from the WSO community for this. I have been really struggling with the thought of doing PE recently and have even considered leaving finance. This post even adds more fuel to the fire. I am currently in final talks with a MM P/E firm and I am just losing a lot of interest in pursuing PE. I hate banking, I hate long hours, I hate sifting through data rooms, formatting, researching impossible to find stats, modeling is going to suck when you do it 24/7. To an earlier point, maybe I just hate work haha. Anyway, I know the pay in PE is is pretty nice, but I I'd be ok making 70K - 100K and loving what I do. On the other side of the spectrum, when I have a family in the future, I do want to be able to provide a comfortable life and not have to worry about money.

And lets talk about hours. I mean I've now realized how much hours matter for me. I have been working my ass off in banking, like worked to the core. A lot of you went through the same shit I'm going through but damnit it sucks and I don't want any part of it. Maybe I'm burnt from the countless all nighters and 4AMs for 8AM meetings. I just can't picture myself sitting in a desk for the next two-three years, working like a dog doing the same things I did in banking. Especially now that I'm near the end of my analyst career and the hours have improved somewhat, I don't want to back to that dark, dark place...

For the rest of us monkeys at a crossroads, It'd be great if some of you in post-banking jobs could:

  1. List your typical weekly hours
  2. What kind of firm you are at, MM PE, MF, HF, Bus. Dev., Surfer?
  3. Are you happy in your role and do you consider your career or life more important?
  4. Do you plan on going to B School (let's face it, its a huge freaking investment)
  5. Are you going B School because a) you don't know what else to do and its whatever everyone else is doing, b) you are tired and you want a break, c) you hate your current track and want a career reset, 4) you are interesting in making connections and learning more - be honest as I've heard all of these before.

Thanks for all the discussion thus far.

2/16/11
  1. Typically 8:30 - 7:00pm (varies, obviously), very few weekends
  2. Lower MM PE (< $500M)
  3. Beats the hell out of banking, but same menial work day-to-day. I am happy relative to my analyst days, but do not think that I've found my calling in life. That being said, I continue to learn and appreciate the exposure I am getting to the deal process at such a young age. This whole thread should be required reading for all college seniors and IB analysts considering PE.
    4/5. PE --> MBA is a whole discussion in itself. I have been thinking very seriously about why/if I want to do b-school, particularly with the recent backlash against 2+2 candidates. I have a lot of highly qualified friends who did not get interviews at H/S/W and others who will not be applying to business school at all (don't see the value, don't want to deal with the rat race, don't want to re-learn what a balance sheet is with a bunch of kids who did TFA etc.)
2/16/11
LBO2:

don't want to re-learn what a balance sheet is with a bunch of kids who did TFA

I actually have nightmares about this very scenario.

2/16/11
rebelcross:
LBO2:

don't want to re-learn what a balance sheet is with a bunch of kids who did TFA

I actually have nightmares about this very scenario.

^ This

"Jesus, he's like a gremlin; comes with instructions and shit"

2/16/11

1.) 8:30-7ish, sometimes later if need be
2.) Around 1 AUM at my firm but work on a smaller <500MM fund
3.) I really do enjoy what i do, get to talk to CEO of portfolio company and help with stuff on a daily basis, obviously stuff sucks like writing valuations, valuation write-ups, but as long as i see the bigger picture i'm happy
4.) dont wanna get my MBA

It's not for everyone but it is a means to an end.. grass is always greener and i couldnt imagin being anywere else right now at this point in my life. I love my job, my boss is awesome and the people at the office are all good people willing to help you out.

2/16/11

Great thread, guys!

It's good to see hours at MM funds aren't that bad at all. My friends at megafunds are working insane hours.

I also agree that all work at junior level SUCKS, whether it's PE, banking, consulting, equity research, whatever. But I still think that finance/investing gives you the best options, if you're willing to put up with the junior roles for a couple of years. I still think a senior role at a PE fund, or especially at a hedge fund is an unbelievable gig, when you consider the risk/reward. Also it takes you years to rise up in general management, but you can get a solid senior level gig in PE/HF in 5-6 years.

Keep in mind, I'm excluding entrepreneurship option from this. That's a completely different animal.

2/16/11
barkatthemoon:

Great thread, guys!

It's good to see hours at MM funds aren't that bad at all. My friends at megafunds are working insane hours.

I also agree that all work at junior level SUCKS, whether it's PE, banking, consulting, equity research, whatever. But I still think that finance/investing gives you the best options, if you're willing to put up with the junior roles for a couple of years. I still think a senior role at a PE fund, or especially at a hedge fund is an unbelievable gig, when you consider the risk/reward. Also it takes you years to rise up in general management, but you can get a solid senior level gig in PE/HF in 5-6 years.

Keep in mind, I'm excluding entrepreneurship option from this. That's a completely different animal.

5-6 years... if 1. you LOVE the job. 2. Don't burn out 3. Suck an insane amount of D 4. a little bit of luck

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

2/16/11

Has anyone here ever transitioned over to a portfolio company, either temporarily or permanently?

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/16/11

My dad did and ended up being the best (most lucrative) move of his career...

2/16/11

Although, at PEI training (awesome 3 day course but expensive as fuck), the ex partner of a MF said he viewed this as a big no no. Every organization will have their own perspective on this.

2/16/11

I'm sure it depends on the context. For example, I know people who have been asked to step over to portfolio companies while they're owned by the sponsor but not someone who's left to a former portfolio company after exiting the investment.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/16/11

Guys, when running through your typical hours, size of fund, etc., would you mind including location? HFF and LBO2, could you toss in your location?

2/16/11

Chicago

2/16/11

Good stuff guys. Interesting how the beginning of the thread makes the hours seems worse than people think, but then the 2 people to post specific numbers are right in the 50-60 range that everyone dreams of after banking.

Also, a new question: How does PE compare to VC?
(in terms of lifestyle/hours, the work itself, general satisfaction etc. oh and pay too) They seem somewhat similar, but I've heard VC is a little better lifestyle. I know VC is a loose term these days but I'm interested in both growth equity and principal/traditional VC.

2/16/11

Boston

2/16/11

LBO2 -- do you know many other PE associates in the Boston area? What are their hours/experiences like, and what size funds do they work at?

2/16/11

As a disclaimer, I haven't read the second page of this thread (but will later) but Alex mentioned that PE professionals (anything below the partner level) are essentially capped, which hasn't been my experience and is completely false. What happens when a strategic or financial sponsor swoops in and pays an exorbitant amount for one of your portcos making your carried interest (which was worth zero the day before because you were probably over-levered and under-performing during the recession) worth a ridiculous amount of money. PE is exciting because you are comped well and always playing for the ups, which are basically unlimited.

2/17/11
junkbondswap:

As a disclaimer, I haven't read the second page of this thread (but will later) but Alex mentioned that PE professionals (anything below the partner level) are essentially capped, which hasn't been my experience and is completely false. What happens when a strategic or financial sponsor swoops in and pays an exorbitant amount for one of your portcos making your carried interest (which was worth zero the day before because you were probably over-levered and under-performing during the recession) worth a ridiculous amount of money. PE is exciting because you are comped well and always playing for the ups, which are basically unlimited.

You usually don't get carry at the junior levels, and when you start getting carry it's often a very small percentage...

Consultant to a Fortune 50 Company

2/16/11

Boston is no different than other cities in that hours vary greatly by fund. In general, most associates I know that work at $1B+ funds do put in more hours. Some work 60-70 per week on average, others work banking hours or worse. In my experience, hours are correlated more with bureaucracy and hierarchical structure of a firm than fund size alone (though the two often go hand-in-hand). For Boston specifically, CompBanker is another good data point - he has discussed his experience a number of times in the past.

I will say, for the hours they put in, my friends at MFs get absurdly high comp; however, I wouldn't trade with them for a day to go back to that schedule.

2/16/11

I was more curious as to smaller sized funds... I have spoken with CB about his experience before, and it seems pretty much in line with yours. I'm guessing 50-60 is pretty standard for lower MM firms investing out of <$500 million funds... But as you mentioned, varies depending on the hierarchy. Do you mind disclosing your approximate comp, base and bonus?

2/16/11

Note to Patrick:
Can we make this thread into a sticky?

2/16/11

1) NYC,
2) MM PE focused on $1B-$3B EV size companies
3) 50-60 hours per week in the office (rarely in the office on a weekend, maybe once every 3 months depending on where we are in a deal cycle) but always on call to answer emails and calls
4) Love my job and enjoy going to work everyday. Good group of intelligent, entrepreneurial type competitive individuals who want to make as much money as possible but value things like work/life balance, family/friends, etc.
5) Undecided on b-school, I think its overrated given my existing network, skill set, deal experience. would love a 2 year vacation but would probably go PT if at all.

Alex, I would think that managing money on your own would eventually get to be boring. Dont you miss the camaraderie of the office, working towards a common goal with your peers. I think PE is getting a bad rap on this thread. The deal cycle can be incredibly exciting. Sure parts of the cycle are mundane but the excitement of submitting bids, closing dinners, trips and learning granular details about companies make it worth it to me.

There is no job in the world that would have provided me with the same level of access to these types of business leaders and these types of experiences at such a young age.

Also, Alex, have you ever bought a house, co-op, condo, etc.? Being a real estate agent is a "fun" job? Really? I would hate to be in a sales position kissing clients asses all day.

One last point regarding the important of industry experts and operational improvement guys...these are the guys who create real value for private equity firms. You are significantly underestimating the value of a guy who can come into a company and institute best practices by reducing headcount, combining roles, renegotiating contracts, changing procedures, etc. The only reason that many companies survived the recession is because people were willing to cut costs to protect earnings.

2/16/11
junkbondswap:

1) NYC,
2) MM PE focused on $1B-$3B EV size companies
3) 50-60 hours per week in the office (rarely in the office on a weekend, maybe once every 3 months depending on where we are in a deal cycle) but always on call to answer emails and calls
4) Love my job and enjoy going to work everyday. Good group of intelligent, entrepreneurial type competitive individuals who want to make as much money as possible but value things like work/life balance, family/friends, etc.
5) Undecided on b-school, I think its overrated given my existing network, skill set, deal experience. would love a 2 year vacation but would probably go PT if at all.

Alex, I would think that managing money on your own would eventually get to be boring. Dont you miss the camaraderie of the office, working towards a common goal with your peers. I think PE is getting a bad rap on this thread. The deal cycle can be incredibly exciting. Sure parts of the cycle are mundane but the excitement of submitting bids, closing dinners, trips and learning granular details about companies make it worth it to me.

There is no job in the world that would have provided me with the same level of access to these types of business leaders and these types of experiences at such a young age.

Also, Alex, have you ever bought a house, co-op, condo, etc.? Being a real estate agent is a "fun" job? Really? I would hate to be in a sales position kissing clients asses all day.

One last point regarding the important of industry experts and operational improvement guys...these are the guys who create real value for private equity firms. You are significantly underestimating the value of a guy who can come into a company and institute best practices by reducing headcount, combining roles, renegotiating contracts, changing procedures, etc. The only reason that many companies survived the recession is because people were willing to cut costs to protect earnings.

You sir will be an MD or Partner one day. Good luck to you.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

2/16/11
junkbondswap:

Alex, I would think that managing money on your own would eventually get to be boring. Dont you miss the camaraderie of the office, working towards a common goal with your peers. I think PE is getting a bad rap on this thread. The deal cycle can be incredibly exciting. Sure parts of the cycle are mundane but the excitement of submitting bids, closing dinners, trips and learning granular details about companies make it worth it to me.

There is no job in the world that would have provided me with the same level of access to these types of business leaders and these types of experiences at such a young age.

Also, Alex, have you ever bought a house, co-op, condo, etc.? Being a real estate agent is a "fun" job? Really? I would hate to be in a sales position kissing clients asses all day.

One last point regarding the important of industry experts and operational improvement guys...these are the guys who create real value for private equity firms. You are significantly underestimating the value of a guy who can come into a company and institute best practices by reducing headcount, combining roles, renegotiating contracts, changing procedures, etc. The only reason that many companies survived the recession is because people were willing to cut costs to protect earnings.

Didn't put in the time to read every post, but I think Junkbondswap's comments pretty closely align with my own feelings. There are a million different careers out in the world and PE ranks pretty darn high on that list. The difference between PE and IB is that the PE experience varies dramatically between shops. In banking, the analyst's responsibilities are primarily modeling, ppt, writing CIMs, or doing research. In PE, there are some shops where you'll be sourcing investments all day long (cold calling). Others have their associates continue to crank out models til they are blue in the face. Others have associates do due diligence all day. Hours can range from 50 hrs a week to 100 hrs a week. Pay can also vary from low $100k's to $350k+. As a result, everyone is going to have a different impression as to what a job in PE truly entails, and there really is no good answer.

It sounds like some posters in this thread have found PE shops that are a good fit for them, while others may be doing a less exciting role. Personally, I work at a shop where associates do diligence, work ~50 hours a week, but don't get paid nearly what the megafund guys do. For many on this board, that sounds like a nightmare -- its megafund or bust for them. So, in conclusion, it is really hard for someone to make the statement: "PE isn't all it is cracked up to be." Like anything else in life, for some people it is, for others it isn't.

CompBanker

2/17/11
junkbondswap:

1) NYC,
2) MM PE focused on $1B-$3B EV size companies
3) 50-60 hours per week in the office (rarely in the office on a weekend, maybe once every 3 months depending on where we are in a deal cycle) but always on call to answer emails and calls
4) Love my job and enjoy going to work everyday. Good group of intelligent, entrepreneurial type competitive individuals who want to make as much money as possible but value things like work/life balance, family/friends, etc.
5) Undecided on b-school, I think its overrated given my existing network, skill set, deal experience. would love a 2 year vacation but would probably go PT if at all.

Alex, I would think that managing money on your own would eventually get to be boring. Dont you miss the camaraderie of the office, working towards a common goal with your peers. I think PE is getting a bad rap on this thread. The deal cycle can be incredibly exciting. Sure parts of the cycle are mundane but the excitement of submitting bids, closing dinners, trips and learning granular details about companies make it worth it to me.

There is no job in the world that would have provided me with the same level of access to these types of business leaders and these types of experiences at such a young age.

Also, Alex, have you ever bought a house, co-op, condo, etc.? Being a real estate agent is a "fun" job? Really? I would hate to be in a sales position kissing clients asses all day.

One last point regarding the important of industry experts and operational improvement guys...these are the guys who create real value for private equity firms. You are significantly underestimating the value of a guy who can come into a company and institute best practices by reducing headcount, combining roles, renegotiating contracts, changing procedures, etc. The only reason that many companies survived the recession is because people were willing to cut costs to protect earnings.

I do miss the camaraderie of the office but if I get bored I can meet with someone for a drink after work (most of my friends don't work finance-type hours). Actually, one reason I post here is because I miss the camaraderie and here I can talk to other finance people and take little breaks from my work to chat. Still, it's not a big deal at all, hopefully in a couple years I'm at a point where I can hire someone, and nothing beats being able to take a day off whenever you want.

I have bought two condos actually (only own one, sold the other). I've dealt with realtors for a very long time, growing up my parents moved a lot. I've made friends with several realtors since graduating (even hooked up with this gorgeous one once haha). If you don't like sales jobs that's fine with me. What is considered a "fun" career varies greatly from person to person.

Consultant to a Fortune 50 Company

2/16/11

Appreciate the insight, jbs. Totally agree on the operational improvement side of things. While I don't believe every firm does it (nor does every firm have the ability to do so properly), the firms that I do work with that stay within their "comfort zones" and focus on operational improvements (primarily implementing best practices, which include headcount reductions, focusing operating cost structure, etc.) are the firms that have the most success.

2/17/11

re: Junkbondswap and CompBanker

I think you both have the right ideas here. My main point in my posts within this thread (and others) is that PE needs to be demystified and people need to realize that it is a deal business. If you don't get excited by working on deals and doing due diligence, than it isn't a job for you. The idea of "operational improvements" and other such junk from the perspective of being an Associate is a bunch of junk and should really not weigh on one's decision to do PE or not. Again, to summarize, if you enjoy working on deals, enjoy due diligence, and truly do not like the marketing aspect of banking (which has it's high points, believe it or not), then PE could be for you. It's just important that everyone has a realistic view of what they will be doing in PE and not go in with lofty dreams of being some sort of uber-decision making PE God.

2/18/11

Interesting article from TPG founder Jim Coulter discussing the dynamics of making improvements to portfolio companies:
http://www.businessweek.com/magazine/content/11_09...

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/18/11

Great article, i went to 3 day class (8hours a day) with like 5 other people in it led by a form Clayton Dubilier and Rice partner. It was an awesome class that stressed the need for PE to get back to operational improvements and not rely on financial engineers (who this guy seemed to not be too fond of).

2/18/11
HFFBALLfan123:

Great article, i went to 3 day class (8hours a day) with like 5 other people in it led by a form Clayton Dubilier and Rice partner. It was an awesome class that stressed the need for PE to get back to operational improvements and not rely on financial engineers (who this guy seemed to not be too fond of).

what kinda class was that? company specific training?

2/22/11
fomc:
HFFBALLfan123:

Great article, i went to 3 day class (8hours a day) with like 5 other people in it led by a form Clayton Dubilier and Rice partner. It was an awesome class that stressed the need for PE to get back to operational improvements and not rely on financial engineers (who this guy seemed to not be too fond of).

what kinda class was that? company specific training?

Not company specific, basically molded his experience working on some huge LBO's during the boom days with good practices in PE. We went over how you should select a board, how to set up compensation structures for C level employees, and went through a lot of cases. We would split up into teams and decide if you'd invest or not invest and why. Class was pretty intense (had homework for god's sake) and was like 10 hours a day but well worth it.

2/18/11

Nothing new-if you read Barbarians at the Gate, Forstmann's conniptions over junk bonds, PIK, etc destroying the classic operation-improving management-friendly LBO are basically the same things that people are saying did in PE during the last boom.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

2/19/11

If any of you have insight, please compare VC (true early stage) to PE, in terms of lifestyle and work content? If you don't enjoy the content and lifestyle of your work in banking or PE, does anyone know if VC (traditional early stage) is a promising option?

2/20/11

I'd be more interested in the people that pick MM PE over Megafunds... i.e. have offers from both.

2/23/11

Alright guys, great thread. I'm starting into an intership in a BB IB firm in a few weeks and I've got to say reading a lot of this stuff stuff seriously puts me off the industry. Are there any people out there who actually enjoy working in banking? And if there's such disdain for IB, what other options do people consider? With the skill-set and interests that most people who enter banking, and indeed PE, have, what other career options would anyone recommend? I'm still pretty unsure what exactly I want to do myself, trading is still in the back of my head but from what I've read and talked to people about I thought banking would better suit me.

2/23/11
Playingbyear:

Alright guys, great thread. I'm starting into an intership in a BB IB firm in a few weeks and I've got to say reading a lot of this stuff stuff seriously puts me off the industry. Are there any people out there who actually enjoy working in banking? And if there's such disdain for IB, what other options do people consider? With the skill-set and interests that most people who enter banking, and indeed PE, have, what other career options would anyone recommend? I'm still pretty unsure what exactly I want to do myself, trading is still in the back of my head but from what I've read and talked to people about I thought banking would better suit me.

Keep in mind that I still have not started working full time, but I loved working for a PE firm on balance (which I did for 8 months); and think that I will enjoy working as a banking analyst (scheduled to begin in the summer) - I really like finance and econ though, and can honestly say that I'm not doing it for the money, I'm really looking forward to it - I think about it like this: if consultants were paid more out of the gate, I still don't think I would want to be one (they would not be paid more though, b/c the incentive structure is set up such that they should not make decisions based on closing a deal, same with lawyers.)

I am actually looking at the banking thing as a possible career in the long term, not like boot camp.

Again, check in with me in a year, I might have a different opinion! But based on my internships, I've enjoyed being in the office with smart people.

If you don't like corporate finance though, you might want to reconsider.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

2/23/11

Emory, good attitude. Give it a month or two and you will hate banking, I can promise you that. You can love finance all you want -- last I checked, finance doesn't include changing the color of a chart in a pitch book at 4:30am. That just isn't fun, but it happens way too often.

2/23/11
jimbrowngoU:

Emory, good attitude. Give it a month or two and you will hate banking, I can promise you that. You can love finance all you want -- last I checked, finance doesn't include changing the color of a chart in a pitch book at 4:30am. That just isn't fun, but it happens way too often.

What about taking a long run view though - putting in the bullshit now for the end game? When does it start to get better? VP?, there have to be some things you still like about your job right? I assume that you felt as I did?

A Corporate Finance Bestiary

M is for Managing Director:
Crafty, elusive
Kowtows to clients; but to juniors abusive

Sleek and well-groomed, he
Swans about like a diva
Steal clients or credit?
He attacks with a cleaver

Pompous, self-loathing
His wife and kids hate him
Knows everything and everyone:
You can't educate him

  • *

V is for Vice President:
Long-suffering, put-on
Screwed by MDs and clients, otherwise no-one

Chubby, disheveled, he
Rues weekends spent downtown
And longs for the day he
Can call in from the Hamptons

Bossy, intrusive
Associates hate him
Lusts for the VP in Bond Sales
But she just won't date him

  • *

A is for Associate:
Feckless and eager
Thinks he's Felix Rohatyn but his skills are too meager

Hair-slicked, suspendered, he
Wanders the 3:00 am hallway
Boasting how little he's slept
Since a week ago Tuesday

Loud-mouthed, annoying
Hot young models despise him
No matter how many bottles
With which he plies them

  • *

F is for Financial Analyst:
Bitter, exhausted
Never fucks, sleeps, or earns as much as his boss did

Tousled, unshaven, he
hunches over a keyboard
While vacations and nights out
Flash past like waves on a seashore

Rueful, uncertain
He ponders his Faustian bargain:
"For two years of this shit
I skipped screwing my girlfriend?"

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

2/23/11

To the hedge fund people reading this, are you any happier? Would you say that going to a fund allows you to learn a lot about the companies/industries you cover?

2/23/11

Man, this is a great discussion. I'm glad a couple guys came in near the end to lift some of the hate dropped on PE. i'm an IB analyst but it's that time of year for MM funds so I've been doing a lot of soul-searching with regards to where and how i want to spend the next few years (or many years) of my life...

i think the only career that would really make me happy would have to do with music... i would even like to transition banking-developed skills into talent management or something like that, or just own a record label or something. does that mean i should cancel my interviews?

2/23/11

I'm in the same boat Cjl49, love to get a job in music, that'd be the dream.

2/23/11

Emory,

Everyone in banking is miserable. There are a few parts about my job I don't mind, but the problem is that 75% of the crap is mind-numbing, boring shit (probably more at this point in time). The other serious issue is that everything, no matter how urgent in nature it actually is, is always RED EXCLAMATION POINT urgent. What's that, a bake-off in a month? I need a complete draft by tomorrow morning. Get to work on valuation and you can crank out positioning tonight. We might be mandated on this sale process? Get to work on the CIM over the weekend, I expect a complete market opportunity and financial overview done by Monday AM, just in case we get signed up next week...

2/23/11
jimbrowngoU:

Emory,

Everyone in banking is miserable. There are a few parts about my job I don't mind, but the problem is that 75% of the crap is mind-numbing, boring shit (probably more at this point in time). The other serious issue is that everything, no matter how urgent in nature it actually is, is always RED EXCLAMATION POINT urgent. What's that, a bake-off in a month? I need a complete draft by tomorrow morning. Get to work on valuation and you can crank out positioning tonight. We might be mandated on this sale process? Get to work on the CIM over the weekend, I expect a complete market opportunity and financial overview done by Monday AM, just in case we get signed up next week...

This is by far my biggest frustration with banking - the constant panic.

2/24/11
jimbrowngoU:

Emory,

Everyone in banking is miserable. There are a few parts about my job I don't mind, but the problem is that 75% of the crap is mind-numbing, boring shit (probably more at this point in time). The other serious issue is that everything, no matter how urgent in nature it actually is, is always RED EXCLAMATION POINT urgent. What's that, a bake-off in a month? I need a complete draft by tomorrow morning. Get to work on valuation and you can crank out positioning tonight. We might be mandated on this sale process? Get to work on the CIM over the weekend, I expect a complete market opportunity and financial overview done by Monday AM, just in case we get signed up next week...

Wow, can't wait to start...

6/12/12
jimbrowngoU:

Emory,

Everyone in banking is miserable. There are a few parts about my job I don't mind, but the problem is that 75% of the crap is mind-numbing, boring shit (probably more at this point in time). The other serious issue is that everything, no matter how urgent in nature it actually is, is always RED EXCLAMATION POINT urgent. What's that, a bake-off in a month? I need a complete draft by tomorrow morning. Get to work on valuation and you can crank out positioning tonight. We might be mandated on this sale process? Get to work on the CIM over the weekend, I expect a complete market opportunity and financial overview done by Monday AM, just in case we get signed up next week...

Ok, this is probs too naive, but can't we (people of finance) just slow it down so it's not like this. I mean just wait. I know the markets can't wait-that's fine (and HF guys still don't need to be at work all the time, which is ironic)-but who puts in the urgency, the client right? Well what if everyone, like all the IB firms were just like, we're not going to take being bullied by the client anymore. What could they do? NOTHING. Idk, it's late and I don't know what I'm saying, but I mean in a perfect world right.

6/13/12
mokey1234:
jimbrowngoU:

Emory,

Everyone in banking is miserable. There are a few parts about my job I don't mind, but the problem is that 75% of the crap is mind-numbing, boring shit (probably more at this point in time). The other serious issue is that everything, no matter how urgent in nature it actually is, is always RED EXCLAMATION POINT urgent. What's that, a bake-off in a month? I need a complete draft by tomorrow morning. Get to work on valuation and you can crank out positioning tonight. We might be mandated on this sale process? Get to work on the CIM over the weekend, I expect a complete market opportunity and financial overview done by Monday AM, just in case we get signed up next week...

Ok, this is probs too naive, but can't we (people of finance) just slow it down so it's not like this. I mean just wait. I know the markets can't wait-that's fine (and HF guys still don't need to be at work all the time, which is ironic)-but who puts in the urgency, the client right? Well what if everyone, like all the IB firms were just like, we're not going to take being bullied by the client anymore. What could they do? NOTHING. Idk, it's late and I don't know what I'm saying, but I mean in a perfect world right.

That will never work. Everyone is looking for a competitive advantage and turning requests quickly is just part of the game. If every bank got together (which is nearly impossible) to collude on slowing down the pace, then the fees, in the eyes of the clients, would no longer be justified. If the fees are lower, so will lower the bank's profitability and eventually your bonus and maybe even your base salary. If you want a job that is slower and pays less then look at middle or back office positions or any number of other positions that aren't on Wall Street.

I think it's a noble idea but it just isn't feasible. The bottom line is banking is practically a commodity. MDs spend decades building relationships and want to please those clients once they get them, much like a real estate agent. You don't make money if those clients go away, so you go to great lengths to keep them, which means unrealistically short turnaround times, etc. Of course, it doesn't help that the MDs aren't the ones in the trenches but such is life.

Shit rolls downhill...except in the southern hemisphere, where it rolls uphill because gravity is confused, or something...but the hills are basically upside down, so you still get the shit as an analyst. It's science, there's no changing it.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

2/24/11

great thread!

2/24/11

Hey guys,

Do you think it's possible to go from MM to MF? It's quite hard to go from M&A boutique to M&A bulge bracket, how is that different in Private Equity?

2/24/11
Glabibou:

Hey guys,

Do you think it's possible to go from MM to MF? It's quite hard to go from M&A boutique to M&A bulge bracket, how is that different in Private Equity?

Definitely possible. I know MM analysts that have ended up at almost every single one of the PE firms typically considered "megafunds" on these boards. You're probably not going to get a personal recruiting call from Henry Kravis, but you definitely have a shot if you have what it takes to interview competitively.

- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

2/26/11

how big is the pay difference between middle market to mega fund PE? i guess this could be a potential deciding factor as to why ppl choose megafunds. also do 1st year associates at MFs get carry? or is this more prevalent for middle market pe? thanks in advance - indeed a great thread.

2/27/11

Any insight into how megafund laterals occur?
From what I heard, departure before the 2 year program seem rare(r) relative to banking

Also thoughts on whether you can work lateral to a MBA heavy fund like Bain cap pre-MBA?

The answer to the above, 200-250 at Large MM and MF (afaik, correct me if not right).

2/27/11

I think MFs give first year associates something between 250-300k (last time I checked). This may have changed. I"m not sure what the progression looks like though from years 1 to 2. No carry for pre-mba associates and most, if not all, are 2 years and out programs. Some will give return offers.

I think pay is all over the board for MM PE mostly because there are a TON of MM firms out there. Anywhere between 175-250k is a good range. On carry and the 2-years and out program, some MM firms will participate and some won't; very firm dependent so it's hard to make a generalization.

2/27/11

thank you both for your replies!

2/28/11

If you are good and deals are constantly in the pipeline you will not be forced out. This is my brief experience at a smaller MM fund, associates who have a firm grasp of shit going on and who have been there for 4 years are far more valuable to these firms than someone from H/S/W. No matter how smart you are, even if you went to Harvard and come from Goldman TMT, you will still take a few months at the very least to learn the ropes of how shit is done in that partricular fund...

3/9/11

Big thanks to all the contributors to this thread! It really have made me think about my future career and reflect over what I really want out of life. I can't tell you how much I value the insights I get from you people.

+1 SB to Lurker22 who actually got this discussion going.

"It's a little like wrestling a gorilla. You don't quit when you're tired you quit when the gorilla is tired"
-Robert Strauss

3/14/11

Great thread. Wanted to quickly comment on a couple things.

  1. For those who asked, MF pay is ~250-300 first year, ~325-375K 2nd year.
  2. I've heard most MFs do not give carry, which can definitely change the $ equation, but this is definitely not universal. There is at least 1 I know of that does allow you to coinvest and get the carry.
3/14/11
directionallyright:

Great thread. Wanted to quickly comment on a couple things.

  1. For those who asked, MF pay is ~250-300 first year, ~325-375K 2nd year.
  2. I've heard most MFs do not give carry, which can definitely change the $ equation, but this is definitely not universal. There is at least 1 I know of that does allow you to coinvest and get the carry.

Thanks for that datapoint. SB for you.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

8/3/11

1) Boston
2) MM PE with ~$10Bn AUM, latest fund $3Bn
3) 50-55 hours per week in the office (haven't been in the office on a weekend yet, certainly the occassional e-mail traffic/updates as deals gain steam in their cycles but could work from home via laptop if necessary). Agree that like banking, we have a duty to be readily available by phone/e-mail. However, I have not experienced anything close to banking in this regard - the people would much rather work smart than hard.

4 / 5) Do plan on going to Bschool after 2-3 years here, unsure of where/what I'll be pursuing after.

I got ruined at a BB in NYC like most of us here, and it hurt. Hours worked in a day affect my overall happiness, and I believe working hard in a reasonably finite time-frame works wonders. Now that facetime is gone, I am happy to crank away for 10 hours knowing that I can leave at my discretion. I don't believe people give that shift in mentality enough credit (live deals aside...).

My only advice to the aspiring and prospective PE employees would be to really diligence the firm in question. Joining a MF has its merits and nobody denies that, but I urge everyone to look beyond the brand name. I went through the recruiting process and found a gig that met my criteria and gives me a nice balance between AUM, lifestyle and future potential. Just like college selection and undergrad job selection, this recruiting process is ultimately dictated by you.

A quick note about MMs as it seems MFs believe brand name trumps all - in MMs you are more likely to get carry (I get carry as a 1st year associate) and there is no pre-existing mentality of "2 and out, if you want to make it to VP and beyond you need to get in the 20-year line and toss your 30s out the door." In fact, the culture is to stay if you're good and the promotional structure is much less rigid and spot dependent. My best friends work for BainCap, Advent, and MS Capital. Most people on this thread get boners after reading that sentence. I get sick thinking about how much more they work than me. Hope this is helpful.

8/2/11

Silver banana to the above.

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

8/4/11

Hawain, are you referring to a firm similar to: ABRY/TA Associates or a Charlesbank/Spectrum/Parthenon/Great Hill.

Not trying to out you, as the AUM and fund size only offer a few choices. I am more curious as to how "big" the name is vs. the work/life balance; the hours you mention sound very managable.

8/12/11

Sorry, none of those. I'd tell you more but I don't want to risk my cover. I think the largest part of work/life balance tends to be the fund you are working on - a $10Bn fund with a $600MM fund that's investing, in my opinion, would have much better hours than a $10Bn fund with a $5Bn fund that's actively investing. The "size" of the shop's name definitely has an influence too, which you were alluding to.

8/22/11

I just read this thread in its entirety at work...

My God...

8/22/11

Here's an article on former BX tech buyout MD Chip Schorr starting his own firm in part to focus on mid-market buyouts:
http://blogs.wsj.com/privateequity/2011/08/19/chip...

The money quote:
"Schorr's view of the market and of investments risks and returns differed from what Blackstone was comfortable with, these people said. Where Schorr saw outsized growth was in the middle market, but Blackstone had no appetite for such deals, partly given the size of its funds, these people said."

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

9/4/11
Kenny_Powers_CFA:

Here's an article on former BX tech buyout MD Chip Schorr starting his own firm in part to focus on mid-market buyouts:
http://blogs.wsj.com/privateequity/2011/08/19/chip...

The money quote:
"Schorr's view of the market and of investments risks and returns differed from what Blackstone was comfortable with, these people said. Where Schorr saw outsized growth was in the middle market, but Blackstone had no appetite for such deals, partly given the size of its funds, these people said."

BX didn't make any more tech investments after Chip led Freescale, which leads me to a slightly different conclusion than BX didn't have appetite for MM deals...

9/16/11

I see everyone here is trying to get the Goldman Sachs offer. I just wanted to know how does everyone feel about Goldman Sachs offer versus Mark Zuckerberg status?

He's a billionaire @ 26 and IBankers won't be billionaires unless you are David Rubenstein, Kravis, or Schwarzman and at a really OLD age.

any views?> just want to hear other thoughts!

if u had the option which one would u take, prestige or billionaire?

9/16/11
KPham:

I see everyone here is trying to get the Goldman Sachs offer. I just wanted to know how does everyone feel about Goldman Sachs offer versus Mark Zuckerberg status?

He's a billionaire @ 26 and IBankers won't be billionaires unless you are David Rubenstein, Kravis, or Schwarzman and at a really OLD age.

any views?> just want to hear other thoughts!

if u had the option which one would u take, prestige or billionaire?

Is this a serious question? Of course billionaire, fuck prestige. Keep in mind though that over a certain amount of money, it doesn't affect your quality of life, and money just becomes a score keeping mechanism (aka, prestige). I'd also argue that while ending up as Kravis, Schwarzman, or Zuckerburg are all essentially winning the lottery, you've got a much better shot at landing someplace soft and full of dollar bills if you aspire to the top of the finance heap, rather than trying to be the next Zuckerburg.

- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

9/19/11

It seems to me that your experience depends on the PE firm you work for....

What are some of the names of these MM P/E firms in the Boston area that only work you 50-70 hours a week?

  • SpencerMakesBank
  •  9/21/11

Is an MBA worthless if you want to get into entrepreneurship?

9/21/11
SpencerMakesBank:

Is an MBA worthless if you want to get into entrepreneurship?

Yes. You'd be far better served spending the two years and $100k starting a few businesses and learning by doing.

- Capt K -
"Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

10/11/11

I was just reading over this thread and it all was a very big help. Recently, I have been contemplating changing my career path to get into the IB or PE industries. I have been talking to some of the guys in my local alumni club and they have been helpful into introducing me to several area contacts to make this transition. The reason I have been looking into this change is because I have recently come into some money. I am 24 and work at a great company with a lot of room for advancement in the future, but I am not sure if that is really the best career path for me. I don't just want to sit on this money. I want to make it grow and take on new challenges. I want to start looking into some entrepreneur ideas and take on some larger investment in the 5-10 year future. The job I am at now will not prepare me for anything like this that I now have aspirations towards. The hardest thing for young entrepreneurs starting out is obtaining capital. I already have that, now I just need the experience necessary to do something productive with my money. I do have a degree from the University of Illinois in Consumer Economics and have taken numerous finance classes, but these are just classes and not real world experience. I am looking for what to do next to obtain this experience. Is working at a PE firm a good way to learn about industries or taking on entrepreneur investments? If I work there for a few years, would I be ready to start taking on my own investment ideas and would working there give me some more ideas as to what industries to invest in? I am basically looking for some advice. What would best prepare me for entrepreneur endeavors in my 5-10 year future? Thanks in advance.

10/11/11

PE firms invest in mature companies. Venture capital firms invest in "entrepreneur ideas/investments;" though that really isn't a term, they invest in start-ups/early-stage ventures.

6/12/12

Epic thread...

1/3/13

Wow, this was perhaps one of the most informative things I've read ever, and it made me think quite a lot. As I've been making my way through it, and various other similar threads on here, I've been going back and forth sharply on wanting to be in this business at all. But in the end I still do. I think, for the moment, I at least have an idea of the direction I want to go in. Very informative, and incredibly helpful.

"When you stop striving for perfection, you might as well be dead."

1/3/13

^^^Would also like to know this

"When you stop striving for perfection, you might as well be dead."

1/17/13

prestige.

1/23/13

I think it depends on what you are interested. Every fund has there own approach and style - and roles at different funds will have different responsibilities. We focus on the lower-end of the lower middle market. I had opportunties to work at larger funds but enjoy working with these size companies as generally they need/want the help. Additionally, our philosphy is we back the management so don't go in with a heavy hand but rather look for a meaningful partnership between the management team and us. I think focusing on the funds style is important as it varies and may or may not be of interest to you.

6/17/13

this thread blew my mind. thank you WSO. top 10 thread I've read on this site.

I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought- GG

6/17/13

What about a mezzanine / co-investment gig? Obviously not as much prestige and the pay is lower, but hours and work/life balance are much, much better. Can anyone with experience in that area comment as to whether or not they find the work interesting, etc.?

10/9/13

Best thread ever. Thanks guys.

5/23/14

Just found and read this. Cover to Cover. Amazing.

6/15/14

Simply echoing the comments made above, but as someone focused on the IB->PE track, this thread was one of the most enlightening reads of my life. Thanks to everyone who participated.

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