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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)

2/16/11

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?

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2/16/11

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

In reply to TheBenevolent
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.

2/16/11

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.

In reply to junkbondswap
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

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.

In reply to junkbondswap
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

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.

In reply to alexpasch
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

In reply to junkbondswap
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

In reply to labanker
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

In reply to junkbondswap
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

2/18/11

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

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.

In reply to HFFBALLfan123
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?

2/19/11

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.

In reply to fomc
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.

2/23/11

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

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

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?

In reply to jimbrowngoU
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

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.

In reply to Playingbyear
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.

The WSO Advantage - Private Equity

PE Interview Prep Pack

9 LBO Tests, Get an Edge, 200pgs+

Resume Help from Actual PE Pros

Land More PE Interviews.

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...

In reply to jimbrowngoU
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.

In reply to jimbrowngoU
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...

2/24/11
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?

In reply to Glabibou
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.

In reply to directionallyright
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.

8/2/11

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

8/3/11

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.

8/4/11

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.

In reply to Kenny_Powers_CFA
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?

In reply to KPham
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?

In reply to SpencerMakesBank
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
In reply to jimbrowngoU
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.

In reply to mokey1234
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

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."

In reply to TheKing
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

^^^Would also like to know this

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

In reply to Bullet-Tooth Tony
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.

In reply to TheKing
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

In reply to cphbravo96
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.

In reply to TheKing
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.

1/17/13
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.

2/9/15

This was great, thanks everyone

2/9/15

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