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Why do sell-side before buy-side?
 

Darren's picture
IB
 
Points)
 on 4/18/08 at 11:15am

I just curious what is the rational of going sell-side before joining buy-side? Is it because the number of buy-side position is less than sell-side one? Given choice, will you prefer buy-side right after graduation? Is sell-side give one a stronger basis, like modeling skills, or sth. else providing you a boarder exit? What is the advantage and disadvantage of doing each after graduation?

Any thoughts appreciated!

Tags:
joefish's picture

Good question, my friend

IB
(Gorilla, 576
 
Points)
 on 4/18/08 at 11:18am

Good question, my friend just got an internship at a PE firm. He was originally going to do M&A, then PE after 2-3 years, but once he found out it was possible to go buyside straight off, he went for that instead.

Darren's picture

thanks joefish, so what

IB
 
Points)
 on 4/18/08 at 11:41am

thanks joefish, so what would a 2nd year M&A analyst compared with a 2nd year buy-side analyst, say in Private Equity Dept at BB or top PE houses..any thoughts?

junkbondswap's picture

The only benefit of doing

(King Kong, 1,723
 
Points)
 on 4/18/08 at 11:43am

The only benefit of doing banking before PE is the training and comprehensive/diverse exposure to different types of transactions. I started on the buyside and think that I could have gotten a lot more out of my experience (at least starting out) by going through a formal BB analyst training program. I also think that the sell-side serves as a rite of passage for those who eventually make the jump.

curiousmonkey's picture

for one

PE
 
Points)
 on 4/18/08 at 11:49am

it's pretty damn hard to find really good buyside options out of undergrad. it's not like tpg and kkr are recruiting undergrads on a regular basis. blackstone is the exception and they already get the cream of the crop.

Darren's picture

junkbondswap: what is the

IB
 
Points)
 on 4/18/08 at 12:10pm

junkbondswap: what is the benefit of starting at PE? will you consider back to banking after PE work?
btw, how is PE group at BB sounds like, compared with top PE houses? i knew the pay is not the same, anything else?

mlamb93's picture

agree with junkbondswap

IB
(Orangutan, 271
 
Points)
 on 4/18/08 at 12:26pm

I went straight to PE from undergrad and I agree with junkbondswap. Starting at a BB provides diverse experience and a great training program. Depending on the BB, you also get a "name" on your resume.

What I've often wondered is exactly how polished of a skill set the average analyst has after a 2-year stint. Obviously this is contingent on the group you worked in, but I'm still curious generally speaking.

Starting in PE does have its perks if that's where you'd ultimately like to end up. Already being in the industry makes it easier to lateral from firm to firm. You'll be competing for Associate positions with banking analysts who haven't been doing PE for 2 years. PE also provides exposure to the management consulting mindset (providing you do some work for portfolio company initiatives). Lastly, in my opinion, having PE on your resume definitely helps for B-School.

Clearly all PE firms are not equal in terms of quality. Everyone that goes to PE from ugrad doesn't end up at BX, KKR, TPG, or the like. However - if you want to do PE and have the opportunity to join an active shop upon graduating, I would seriously consider it.

graduate24's picture

buyside undergrad opportunities

IB
(Monkey, 47
 
Points)
 on 4/18/08 at 1:46pm

Please rank the below 5 buyside opportunities to go to the buyside directly as an undergrad given current market conditions and future prospects / transferable skills..

Please assume pay , culture, people are all the same, fund size all > $5bn

-Real Estate Private Equity

-Mezzanine fund

-Secondaries Private Equity

-Traditional corporate Private Equity

-Distressed Debt fund

joefish's picture

Dosk is Life

IB
(Gorilla, 576
 
Points)
 on 4/18/08 at 1:25pm

I think an analyst's skillset probably varies wildly bank to bank and team to team and it's all up to the individual. If you really enjoy the work and are genuinely interested, then IBD is clearly a great career option, whether for 3 years or longer and you can pick up many valuable skills other than the abilty to BS. PE at a junior level is probably a bit less structured than a BB analyst program, some people would prefer this, some would not.

I think this article from dosk is a pretty good read and makes some excellent points: http://www.mergersandinquisitions.com/2008/03/03/i...

Personally, if I had the chance to start at a small PE firm or an i-bank where I would have many more people in my age group, I'd take i-bank every time. The people make the experience, I'd rather be in a bullpen with 10 assholes and 10 friends than in a PE team with 4 decent guys and 2 dickheads. What can I say, I'm a people person

Also, obviously one can make the switch IBD to PE, but I don't hear of too many doing the opposite, so you should bear this in mind also.

joefish's picture

Don't know if you should be

IB
(Gorilla, 576
 
Points)
 on 4/18/08 at 1:28pm

Don't know if you should be factoring in "market conditions", no-one can predict what's going to happen to PE, despite what people may tell you...

In saying that, I've been advised to take a good look at distressed debt private equity by this senior M&A dude I know, so I would tentatively rank that no. 1

I know nothing about real estate PE....but it sounds muthaf*ckin' boring zzzzzzzzzz

Wait a sec, isn't Real Estate PE what estate agents do!!!? :P

smuguy97's picture

By definition, mezz and

PE
(King Kong, 1,004
 
Points)
 on 4/18/08 at 1:39pm

By definition, mezz and distressed debt are not private equity.

joefish's picture

Apologies

IB
(Gorilla, 576
 
Points)
 on 4/18/08 at 1:58pm
smuguy97:

By definition, mezz and distressed debt are not private equity.

Oops

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