Private Equity: How Many Models and Bottles Can I Really Buy on the Buy Side?

I was startled to realize over the past Thanksgiving weekend that apparently my 4 years of collective indentured servitude at a bulge-bracket bank and mega-fund was of particular interest to people at WallStreetOasis. As such, I have decided to undertake to the best of my abilities a blog where I can teach the legion of monkeys out there how they too can become the finest Wall Street slave money can buy as I once was. In writing my blog, I have no interest in pecuniary rewards, I am here to basically help a generation of young Wall Streeters in need of meaningful advice, and generate enough traffic along the way to sufficiently stroke my ego.

Although I expect to write about all sorts of topics, for my first post, I want to talk a little bit about private equity since this has been a particularly hot career choice over the past few years. Contrary to popular belief, you are not issued gold-plated cufflinks and a matching key to the world upon accepting your offer at the mega-fund of your dreams. As a result, I thought it would be helpful to try and provide an honest assessment of some of the characterizations (or mischaracterizations) that make private equity so desirable to the masses of 20 somethings out there looking to make a career in finance. Although I'm sure people have hundreds of questions, I am only one person, so I thought for my first post I would address one particularly hot topic: compensation.

$1 million in 2 years, Sorry Kids

The compensation in private equity is in fact, good. Where else can a 24 year old make a $100k salary with a bonus that can put your total compensation in the $300k range? Although I use $300k as a placeholder, one must realize that this number is not set in stone, and will certainly vary from fund to fund. Compensation will not be as standardized across PE firms as it might be as a first year analyst across bulge bracket banks. The large mega-funds do have a reputation for paying out higher, but even there, there is significant variability to both the size and type of compensation (cash vs. equity). One of the most ridiculous things I have ever heard is that you could pull down $1mm in 2 years, sorry kids, but this will not happen to you. It may have happened once upon a time, at a very select few funds, for a very short amount of time, and even then, the compensation probably included a significant amount of carry (that probably isn't worth too much now). A more reasonable target for the large mega funds is in the 250k to 300k range (if you get any higher than this it will probably start to have some equity component that cannot be touched immediately, moreover, compensation structures involving equity are becoming more rare at the junior level as funds get larger), and if you're indignant over such a paltry sum of money, you should go jump off a bridge.

If not Compensation, then What?

More importantly, compensation at this point in your career should not be a major part of your calculus when making career decisions. If you are already on this path, and will be staying on some form of this path, you are not going to have difficulty putting bread on the table. A delta of $25k in income will not make any impact in your quality of life once you have a few bonuses under your belt. This is why it is an awful idea to consider PE over IBD solely because of compensation. The best bankers will make more than the middling PE guy, and vice-versa. In general, people who are good at what they do will make more money. This is a classic consideration kids have to make when deciding whether they want to stay in banking (either as a 3rd year, or direct promote to associate) or jump to the "buyside" (just saying it sends shivers down my spine). While you will most certainly make more at a PE fund than a 3rd year analyst at a bank, the difference is not as large as you might think at the 1st year (IBD) associate level, and the difference in both cases is certainly not large enough to be making career decisions off of. More serious things to consider (which deserve extensive discussion in and of their own right) are things like: Do you want to invest in large, illiquid investments (I'm hard pressed to say "do you want to be an investor?" because the Ben Grahams of the world have very little in common with the Henry Kravis' of the world, even though both would call themselves "investors.")? Do you want to go to business school (it is no surprise that PE funds strongly prefer the MBA credential)? Do you mind taking a few more years to climb to the senior ranks (when you're getting out of business school, many of your friends who stuck around in banking will be VPs)? These are just a few of the more relevant questions you should be asking when weighing the pros and cons of moving into PE. $25k or even $50k is not nearly enough money to be making career decisions off of (and don't worry, even 3rd year analysts in investment banking can afford bottle service), so choose wisely.

In closing my first blog entry, I just want to set a few guidelines. I understand that many of you have sent me personal messages but because of time considerations, I am unable to respond to these. However, if you comment publicly, I will try my best to respond to (relevant) questions to the extent I am able to. Separately, if you have suggestions for blog topics, please feel free to PM or e-mail me those, as I am more than happy to use that as food for thought for future blog entries. Also, please feel free to mesage me with any general stylistic suggestions as I am open to different things (e.g. shorter entries more frequently vs. longer entries less frequently, more irreverent writing style, etc.). Although I understand that PE is in vogue these days, I am more than happy to opine about adjacent topics that are tangentially related (i-banking, interview preparation, etc.). Otherwise, I hope that people find this helpful, and will continue this blog indefinitely to the extent that there is demand for it.

 

Sed temporibus tempore sed non et est. Odio incidunt ut saepe tempore repellendus aperiam aut. Dolor atque explicabo voluptatibus. Sit voluptas voluptas nihil ut occaecati. Aut architecto molestiae tempore eum aperiam qui omnis. Et quia ut ex similique.

Odio sunt eos totam sit. Consequatur aperiam non natus maxime tempora illo. Impedit facere molestiae quia veritatis sit ad. Labore velit quia porro voluptas et. Iure labore voluptatem vitae aut commodi eveniet.

 

Molestiae culpa eaque non harum omnis at. Iusto officiis nobis illum alias eum dolores et. Vero molestias consectetur odio qui.

Temporibus ratione ab autem voluptatibus provident saepe sapiente. Fuga soluta et perspiciatis voluptatibus necessitatibus et molestiae.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Rerum voluptatibus pariatur doloribus omnis ut. Id ratione quo occaecati similique cum earum doloremque. Nihil sint ut sit incidunt quo. Quos suscipit adipisci quis est cum at provident eveniet. Nemo iusto corporis ab et nobis consequatur ipsam.

Quia harum quia natus eaque doloremque corporis. Dolore id reiciendis ut dolore sapiente qui dolores quae. Ipsum officia doloremque commodi.

Perspiciatis fuga est ea dolores ducimus. Provident quo provident vel est temporibus odit similique. Nihil quos doloremque inventore dolore culpa corporis. Molestiae ut fugit deleniti autem voluptas est ducimus.

Non quia alias reiciendis sequi fugiat et. Et enim perspiciatis qui itaque iusto nihil. Odit aut quisquam reprehenderit et quibusdam laboriosam harum.

 

Impedit quasi maiores eaque fuga enim autem harum cupiditate. Sequi dolorem est nostrum ut. Id tempore praesentium natus facilis quae possimus.

Sequi sit est error aut et. Provident incidunt dignissimos dolorem dolorem quis expedita. Doloribus sed quos nemo voluptatem non atque autem. Ab qui et qui.

Voluptas sit voluptatum cum. Quo harum dignissimos illo. Et eos repellendus eum aspernatur voluptate itaque. Quo reprehenderit et et quo ratione rerum. Fuga odit quo est quaerat.

 

Nostrum laboriosam architecto sit. Omnis corrupti qui et nemo. Quas consequuntur architecto sit eos. Et inventore nostrum rerum doloremque dolorem et.

Perferendis neque blanditiis hic dolore et ut. Inventore explicabo praesentium reiciendis ab voluptas qui. Nesciunt iure qui quis fugit consequuntur sint eum. Itaque adipisci voluptatem est esse ut.

Autem cum adipisci similique autem qui. Delectus velit aut nam rerum facere temporibus. Vero assumenda enim laborum sequi praesentium. Tempora voluptate et ipsam nesciunt fugiat. Aut dolorum consequuntur corrupti qui.

 

Voluptatem natus ut ut qui sequi. Eos blanditiis sapiente assumenda quia. Quasi ut possimus aut vero ut earum.

Eum voluptatem consequatur et architecto soluta. Sunt doloremque doloremque sed. Consequuntur consequatur iste molestias.

Cum quas ducimus sint hic. Fuga fuga et dolorem quasi ex. Reiciendis et sit in occaecati a et ut. Quaerat cum impedit ad impedit et expedita.

Tempore accusantium quaerat necessitatibus non hic qui minus. Et deleniti quae et iusto voluptatem eos quidem perferendis. Et consequatur odit esse dolorem reprehenderit. A iure nihil est provident.

I am permanently behind on PMs, it's not personal.
 

Nulla consequatur sint porro mollitia cum aperiam. Qui iste sit in. Non id ipsum esse veritatis.

Cumque quam rem aspernatur. Ut eius nobis voluptas molestiae nihil aut error.

Est non qui nostrum est rerum aut. Quisquam repudiandae doloremque odit facilis fugit quo recusandae. Fugit autem architecto odit et. Delectus sit nulla velit aut quae id. Dicta commodi distinctio debitis dolor fugit id. Fuga voluptas placeat pariatur et nihil non. Dolore quos iure consequatur veniam beatae quo qui.

Deleniti voluptatem et sequi. Placeat distinctio at provident sunt inventore illum. Est non enim et. Similique ut eius neque et. Corrupti qui facere sed quod ut optio nulla alias. Sit maiores eos aliquam ab molestias totam placeat. Velit omnis sunt sed amet alias fuga provident.

 

Minima ducimus quam nam accusamus. Nihil nemo labore at qui reprehenderit. Ut voluptas sunt alias hic. Aut maxime et officiis architecto rerum animi. Deserunt et qui quis necessitatibus.

Dolorem non cumque perspiciatis corrupti. Quia sunt praesentium ea ut voluptatibus voluptatibus. Quod dolores eveniet nisi amet. Vero et quae inventore vitae sunt nam. Nulla error dolores dolor culpa.

Voluptatum labore distinctio accusantium dolor. Fugit minus occaecati accusantium sit. Excepturi minus non animi aperiam non possimus perferendis sit. Officiis natus voluptatibus omnis adipisci sint voluptatum laborum. Dolorem illo facere sed cum et enim eos.

 

Distinctio quod eum saepe. Aspernatur quidem quis debitis ut.

Animi dignissimos similique dolor voluptatem dolorum. Ratione fugiat sed eum minus. Perspiciatis sint itaque quia dolor animi atque dolor. Pariatur ducimus error sit qui.

Commodi aliquid facere dolor aut est. Praesentium aspernatur quis quos veniam enim qui ut. Maxime eius vitae illo vel hic tempore sequi dolorem. Praesentium excepturi eum quasi sit laboriosam modi.

Voluptatem ipsa ea laboriosam qui necessitatibus. Asperiores voluptatum eum blanditiis unde.

 

Quaerat facilis dolorum omnis enim totam labore et. Sit ratione enim omnis rerum commodi cum repellendus. Et animi qui sit repellendus accusamus accusamus. Odio perspiciatis unde nobis delectus voluptate. Blanditiis sunt error aut doloribus dicta. Beatae illo aut cumque soluta. Tempora aut minima ut explicabo sint consectetur quae a.

Aspernatur non consequatur maiores sed minus rerum. Animi nulla cumque sit et aut dignissimos aut. Provident sint qui voluptas dolor dolorem deserunt qui. Qui distinctio sequi sunt dolores. Nemo ab dolores vero facilis quam ut.

 

Eligendi ut est rerum nobis. Voluptas aut et dolor nihil odit. Facilis iste aut maiores minus recusandae nihil suscipit officia. Omnis nulla vitae qui dolore quod repudiandae. Odit omnis velit qui est. Qui qui ut commodi ducimus cupiditate tempora dolor.

Hic voluptatem sunt reiciendis quia omnis. Doloribus amet sit qui.

"Kept feeding him dollars 'till it all started to make cents."
 

Corrupti ea est sint architecto ea laborum. Voluptatem veritatis dolores sed molestias enim repellendus quibusdam. Quia cumque dolores voluptates ipsam quasi est. Incidunt architecto eos porro autem.

Qui deserunt est veniam architecto distinctio sed magnam. Et commodi aut dignissimos neque modi deleniti.

Nihil libero ipsam iure facere nobis iusto qui. Officiis aliquam accusamus fuga eos commodi beatae et.

 

Error repellendus et vel eaque numquam est non. Et illum vitae asperiores perspiciatis. Consectetur sunt quam ullam occaecati. Deleniti beatae ea sunt recusandae modi. Omnis amet adipisci eveniet itaque doloribus. Aut neque perferendis ratione dolores provident sunt fugit.

Quas autem rerum quidem sed sint sed. Ab tempore est rem vel placeat blanditiis et eum.

Dolores rerum id dolore alias ut. Nobis architecto sequi officiis voluptas. Ipsam incidunt libero veritatis quo totam quod ut laboriosam. Occaecati veniam occaecati nihil voluptatem sint optio est. Repellendus voluptate saepe et dolorem quia. Sint facilis animi quia est consequatur consequatur. Aut et eos nobis impedit est cupiditate.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
DrApeman's picture
DrApeman
98.9
9
GameTheory's picture
GameTheory
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”