How do top credit shops compare to MM/LMM buyout?
If you had to choose between a top well-known credit shop (Ares/Oaktree/Golub) vs a no-name MM/LMM PE firm, which one would you choose? Currently going through a recruiting process and have options to go for both. Leaning towards credit due to brand value but trying to be aware of whether I'm going to pidgeon-hole myself into credit for the rest of my career. Are exit opps going to look vastly different?
What do you want to do? Honestly don't understand questions like these.
What does the comp differential typically look like at top private credit shops vs MM/LMM buyout shops?
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These are different jobs. If you want to end up in the credit investing world, take the Credit job while if you want to be in equity investing take the buyout job. It is way harder to move from credit to equity than from one fund to another pursuing similar strategies.
Also might be hard to move to a top credit shop from a true LMM SMB shop to play devil's advocate
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The answer on here will lean towards buyout PE - it's more "prestigious" and you're doing your own deals. That said, I have friends in MF credit who make really solid comp and their hours are better than even MM/LMM PE.
It's not going to be easy to do credit -> MF buyout PE, so don't go into credit thinking you'll have tons of vanilla PE opportunities. That said, not like a no-name firm will open endless doors for you either.
If you're open to credit long-term I'd lean that direction solely based on friends experiences, if buyout is 100% your focus take that offer
I assume MF credit comp is higher than MM/LMM PE comp. Are you aware of any major difference in comp between MF credit and MF PE?
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I don't think this is very accurate in terms of exit opps. I personally know two guys who went from MF Credit (Bain Cap) to Apollo. You can find them easily by LinkedIn filtering.
There is one such person at Apollo, at least in the US. Other Bain Cap Credit exits are much different. Look at the norm, not the outlier.
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I’m a PE Associate recruiting for Private Credit. If you want to ask any specific questions feel free.
What drove you to recruit from PE to private credit and how has your recruiting been thus far?
Which type of private credit firms have you been targeting?
At first when I tried on cycle as an An1, I was just taking interviews not knowing what I wanted to do or where I wanted to do it. One of the interviews was for Private Credit at a MF, and while I didn’t get the offer (my model was a dumpster fire tbh), it made me realize I find credit interesting.
Now, why I’m recruiting for it is because, in general, it has better work/life balance than Private Equity for similar pay. One fund I’m interviewing with said in my first round a comp range of $225-275 is fine.
Recruiting is going fine. Private Credit is exploding, so there’s plenty of opportunities — let’s ignore market overcrowding for now :). As a Private Equity Associate you’ll get looks from a lot of places. Still in the early innings of recruiting, but I’ve been targeting from UMM to MF (e.g., AEA to Blackstone) in their Direct Lending Groups (vs. Special Sits or Opportunistic).
Something flashier would probably keep more doors open and make my resume sparkle more, but after a few years in finance I don’t really care about doing anything cool. If I can make nearly $300K at 25 slinging 1L paper with fine WLB, I’m fine with that.
Interesting, all makes sense and thanks for sharing. Can certainly see why seeking a transaction oriented role in addition to better W/L balance while not sacrificing comp, would lead you to direct lending. To your point, special situations while intellectually stimulating and offering creativity and flexibility in structuring can be interesting, the lifestyle is worse than your traditional direct lending fund and is likely more akin to PE. Best of luck!
Thank you, and of course. Happy to help.
I’ll also add — reasons to use in an interview (you can decide how true they are):
Depth of diligence is quite deep — as in 2 hour calls listening to Marsh pepper management about their Insurance. Pre-IOI, Associates often lead diligence at my fund. Post IOI/LOI you have a large part still. You’re running the model and various analyses (e.g., funds flow, waterfalls, churn, customer retention, LTV/CAC, ROAS, etc.), you’re managing 3rd party providers, support on transaction/financing documentation and taking the pen on the IC memo.
Workstreams are rather broad (particularly given we’re underpaid, but that’s not the point). We’re responsible for 1) deal execution, 2) sector work (I cover 6 sub-sectors) which can involve market mapping, general research, update presentations, outreach to potential targets or intermediaries, 3) administrative work (e.g., deal flow reporting), 4) internal whatever (e.g., we need an analyses to see what happens to our portcos if interest rates stay high through 2023, etc.), 5) origination: we all cover different banks and lenders and are responsible for maintaining the relationship with them, and 6) portfolio management (e.g., we just for managements 2023 budget we need to stress test it and give feedback, basically running CorpDev w/ your VP, etc.)
For what I can ascertain as someone who hasn’t worked in private credit, it seems like the the responsibilities are, by and large, similar. However, when it comes to transaction execution and portfolio management (two of the biggest time sucks), it doesn’t go nearly as deep when you’re investing in credit vs. equity (in general).
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