Is Private Credit Paradise?
From what I've read online, people in top PC groups are making roughly the same as those in the top PE groups, except working 10-20 less hours (~50-60hours/week with a few weeks at 70/80). Carry seems to be more secured but have a lower ceiling. Prestige is less, but who cares? High pay, great career progression, interesting(?) work, and fantastic WLB. Although the sample size might be low since it seems like there are very few people vs. IB/PE. Is this glamorized WSO BS or the real deal? I feel like if it was true then more people would be talking about it.
Based on the most helpful WSO content, the perception of Private Credit (PC) as a paradise might not be entirely glamorized, but it does come with nuances that are worth considering. Here's a breakdown of the key points mentioned in the discussions:
Work Hours and Lifestyle: It's noted that individuals in Private Credit can expect to work around 55-90 hours a week, depending on deal flow. This range suggests that while there may be periods of 50-60 hours a week, there can also be weeks where the workload spikes to 70-80 hours. This variability indicates that while the work-life balance might be better than in some Private Equity (PE) roles, it's not uniformly relaxed across the board.
Compensation and Carry: The discussions highlight that compensation in Private Credit is very good, generally a little less than in PE, with less volatile Carry. This suggests that while the earnings are competitive, the ceiling for Carry in PC might indeed be lower compared to PE. The notion of Carry being more secured in PC could be attributed to the consistent cash pay on a quarterly basis that LPs receive, making it a stable income source.
Prestige and Career Progression: Prestige is acknowledged to be less in Private Credit compared to Private Equity. However, the emphasis is on finding a career path that provides personal satisfaction, challenges, and a sense of accomplishment. Career progression in PC is seen as promising, with opportunities in Credit Hedge Funds, other debt strategies, and potentially even a move to PE or industry roles.
Interest and Work Nature: The work in Private Credit is described as involving a deep dive into new opportunities, albeit not to the extent a PE sponsor would. This suggests that the work can indeed be interesting, offering a chance to look at and close a lot more transactions than in some PE roles.
Market Perception and Future Outlook: There's a strong belief in the potential for Private Credit to grow significantly over the next 5-10 years. This optimism is based on LPs recognizing the attractive returns that can be achieved in levered credit funds, especially in comparison to average buyout funds.
In summary, while Private Credit offers many appealing aspects such as competitive pay, potentially better work-life balance, and interesting work, it's important to consider the variability in work hours, the slightly lower prestige, and the nuances of career progression. The discussions suggest that the positive perception of PC is not entirely "WSO BS," but like any career path, it comes with its own set of trade-offs.
Sources: Private Equity vs. Private Credit, Private Equity vs. Private Credit, Private Equity vs Megafund Credit, What replaces Private Equity? What's the next popular exit opportunity?
In my (biased) opinion, yes.
What I enjoy about my job in general is constantly looking at new businesses, business models, markets etc. You get this in both PC and PE.
I think PC offers mostly the nice aspects of PE with less bitch work. My working hours are on average 9-9 Mondays to Thursdays and I fuck of between 5 and 6pm on Fridays. If we are on a live deal, hours might be 9-11/12pm but I also leave at 6pm during the week if nothing's to do. I have been maybe 2-3 weekends per year (!) in the office, while reading IMs/DDs for a few hours on weekends here and there. For me, that is probably the best WLB I can have in finance while clearing roughly the same as M&A peers (unless they have a stellar year, and also a bit more bonus heavy on our side) and PE peers (in fact, in Europe PE underpays on Analyst level given the high supply of students willing to work for practically nothing to get into PE right out of university).
The only caveat is that you have a more passive role, but the more I've talked to PE friends, the more I realised how active management can become a burden if companies are not performing. And really a lot of portco's do not perform right now..
Ultimately, there is no way around it, if PE performs, you will earn more going this route. But let's not kid ourselves, many many funds do not perform and I am more than happy to make a bit less as an PC MD (vs. PE MD) if that means I had a significantly better life getting there and still make several hundred thousand per year excluding carry.
How often are live deal sprints? I heard that at MFs (NYC) that it could be from September to Christmas. Also, how does WLB progress in PC? I'm assuming it will get minutely better and there will be more travel involved.
I only have ~2 yrs of experience and last year was very calm (at least in Europe). I am also not at a MF but rather a upper midcap fund, just keep that in mind.
Sprints are significantly shorter compared to PE, so 9-12pm days are usually just ~2 weeks for a deal, after that it is more managable again (sometimes even without weekend work). I'd say we have 4-7 "sprints" were we go to final IC with a 6-12 smaller sprints of maybe a week (also usually limited weekend work) where we go to IC but do not proceed.
Overall very managable, sounds tougher than it is. I truely enough not being an PE associate sitting there at 3am checking some shit the IC requested in the customer data cube.
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