There seems to be a growing trend of those who eventually want to work in public markets spending a couple years in large buyout shops before transitioning. Curious what people’s opinions are to the benefits/detriments of taking this route vs trying to break in straight out of IB
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Three large reasons:
Much easier to go PE -> HF than the other way around.
PE is a much smoother transition from IB, as the work is similar and there’s a more structured recruiting process compared to HF.
Finally, PE is generally a safer path at the moment. HF industry has been heavily scrutinized for the lack of outperformance against index funds, whether rightfully so or not, and as a result many shops have recently closed their doors. It’s very hard to outperform in a never-ending bull market. On the other hand, PE is booming and there is a ton of dry powder to be spent, which provides job security for at least the next 4-5 years.
Whether these trends will continue over the medium / long term is anybody’s guess
I did PE before I moved to a HF. One of the above posters pretty much nailed it. PE is safer from banking, there are more spots, recruiting is more structured, the work is similar, and you probably have more varied exit opps from PE than from HF. That being said, if you prefer the public markets, spending more time on analysis, more responsibility, and are ok with more volatile pay, then HF is the way to go.
I found that my PE background made me more attractive to certain HFs / PMs and probably helped me better understand fundamental drivers of business performance better than I otherwise would have.