Carve at MM or X-over fund
Hey monkeys
Background: I’m a TMT analyst currently at a $2.5B fund (joined out of college). 6.5 yrs buyside experience. Started recruiting after another disappointing comp year and debating between 2 offers.
The first is to run a carve of $300M at a MM (citadel, p72, mill) that would scale over time. PM was promoted internally. The second offer is at a crossover fund with $3B in AUM and I’d spend my time 50 public/50 private.
I think the crossover fund is a more interesting role since I’ll add private investing to my skillset, I think it has more stability (although who knows), and better culture. However the offer is $4-500k all in which is basically what I make now.
The MM is obviously less stable and there’s a high chance I’m recruiting in 2 years. But they are guaranteeing $900k all-in for this year with upside.
I know the forum is pretty biased against MMs in general, but how would you rank these opps (or would you stay put)?
Take the guaranteed money at the MM. Clearly you’re decent if that’s what they’re offering. Stability at these single managers are overrated - I know several people that were fired or got shitty bonuses last year
damnnn that's a crap ton of money they are offering u. Wow you must be a really good HF monkey since u say ur making around 400-500k already.
Not really considering that’s what IB associates are making these days with 4 YoE
I personally would take the MM and it's not even close. Good luck
Not sure this forum is biased against MMs...seems like 90% of the threads are about the Big 3 / 4.
Anyways, if money is the issue here, why not go for the job offering >= 2x the other job? How much more interesting do you think private investing will be? $500k more interesting?
More interested in the future career optionality. I probably can’t get this role out of a MM. The tradeoff is a $500k today vs not having a job/less options in 2 years
How do MMs offer guarantees to analysts? Izzy reaching into his pockets to pay $900k if pod goes bust before 12 months is up?
I think it all depends on how good the pod PM is and to what extent you can ascertain that by your own checks. I've seen a lot of new internal promotes not survive jump to PM in their first year so buyer beware.
The investors pay for it
Love me some pass throughs
If the 900k is in writing with no deferral or other gimmicks, it's a no brainer
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More important is comp trajectory over time
wasnt there a thread showing comp trajectory at these places stepping up to $10M+ by 30 with less risk than MM?
Could you link the thread? I couldn’t find it
$10mm is way more than anyone I’ve talked to unless you’re a partner at a $10bn fund. Top quartile for analysts is $1mm and for senior analysts/MM PMs its $3-4mm. Half those numbers for average
Youre probably thinking about the dragoneer/altimeter thread? Both of those are 20 bn plus funds. The op here is talking about a 3 bn dollar fund. Assuming 15 percent avg returns with a 15 percent incentive fee you'd need to have 15 percent of the carry pool to hit 10 million....and i doubt the founder is giving up that much of carry for a new hire at an established fund
What are the terms of the carve?
MSD on my names. Trades go through the PM
I think you have the optionality point backwards. If MM is offering a carve, that is the operative decision point in this comparison. This is your shot to build a track record and get on a PM track. You are still younger in your career, so you’ll be fine in 2 years if you shoot and miss. I think if you’re getting crossover offers now you will get them again in 2 years. “Private investing” is not some mythical or differentiated skillset, don’t get carried away from all the marketing bs - if you can analyze and value a business, you already have it. This is obviously different with operationally driven control buyouts, but that’s not what we’re talking about here.
Portfolio management, on the other hand, is a real and distinct skill set. It will be harder to get that shot at running a book 2 years from now if you take the crossover and just be another analyst.
The money difference here, which is no doubt significant, is just icing on the cake. In my view you are thinking about the optionality point backwards.
Thanks for the insights. I see what you're saying, but my view is somewhat different (and might be biased by the people I've talked to)
At the crossover fund I would get private/deal experience for the first time since I didn't do banking. I agree that it's not all that difficult, but it formally adds it to the resume. If things don't work out, I THINK the pod shops would still hire me (because they're always hiring) due to my public experience + I can go to other growth equity firms
At the MM, there's a chance I perform well and get paid - great. However, the majority of people (who I'm sure are all just as competent/qualified) end up getting fired, hop around to different pods since the skillset is so specialized around trading quarters, before ending up in corp dev. A few make it to PM but most don't.
The $ is what has me interested so I'm still leaning towards it but maybe I'm misreading the opportunity.
think you have more optionality and duration in career from the x-over opp. $500k is fine, just make sure you have a sense for how comp progresses beyond that. privates are interesting and, to your point, additive to your skillset since you didn't do IB
$900k year 1 is good with ~7 YOE, but you could end up getting bageled on bonus the year after + lose the optionality. MMs blow up for no reason, and you're really just at the mercy of the PM. decently steep learning curve at MM too, but unclear if transferrable to the extent you decide you don't want to do publics anymore, at least professionally. there was a decent survey from Odyssey about post-HF careers for those who left. was not that promising, at least in TMT privates get you exposed to some interesting companies that you could potentially work with/for down the road
however, i'm sure i am also biased. have basically same YOE at similar sized SM covering TMT and jumped straight to buyside out of school
If everything you provided is correct then take the MM.
Two main points to consider though, 1/ crossover funds (depending on sector) are holding a lot of bags especially with SPACs deflating and a lot of funds are underwater in both their public and private books 2/ the 900k offer is dubious. Sounds like the guarantee is from the PM, if so then there will be strong expectations you will make more than this in PNL from your sleeve. But you have to share economics with your PM so you won't be receiving the full 20% (depending on platform). If your PM is generous he/she may have offered you 10% which means that on the 300MM you have to be up 5% at least at the end of the year to justify hiring you. I don't know how you invest in your current seat, but doing 5% on 300MM gmv at an MM with tight risk across factors is very hard and a stellar year.
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