I’m going into my analyst stint in a top group in M&A. I’m seeing my entire cohort gun for MF buyout, but I am confident that where I ultimately want to end up is in public credit.
I’m curious if recruiting for a top credit SM is similar to recruiting for a top equity SM, in that I should do a stint in buyout first? What are my odds like going straight from M&A? Is there a different stepping stone that’s better (PC instead of PE, for example)?
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Based on the most helpful WSO content, transitioning from M&A to a top credit hedge fund (HF) or single manager (SM) is a viable path, but it does come with nuances. Here's what you need to know:
Direct Transition from M&A to Credit HF/SM:
Stint in Buyout PE:
Private Credit as a Stepping Stone:
Odds of Success:
In summary, while a direct move from M&A to a credit HF/SM is possible, gaining experience in private credit or leveraged finance could enhance your profile and improve your chances of landing a role at a top credit fund.
Sources: How do top credit shops compare to MM/LMM buyout?, Buy-side vs sell-side path to credit funds, Credit Hedge Fund opportunities, Buy-side credit research to hedge fund?, Credit research to equity research
Made same transition from M&A banking analyst to, eventually, credit at single manager hedge fund over the course my career. Not a huge lift by any means to make this move but you are, relative to guys who work in leveraged finance or on loan/HY/distressed trading desks or on RX teams, likely lacking some knowledge / deficient technically.
What I’d advise you do (unless you feel you are very strong at credit fundamentals coming out of your analyst program — for the record, I absolutely was not), is join a public credit focused team at one of the large listed alternative asset managers (BX KKR ARES APO or BAM). Note this should NOT be CLO or direct lending teams — it should be opportunistic credit / speci asl situations / etc (they call the teams different names at different places).
These places tend to have chunkier teams and far more training resources vs hedge funds like where I work . I get on the phone to talk a name with these big platforms and 3 to 5 people join vs 1 on my end. Those places may not a good place to make as much money as possible or get real responsibility; indeed, they tend to be somewhat bureaucratic / hierarchical organizations versus top single manager funds or top credit pods.
But the flip side is if you don’t know what you’re doing at, say, Diameter or Davidson Kemper or Citadel or Sona or Arini, you might not last long. There just isn’t as much space for training you on the basics as there is at a large platform where there are many layers and investment committees and so on. You generally need to be able to come in and pitch ideas / own your coverage (if you have dedicated sector responsibility) at these types of places.
So imo your best bet is do liquid, mid to high teens returning credit, at very big alt asset manager out of the gate.
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