Are RX Off-Cycle Exits Still Good?
While everyone knows that RX exits for the top RX groups (PJT, EVR, MOE, LAZ, HL) have been strong over the past couple of years, it seems to me like the majority of the vanilla buyout PE exits out of RX happen primarily during on-cycle. If you’re recruiting off-cycle, does RX still place well into buyout PE, or is it at a disadvantage compared to a strong M&A or M&A coverage group? Based on placements I’ve seen, it seems like RX doesn’t place as well for vanilla buyout (obviously different for value, credit, distressed, and spec. sits) if you don’t recruit on-cycle.
Ignore title. Am a second year RX analyst exiting to MF (not buyout). You definitely have a point, especially if you're in your second year and have some deal experience. Someone with a sponsor lead M&A deal may be able to convey their interest in PE better. That said, I would leverage your “superior” modeling skills (whether or not that’s true is another question) in interviews. You will still get looks from MF/UMM buyout funds (probably not tech or growthy funds) if you click with headhunters. Two from my analyst class are going to very reputable buyout funds through off-cycle.
RX typically exits well into MF/UMM firms due to a perceived stronger modeling experience/skillset from the headhunter perspective. This generally rings true for everything except the MF Tech firms where RX kids simply don't typically end up. I am not sure if that's just purely self-selection or lack of getting looks, but either way you should be competitive for everything except the tech-focused seats. I do want to note that a lot of RX placement is self-selection: I..e more kids who are good at modelling/the skills required for PE associate recruiting end up in RX due to the more technical interviewing process. Top standard BB/EB groups still get more looks, but RX kids typically convert these at a higher rate despite lower interview rates. Am at one of those non-RX groups and have friends in RX and noticed that during our PE recruiting process last year.
One nuance I would add here is that most top MF Tech places (TB, SLP, Vista) eschew on cycle. Many of the top RX analysts would prefer to have offers from the firms going during on cycle, than to hold out for the aforementioned shops. As a proxy for RX -> MF Tech potential, I would look at how many RX kids end up at H&F (who goes on cycle).
It’s not that M&A people are getting “more looks,” but that the looks are often too late for RX groups. Because the perception held of RX firms by PE firms’/ headhunters’ and the general hardo/sweatiness of the analyst class, many of the top RX analyst class get an offer during on cycle. A lot of the analysts without offers, as mentioned, chose to explore other opportunities that are more congruous with the RX skill set. But the ones that still want MF PE still place well / get as many looks.
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