Anecdotally, this is now the third group I've heard of with no associates left, and maybe 1-2 analysts (god rest their souls).
Where are you going? PE pay isn't like the US, corp dev is even worse.
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I’m in CB but can speak to some of my friends:
- CB associate moved to small tech PE fund in BC
- ECM associate moved to corp dev (energy)
- M&A Associate at LMM IB shop moved to corp dev at a healthtech co
- M&A analyst moved to corp dev (energy)
pay seems to be shit everywhere in Canada when compared to COL.. Blame our moron leadership and communist values
Interesting. Makes sense, juniors are wayyyy underappreciated and constantly shit on. Good for them.
Low pay vs. The US and high COL was a staple of Canadian life way before Trudeau.
In the UK now and it’s even worse here.
Exactly, as if the Conservative party in Canada would slash income taxes so that it suddenly looks like Texas. Anyone who says Canada has high COL / is socialist should realize that literally all the developed Western world outside of the US has even higher COL / more socialist. I'm not advocating for Canada, I moved to the US and enjoy my lower COL and higher pay but it's obviously not something that miraculously cropped up when Trudeau was elected (as little as I think of him).
The Canadian dream...
Analyst at a B5 Bank in Toronto. Below are the common exits/HH reachouts for Canadian juniors in terms of frequency across B5 + BB banks
1. Corp dev/biz ops roles
2. Pension investment roles
3. Canadian PE (LMM/MM)
Elite exits from banking are just really rare for Canadian juniors
Thanks for this. Are there really that many roles available? I guess pensions take a bunch, but there are only a handful of LMM/MM funds no?
there is a surprising number of LMM PEs in Toronto and don't forget, not that many IB analysts either.
Hmm...are there really that many? The one's I know that take Associates consistently are Birchhill, Clairvest, Torquest, Peloton, Novacap and Imperial. These are the largest MM/LMM funds in the country and each only take 0-2 associates per year. There's a handful of additional "real" firms out there but they only recruit once every couple years so I can't remember them off the top of my head.
There's probably a ~100 IB analysts coming in every year, so getting an exit into PE/VC is not something the vast majority of analysts entering IB will be able to pull off
There's a bunch smaller than that as well. Not sure what bucket you'd fit them into but I'm talking about the Fulcrums, Ironbridges, Banyans, Signal Hills of the world. Not sure why anyone would want to exit into those but I see people going to CPP PE as well and that almost strikes me as the worst of both worlds....their direct PE (which has a strong team) can be pretty sweaty but you're not going to earn carry.
Yup, have heard of a few of those. The challenge is (1) they don't hire often (2) they hire big 4 corp fin/valuations people so the comp is often a huge paycut from banking. Would not be surprised if the senior analysts/associates at those firms make =C$150
Re: pensions, I somewhat agree. Most of the time they just piggy back off the diligence of the GP which makes the role less sweaty and adds a semblance of WLB. I'm not a 100% sure, but associate cash compensation at pensions is above or close to what some of the MM PE players I reference above in Toronto pay (~C$200k) but getting no carry makes the senior level compensation abysmal. I'm not a 100% certain on pension or MM comp, let me know if you have a few numbers
Do the pensions really not offer carry at all?
Going to jump in and provide a differing perspective as I went through Canadian buyside recruiting in the past (landed at a pension so may be biased) and a lot of the information in this thread strikes me as incomplete. I personally found pensions to be among the most appealing roles because of the institutional environment / resources (instead of having culture and resource allocation be dominated by a small number of founders), relatively high pay (many of the MM PE firms here paid extremely poorly when I was going through this process), and ability to stay on longer than 2 years. I am sure there are some exceptions to my generalizations about the MM PE firms, but this is what I found from a sample of ~5 interview processes. Nothing I am writing below applies to the "Canadian MFs" (Onex, Altas, Brookfield).
1) Number of Canadian MM PE Firms: there are quite a few more than mentioned in this thread - some others that come to mind are Northleaf, Fengate, Forum, DW Healthcare, Georgian, Sagard, iNovia, and I'm sure there are more. But the big challenge with these firms is that many have two year programs and no intention of ever promoting associates to VP. In this case, getting carry doesn't even come into the equation, as the firm is not growing and economics are just accruing to the top. There are exceptions, but my impression is that it is a toss up at best. Regardless, there are actually quite a few seats available and most people in my analyst class who were decent at their job placed in a buyside role (provided they wanted it).
2) Culture / Resources: it is worth keeping in mind that these MM/LMM firms are basically just small, founder-run businesses. Not much else to say, but just remember that your enjoyment will be determined entirely by how well you get along with these founders. More institutional (i.e. larger - Northleaf, Fengate, pensions) firms will have more consistency in culture and professionalism.
3) Pension Investment Style: know that whether or not pensions just "piggy back" GP diligence varies dramatically by fund. For example, I understand CPPIB leans on GPs for sourcing, but almost all diligence is done in-house for the Direct PE team. I believe OMERS and Teachers both source and execute deals independently and effectively function as GPs. All three of those firms have "Portfolio Operations" teams that support portcos, similar to how the large US GPs work. Newer pensions (HOOPP, IMCO) may lean more heavily on GPs than the larger pensions and I believe they lump funds investing and direct investing into the same team.
4) Compensation: For associate level roles, I found pensions to pay much more on average than MM/LMM PE firms. At the time I was recruiting, pensions were offering $180-240k for a first year associate compared to $140-200k for MM/LMM firms. This all is now outdated because of recent pay raises across the street so figures should be much higher for pension - not sure if the MM firms matched. Although you will not get carry at pensions (OMERS used to offer it and is now getting sued by a former MD for $65m), the killer in Canada is that the lack of upwards mobility across almost all firms means there is limited opportunity to get it at GPs as well! So for any analyst evaluating options, consider the track record of internal advancement for each firm you look at. A $500k+ cash salary at a pension is not a bad option in the long term if you actually like investing. If you want to maximize earnings though, it is likely best to just stay in banking (or better - go to the US).
From my experience, corp dev seems to be a more common exit here in Canada than it is in the US. This is probably because outside of the pension funds and a few small players here and there, PE is basically non-existent in Canada, and PE guys at the pension funds make far less than their US MF counterparts. So I think the combo of lifestyle and comparative pay makes corp dev a more attractive option. Also it isn't uncommon for Canadian IB analysts at BBs/Big 5s to move to overseas offices after a year or two.
Yup, totally agree. I did some rough math and came to the same conclusion. ~100 IB analysts at Big 5 + BB + NBF entering each year. There's maybe ~15 "real" PE/VC slots in the country per year, then ~15 investment seats at pensions. The remaining 70 analysts per year (plus the backlog of analysts who did not make it through exit recruiting favorably in the last cycle) usually do either (1) A2A promote, stick it out in banking and try to exit again next year or (2) exit to corp dev/ industry role
That was my thinking too, hence the question. There are only so many buyside spots, we don't really have a big HF scene.
Always love the "Big 5 and NBF" comment :). Never fails to crack me up.
As a side thread, why are more US PE shops not taking advantage of this? Hire the massive amount of Canadian talent that is taking a pay-cut on top of the below market Canadian finance cut to do deals
There’s plenty of talent in the US to pick from without having to go through the hassles of sponsorship and tax withholding regulations.
Agree with above poster. US has plenty of talent. Although the best of the best Canadian analysts do jump to the US - you see occasional US exits (maybe ~2-3 per year) and that's usually limited to BB analysts with the odd RBC M&A/BMO Mining/BMO M&A analyst sprinkled in
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