ECM sucks, how about growth equity?
ECM associate here (ignore title) seeking advice. I’d ultimately like to pursue a career in growth equity or VC, but understand it is improbable with limited modeling experience. I have only seen 2-3 people make this exit from ECM. I’m considering these options and would appreciate input:
(1) Lateral to IB coverage role for ~1 year
- Modeling experience would open door to GE/VC recruiting
- I’d likely take a step back to analyst level
- I do not want to repeat the analyst hours & lifestyle
(2) Take modeling courses and try to network into investing role at smaller / less prominent firm
- Gain modeling experience while avoiding a return to the miserable analyst lifestyle
- Unlikely to garner attention from recruiters, as they mostly recruit from coverage or M&A experience
Open to other suggestions.
Note: I am not interesting in getting an MBA
2 is def possible.
I’m in DCM and will be leaving to the buyside soon (private credit). It’s not an Ares / mega fund type of place but they do decent work and have a couple billion in AUM.
They definitely questioned my lack of modeling experience but literally told them I was willing to come in person to do a modeling test. So they called me in and crushed the test (after practice on my own for a few weeks). Had to build an LBO with some credit analysis involved too.
People on this forum over exaggerate modeling like crazy. It’s just one aspect of a broader investment thesis and you’ll also be surprised how many of your coverage counterparts have weak modeling skills.
Also don’t let the fact that you’re in ECM discourage you from recruiting growth equity or anything else on the buyside. It’s always possible to move from any banking role to an investing role (albeit not a mega fund / UMM), just takes a longer grind. But eventually someone will give you an offer, trust me.
There’s no 1 golden path to the buyside, contrary to the redundant sentiment you see on WSO.
All the best with your journey!
Offering to come in for a modelling test is a great idea. Congrats!
Same, had lots of 3-statement experience but limited LBO modeling (just extra steps). Study through the free online courses (WSP has a 1-hour model template with scenario and answer key), model cases from friends, etc. and you'll be fine! WSP's $399 complete modeling course is also helpful.
Can you pm me about your process? Very curious if you’re willing to provide info.
Curious how did you frame your experience in DCM to catch the eyes of the headhunters on the buyside? Currently have some lead-left bookrunner deal experience but relatively little valuation (think IPO matrix modeling)
Very appreciative of this response. Thank you
This is great advice. You see people with nontraditional backgrounds on the teams page of firms all the time. They didn’t all get there by luck. If you are a compelling candidate (you are thinking like an investor) and can demonstrate you clear the bar technically / intellectually, it doesn’t really matter where you come from. If you clear the headhunter / first round, you’re on an equal playing field with everyone else.
Can I pm you? I’m interviewing for a DCM job, want to pick your brain about how your role led you to private credit.
Modeling experience is one small part of making the transition and basically a given that everyone has that experience as a base line. Its the ability to lead due dilligence, understand markets and industries, influence, negotiate, analyze and communicate data quickly that are the skills to get you to the next level. The modeling is just the step one of the process.
Definitely makes sense. Can I ask, how do you build those skills (outside of modeling which is a baseline)? Like, in an interview as a jr banker - are you expected to have a general sense / view of how to run DD, markets, etc, or are they expecting you to be an “expert” in those items?
It feels like a lot of the above you can learn on the job, as in IB you’re doing the above but obviously not to the extent that you would be on the buy side, but I am admittedly not on the buy side and my opinion is not worth as much as yours - curious on your thoughts
Are you an associate 1 like your title states? At that level I would expect you to have run with a deal and know the high level sketch of the points that need to be hit for a DD, have reviewed the information for the model inputs, question and understand the various drivers and been able to at the minimum come up with a list of follow up questions and be able to begin running the back and forth of gathering that information and having those conversations, with guidance oversight from a senior person. You A2A experience should have prepared you for that.
Lol let’s be for real please. Very few incoming associate 1s in PE today are up to the level you’ve described. Give them a year and many will approach that level, but right off the bat? Absolutely not.
Yeah I agree with this - you’d be surprised at how few A2As can run a process, but it depends on their prior experience. If they started at a solid mm or eb group as an analyst that gave opportunities for plenty of deal reps, then probably. But if they started at a lower deal vol group or in a different product group like ECM like op, then they may not have as strong of an idea for running a deal process on their own. I went from corporate banking to dcm, got promoted to associate then moved internally to our M&A group, and I don’t think people expect that I had a ton of deal reps prior to joining, although I’ve gotten some experience this year since joining
I am a jr Associate. Rated top bucket this year. I am in a technical (non M&A product group). I am contemplating an internal lateral transition to a coverage role, and I was solely interested in hearing your thoughts. Insightful, helpful, and detailed - thank you for sharing your background too. Definitely don’t have that experience right now, but as someone below noted, I would consider myself as one of the folks on the “sharper” side for product group folks and it’s helpful to hear you say those things as they seem quite manageable and reasonable to pick up in your free time when it’s slow at work. The main item that I am prioritizing is attempting this lateral move at my firm. It is certainly a challenge in this workplace environment today despite being rated well and well liked.
It’s been a long time since I was at that level- but when I was at that level that was where I was and the analysts I have now- with 2 year experience- are coming to me with their initial dilligence thoughts and questions after completing the model. They are not at all leading calls but I do include them in the calls and at times let them ask some of the softball follow up questions. I think it’s a matter of culture and where you are and what kind of development people are willing to invest but I stand behind my answer.
Let them join calls and ask the soft ball questions is heavily dialed back from your initial post. I have no doubt you were at that level coming in years ago, but the truth is the quality of incoming associates today has fallen dramatically. Someone coming in from ECM today who is sharp is likely on the same level as the vast majority of incoming associates who did 2 years in more classic IB roles.
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