FT PE vs on cycle
Current (2023) summer intern at a top group (think GS TMT/FIG, MS M&A, EVR M&A, LAZ M&A) interested in the buyside.
I'm not deadset on going buyside out of undergrad but do want to exit to private equity post-banking.Is it worth recruiting for FT PE analyst positions during the summer or would it be better to wait for on-cycle?
I realize it's not guaranteed either way, but worried about recruiting impacting my chances at a return offer.Is there any added value to having the banking name on my resume for full time?
I was in a similar position last year and decided to recruit on-cycle because I felt like I was not 100% ready for PE interviews.
First impressions matter a lot and out of a top group, you'll definitely have the chance to recruit on-cycle to any of the shops that have analyst programs (WP is the first that comes to mind).Plus, you get the optionality to explore what strategy you like the most (Growth, SS, Buyout) and prepare for interviews during your senior year in places that do not have analyst programs.
Focus on getting your return offer and then grind for on-cycle.
Did you have any deal experience during your summer? Or was your hesitation just re: personal preparation
I was staffed on a live deal and could talk about it in-depth but still felt hesitant/ underprepared bc I wasn't sure if I wanted to recruit to a buyout/ growth place's analyst program (KKR/ WP) or something more distressed related (Centerbridge/ APO HV/ Oaktree)
bump
Aren't you the OP? 😂
Also curious to know if anybody has any stories to share?
Feel like it's always good to "give it another shot" through FT, but just seems like a very difficult thing to smoothly pull off while doing the internship.
Heard someone at GS didn’t get a return since his group found out he was re-recruiting… risky business
Can you elaborate? I’m trying to do this….
I'll try to make it related to the post at hand: There is nothing wrong with looking at different FT opportunities for your first job when you are a SA at a firm you signed for as a sophomore, people's interests change (especially students). That is true whether it is for IB, PE, HF, or outside of finance.
That said, you should make getting the return your first priority if you want to remain in finance a) in case lateraling doesn't work out b) they ask for proof you got a return so they have a sense you are competent. So, keep the networking calls to the early mornings before work or worst case over dinner when most of the senior team has left. Most FT lateral processes anyways happen after every firm gives offers to see how many spots they have available. Talk to PE analysts from your college to hear about their FT processes.
Starting in IB at a top group guarantees an outstanding training program and the "I started in banking" + significant name on the resume will help you even years down the road. At most of these PE roles you'll either be in a very small class (likely the only analyst or one of like 2-3 analysts in your group) or it's a new program and the training program is still in the works. Additionally the analyst job is a lot of admin-type work and associates usually hold pen on deals/models since they are well trained from banking. TLDR I don't think the analyst programs are quite old enough to have a predictable/consistently good training program, and you may very well end up behind others in your class who grinded out 50 staffings for two years in IB. You have a long time to do PE.
Not to mention FT PE at a top MF group is essentially impossible if you don't check one of the following boxes: interned there during soph or junior year, or attend a target/are diversity. You will basically spend your entire networking for some one in a million shot at these top programs.
Great perspective.
Both target & diversity w/ one of the groups mentioned above. I have a strong network at one of the MF's with a historically strong analyst program (went through jr SD process).
Would you recommend only looking at this firm if I decide to FT recruit given I already have the network? Seems pretty time consuming to network with a bunch of firms and make it to breakfasts and events before and after work.
This comment is just not accurate imo.
1) The established large cap PE programs that have existed for a while have good training programs. You receive good training in banking as well.
2) Analysts in the established PE programs are not busy doing admin work lol, not sure where you got that from. In fact, banking analysts do much more admin tasks (sending calendar invites, setting up data rooms, etc.) PE analysts pretty much don’t. PE analysts model and second year PE analysts are easily better than first year associates who came from banking from a modeling perspective. The issue is that banking models are not really well thought out (just random complexity with no real understanding of the key drivers / numbers). First year PE associates from banking are good at formatting the model and making it look nice, but they need time to understand key drivers for each business and they are never tight on the numbers which matter. PE analysts learn this during the first year and by the second year they understand what matters vs what doesn’t and the numbers actually make sense in a logical way. PE associates from banking also learn this by the second year mark.
The only thing PE associates from banking are better at is PowerPoint, but most PE firms are literally just snipping stuff —> slapping onto the page —> adding a thoughtful couple lines as to what the chart / analysis / whatever you have means for the investment.
To OP — the disadvantages of a PE analyst program is that you will be in a smaller class (this matters to build a network early on in your career / get through long hours). If you are confident that you don’t need a big class and are good with the strategy/culture of the fund you are joining, PE analyst programs are the way to go. It lets you start thinking like an investor earlier, gives you a fast track to HFs, and let’s you understand the processes of your firm earlier if you want to stay long term. You are also typically surrounded by people who understand businesses much better, which lets you learn a ton. If you want to be in a big class or unsure of what you want to pursue, nothing wrong in doing banking for two years, it’s also a great training ground. Most advice on this forum about PE analyst programs are largely untrue, try to reach out to alumni who did PE analyst programs and left recently. They will give you a more accurate take in a transparent way.
The last lines about how to recruit to these programs is not true either.
Is the main benefit to waiting for on-cycle better clarity on what firms/roles to target? Ex. realizing you like private credit over private equity, secondaries vs growth etc. versus the actual analyst experience?
One man's opinion from my post. My 2 best college friends each started at tip-top MFs as analysts and both did close to zero modeling until associate, and training was nothing compared to a BB program churning out hundreds of analysts per year. They both very explicitly tell kids from our school who reach out that given the choice they would do banking first for the training.
Also, not sure how you think these recruit but it's not like they are handing out MF PE spots to non-targets en masse. FT MF PE without a prior internship is just about the most difficult spot to land.
I spoke with an associate at KKR about his thoughts on the pros and cons of buyside out of undergrad. The thing he highlighted most is that many people don’t realize how mature you have to be to make the choice make sense- you could be the only analyst or one of two or three in your group/firm, and for kids coming right out of college, it’s a big jump to go to that kind of solidarity. Banking on the other hand has larger class sizes and a more collegial environment at the analyst level.
I think the pros and cons vary across individuals enough where there is no dominant choice, and if you feel the same, you should give recruiting a shot. I wouldn't hesitate because some folks overprioritize recruiting and don't get a return / the optionality that on-cycle affords. Plenty of folks I know who ended up with a PE offer also got a return from their internship; there's also a good enough mix of analyst programs (BX, KKR, Bain, WP, SLP, Ares, Insight, etc.) in terms of geography, industry, size, and investment stage (excl. most distressed names), so you'll have optionality. It's also worth noting that analyst interview processes are much more drawn out than on-cycle, which might make for a more informed decision -- especially when you consider on-cycle is much earlier now so you aren't given much time to craft a preference.
TLDR there isn't a "right" answer, so shoot your shot to limit regret and take advise about return offer blow ups / on-cycle optionality with a grain of salt. Think you can mitigate risks concerning return offer and optionality by limiting your recruiting to firms you'd take in on-cycle anyway since there'd be naturally less time conflicts with internship from recruiting (relative to a shotgun approach) and gives you "an extra shot" at a firm you'd want to work at 2-years post banking.
Would the advice in the thread change for someone who’s not in a “top” group but still strong etc? Like BofA FSG, GS NR, MS consumer. What about for middle market banks?
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