https://www.efinancialcareers.com/news/2021/05/banking-to-private-equity-promised-land
Good article from efinancialcareers this week on the perils of joining PE
Once you arrive in the promised land of private equity, things aren't what they expected. Oops, the hours are just as bad as at Big Bank of the Universe or the Boutique Bank of M&A, and there are years of long hours and basic salary and bonus ahead of them before any prospect of equity ownership in the form of carried interest.
But what do you do when you've skipped to the exit option, and then you want to exit that too? Pre-pandemic, I met with a graduate of a name-brand New England prep school, Ivy League college, near-Olympic-class athlete, who had gone from two years at Goldman Sachs to one of the big four U.S. private equity firms (KKR, Apollo, Blackstone or Carlyle). He quit his private equity job after less than a year because the working hours and lifestyle were no better, and he had no equity in deals.
Maybe he shouldn't have expected carried interest going in. But he would look at how much revenue the PE firm expected to generate from a deal he worked on (perhaps $400 million over the course of owning the company) and compare that to his few hundred thousand dollars a year in salary and bonus, and feel short-changed.
After a year or so, he left to sell real estate and tried to pick up one-off finder's fees from introducing companies to start-up PE or VC firms run by peers of recent MBA graduates. I don't know how he's done since the pandemic, but it seemed like a better bet than climbing the long ladder in private equity.
Yes, but to do anything else would require us lemmings to deviate from the standard path?
Ok you raise some interesting points but I’m too insecure and risk averse so idc thx
people in ib/pe delude themselves into thinking they will have golden exits no matter what to justify the hours and horrible lifestyle. Reality is that PM's (product, not HF), or MBB consultants at the mid-junior levels have much more optionality than someone working MM PE if they choose to exit.
Guess we found the banker who made this video:
How much do product managers at a big tech make, coming out of MBA? Have heard 150k-200k thrown around but that sounded low to me, given what they do.
Actually I should rephrase - given what they have to do (a large portion of which seems to be a glorified secretary) I would really want a lot more than 150k-200k out of MBA to do that job.
LMFAO PM's at FAANG make closer to $275k all in with half the hours of bankers. Maybe at Alabama state they make $150, but it is considerably more. It also scales up to $1-1.5m ceilings (look at levels.fyi if you don't believe me).
Sure, the top PM's will be capped at less than $2m a year, but what percentage of investment bankers get to that point? I'd much rather be a mid level PM clearing $600k working 50 hours a week than a mid level banker doing the same.
This is straight up wrong. Got friends going into PM at FAANGM right now. Base salaries range from 120k-180k depending on the company and what gets most over the 200k hump is small (5-50k) cash bonuses and stock packages (which have to vest). If a 1st or 2nd year clears 250k its because the stock went wild and you can't count on that with the same consistency you can finance bonuses. Also it does not scale up to $1+ mil for most (like 95%+) people. Not even close. The virgins on blind wouldn't even say that for FAANGM.
There are a million threads on this stuff.
Getting into and performing in a high finance role is no joke from day 1 to when you decide it's not for you. Working at an investment bank then a PE firm takes it's toll and you need to either be well connected or an absolute beast to stay in either and advance through the ranks. That's why you see mostly industry exits after PE (either something completely separate from the firm or a portco role). The reason the IB exit is so coveted though is the optionality it presents. Having a couple years of banking and a couple years of PE really lends itself to your benefit as a ton of opportunities you may not have had without those roles open up. If you're not looking to stay and live the grindy life, doing the "routine" high finance steps gives your resume the boost and credibility which you need to get to those chiller jobs in industry or whatever it is after you're done. It's really a trade-off and a question of how much value you place on your future opps rather than the short-term shit you have to go through in these roles.
Just my two cents but I've seen people usually fall into the buckets of either doing high finance for either the opportunity to move up the ranks or use it as a jump-off for something better they wouldn't have gotten otherwise.
Efinancialcareers is total garbage and I’m convinced nobody there ever worked in finance (and if they did they were an analyst in london for like a year)