IB VP or Associate to PE -- is this a thing?
I keep reading about the "normal" path to PE, which seems to be 2 years as an IB analyst (with super early PE recruiting), and then PE. But what about for those who want to give IB a fair shot, as in doing it for multiple years? Is this doable? To make the move from IB to PE as either an IB associate or VP? Or are PE shops only interested in IB analysts and MBAs?
Thanks for input.
IB Associates wouldn't end up at a mega fund, so a lateral to a PE Associate role would be a significant drop in pay. On top of that, you're starting over as the low man on the totem pole as an Associate, in most cases with a two year clock ticking over your head before you're likely kicked out. The best you could hope for is to make a Senior Associate role which isn't as lucrative at the vast majority of shops as IB Associate, so you'd be grinding as an effective Analyst at an IB Analyst salary for two years just to hope to get the Senior Associate role to basically be back at the same level (probably less) than what you were making as an IB Associate.
Assuming you're an IB Associate 1, in that time you could've went to IB Associate 3 with a path to getting promoted to IB VP. Every year you would've gotten a pretty big bonus (this year excluded), gained responsibility and increasingly gained the ability to push work down to Analysts, further improving your work life balance.
So from a pay and position perspective there is very little incentive to go from IB Associate to PE Associate. It's just not nearly as lucrative as for Analysts, and is in fact a significant step back with high risk to even claw your way back to where you were before.
Everyone in the industry can also see where returns are trending. IB Associates won't go to mega funds, so you're going to be most likely to go to some mid market fund or smaller, and competition in that space for deals is insane. The upside in the mid market has been coming down meaningfully and is arguably a secular decline in returns and comp. In comparison to that, investment bankers are always going to be around, deals are always going to get done and fees aren't going to move meaningfully on a TEV % basis from where they're already at.
Pair that with the fact that the interest in people going into banking has significantly declined over the past decade, and with improvements to "culture" and "work/life balance" (though much of it is bs, there have been meaningful improvements on this front since 2007), and you have your answer. Even if an Associate were qualified to go to PE (which in itself is uncommon), why would they?