Is it worth leaving banking if I have it pretty good already
1st year analyst at a BB, group placement went well for me last summer and I got into one of the top groups. Not a GS TMT/MS M&A kind of group, but my group is consistently top of the street in our coverage area. Loved the experience over the summer, loving it so far as well. Really good culture where the seniors seem to value our time, and because they’re pretty well respected people in the industry they don’t go into meetings with 100 page books trying to impress the client, so we end up with a lot less meaningless work. Not that we don’t have long hours, but they’re exclusively on stuff that matters. What I’m trying to say is this is about as perfect a balance as you can strike between a top group with great deal flow and simultaneously not a terrible lifestyle.
Everyone of the juniors leaves for PE, and I had kind of always assumed that was the next step because it would be foolish to waste the good opportunity now as an analyst, but starting to question whether PE will truly be better. People talk about moving for better hours or more interesting work, I feel like I already have a pretty decent balance of that and leaving opens me up to an unknown: what if the fund I land at doesn’t have as good a culture? But at the same time, compensation could be multiples higher as a successful PE partner than for a successful banking MD.
How would you guys go about thinking through the decision to leave for PE or stay in banking? Whichever route I go, I enjoy the industry enough (in my limited time) that I really could see myself wanting to stay for life, so that’s why this decision feels important to get right.
I made the move to PE, and one aspect I under-estimated was how much time can be spent managing portfolio companies and how draining it can be. While interviewing, I think I was too focused on getting to evaluate a bunch of potential companies to invest in and the buy-side just seemed “sexier.” People always talk about how once you’re on the buy-side, you’re not wasting time chasing after clients, sprinting to meet other people’s deadlines, etc. - and this is absolutely not true. We are still chasing after deals (several of which we lose), sprinting to meet bid dates and trying to position ourselves competitively compared to other potential buyers. On top of that, when a portfolio company starts getting stressed (like many have during COVID) it’s up to you to help pick up the slack, get lenders comfortable, etc. I don’t regret moving to PE because I didn’t really like my role before, but if you enjoy your job now then these are all things to consider. Just go in with eyes wide open that contrary to popular belief, you’re not just sitting in a conference room, laughing at sell-side bankers while you spend all day voting “yes/no” on potential investments and drowning in carry.
I deeply regret leaving my own IB rotation for PE, if that helps you. It is the single biggest career mistake I ever made. In my rotation I was working with good people (not always the nicest, but winners who were bringing and closing) and the work life balance wasn't great but not terrible. But I was learning! The exposure and training I was getting was top notch. My mistake was leaving a good (but not perfect) situation that I knew, to pursue greener pastures in PE, because OMG it's PE and I'd always heard PE was awesome, plus the PE firm team seemed like really nice people and they were building something exciting. DUMB move.
In my ibank there was a structured rotation and training program, and we were put on a track to senior management. Do your time, move up in ranks, get paid, get trained, move ahead. In PE there is a massive amount of variance firm to firm. You need to think through so many permutations before joining.
I went to a firm that had nice people, but no training, and no structure for promotion. The leadership team is a partnership, and they'd been together for years. Penetrating that would be a massive undertaking. In the firm, management didn't share carry. So it was a massive financial hit. I found myself totally on my own to figure out how to learn the trade and I had to fight for my own place in the pecking order. I knew within a week I'd made a massive mistake, but I was unable to reverse it.
So when I hear you say "I've got it really good. I've got a nice team, good W-L balance, good exposure and training, and I'm moving ahead. I think the clock is ticking and I should move to PE." It's like I'm hearing the 27 year old me. I want to reach back through time and give you a hard slap across the face for your own good. Do NOT screw up a good thing that you've got going for the theoretical better thing of PE. PE will still be there, if you feel like you've had enough once your IB experience has run its course.