PE or IB out of college
I will be interning at a reputable PE fund this summer as a sophomore. Not a mega fund like Apollo, Ares, Blackstone etc. but a tier below. The fund has given out FT positions after internships and I would definitely be interested in taking such a position if the opportunity was presented since my ultimate goal is to work in PE. However, being that the traditional route to PE is IB and IB SA 2024 recruiting is coming up, I am trying to figure out what my better route would be…
1- wait till after the internship, which ends in August, to apply to IB SA if I don’t get a return offer
2- apply as the IB SA positions open and accept what I can get
A lot of this question stems from my overarching question, what is better out of college, PE at a UMM fund or IB at a BB?
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I would argue doing a stint on the sellside teaches you the skills that buyside never will. Even in a "FT" program. PE isn't structured to be a training ground. My advice would be to do your time on sellside and get the experience and turnover of deals in a structured environment where people will teach you the skills necessary. The option to move to PE will always be there until you get to VP level.
I know far too many PE associates who leave after 1 year or 2 years as an analyst and never learn the skills necessary to be a top PE investor. The worst ones think they know what they are doing but actually know nothing about M&A and couldn't run a process to save their lives.
Bridgepoint is a classic for those PE Associates but they are rife.
Honestly, would agree for the most part, but I would only consider MFs with reputable analyst programs (BX, KKR, SilverLake, Vista, warburg, Bain, etc) over IB, especially if the end goal is to recruit for PE as an associate,
even being at a top bank gives you only a chance at an MF, being AT an MF as An analyst presents you the opportunity to be promoted to associate, which isn’t easy by any means, but certainly much better than the crapshoot that is on cycle recruiting
I think generally, the answers to your question will be somewhere along the lines of PE is the exit from banking so if you can skip those 2 years of hell, why would you not? And I do think there is merit to that.
That being said, there are a few nuances to the job that can be picked up fairly quickly, but will be forced learning in a banking environment vs. something that you kind of just need to know at a PE shop....model building, managing a VDR, etc. Not the most glamourous skills nor things that will ultimately decide if you're a good PE investor or not. But the reason that historically PE shops don't hire analysts despite everyone wanting to work for them is they don't have the desire nor infrastructure to train analysts. Over the years obviously more and more firms, especially the MFs have rolled out analyst programs, so not sure if this has changed. But there are some mechanics and nuances of the job that you'll learn more......efficiently.....at a bank than you would the PE shop.
All that said....if they have a track record of investing in your development and skills, then absolutely think the PE shop is the way to go. But I think some of those earlier skills you learn as a desk monkey at a bank get taken for granted since they don't actually aid in the investment process, but it does make your life a whole lot easier once you know them.
LOL if you are serious about a career in investing, a UMM/MF PE analyst program will put you ahead of peers in IB. If not, then go top IB.
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