Why do so many jump to PE?
What I have noticed is that almost everyone going into investment banking going out of undergrad seems to want to jump into PE or other buyside positions, with a specific focus on the MFs/UMMs? But how I see it, the work does not seem to be that much different, the hours are probably going to be worse, and your compensation would be lower (assuming you make Associate at an EB). The only possible benefit I would see would be slightly better exit opportunities into HFs. Am I missing anything here? And do you think it will be harder to move into MFs from IB going forward, as these MFs increase their Analyst class sizes? Also, is my ranking of projected 4-5 year comp seem correct?
Ranking of projected 4-5 year compensation:
1. EB Associate
2. MF Associate
3. BB Associate
4. UMM Associate
Lol what's funny to me is that people go into IB for the sole reason of breaking into PE because they think:
1) They'll be working less hours: They then get fucked once they realize that this couldn't be farther from the truth, especially at the MFs ad UMFs.
2) Pay would be better at the junior level: They then get fucked with the steep pay cut at the MMFs and LMMFs.
3) Investing work would be more interesting: They then get fucked reviewing boring ass teasers and CIMS all day for companies they could get less about, in a secluded environment. At least there is a level of comradery with the juniors in IB
4) Pay would be better at the senior level: They then get fucked in a 2 in n out program, forced to go back to business school, and with the intense competition for post MBA associates, go back to banking. Or better yet, they get fucked with shitty carry that takes forever to realize upon exit
What's crazy is that I'll still recruit for PE in my first year 😂
Man you're a hs senior deciding what college you want to go to. at least have some fun in life before it beats you down. really? you already decided to recruit for MF PE before you've entered college?
These threads come up every week. Use the search function. You'll make more money in banking unless you're at a mf most likely. People go into pe because there's not a huge downside with more potential for upside. There's literally no harm in 25 year old trying a new job that keeps just as many, if not more doors, open than banking. You can always go back to banking and 2 years of 30k less comp is pennies in the lifespan of a finance career. Don't worry about why others do something, just figure out what's best for you, and don't use comp to pick your career otherwise you'll end up being miserable.
My buddies and I all left our EBs (few of us were early promos) and were fortunate enough to all get into MFs or UMMs. The best piece of advice we all got at some point in our early years was to diversify our experiences and network and consider the risk/reward in our careers. Could we have all stayed on and collected paycheck after paycheck at our EBs? Sure. But we all knew we weren't gaining more skills or progressing at the pace we wanted to. Within EBs, the consensus was always the Partners were strong but the MDs and VPs who were homegrown had no way up and were overall just less impressive. I personally went into PE because I didn't want to be in the situation down the road where I did not have an extensive network or a certain niche skillset and see myself get dicked. For those on this forum who are interns or analysts, I'd say you'll quickly find the incremental post-tax difference in pay between an EB or MF or MM etc. is pennies in your career. Invest in yourself today and set yourself up for success in the future.
I'm 2 years into my MF program (not a 2 and out) and can confidently say I've learned a lot more than excel modeling in PE that I know I would not have learned in IB (I spent a year as an A2A). I've also grown my network immensely by working with a number of companies both in evaluating deals and portfolio work. Some things, $ and compensation can't buy. My friends and I all feel we have a lot more optionality going forward (staying on, b school, back to IB etc) as well
Feel free to PM if you want more details as I am happy to help. WSO has been a great resource to me back in the day and hopefully I can give back
I can't speak to the specifics for my friends but can say generally we are all having a positive experience. For me, I was fortunate to join a group with a very good culture and plan on staying on. With that said, I won't lie and say everyday is a 9-5 flip through a few CIMs, dick around with some colleagues and call it a day type of day. I think if you go in with the mindset that you'll work hard but will come away with a ton of experience, it isn't as draining. I will say my life is a lot more predictable (no random calls from an MD saying we have a bakeoff in a few days, etc. like in IB). I might work about the same or fewer hours than IB but having predictability means I can plan around work (e.g. if I know IC is on a Monday, then I have to send around the memo by saturday noon so I know the rest of sat and sun are free, etc.).
I don't have any experience in GE or HF but from what I can tell from some of my college buddies, it could be more draining given the relatively less structured nature of the programs (this isn't a bad thing, just not my cup of tea). PE programs in my opinion offer a lot of structure and a great way to develop your investment acumen early on in your career.
That's a great question and to be completely honest it depends. The biggest thing I've noticed in PE is that people all have different career goals. In my EB though, it was always I'll do 2 years and exit for the buyside or I'll stay on and take de facto promotions. Here, you are on the buyside and so there is a lot of variability in terms of what people want to do with their career. Some in my class recently got into b school (matriculating in Aug and praying for COVID to be gone lol), others want to stay on, invest their income and leave in a few years to start their own business. Others want to stay on long term, leave for a different type of investing, etc.
Most of my very wealthy friends consider b school to be a great option (they can afford it / networking is great). Other friends who want to retire early have basically said no way to b school. It really just depends on what your personal goals are. There's definitely some value in an MBA but it's a decision you have to make based on opportunity cost.