I have heard that the work life balance isn't better, pay mostly on par with IB Asso, and carry is insignificant. Feel like it only makes sense to exit to a smaller no-name fund with tremendous upside (and risk obv) or exit to start-up / chill role at cool company.
I know jack shit tho haha so pls enlighten me with whatever I might be missing. Really hope prestige isn't the driving force here.
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I’ve never understood it either. They all say “because the money is better on the back end”. I just disagree with how competitive the investment landscape has become. Carry is so diluted at this point with those MFs you might as well have just been a banking MD. Not only that but you’re right, WLB is arguably worse.
I’d say on average, the difference in net earnings of a career in banking and a career in PE are immaterial, but the top 1% of PE earnings crushes the top 1% of banking rainmakers. So the pipe-dream of being a top 1% earner is what drives the switch I guess.
Now go ahead, salty PE knobs, I’m hungry. Fill me up with my monkey shit.
Solid take
do you have any data on carry dilution? Seems like fund aums keep on going up esp with mf and umm while headcount hasn’t grown directly proportionally
"yeah man, let me just check my carry dilution data in the notes app of my phone!"
Pretty sure IB actually has higher median earnings than PE, it's just that the top end of PE kills IB
doesn't this imply that you eat shit?
Implied? It’s explicit.
Back to work intern
Top 1% of any industry makes a killing, and it requires the same level of dedication, intellect, and shrewdness whether it is plumbing or high finance. You might as well do something you enjoy and/or naturally good at.
I am sure that the top 1% of plumbing does not make 1bn per year
True, but neither will you.
Top 1% of plumbing will be business owners, pulling in a few mil a year. Sure they don't have preftige, but they're richer than most. Here in London, founder of a major plumber is worth £70m. He founded the company in 1979 and sold it for £130m. Good luck finding any non-founder of any firm worth that.
It’s not the top 1%, it’s a select handful of Hedge Fund managers / PE people that make that much money. The top 1% of trades own the business, which like any field is how you can more easily make a lot of money. That’s why top bankers start boutiques
I know a plumber worth $100m
That’s more than most PE partners
I think if prestige were removed from the equation, 95% of folks wouldnt. May be a hot take but MF PE seems like the least interesting type of investing. Super by the book, an insane number of extremely type A douche bags, limited opportunity to prove yourself or stand out, horrible hours, comp is lower than alternatives, carry may or may not come to fruition if you give up your social life for 10+ years and are insanely smart.
LMM / MM PE sound cool, working at a HF of any caliber would be sweet, and I feel like at the top HFs you actually have a unique approach or are at least just working with interesting people (from a business rationale perspective), even corp dev is fairly interesting. AM is of course cool too, as is private debt. I swear, remove the prestige from MF PE and you would see a 75+% decline in interested candidates.
working at a multi manager HF sounds like shit
not sure why you're getting MS. terrible hours, low job security with potential for outsized comp in a few years but median case doesn't seem great
Honestly couldn’t agree more. MF PE is basically index investing in private markets at this point. They just buy fucking everything without any regard for price/multiples because they have so much dry powder and don’t even have a choice. There is no “edge” or unique strategy anymore. It’s as vanilla as you can get in regard to private market investing.
As you mentioned, there is very limited opportunity to stand out or distinguish yourself due to the hierarchical structure and rigid operating model. Sounds pretty miserable to me, but lots of people seem to want to do it lol.
b
WLB is better (60-70 hours/week; personal experience), work is much more interesting (working directly with top-class entrepreneurs, a board seat to influence company direction, evaluating different business models and actually taking a bet), higher caliber of colleagues (if you enjoy working with smart people), higher potential upside / performance-based rewards even at a junior level, better development of critical skills (beyond financial modelling/pitching, such as influencing industry stakeholders, creating value through operational improvements, fundraising, portfolio valuations and monitoring, etc.) higher job stability during a recession (due to management and performance fee model) and so much more...
If your sole determinant is total comp (base + bonus), staying in BB/EB could make more sense given higher predictability of career path / less MBA requirements. However, a career in MF PE could be a lot more fulfilling and potentially financially rewarding - subject to personal preference.
MF hours are 70 hours minimum, partners work up to 60 hours a week with travel
Source — entire BB (Cit/CS/BoFa/Barclays) group is feeder to MFs
Potentially, but part of that time isn't spent at your desk creating pitches or turning models. It also includes time spent with founders to strategize at their office, other investors and LPs over a meal/coffee, traveling for diligences or board meetings, attending industry conferences and events, etc.
Not sure that there's any "entire" BB group that is a feeder to MFs--not even PJT RSSG or GS TMT let alone Citi/CS/BofA/Barclays
Literally if you prefer investing over advisory work. At the junior level, IB is such a pain and you do absolutely no critical thinking once the learning curve flattens.
IB is going to be a sales job upwards, but PE is never a sales job. IB is a job that you really have to make it rain every certain period of time, which you will not like it. Not only you have to be selling, you also have to be licking clients' asses all the time. In PE you have to make your fund profitable and maintain good relationship with LPs, but you never have to lick individual clients' asses all the time. And also PE investment roles are really strategy-oriented job.
You have no idea how PE really works at the top level. It is as much a sales job as IB jobs are.
My man thinks the funds money appears out of thin air
PE at the high level is a sales job itself. Fundraising, getting shit thru IC, "networking' with entrepreneurs etc.. all require sales skills. Even though I work on sell side, I've seen buy-side principles, directors at UMM funds zre just as miserable as my MD. Grass is not always greener my friend.
PE is just as much of a sales job, often times at all levels, as IB. The whole business model of PE firms is based on relationships to find opportunities and eventually exit them lol.
Sourcing - sales
Fund raising - sales
Exiting - sales
Negotiating deal terms - sales
Lol it's entertaining to see college kids shitting on my thread.
Only if you rlly think PE is all about “investing” lmao. Firms care about much more about management fee, acquisition charges than those uncertain carried interest, especially those public traded MF because like Gordon Gekko said “I bet on sure things”. Smaller firms try to get fundraising founding partners’ track record. But again, never ever have they talked about their failure investments, bc they are selling their ideas and capabilities. It is just as much selling as banking.
If you can't sell your idea to the IC, they'll decline it.
This has been covered numerous times on this forum and is pretty simple - if you enjoy advisory and see a path to becoming a good senior banker, stay in IB. If you want to become an investor and think you’ll be good at it, go to PE or another buyside role.
All else equal, comp and WLB are close enough to where they shouldn’t be the primary consideration IMO. Only other thing I’d keep in mind is that IB is more cyclical.
Up until recently, MF was paying better than banking for associates. Now that associates are making 225K base salaries with comparable bonuses in banking, the pay paradigm has totally shifted. Like when I went to PE at a MF, my base as an associate was 185K when my banking peers were at 150K at the associate level.
So the leveling up in pay for banking that has occurred has caused a real question to be asked in those who were always thinking oh let's do banking and then PE cuz I'll make bank more and more. Now it's more do you want to be an investor or be an investment banker which is a better question to pose to candidates.
Obviously PE can yield amazing money if you're sitting with carry and the fund exits paying your carry out... but let's be honest, banking can pay a ton too. And lots of people will say well only if you're a good banker or good people person etc but like yeah you're right, only if you're good in either industry will you get paid out like you want...
PE extends optionality - you can leave that and go into hedge funds or banks so the game theory is same salary and optionality vs. Same salary all things being equal and assuming carry is useless. This holds true for the associate years but starts to break down after associate years.
Being a MD in IB and a MD in PE are two completely different jobs. Why is this even a question?
Because IB analysts are risk-averse and insecure which leaves them prone to herd mentality, i.e. pursuing PE because that's what everyone else wants.
What kinds of returns / IRRs are MFs returning these days?
I believe mostly due to money and job satisfaction. I believe you have more autonomy and ownership in PE vs IB. Also not 100% sure about WLF in terms of numbers of hours, however compared to banking you have much less unpredictability. This said, I would agree the IB is more of a prestigious career which appears “easier” and often faster (mkre “automatic” promotions)
whats WLF? have only heard of WLB
Risk-adjusted returns in banking are higher than PE, full stop. Top decile or whatever comp in PE is higher, full stop. The reason so many people on here go to PE is because everyone on this forum thinks they're good enough to be in the top decile of PE, which is already taking some of the highest performers from banks all over. It's insanely tough to get to PE partner, still tough but much less so to get to MD.
isn't a more challenging journey to make partner in PE more fulfilling though and once you make it you get a better sense of accomplishment vs coasting to MD in IB? just something i've been thinking about as well as an associate 1.
if you're unfulfilled in your job you should look elsewhere unless the comp is astronomically higher which isn't the case here
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