Why PE?
As someone who wants to do finance after, from my research IB to PE seems to be the most popular career path. That is, IB analyst to PE associate. But why the transition to PE? On paper it doesn’t make sense, so am I missing something? The comp at a top BB seems to be as much, if not more than at a top MF. And I’ve seen that it is much harder to make partner in a PE firm than it is to make MD in IB. So I thought it must be the hours but from what I saw, PE hours don’t seem to be that much better. At least not enough for IB to lose its edge. Am I looking at something the wrong way or is that another factor that I missed?
I'm a consultant so take my opinion as you will, but there are likely two reasons.
1) PE is much more interesting work than IB (or consulting for that matter). You're an actual investor in PE, as opposed to an analyst whose primary job responsibilities are grunt work in Excel and Powerpoint.
2) Not sure you're right about the pay. PE has much higher bonus potential, and I know some firms will allow you to co-invest in the companies they buy. So I think you can see that, all-in, you can definitely make more in PE
It’s all about perception. You think you will be more analytical and all, but the investment decision isn’t actually made by you. 95% will be kicked out in a few years before realizing the true upside in PE. Consultants, bankers, and PE associates are all just trivial plebs slaving for the partners and CEOs who will be getting exponentially richer every year.
I would think that M&A work would be more exciting, especially down the road when you deal with clients directly. But it does sound very appealing that they can co invest.
Most people who are into finance are doing it because they want to be an investor. IB post ASO is a very different job that require a very different skill set.
Comp at top BB is certainly NOT more than top MF even without carry. EBs yes, BB can literally check any bonus threads and it is not the case.
I think you are underestimating the difficulty of making MD.
In terms of the hours PE is much more predictable. Yes deal sprints are bad but you have visibility on when those happen and can plan accordingly. IB you are on 24/7 for the clients.
it's much easier making MD than MF PE partner - might not be easy on an absolute basis but there are ton of $1-2mm MDs at 2nd / 3rd tier shops that do 80% capital markets stuff and were 70th percentile performers all through their junior years. Maybe 1 in 5 PE associates even make it to VP / Principal
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