This topic has probably been discussed extensively, but I’m having trouble finding clear answers - so I figured I’d start a fresh thread.
As an IB associate earning market comp (~$200K base + $200K bonus), I’m trying to understand why so many people are eager to transition to PE - especially when most middle-market funds seem to offer all-in comp in the low $200Ks. On top of that, carry typically doesn’t kick in until VP level or higher at most funds. Am I missing something in my calculations?
Even assuming you make it to VP - does carry meaningfully boost total comp beyond what a banking VP would earn, especially since visibility into post-VP outcomes seems pretty limited? I’d also appreciate any help breaking down how carry actually factors into overall comp - it’s been tough to wrap my head around why so many are willing to make the switch when the path seems steeper and the pay potentially lower (at least early on) compared to IB.
I went A2A (EB), but most of my peers in my class went to PE after their 2 years in banking. A lot of them took a material pay cut to do so, and not a single one of them has regrets about it.
PE is still surface level. Not really understanding company/industry dynamics. I see live on a daily basis
I will give another perspective of someone that went IB -> PE and considering going back to IB.
Ultimately, I had a rough PE experience so a bit jaded and thought my banking group was awesome. I think if you are passionate about private investing, definitely go for it as you can usually go back to your banking group or find another bank and I think if you can find the right fit, PE is an awesome path.
Agreed, there’s definitely more psychopaths in PE for whatever reason
It's because they are fighting for their job everyday and its crazy sharp elbowed. There are some really good places out there but I think most PE funds (esp in the $5bn+ fund size range) view people at contractors
How do you navigate your work life if you’re part of a group / industry filled with psychopaths?
Also how do you define a psychopath, like what’s the day-to-day behaviors at work?
Could you speak a bit more about why your PE experience in particular was rough?
Also how does one go about finding a partner track seat?
hi! did you end up goign back to IB? in a similar boat rn in PE.
Because some people don't just want to be at the beck and call of sponsors & clients all day. And you don't have the same opportunity to absorb operator-adjacent experience (and potentially step into that role yourself at some point) if all you do just run bid and capital market processes.
Yeah at the end of the day it’s this - no one wants to be multiple clients bitch all the time and your job is based on revenue through new clients. It gets increasingly more being a client bitch the more senior you go - trust me the scary MD that yells at you will get on his knees for any of his clients
What is the appeal of being an operator one day? Am I not understanding why people go thru such harsh environments such as IB —> PE … just to understand how people within businesses with far less rigorous backgrounds do their jobs? Those people clearly have more industry specific knowledge that can’t be replicated thru investing experience imo…it’s like saying the best most efficient heavy-machinery operator can easily be replaced by a math major who was shadowing him for a week…
I’ll give you my situation and it’s unclear if I’m better or worse off.
Through my VP years I’ve made an average of 700k pa cash comp in the last 3 years.
I have about 5m of carry at work. This is marked at about 1.6x and about 50% vested.
About 350k should be realized this year.
Maybe another 200-300k next year
The bulk of it in 2028 ie about 4m. I would have been with the firm 8 years at this point and obviously it also depends on the 1.6x going to 2.0x.
I have decent visibility of not being fired for at least 3 years. After that it’s up or out.
You can decide how to haircut the above / compare it to banking based on timing and risk.
I think this is a top decile outcome. How does your peers compare?
Kind of a dumb question, so please bear with me….
1. Did you start getting carry only as a VP?
2. If you get fired before 2028, you won’t get the remaining of the 5mm that is scheduled to be vested in 2028?
3. How hard was it to go from Assoc —> VP?
If you're assuming $4M will be realized in 2028, I assume the entire $5M of carry at work is invested at this point?
Correct and marked at 1.6x
One other thing people forget to mention at times - how important is it for you to be working with smart people?
One thing that becomes apparent very very very quickly is how much dumber the general IB associate/VP is compared to when you join PE. PE just has smarter people in general and you get to learn from them. This can also lead to increased pressure and having to be right all the time, but it’s a great way to learn.
Also means harder to be promoted. Rockstar in IB could be mediocre in PE
It's not worth it, grass is not greener
People jump to PE because they’re tired of being a slave to their clients, having fire drills pop up randomly on unimportant things and ruin your sleep/social plans, and enjoy the job more.
Hours are slightly better if you don’t go to MF (more predictable), and comp likely the same in the mid term (much better later)
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