Up until fairly recently, PE basically had two entry points; post banking (pre-MBA) as an Associate, or post B-school as a Senior Associate.
Today, however, kids with 0-1 yrs of experience are getting into PE (as well as VC) at the ANALYST level- some through their personal network, and some with just stellar undergraduate credentials.
My question to you all is: what are the key differences between 'analysts' and 'associates' at larger PE firms in terms of...
1- Interview process 2- Pay & Hours 3- Technical knowledge required (mainly curious about analyst here) 4- Day to day responsibilities (time spent sourcing vs diligence vs portfolio monitoring vs modeling) 5- Exit opps
Curious specifically about LBO PE not growth equity, and about MM/MF not Boutiques.
Thanks in advance for responses!
Y'all keep bumping this so I'll chime in. I can't speak for larger PE firms doing LBOs, but I can speak to the smaller MM Growth equity area. I'm currently an analyst at small team at a PE firm of about $200MM-$500MM, we have 1 associate and 2 analysts. Currently I'm taking the responsibilities of everyone as we're in a bit of a gap until the new analyst starts and my associate is on vacation.
Analyst interviews are pretty straight forward and simple (We hire out of UG), so you just need to know basic technicals and understanding of the business. I had 3 interviews, first with Analyst and Associate, then MD and lastly with the Partners.
I won't speak much to Comp and I don't know much about bonuses yet, but being a smaller shop it's merit based and typically above market.
Hours, I work 8-6 and I'll take work home once of twice a week. My MD is a fucking beast and works 5am-11pm, but is usually in from 8( or 9) to 6.
Technical knowledge: As an analyst it's a bit of modelling, and being able to read through term sheets to find what's important. Pretty standard, but a lot of it is industry specific and I've had to pick it up on the job. My associate is usually handling some more complicated things like waterfalls and training me on those as well.
My day to day is always different. Right now I'm doing 30-40% DD and research (including modeling), 10% portfolio monitoring, 20% sourcing, 10% doing operational and strategic work for our portfolio companies and then 20-30% is sourcing.
Exit ops are mostly to a different PE firm or a portfolio company.
There's no fast and hard rule here, but I generally think a firm investing out of a ~$10Bn+ fund is considered a megafund. I don't consider AUM to be terribly relevant to the distinction. THL raised a $8.1Bn fund in 2006, but is currently investing out of a $2.6Bn fund. With their 2006 fund, they were very much participating in and making large cap buyouts - a rough rule of thumb is the most equity a fund can deploy on one deal, without LP coinvest or other quirks, is ~10% of the total fund. However, they are absolutely playing in the middle market these days, even though that 2006 fund is still being counted in their AUM.
Again, these lines are blurred though. I've seen smaller firms compete for deals with funds that are much bigger, albeit with special dispensations. I think the world has also changed meaningfully from the pre-recession days. You are seeing much fewer $10Bn+ EV deals and even the funds generally considered to be 'megafunds' are really doing a lot more deals at a smaller size vs. a handful of massive deals. I imagine it will be awhile before we see another deal the size of TXU, but who knows, these things can be hard to predict.