Are the times of PE over? The Nth-complainer thread ...
Honestly this might be the N'th tread calling that the good times for PE are over and while I agree, that a fair share of it is driven by cyclicality-doom-mentality (i.e., there were for sure plenty of people in the early 2000s declaring software for over) the attractivity of this industry seem to have absurdly decreased.
Where did this happen? Let me just reiterate what bothers me the most:
- PE went from "lifestyle improving" way out to worse than banking: years ago the general wisdom on this site and among peers was that the buyside would be the escape to less straining, cruel hours than banking. The recent wisdowm is that PE at large-funds is same, if not worse, than banking in terms of the hours.
- PE went from interesting / investing place to boring PMO type of work: this bothers me the most. I again want to emphasize how hyped up PE was in the late 2010s and about how everyone fancied an "investing seat". Nowadays PE just seems to be an extremely commotized mix of performing the 100th analysis for an overly nervous partner until the wee hours and doing some slave/PMO type of work for portcos.
- PE went from big $$$ to "actually banking has better comp": I don't need to emphasize the past take on this but the general wisdom these days seem to be that buyside doesn't pay so well and carry is all but an uncertain carrot that could-maybe materialize 10-15 years down the line.
What happened? Will we see a rebound and observe a surge of attractivity for PE again or are we spiraling down an unhaltable structural decline.
Decide which job you want and take it. PE Comp is back-weighted and hours are a mixed bag depending on the place you work at (comp is also higher at MFs than banking). The industry is slowing growth / flat which makes the career path much harder but I think you will end up just fine
Every day, you’ll see yet another post on here from a college kid trying to rank MFs (BX vs KKR vs Warburg etc.) before his/her Algebra final the next day. Literally wants to me vomit because such people fail to understand the “big picture”.
It’s like trying to compare working at McDonald’s versus Wendy’s. Both are 95% functionally the same, with the tiniest of differences that don’t even matter because such firms are so institutionalized.
The hype with MF PE is crazyyy and the lifestyle is far worse than banking. I predict PE will continue to be squeezed and only the strongest firms will survive; larger MFs will start to move downstream because of return compression. Advent is already doing that.
All of this is coming from myself, an ex-MF PE associate and still in PE (UMM fund).
Aren’t returns being even more/equally squeezed downstream? There’s so much competition for MM deals too. It’s only in LMM where things get nichier I think?
The lack of upward mobility in PE is something that makes me question it as well
Checking in from Vail!!!!! We still good!!!!
I benefit a little here as my other half works in PE.
1) Depends on the firm. So much. I do concede that a lot of MFs tends to be without exception quite awful in terms of hours, but the picture at smaller funds tends to be far more mixed. My partner's fund, for what it's worth, has an excellent culture and, while there are certainly deal sprints, the WLB is generally great. That said, some IB groups have great cultures - things are seldom as bad in reality as the seem on WSO. You get the extremes of human experience on this forum. Nobody is posting about 50 - 70 hour weeks, but if you've worked 100+ hours for the last month, that (legitamitely) deserves a rant.
2) I do think that this is a thing. There's certainly "analysis creep" where people look at past IC memos and try to build on them. I sort of explain this to myself as tools becoming better and more efficient, and so humans instictively find ways to fill the void that remains. I hate it (naturally as a banker, this spills into myself and my junior team), but see it as a cost of doing business in this industry, and if you're looking at a role in PE, keep in mind that it's no holy grail and most of the work, particularly at the junior level, is far from glamorous.
3) Yes this is firm dependent. But yes, it's true that comp ex-carry is lower in PE than banking. Carry is the sexy but uncertain upside. But that's always been true, there's nothing new here. Funds have always blown up. IRRs have always fallen below hurdle rates in some cases. You don't hear about that as much. It's not better or worse than IB, but it's different - PE offers greater upside but with more risk. IB comp has lower volatility but isn't as high. Choose your poison.
In sum, I don't think PE is over. There are always cycles. But for pity's sake, don't assume that PE is some kind of holy grail. Looks at the differences between IB and PE and make a decison.
+1. I'm a first year analyst at a BB and my hours probably average 55-60 hours a week
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