To an extent it seems like all of us that are below SVP in banking or Principal in PE, what is the end game? Even if you grind out the expected amount of years to make MD, there are only so many companies to cover that are at scale and also only so many companies you can buy as a PortCo.
There are only so many seats at the top. Most of these MDs/Partners are in their 40s/50s with no intention or reason to retire anywhere in the next 10-15 years while the levels become more and more bloated below them. We are all constrained by the amount of fees we generate or funds we manage which ultimately dictate headcount and compensation.
I don't have the answer and more so a question to see if anyone else has thought about this before and how it plays out in their mind.
Absolutely nothing wrong with grinding it out until late 30s getting a $4-8m (your situationwill vary) nest egg and then exiting to corporate making $300k
This the level of delusion I aspire to have
why delusional?
Not sure why people are giving you shit on this. I am at the VP level in PE (on the ops side, so don't take home as much as you), and am at ~$2M NW at 33. Hoping to run it up to 4-5M in the next 5 years and then do something less demanding for the rest of my career
How did you ammass such a high net worth on the ops side, if I may ask?
Curious as someone who has thought along the same lines, do you have an ideal stopping point in mind (either $ or age)? Struggling because it's easy to just say one more year...
So far I like the people and my work (though the long hours still suck) and until that changes I think I'll keep at it and similarly to you its a yearly / 2-3 year horizon assessment.
I think this could change dramatically in the medium future once (or if) I have kids but until then I'm going to carry on.
working in corporate is the most boring shit ever
There will be a moment in time in your life where you decide to have an honest and open discussion with yourself. In that moment you will decide whether the grind is worth it or not. Unless you've had that moment, no one here or in real life will be (or should be) the catalyst for you to decide.
Yes. Unfortunately, most people don't recognize that they are just not good enough until it is "too late."
It reminds me of the experiment that this one prominent... corporate speaker does when talking to a room full of bankers. He asks them to close their eyes and then asks them to stand up if they think they are in the top 1% of bankers in terms of how good they are at their jobs. Then 5%. Then 10%. Then 25%.
More often than not, by the time he gets to 25%, the overwhelming majority of the room is standing up.
Young people have a hard time coming to the realization that those who were their age 25 years ago in PE (now 50-60 year old MPs) were working in this industry when it was much less mature, money was easier to make and competition wasn't so high. These people are insanely wealthy from owning their firms as much as they are from carry. Those opportunities just aren't there anymore as those individuals either didn't have a ladder to climb (started their firms at the beginning of a wild run in PE) or the ladder was 3 rungs tall versus 50 rungs today.
I agree with the point about joining a more mature industry means it is harder to make money in it, and that a lot the "your grandkids won't have to work a day in their life if you don't want them to" money comes from owning successful firms.
However, I would disagree on the difficulty it is to replicate that career path. We can look at many of the MFs. Their first funds were amounts that, in today's dollars, are not unreasonable for first time funds to raise. Many of those founders were coming from "prestigious" backgrounds (ie - running Lehman's M&A group, MDs at Bear, partner at a Big Law firm, etc), but there was nothing particularly unique about their experiences. There are hundreds, if not thousands, of people with similar experiences as them.
I say this because, while I agree with the underlying sentiment that it is harder now than it was in the 70-90s, it is not as hard as many people may think. The biggest difference is that there are MFs/UMMs that can "keep hold" of people better than during those days. There are many people at those firms where, if they were working in finance in the 1980s, they would have gone off and started their own shop
Who cares? Outwork others and win.
There are no paths in life where "the odds suggest" that you will stumble into sucess and wealth. To the extent that these exist it is temporary as competition realizes this and enters the market.
To have an uncommon outcome, you need to be uncommon. WSO posters need to have more agency and stop with the doomer takes.
Will say that US is indeed suprasaturated with funds and competition, I have no clue how US funds are able to compete in that space. In Europe we have more fragmentation and usually because of cultural/jurisdictional/language barriers there are more opportunities to compete regionally at a smaller scale + there is not the similar "sale my company" culture which is given like in the US and a nice exit idea for many business owners, so yu can also find management and court them and you might find some jewels from time to time. With the energy transition after Ukraine/political disruptions, also lots of opportunities on energy/infrastructure/military companies. So I just believe that incredible opportunities lie ahead in Europe, so just change continent.
Besides, at the end of the day, you can always move to some sort of public markets with your skillset and live and die by your PnL instead of seniority or just exit altogether finance and get into the buy-and-build lifestyle. CFO/startups/CorpDev also potential paths.
You really make it sound like not making MD or Partner means complete failure, but there are lots of options, you just move on once you finish crying in the pillow or you just hope you're at the right place at the right time to ride the next wave of whatever might be going on in finance.
And for anyone who follows the news they’re probably also aware of the developing situation in Japan with recent shareholder-friendly regulatory reform, a record amount YTD of corporate buyouts with foreign sponsors, interest from public equity investors, etc. Japanese companies as a whole are probably not levered enough and carry too much cash, cost of capital/interest rates are low, and there’s ample takeout targets (Japan has an usually high number of public companies, many of which 1) arguably should be private and 2) are in need of financial restructuring. Japanese companies are also very cheap from a valuation perspective. This is a nice setup potentially for a decade long trend of capital inflows and opportunity, look this is just one example and you get the idea but there are always things to play in global markets for someone who is savvy about making money
Wow I’m so surprised that the CEO of Apollo called out private markets as the next big thing. Crazy analysis!
he's promoting his alts platforms, so I get it
but 93% of funds underperform, the equities rally of the last decade may also be gone, 25-30% of the market is made by the Mag 7, 60% is made by ETFs (which also made managers focus more on arbitrage opportunities rather than true alpha i.e. finding good companies to invest), the ones who achieve high returns is just levered beta/quant funds, everyone is looking at the same 500 companies + 300 microcaps so it's higher to find good companies, so everything is highly correlated with low chance of alpha unless you're in one of those outlier funds
there are higher chances to find a good company/or get safe and stable returns in private markets, which when you consider as well that those markets are bigger than public markets (and more isolated from foreign investors to avoid even higher competition in price) you have greater chances of finding alpha
May I ask which sector in Europe IBD do you prefer as a start of the career today?
healtchare
high life expectancy + lots of elders + pension issues / budget pressure so probably more need of private practices / cheaper medical alternatives
Didn't wanna disagree with you on this, great insights, but I thought you preferred public credit? Which one do you prefer?
To deep in PE to make a move, but if I could go back, sure, good career + WLB > IB/PE meat-grinder.
yes grow a brain and pivot to tech
What role specifically in tech are you referring to?
The street is def a pyramid. Less jobs more money up top. But no not delusional if you’re going into non saturated/growing areas (e.g. s&t, secondaries). If you’re a robot and choose a product that isn’t growing or is saturated ur cooked
So do you really think S&T is not saturated?
S&T is definitely saturated but it's one of those areas where if you're good you'll rise through the ranks regardless, meaningfully quicker than IB/PE. Not sure I'd compare it to normal IB or PE where there's generally a more structured/tenure-driven component to advancement.
Contrary to the other commnt I do nt think s&t is saturated. Unlike plain-vanilla coverage in IB, the flow of new products (derivatives, structured credit, commodities, macro, systematic strategies) keeps creating niches. Each niche requires expertise that isn’t easily commoditized, which means talent is still scarce relative to demand.
Yes.
Here’s how it could play out:
Unless you’re delivering on bringing capital/deals in the door, then what can you say you’ve really done?
The top dog will come right back at you and say something like: “last I checked, I’m the one who landed all the institutional accounts. Without me, you wouldn’t have a job. I can get a line around the block tomorrow for others who can do what you do.”
So, you step up to the plate, go out there, and get some capital in the door. That’ll get rewarded, no doubt. But then, the top dog will say something to you like “yes, you raised capital, but you did it with MY track record.” He then gives you peanuts in comparison to doing that on your own.
You get fed up with his ego and decide to go raise money on your own. You know the ins and outs, you’ve got the chops to do it. How are you going to convince an institutional investor that you’re “different” than the other guys?
So much of this comes down to luck.
Part of that “luck” is finessing the “soft” parts of the game. That includes navigating around others who are just as, if not more competitive than you are, and who’d push you in front of a truck if it meant not splitting the pot with you. Unfortunately, there can often be home cooking you have to work around as well (hiring from outside the firm, denying you a promotion, or, in the worst cases, nepotism).
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