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May 31, 2024
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IMO, no. You’d be better off at an EB and then recruiting to join a growing firm. I’m familiar with Ares and their LP base. A number of larger LPs are sitting out of the latest fund. Performance issues and issues with behaving how LPs want (co-invest, etc.). Those reasons combined with an allegedly toxic culture makes me think a more traditional path is better for you.
Current Ares employee and happy to provide a follow-up here. The poster above mentioned some interesting points that I can comment on from my own experience. 1) ACOF V returns. Calpers data lags 1-2 quarters and as of the most recent update (Ares earnings from Q1’21) you can see the recent momentum within ACOF as it was up 16% on the quarter and is returning 8%+ gross as whole (and if you listened to the earnings transcript, poised for a solid recovery). 2) Co-invest interest / ability. This one baffles me. Ares is perhaps one of the MOST active when it comes to LP co-investment opportunities and has done so with two of their most recent deals (Tricor Braun and Vmo). In fact, one of the differentiators of the platform is their willingness to lean in to co-invest (though tbh as an employee I’d love to hold more of the equity in those deals rather than syndicate out). 3) Culture. This one has been discussed at length recently on this forum. All I can say is from my own experience the people are extremely bright, nice, respectful and there has been a push to retain junior talent (though tbd on how this ends up playing out). I can’t speak from experience, but have heard that culture was quite toxic before 2018 when there was a change initiated from the top down (bad apples at the top were asked to leave). As for the HC departure that was one partner (amazing guy) who left to start a new fund with the former head of HC PE at KKR (his former boss) and it honestly makes so much sense (the goal of everyone at that level for the most part is to start your own thing and get much more meaningful carry dollars than you could ever expect at an institutional fund).
In summary take the comment from the poster above as you may, but IMO it unfortunately shows how people with limited secondary information perpetuate ideas that may not be the most sound way to look at things.
Lol at the end. Still need to stay anonymous but I am very close to your LP base (wink wink). I just totally disagree with your points #2 and #3 based on conversations with the leaders of your firm who (behind closed doors) admit you fall short on co-invest. All the platform differentiated points, etc are just outward marketing fluff that doesn’t fly when you’re in the room. Barely hitting an 8% hurdle including credit lines isn’t something to pat yourself on the back for. Don’t mean to be too mean but if we are gonna start calling people out for limited secondary insights (which is not true in my case, it’s primary), we can take the gloves off a bit more... there is growing concern in the LP community that Ares just isn’t very good at PE anymore. This is coming through in your current fundraising (hard to argue it’s not, even college kids are picking up on it. Albeit, very bright college students.) There is hope for Ares credit. Probably too blunt but those are the facts. Your HC guy left bcs the other partners were losing him money. Partners want platforms where the other partners are also good at making money.
Serious questions as I have no clue (but do have a hypothesis), but how did paying 20x for Coopers Hawk pre-pandemic work out for you guys?
For the OP, the Ares analyst program is one of the best opportunities you can get out of undergrad if you like finance.
There's a really healthy debate going on between the two people in this thread and each have valid perspectives, but as analyst fresh out of college, I think your priorities are to learn skills, not get obliterated, and have good exit opportunities.
1) The people at Ares are smart and know how to critically evaluate businesses. You'll learn by being a part of the deal team, as you go to most all management and diligence meetings. The associates usually run the models on all the deals once things get serious, but you'll still get reps in on early looks and will run with diligence workstreams with the VP on more intense deals (which is the more interesting part of the job vs. running endless cases and sensitivities).
2) Your lifestyle as an analyst is quite good and your job is much less stressful compared to the associate job (see model comment above)
3) Working in an investing or buyside environment positions you much better for exit opportunities vs. working in the sellside. In addition to learning to think like an investor, you get to see deals that other teams are working on and develop a sense for why some companies are good vs. bad investments through osmosis. In addition, you'll do primary research (e.g. GLG/Guidepoint calls) on deals/sectors, which most analysts on the sellside don't even know exists (much less how important it is). All this means that if you want to recruit for a different PE / HF a year or two in, you're a much more appealing candidate than most of the banking analysts. Additionally, Ares gives its analysts offers to become associates once the traditional "recruiting season" kicks off, so you usually have 2 - 4 years of job security, should you want it.
There are some real cons to working at Ares, like the closed door culture; emphasis on process and endless memo creation (analysis paralysis); the historically narrow investment committee strike zone in terms of business characteristics, valuation, industry; the embargo on recruiting to another established LA private equity shop (for example, LGP and Apollo are off limits because of close ties between founders), and you need written permission from Ares to work with the major headhunters, but all in all, it's a great job.
The traditional banking program is really good for developing Excel/PowerPoint skills, attention to detail, and your network. As discussed before, it does not train you to think like an investor.
The learning curve at Ares is "steep", but it's not usually a killer of analysts. Here's what I mean: one of the major downsides of Ares, as discussed in my earlier post, is the closed door culture (and general lack of mentorship, outside of a handful of kind and generous few). What this means is that as an analyst/associate, you're usually left to fend for yourself on looking at precedent models, precedent formats, etc, and thus must climb the learning curve by yourself.
However, Ares tends to select analysts from schools with strong undergraduate business programs and a really strong pre-professional club culture...namely Penn, Ivey, Michigan, Berkeley (though analysts certainly come from other schools, which are equally great!). This isn't because those schools are better, just that you can find students who are super gung-ho about finance and therefore do a ton of self-study...which means that Ares doesn't really have to teach them that much, and thus they have enough baseline knowledge to not be completely useless when evaluating deals. The analyst/associate dynamic is usually really friendly, but the associates usually aren't great about mentoring and teaching analysts in a structured way, because the associate and analysts usually work on separate workstreams and therefore, there isn't a super organic way for analysts to learn from the people who recently did the "analyst" job.
I don't think banking gives you additional optionality above a more widely-recognized brand name and network. One potential downside of Ares is industry-specific: the firm's aversion to high multiple technology/software businesses (there's a point here to be made about how one driver of the firm's laggard returns vs. the S&P can be traced to a lack of tech exposure). There aren't enough data points to say whether or not this impacts your exit opp outcomes. After all, you still evaluate the companies and the market that the company operates in...enough to talk about in an interview and certainly more compelling than the time you spend in banking moving around boxes in Powerpoint and making pie charts for CIMs.
On network - the LA finance community is very small, so you won't find it as easy to meet people and generally broaden your perspective. If you are reading this forum and are still in college/high school, you have so much life ahead of you and working in private equity / investment banking is not the end-all-be-all. Making friends is important, and going through banking training with 30 - 100 other college kids is a great way to do that. You definitely don't get that same opportunity at Ares, as the firm is so small and LA centric. But your life is way chiller at Ares than it would be in banking, so the comp / hours worked ratio is better. There are only a handful of analysts seats per year though, so it's quite competitive.