Currently planning to pursue career banking, but I'm also decently interested in PE. Therefore I don't want to shut the door forever if I don't recruit. Is it fairly doable to exit to PE at the VP/D/MD level and if so, why is there such a rush to recruit for PE asap
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Highly unlikely, given maturity of industry, risk-averse nature of individuals, and wide pool of talent who've come up the traditional way (i.e., IB -> PE).
Anything is possible, it's about what is probable. Check out team pages of private equity firms and get a quick sample size of senior investment professionals (IP) that joined PE as a mid or senior level IP directly from investment banking. There are some examples but its a minority. As you try to transition to PE, you'll be competing against candidates that have direct investing experience and are therefore in many ways more qualified (or lower risk from a hiring perspective). You may also be asked to take a title downgrade, which will likely mean a pay-cut. That will serve as a disincentive for you. In summary, yes it is possible, but there will be multiple factors working against you.
Mid / senior banking -> PE moves most commonly fall into a few buckets in my experience. It’s really all about what you can bring to a PE firm that they can’t get from another fund or develop internally
1) Deep industry expertise / contacts
2) BD roles
3) Capital markets / debt financing roles
Absent that, you don’t really see vanilla investment banking midlevels move into vanilla PE roles. Why take the risk on someone who doesn’t really have a unique skill set and isn’t a junior analyst/associate you can leverage for cheap labor?
This right here - I've seen a senior MD from ER at a BB move to a decent MM shop, I suspect cause of this
Mid/Sr levels who want to make this move really should consider BD spots. E.g., for readers here check out the bio pages for firms likeCourt Square, Kohlberg, Atlantic Street etc. and see where their senior BD guys came from.
So there always exceptions.
Look up Jon Bock. He was an ER research MD at Wells Fargo, and now is a Senior MD at Blackstone for their credit business.
Talk about step-function upgrade.
I know of a banking MD who moved into a mid-level PE role, somewhat recently.
Why would I want to? Make great pay, and I don't need to really understand the companies that well. I can zone out during diligence calls or simply ignore them. I don't have to deal with a bad investment (not my problem after close).
Can just make all my models "illustrative".
In other words, why work 16 hour days and have any real accountability…interesting take.
Ngl as someone who doesn't live and breathe finance, I do miss this about banking (wouldn't trade to go back though)
This. Amen brother. The “it’s just a job” mindset.
true, more PE associates should post about the PE nightmare of being responsible for turning around a bad investment for like 2-3 years. VP will tell you it's your responsibility to make it work even if the company is a fucking shit, so say goodbye to your vanilla PE seat lol
Absolutely underrated. I wish I would have stayed in IB, hit VP, and then pursued corp dev or strategic finance when ready to take the foot off the pedal. The lure of PE is a ruse for most.
Not a common move, but can think of many examples of this at UMM and MFs. However, the ppl making the move were rainmakers (head of an industry group or something), which i suppose falls under 1) from Principal in PE's post.
As said above, mostly 1) small LMMs that need seniors with contacts and 2) BB rainmakers (think Harvey Schwartz being picked for Carlyle; have seen similar moves to go be a partner at a MF)
Jerome Powell at carlyle as well
This is interesting because in the 80s and 90s, it was banking MDs that started the prominent PE firms that we all recognize today - Stephen Schwarzmann (BX), Leon Black (APO), Henry Kravis (Bear Sterns), Robert Smith (Vista), Larry Fink (Blackrock), and both founders of Warburg Pincus.
Banking people aren’t that useless. Some I can think top of my head from HC in investing role include Ravi Sachdev at CD&R, Pete Zippelius at LGP, Jeremy Gelber at Centerbridge, Matt Minnelli at CPF, Nicolas Apostapolos at Brookfield. All these transitions happened in last 5-7 years.
Warburg hired an ex Evercore as its head of Europe recently. EQT hired a couple of bankers into its healthcare team at Partner level (ex Moelis). So to all the posts here saying how unlikely it is - never say never. These big funds see things you don't see.
https://warburgpincus.com/2023/07/31/andrew-sibbald-joins-warburg-pincu…
https://eqtgroup.com/news/2023/eqt-strengthens-healthcare-expertise-wit…
Much cheaper to buy out than PE partners. PE partners are extremely expensive
You can always promote within or get someone from a lower tier PE
Many of the largest firms today were founded by senior bankers. BX, KKR, Apollo, and H&F come to mind.
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