Could banking be more interesting than PE?
I am an Asc at a UMM that started as an analyst, so I have no other context.
But am I crazy for thinking that banking actually sounds kind of interesting? I don’t think I’d go work for a regional bank or something, but if you’re at a GS or MS you get to see all sorts of complex transactions and interesting things.
In some ways the “science” we bring to PE seems kind of fluff in the end, but at least in banking you’re not pretending that it’s anything other than fluff. Comp is also not so bad, I think it’s unlikely I’ll make crazy money in PE anyway, so anything that lets me reach ~1M eventually is good for me.
Is this grass is greener syndrome? Should I consider looking at banking opps as I also consider lateral moves after my Asc years?
Interested from those more experienced - in some cases could banking have higher career earnings than PE? Not a gs/ms but if you join a boutique that pays up and you're a social person by nature
good MDs are easily making 4-5mm+ and I'm not talking about group heads and rainmakers. just good senior mds at EBs
Is this really true? I have a family friend that is a group head at Greenhill and my understanding is that he’s basically not got paid at all the past few years, to the point where he has to sell his second home (I know, first world problems, but still)
Not in some cases, but in most cases. PE is the game of fat tails and outliers. Average banking MD will make more cash in an average year.
Especially with how saturated PE is right now
What has your comp been as an md?
Absolutely. Contrary to the popular belief of prospects and juniors on WSO: different people find different things interesting and different people have different skill sets. I do not think every banking senior would make great PE partners nor do I think every great PE partner would make a great banking MD. Although similar skillsets are needed at base level, the job of the banker is to be an advisor on a variety of deals and the job of a PE partner is to be an investor. Some people are naturally more interested in sales and more interested in working on various things to advise companies, while others are going to find the work of investing more fulfilling. Different strokes for different folks.
It’s funny though because it varies the incentives. Like at a CVC where it’s eat what you kill or a small fund where you have a ton of carry allotment, that’s for sure the incentive is to do 3x+ and rake it in.
But in the large corporate PE that are fundraising machines and everyone who works there is a bureaucrat? IPs are just bankers selling their companies to IC, pre-investment and post-investment. As long as you clear the hurdle, your company’s performance is not going to make or break your long term compensation trajectory — your continued ascendance and political entrenchment within the corporation will.
Of course one way to do that is for everything you touch to turn to gold, but in practice I usually find MDs stressed about deployment if they haven’t in a while, and less worried about “being an investor” until shit hits the fan.
Yeah, I wonder if the skills are truly that different. I’m also not super extroverted to be honest, although I’ve been good at all my jobs. Not sure if this disqualifies me from banking…
No. I worked at GS / MS and a MF for context.
No as in Banking is definitely not a better path?
Because you worked at GS not an EB where banking is actually enjoyable and you're actually paid well
Banking is a completely different job as a MD vs. all of the preceding years. Unfortunately, there are few ways to see if you will like the origination side until you ascend to that level. Your competency in modeling and analysis, which is what you learn as a junior and mid-level in either IB or PE, is actually not all that relevant to predicting whether you would be a rainmaker. The most similar job to being a banking originator is to be in a sourcing function at growth equity shops (TA, Summit, Insight, etc). Except IB MD is selling a broad and complex suite of products (M&A, capital, restructuring, advisory) vs. a single product (equity investment of varying degrees). The relationship motion is also different based on covering large-cap publics and sponsors which is repeat coverage of a book of business against stiff competition vs. MM and boutique model hunting for new clients and diamonds in the rough all the time.
PE job also changes from VP and down vs. at Partner, but less so at large-caps and MFs. Partners are still mostly desktop underwriters in large cap buyouts - basically spend most of your time "getting smart" on some different thing that is important at the moment. Doing analysis and presenting investment cases to IC, etc. Play some role in deal-making, but the bankers make sure the process dynamics commoditizes everyone's capital at that stage and sellers don't care about specific partner at BX vs. KKR. It's just about price and terms. At the MM and LMM level, though, the successful partners really need to come to the table with sourcing strategy, executive skills, and operational knowledge. It's more hand-to-hand combat on improving portfolio companies and CEOs, rather than running 20+ sensitivity scenarios on random macro factors.
At the VP level and below, they are pretty much the same jobs. You're just running analysis and doing research for your boss's needs to deliver on the end goal of getting a client mandate vs. getting a deal through IC.
Super helpful! Damn. I feel like my strengths are mostly in analytical work and number crunching, so I guess I’m consigned to a life of PE. Oh well lol.
Pretty clear you don’t actually know what a PE Partner does all day
Yeah I think his post is 95% accurate but the description of how in the weeds partners at PE firms are is wrong. They spend most of their time doing relationship development or frankly doing nothing at all just chilling at their houses with their family. Their main job is to keep external relationships alive and manage internal politics. And gaslight the execution team.
Do enlighten me. I’m speaking from direct work experience at both a publicly traded PE and a private 40b aum fund that you’d all drool over.
Partners’ real job is to raise funds, ultimately. At these big shops, the key men and LP-facing partners are few. Already well oiled machines. The rest of them just lead deal teams, basically overgrown VPs. Im not talking about the founders and key men/group heads. What did I miss?
you're not wrong. i'm using an extreme example to prove a point, but i'm sure if you ask blair effron, p taubman, m klein, zaoui bros, robey which is more interesting and lucractive (for them) between IB and PE, they'd say IB. and trust me, they could've all started PE funds if they wanted to
None of them are buying sports teams tho
Half joking but theres a reason why the top PE guys are paid multiples of top bankers. There’s only so much upside when you’re paid off a % of deal values versus carry + mgmt fees. Agree with the premise of your point though and what others said re: different people have different skill sets
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