do i need to stay in banking full 2 years after getting PE offer
hypothetically, if i get an offer for 2026, do i need to stay in banking for the full 2 years until 2026, or can i finish the first year and use the remaining year to try something else/try another job/go do a one-year masters program? do i need to communicate this to/get approval from the PE firm?
Interested. Let’s say I get a good amount of reps under my belt in the first year (ideally close a deal or two). What’s the PE firm’s view on quitting and taking a year to pursue a passion / start a company / do literally nothing and take a mental health year? Understand these are quite different so I’m curious to see how each is perceived.
You'd be lucky to close one deal in your first year in this market
feel like i’ve been getting slammed, maybe just my coverage?
The funds that recruit 2 years out are gonna want to onboard 2nd year analysts that can grind. As someone said below, they recruit you based on the assumption you’re gonna get good two years of experience. There is a huge difference in quality going from a 1st year to a 2nd year since you literally have twice as much work experience and 2nd year experience is typically better / more valuable work.
Would not think that HR and your fund would been keen to hear one of their incoming associates has taken a year off to chill after only one year of banking.
Touch grass they’re hiring you because you’re going into a two year training program that is investment banking..
you’re not some investing savant and frankly think it would reflect poorly to ask your firm this. You aren’t going to start a new business in 1 year and if there is a different” passion” you want to pursue at this moment in time then you shouldn’t be doing this job in the first place
To play devil’s advocate here, you definitely can start a business in a year. And the skills you learn from taking a leap like that are arguably more valuable in PE than building another 200 pitch models for another year.
What makes you think you can commit to and start a business in a years time AN1?
Not trying to come across as snarky
No these skills are not relevant or useful. PE firms aren’t hiring you for your unique and differentiated world view or experience - they’re hiring you to be a processing monkey that they can burn though in 2 years. This is an extraordinarily transactional job in an industry that is insanely risk adverse and literally obsessed with “pattern recognition”. They don’t want outliers or to take bets on candidates whose skillset and capabilities are unknown to them. They want the a kid who is a machine who they can get as much throughput of deals through as possible - doing 200 reps of shitty pitches and models will make you a more efficient machine in their eyes.
how does this soud: i go try a business strategy/corporate finance role at a later-stage tech startup for a year, on the grounds that 1)my PE firm is growthy tech-focused and I think gaining operational experience at a later-stage tech startup is relevant experience and 2) i might want to start my own business/join a tech startup one day, so I want to take this opportunity to try it out and either know this is sth I might do after a few years in PE or just kill it completely and focus on making PE my ultimate career path.
Would it be possible to do this and then justify my actions retroactively based on the reasoning above, if they raise questions when i join in 2026?
also, if i just do this without letting the PE firm know first, would this be a problem/would they rescind the offer when i join them in 2026? i suppose the background check will be in 2026 prior to my start date, as opposed to now/after i accept the offer in 2024?
1) Operational experience is not relevant at the associate level and does not help you process huge data rooms or build models or format IC decks any faster. They don’t give a shit if these skills will help you at the principal or partner level because the likelihood you last at their firm until that level is near 0 if not entirely 0 because of a 2 and out program. They are hiring you exclusively because banking trains you to do one thing well: process lots of data very very quickly and turn it into something pretty looking. Do not believe them if they act like this isn’t the case or the role is “career track”. If it was career track for everyone the fund’s headcount would balloon in size because of all the associates and VPs sticking around forever. There is absolutely an assumption of significant employee turnover in their org structure model despite every lmm firm in a regional city all claiming that they’re different and one big family lol.
2) If you hint that you want to do anything that is not PE in the long term, they will assume you’re not committed to this career and will pull your offer. They do not give one singular fuck about your long term career aspirations, they are hiring you as an entry level employee and they want to know that you aspire to be senior in this industry so that they can force you to eat mountains of shit for two years under the carrot of a potential promo to sr associate or VP. I had a partner once tell me that he told his daughter that PE is the only career worth pursuing in America and the attitude from seniors was that any associate who left early or left the industry was a loser who couldn’t compete. Some firms will explicitly say this, many will indirectly imply it.
Many PE firms will write in their offer letter that you being able to join is contingent upon completion of your program. They probably have flexibility for laterals (i.e. changing group, firm, location, etc.) but not for something else entirely.
At the end of the day, you need to realize that you are pretty replaceable as a junior and if you mess with them by quitting without getting express approval, they won't hesitate to hire someone else in your place.
Yes most offers are contingent on 2 years of banking. Think about it like this, just because you nailed the interviews and got an offer does not mean you are just as good as a brand new ASO.
Sometimes the PE firm will let you do an immediate start (usually more common in LMM / MM vs MFs). My fund let me start immediately vs finishing the full two years, but at this point I had already completed ~1.5 years.
This was during on-cycle COVID so the timeline was different than it is today.
Best case scenario they will let you join early after 1 year in IB or they will understand if you quit after your bonus and you can take a few months off (if you're a winter cycle, which very few banks are on these days). More likely than not, if you quit and do something else they'll pull your offer. Private equity firms are in the business of investing based on pattern recognition and risk aversion. For better or for worse, not completing an analyst program or going to some startup in between is deviating from the tried and true pattern that they are used to looking for in Associates and will likely cause them to pull your offer. Most firms want hardo work horses with a defined skillset who they can churn and burn through and eject at the end of a two year associate program - they don't want someone with a unique or differentiated world view.
There's unfortunately no way to game the system - if you want to be in PE they're going to want you to stay on the path and eat all the shit that inevitably comes with it. If that reality sounds unappealing and constraining, then the job of working in PE, with a bunch of sterile, judgmental and conformist people, will probably also be unappealing and constraining to you and its worth considering alternatives before committing four years of your life to this path.
What if you ask the PE firm for permission? Does the act of asking for permission in the first place make you look bad, and worse, does it risk them pulling your offer?
If you ask for permission to do anything other than start earlier, you’re going to make them paranoid that you’re not the finance hardo they thought you were and there is a real chance they pull your offer or it gives them serious second thoughts about you that you will have to overcome once you start. PE is unbelievably more political than Banking, even when the firms are so much smaller because everyone is competing with each other (VPs for promo, partners to stay in the partnership) vs. in IB everyone desperately wants out of the job and is just waiting for the right opportunity to jump.
My advice to you is to be extremely careful and thoughtful in all your interactions with the PE firm you are going to. Always be positive about your time in IB, always be excited to be an investor, never complain about the hours or lifestyle. Show them you’re happily doing service with a smile, and there won’t be any issues.
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