Evaluating Undergrad PE vs. IB Offers

As it kind of says in the title, I would love any perspectives on choosing between PE opportunities and IB offers. I’m pretty sure I want to do PE long-term, but if I hate it, optionality to attend grad school or work in corporate finance would be helpful. 


I am not in the process for the largest mega funds that have really strong analyst programs (i.e., KKR, Bx), though I (and including some of my friends’ processes as they are curious) am in some PE SA processes across the spectrum of size (e.g., firms like GTCR/Vista/Ares/Roark on the larger end, as well as middle market firms like Altamont/Access/Stellex), and was not sure how to evaluate these opportunities versus a MM, EB, or BB banking opportunity


Specifically, do PE analysts often have the chance to exit outside of PE, or at least to another PE firm? Are they trained well enough to break into associate at other places? If you have any insight on a particular firm, would love to hear it. Thank you. 

 

1) Yes, you can break into other PE firms having a PE background lol - just make sure the analyst role isnt heavily sourcing based. And not sure why you would try to go somewhere else as an associate, otherwise you might as well do IB. Unsure why you would accept a PE offer out of undergrad if you wouldn't at least consider the associate role there after.

2) A little confused on the recruitment list provided, as Vista and Ares are certainly megafunds with established programs, and by pure size are multiples larger than GTCR and Roark, so that was some questionable bucketing.

3) Dont have any insight on specific firms, but if you want to do PE long-term, recognizing that is already useful, and these options are great (if the program is established), as they can save you the pain and randomness of recruiting for PE while you start your IB role.

 

I believe I am going to sign IB SA, but my friend is heavily considering MM PE, though unsure of what to look for (i.e., does recent fund performance mean a lot? where do you draw the line between a firm like Ares and a firm in the MM/LMM in terms training and transferability?). Thanks for the perspective.

 

I don't want to be nitpicky but for point number two that's pretty incorrect – Ares' latest vanilla Corp Opps fund was just a hair over $5B while GTCR and Vista raised $11B and $16B respectively. Ares is most definitely a megafund in credit but is certainly a MM player for private equity. 

 

Correct - there is a clear line between the smaller funds and mega funds. Analyst mega fund programs are strictly limited to Blackstone, KKR, Vista, Bain, and Warburg. Ares is a bit weird in that their total AUM is gigantic but their PE arm makes up a very small % of it relative to other businesses.

And then you have solid MMs like JMI, GTCR, Audax, and then transitioning to your top LMM analyst programs like Altamont and Alpine Investors.

Depending on which one of these “groups” a PE firm falls into will definitely change the calculus of whether you take it or a top IB offer.

My take (and from my experience, industry consensus almost nowadays) is consistently MF Analyst Program > Top IB = Top MM (truly just depends how well the MM aligns with your interests, and how good the IB group is) > Top LMM / “lower-tier” banking roles (same applies here)

 

I wouldn't worry about being able to move around to other PE firms if you're an analyst at a megafund. They advertise supreme optionality for a reason - you're likely a cream of the crop candidate if you can land yourself in a seat at a Blackstone or KKR out of undergrad. You'll get looks from top HFs, other UMM PE firms, the list goes on.

Would likewise say that some particularly strong UMM firms (would certainly say a Vista or Ares qualifies as a top PE firm, not even necessarily consider them UMM) will give you great looks at associate gigs elsewhere should you want to go looking elsewhere.

This PE analyst vs IB analyst debate becomes a lot more salient when you're debating a random MM or LMM firm (of which there are far more of) versus the IB role at a top BB or EB. I personally faced this decision myself and went to an EB, simply because 1) branding is forever, 2) A2A at PE firms is not always guaranteed, 3) the training and modeling will always be top notch at a respected IB, and 4) I wanted to get a clear sense of what strategies I liked the most through 2-3 years of deal experience.

People's rationales may vary, but unless its a fund you'd have an exceedingly difficult time to land even out of a top IB program (and I could name at most a dozen such firms with analyst programs), then hands down you're better off taking the EB or BB seat. The one caveat is if you believe you aren't cut out for IB hours and want to avoid going through the slog of banking, but that argument falls flat in my mind because PE across the board generally is not better lol.

 

I'd say its shop dependent. I would say a place like Vista, where analysts are responsible for cutting a lot of SaaS data, probably would not have as easy a time exiting to a hedge fund as BX or KKR (at least not one outside of a tech focus). Don't know enough about specific HF exits at these other places, but I would not base your decision entirely on this rationale as you'll have options anyway.

 
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Every one of those PE analyst seats you mentioned are the best jobs you can get out of college if you want to be in finance. They are not “good enough” and an EB/BB offer is definitely not even close to being in the same league. IB is an extremely monotonous and boring job (particularly as an analyst) compared to building that investor mindset from day one at one of those shops. And yes, you will have your pick of the litter from those programs Bain, Vista and Warburg you don’t see many people leaving to VC/HF/other PE compared to BX/KKR because you have a strong line of visibility into promotion at those firms and they invest heavily in keeping people around

 

If you want to be an investor long term I think it’s optimal to start in PE if you can. I came into PE as an analyst and it’s been much more interesting and enjoyable than my time in IB. It’s a huge leg up to build the investor skill set early on during the two years while your peers are learning sell side processes. Also important to know but not as immediately relevant if your long term goal is to be a fund manager.

 

There are some benefits to banking such as broadening your network, having another "alumni group" to be part of down the line, building foundational professional skills, being humbled out of college, and learning about a broader set of transactions, sectors, and situations than you will see in PE.

But PE from the start will be more interesting, also a great path. 

It's a champaign problem really. 

 

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