How do you deal with being a PE failure going to LMM?
Like basically everyone here lol , did really well in high school, went to an Ivy, did really well, and then went to MBB.
Recruited my butt off and ended up at a LMM firm.
Granted, compared to the people I grew up around , I am doing incredibly well. However i feel kind of like a loser when kids I went to college with and even MBB are at bigger funds.
When I think of my trajectory too, the LMM is kind of crowded so probably will be a 2 and out. With the LMM brand, I don’t see myself going to a better PE firm / it feels like the move will only really be operating which I really don’t want to do (slower learning, SOMETIMES dumber people, etc).
So what really is the solution here? From a PE career pov what are my options ? Obviously know there is an aspect of this that is “oh don’t care so much about your career and find other things to value” but when I really reflect on my life and my values, career success is important to me so it is kind of rough to have tapped out in PE. Any PE advice here
Lateraling to UMM/MM (even if you redo 3rd year or associate program) not an option?
Good question — I’d be very open to it , especially if I could get in NYC (had to be out of NYC for this one ). Realistically though I’d imagine that those spots are really hard to get and they would much rather take the Goldman kid than the MBB LMM PE guy
Fwiw I would take the mbb + LMM PE guy over the Goldman analyst
thanks for letting us know
Who gives a shit what you would do. What would the average person involved in hiring do?
You're in REPE buddy. Pipe down.
Kids are starving to death across the world right now
I mean ya thanks analyst 1, that’s true and it sucks and I am incredibly grateful, and lucky. I feel super lucky every day. Not only in an absolute sense to your point , but even in MBB ppl don’t get into PE as much as you think.
But at the same time dude that’s not some cop out for everything. Ya the world sucks and ya I have a lot of privilege, but that doesn’t automatically mean that I’m wrong for shooting for “more” or anything anting to have the best career etc ? I too come from a family where not too long ago ppl did not have much money and I think one way to honor the privellege I have is to make sure I am doing the best with it that I can
You make the most of every situation. If you're clever enough, could do a crazy LMM rollup and sell for big $$$ down the line. Lot of opp in the LMM..
Why not just lateral to another LMM fund if this is a two and out?
Read about PE economics and careers. The most important things to optimize for are long term career growth, fund performance, and carry economics.
If your firm absolutely kills it and you get promoted up the ranks, in 20 years you will be worth substantially more than any of your mega fund peers.
This is a performance based industry - you can’t eat prestige and past performance does not guarantee future results.
More kids need to realize this. Historically and likely even more so going forward, the best performing funds are sub $1b. Many of the $10b+ funds won't even make their carry from the last vintage or two which will, IMO, cause an exodus from these firms in people 30-40 who thought they'd be worth 20x what they are when carry never materializes.
This is spot on - OP - would recommend you think about probability weighted comp and sustainability instead of 'prestige'
OP - if prestige is what is important and keep you happy, fair enough
you quickly realize there's a ton of money to be made in the odds and ends pockets of the world and large cap plays are largely competed out and you are effectively handcuffed to decades of service before you make money
don't get me wrong those are great corporate ladders to climb but full of pain and servitude which again is fine but really sucks unless you actually love that game
meanwhile i know a gsb peer who bought 1 or 2 little rinky dink software businesses post GSB and a few years out he's probably got a solid $60mm of personal equity on paper
everyone probably thought he was dumb as shit at the time but here i am poasting on WSO without $XXmm net worth. point being just be kind to yourself and pick up the skills you need to do deals which to be honest, in the LMM, means you can start doing your own deals sooner in your career with a wider variety of assets to choose from
You do recognize that an LMM is the place to go if you want Henry Kravis or Orlando Bravo-type money, right?
If you want the easiest way in PE to get fuck you money, going MF or UMM is the way to go. You just have to continue to have a seat there and you'll have that type of money. You will be able to do what you want, when you want.
But if you want to have generational wealth where your great grandkids don't have to work because of the wealth you leave, starting at a small fund is where you do it. Now, it is much harder. You can't just merely exist. But growing a tiny little fund into a UMM or MF is where developing that type of wealth comes from.
KKR started with $35 million. Bain Capital started with $37 million. Hellman & Friedman's first fund was $327 million. Apollo's first fund was $400 million. TPG's first fund was $500 million. If you are good, the opportunities at an LMM are substantially higher than a similarly competent person at an MF or UMM today. But, and I can't stress this enough, the margin of error is basically zero at an LMM versus an MF or UMM, at least in terms of being the next MoU.
That's how I think about it
Focus on the team and the learning - careers are long; plenty of people get the shit kicked out of them in banking 2.0 at a megafund for three years, don't close a platform and then have to look for alternatives which is a tough spot. And yet when all the analysts are leaving banking they're viewed as the smartest guys in the room. LMM obviously a more mixed landscape than bigger fund world with its own share of geniuses and clowns but if you can find some guys who are smart, good mentors, and hungry, you can build a really rewarding PE career. And if those factors aren't there, then start looking for lateral opps. I think the 2020-22 era in PE skewed our perceptions a bit with crazy laterals, crazy promotions, crazy paydays, insane fundraising/deal flow; now that we're in more of a trough environmental we've got to batten down the hatches, recognize that having any seat in the industry is a privilege right now and like most things there will be a cyclical rebound, whether from fundamentals or from enough junior/mid levels throwing in the towel. It's like when you talk to your banking MDs who went through the financial crisis or 2000, in 2021 it was easy to focus on optimizing for prestige but anyone who has lived through a cycle knows there are plenty of great places to make a career and learning, experience and mentorship are paramount in the long run. Best of luck.
I’d add to all the good advice above, if you’re doing a lot better than the people you grew up with, it probably means that you didn’t have a head start going in. So even making it to PE in that case is a feat. FWIW my associate years in LMM put me in a great spot skill wise to run an opportunistic deal outside of finance. That yielded its own opportunities later. you gotta make lemonade.
If you're being honest with yourself, you're just solving for the 5 second feeling you'll potentially get by telling someone at the bar that you're an "investment professional at KKR". I'm here to tell you said person at the bar will always think you're lame, regardless of where you work.
FWIW, I think LMM experience is the best if you want to start your own fund one day. The LMM has the most opportunity for someone w/ a lot of hustle to strike off on their own.
You just won't see targets at a UMM or MF that you can reasonably win if you were to go off on your own unless you're partnering with someone much more senior, but then you're just working for them.
When I realized I would never do better than being an investment banker, and would always be a loser compared to PE and HF gods, I decided to beat them in the other half of life, the personal life. So I married a hot, rich chick. Now when I go to the random Greenwich party, I don’t feel like such a loser. Yes they have way better jobs, but I know they are all jealous my wife is hot and isn’t a housewife using me since her family is richer and she even out earns me currently. Now, if you’re fat or not good looking and likely won’t marry a winner, then I’m not sure how you get over being a loser in LMM. I guess just accept it and start vaping?
'PE failure going into LMM', yikes man. I am so grateful for my LMM shop. Very rapidly growing funds and team size, which is nice. I really dont view a relatively more favorable WLB, higher probably of impacting a firms growth, and all-around relatively more-humble culture as a 'failure'. I think I used to be like you in a sense that I view not being in the top .01% of where I am dedicating most of my time as being a 'failure', but you (and I) are not. We are here, in one of the most competitive industries to break into. Do as much as you can with what you have and where you are, look for things to be greatful for that you wouldn't have at a larger (not always 'better') fund, and try to be proud of yourself.
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