Currently weighing up the merits of staying in PE and grinding or taking the (seemingly) easier route and exiting to a credit fund. I find PE work interesting, however, looking to get some WLB back, clip a ticket and hopefully see an easier path to senior levels. Is this the case or will I run into the same issues that are so prevalent in PE?
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Definitely less competitive. From my experiences, people that come from PE to PC do very well and I’m surprised more don’t come over. Hours are obviously much better as well
Mind sharing what type of fund you are at?
Large direct lender
Agreed, if optimizing for long term earnings and wlb, PC seems like a great landing spot for someone from PE. Maybe it doesn't pay as well as PE with carry (but that's getting harder these days), but annual cash pay often equivalent to PE and of course lifestyle is better.
If you think you can make a career out of PC, lifetime earnings will be way higher than burning out of PE at some point climbing up the ranks.
what kind of comp discount are you looking at going from PE to PC
Hedrick and Struggles has the most accurate data on this. Check it out. https://mc2-192d98af-4522-434d-93f6-6b8e-cd.mcsitecore-deploy.com/en/in…
Not all PC is the same. Distressed / Spec Situation / Opportunistic can be intense
Direct Lending less so
Alt/Structured/Illiquid/ABS stuff can get tricky too
PC usually means comp discount relative to PE, but definitely as an industry is ripping (for now). Also, that carry is annual and recurring once you get down the line.
How material is the comp cut? Could live with something that isn’t too substantial.
PE for the optimistis and PC for the pessimists
Have a couple friends in credit (but welcome input from someone actually in the field). I think the toughest part of advancement is it's tougher to differentiate your skills. Unlike in PE where you can find some unique angle, source some crazy hot deal, lead transformational M&A for the company, credit is 100% binary. You either get paid back what you were supposed to, or you screwed up -- no overachievement possible. Could see this lending itself to a bit more politics or randomness around promotions internally (not that PE doesn't have its share of that too).
I made the switch 2 years ago. Would not recommend. The sector is highly commoditized - PE funds tend to line up PC funds in attempt to push down pricing and covenants. This combined with an insane amount of fund raising since 2021 has made investments with a good ROE challenging. I've also noticed that carry is more unevenly distributed with the GP taking the lion's share of it since PC returns variance is limited so there's less of an incentive to share carry. Furthermore, there's a pattern of some funds raising PC vehicles with no carry component which is in effect a 50% fee cut
Not to worry. They can add lend trillions to data center buildouts
I think you're answer will also depend on where in private credit you're working. Won't repeat what has already been mentioned in the thread, but consider, are interested in Direct Lending? (probably what most people think of for PC)
There's also funds that focus on Liquid Corporate Credit or CLO strategies, or Infrastructure or Asset-Backed strategies which can be pretty different in WLB, comp, skillset, etc. Some of these are a little more niche, but also a lot less commodified/saturated spaces (especially the asset backed stuff).
Depends on what you want in your career, a mile deep or a mile wide
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