How much do you learn as a 3rd year IB Analyst vs 3rd year PE Associate? (How common is a 3rd year in PE?)
Hello,
I plan to go to business school after 5 years of work experience. I'll be working 2 years in IB for sure starting in July, but am unsure if I want to recruit for PE this year or recruit as a second year.
Path 1: Recruit this year - 2 years in IB, potential for 3 years in PE (but might not get as great of an exit since I have no experience)
Path 2: Recruit next year - 3 years in IB, forced to do only 2 years in PE (if I want to get my MBA after 5 years work experience). Less time in PE but maybe a better exit since I'll have a year of deal experience.
My questions are:
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For PE firms that force you to get an MBA to get VP, how common is receiving a 3rd year offer? Very common or not so much? (If it's not that common then maybe I'd prefer to just do 3 years in banking rather than 2+2)
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Do you think spending 2 years in banking and 3 years in PE will provide significantly better learning opportunities than spending 3 years in banking and 2 years in PE?
Long term goal is definitely PE and will absolutely not return to banking or stay in banking past 3 years.
Thanks for the advice!
Totally up to you. I think you are really overthinking the one extra year at banking versus private equity. My point was that at any place you can learn, and is dependent on the person. To be honest this is sort of a stupid question. Not sure why you are set on 5 years before business school or why you think there is a real answer to what you will learn in banking or private equity.
Some firms that I know require pre-MBA associates to get an MBA are Carlyle and Hellman and Friedman. I believe they allow you some extra time to figure out your plans if you don't have them. Nothing is really set in stone - a firm isn't going to let a top performer go.
In general, neither firms nor headhunters will dock you for wanting to wait until your second year. Timing of the PE recruiting process is so early now that it almost makes sense for all but a few exceptions. If you come off as smart and interested in your job during the initial meeting with the headhunters, then they will have no problem entertaining a candid conversation about your situation; most will tell you that it’s no problem for you to recruit during your second year. Keep in mind that there is a bit of a risk associated with waiting a year since you’ll be a known commodity after going through a couple of review cycles during your time in banking. What do I mean by this? A lot of the headhunters will know associates at the banks where they typically recruit analysts from, and if you aren’t generally known as an upper-tier performer then that could potentially be brought up in these conversations, which will impact the PE opportunities those headhunters are willing to connect you with in your second year. In your first year no one knows anything about you - unless you performed really well/poorly during your internship - so the headhunters are just going off of their impressions of you.
To your questions:
Entirely firm dependent. If the firm likes you and you’ve performed well, then there’s usually no issue with sticking around for a third year as long as there are no headcount issues (some groups/firms are stricter about this than others). This is a question you can easily ask headhunters though when you talk about the scope of firms you’re interested in. And yes, as others have pointed out on this thread, it’s unclear why you are so set on 5 years of experience pre-MBA. If you happen to end up in a place where third year offers are hard to come by... then just apply to b school during your second year and do 4 years total
I think there’s a bit more opportunity to learn in PE simply due to the subject matter - you’re going deep on different businesses, so the content you’ll encounter is much more variable in PE given that aspect of the job (there are others, but this is the biggest thing in my opinion). That being said, if you are focused on trying to grow and learn, and if you really feel like you’ve maxed out the learning curve as an analyst in banking (which can happen depending on deal experience), then focus on taking on responsibilities of associates. Learn to manage other people and processes, collaborate with your VP on ideas to present to clients and crafting the materials, etc. There is a lot done in IB beyond the analyst level that is valuable in general corporate settings, so if you have the right mindset then experiencing all of that can be a valuable learning experience
Stats are fine, saw them in your other responses. No one will care that you went to a lesser known school if you have a good rep and perform well in interviews. It could be a reason for people to further doubt you if you give them a reason to knock you slightly in interviews, but that’s about it.
I didn’t make a specific recommendation, just said that it made sense to recruit in second year given timing of recruiting cycle nowadays. Most kids haven’t experienced much on the job and will not have been in the environment long enough to articulate their limited experiences in a way that comes off as polished. If you feel ready to go once you hit the desk as a first year, or soon thereafter, then go for it.
The exceptions I was referring to are those folks who did business undergrad at places like Wharton/Ivey, were in business fraternities, had multiple finance internships... basically, people who won’t have much of a steep learning curve in banking before getting really good. If you are exceptionally diligent during your first 1-2 months in banking and have experience to build from then you should be good to go. Interviewers adjust their standards accordingly if they’re at all respectful - just need to show that you’re smart, willing to learn, and as knowledgeable as you can be based on your experiences at time of recruiting
I work at a MF as a senior associate and have been heavily involved with recruiting over the past few years, so can shed some light on these questions.
Having a closed deal doesn’t matter. If you have something significant on your resume 1-2 months into banking, no one will be particularly impressed because they’ll assume that you were only contributing in the most basic ways possible (which will be the truth, in all likelihood). As banker2018 mentioned, you will be expected to be able to talk about the deal if it’s on your resume, though it’s less about testing for technical knowledge and more about gauging intellectual curiosity. Instead of thinking about it as a challenge you have to deal with, think about it as an opportunity to drive the conversation in a way that’s more natural than talking about something super vaguely.
On second year recruiting, short answer is that there shouldn’t be any downsides to recruiting as a second year. As a general point, most people won’t even notice that you’re a second year prior to speaking to you during the interview. The only way people would be able to tell beforehand is by looking at the dates on your resume and realizing how much time has passed since you joined the bank, and most folks will simply miss that detail since they’re not looking that closely. It’s not like everyone is reviewing resumes and placing the second years in a different bucket for the purpose of approaching the interview differently; come interview day, every candidate will be lumped together into one big group.
To address some of the other things banker2018 brought up:
The only reason why it’s more uncommon for second years to get offers in PE is because there are simply fewer of them recruiting. Most banking analysts choose to recruit as first years.
No one is going to dock you points for being a second year; as long as you didn’t interview at the same firm the year before, the working assumption is not that you struck out the previous year. Rather, it’s that you had a reason for not going through with recruiting during your first year, and that reason doesn’t even have to be particularly compelling.
If you didn’t come from a finance undergrad and just didn’t feel ready to recruit during your first year, then that’s perfectly okay and can even come off as positive if it’s articulated the right way since it demonstrates self-awareness. The PE recruiting process happens so early nowadays that 99% of people will tell you that this is completely reasonable.
You could even say that you weren’t sure that you were interested in PE and that you wanted to do more research before jumping into the next step of your career. You’ll have to explain what made you interested in the meantime, but even that explanation doesn’t require some sort of cathartic moment in order to be convincing. If you can spin it in a way that makes it sound as though you didn’t want to follow the herd mentality, then you could be perceived as being thoughtful and prudent.
As I said, I played a big role in recruiting over the past few years, and we interviewed two second years who explained why they didn’t recruit using the exact examples I described above. They were both hired as associates in the same cycle, and it wasn’t even a debate about whether they should get offers.
Point is that if you recruit as a second year, you have the opportunity to come off as more polished, knowledgeable, etc. since you’ll have one more year of experience than the majority of the other candidates being interviewed that day. If you have trouble doing that, then you probably aren’t a good candidate to begin with since those types of things should naturally develop over your first year if you’re even remotely engaged in what you’re doing (vs. just going through the motions).
Only downside is personal - you’ll have to do an extra year of banking, but that’s a sacrifice that I view as worth it if the extra year upfront will allow you to be more successful in the recruiting process during your second year.
For sure - I recruited my first year, but I was very hesitant to do so. Sounds like you’ve read my other posts so you might have seen me say that I came from a liberal arts background. Given that, even with the extra time that my class had before recruiting kicked off I didn’t feel 100% confident with going through the process during my first year.
After my initial conversations with headhunters, I had open and honest discussions with them about how I was feeling about the process and asked for their thoughts on recruiting during second year; I had heard the same things that you mentioned in your post and was trying to figure out the potential downsides. I established good relationships with the headhunters right off the bat, so I think they felt comfortable telling me that recruiting during my first year was not essential and that I would have no problem recruiting second year if I wanted to wait.
I eventually felt ready to recruit by the time the process kicked off, but it was a bit of a fortuitous circumstance because the weeks leading into the process were relatively light for me work-wise. I used the time to really prepare myself for the process and decided to roll the dice once interviews started going out despite my apprehensions. Ended up with a few offers, but if I hadn’t had the time I did during those few weeks leading into the process I don’t think I would have been ready. Given my earlier conversations with headhunters I would have had no problem telling them that I was going to wait to recruit should things have gone differently.
All that’s to say that I got fairly lucky, which doesn’t happen for everyone. It took a lot of thought and reflection for me to convince myself that I was ready to go through with it, and I would encourage others to be similarly honest with themselves when trying to determine whether they feel prepared enough to dive into the process.