IB vs PE Rationale
Hey Monkeys, hoping to get some insights on whether moving from IB to PE still makes cents. IB today is a lot different from the pre-COVID days as banks are more flexible with WFH, higher pay, and seem to be more aware of healthier WLB. PE associate's hours will definitely range fund by fund, but generally are given more responsibilities than IB associates and will experience more stress on the job. PE pay hasn't changed and is now is on-par or below IB associate pay. Not to mention how after your PE associate stint you have to go to B-School to try to progress up the ladder. Carry is only for seniors at PE and is only on paper, not easy to obtain.
I'm currently an analyst at a BB and am currently prepping for off-cycle, but am failing to see the rationale behind moving from IB to PE anymore. Are there any strong rationale from you guys for moving to PE besides "more interesting work"?
Most PE funds now have the option to promote associates internally without b school so should generally be able to get carry within 2-3 years of finishing your associate stint.
It's a fundamentally different job than banking. To your point, I think the work is much more interesting. WLB and WFH stuff will vary by bank / PE fund. Aren't there a bunch of banks going in 5x a week? Agreed comp has generally lagged although I think more funds have started to bump comp recently and it's becoming a topic raised around the industry. There's maybe more stress on average but hours are much better during the down periods vs. in banking IMO.
I'm glad I made the switch. I like my firm a lot and I have gotten pretty good experience. I fundamentally like the job a lot more and plan to remain in the industry for at least several more years. Still learning a ton (far more than I was at this point in my banking stint). That's just me though. YMMV.
There are definitely reasons to stay in banking - if you like your group and are okay with your VP/MD's lifestyles, A2A can be pretty lucrative. Plus you will always easily be top bucket if you go A2A, as even the brightest MBA associate will be 2 years behind you on IB and group knowledge.
However, I think you're only looking at PE associate pay, and IB pay has only changed in the last ~8 months so PE may very well catch up soon. Over the long term you'll make more in PE than IB, PE even if your associate job doesn't pay as well right off the bat. Majority of my associate friends get carry (very small amount, but does make a difference if you stay) and many PE jobs are career-path now, i.e. no need to go to MBA to be promoted. There's also a WLB value of knowing what deals you're working on and having some control over your own hours, while IB even my MDs get blindsided by client requests at all hours.
The other thing is that if you go IB -> PE and hate it, IB will always take you back. If you go farther up the ladder and decide IB isn't for you, can be pretty difficult to land PE. There's some optionality preservation in that you can try out PE for a few years and go back if you wish, but that door narrows if you stick around in IB.
There's no right or wrong answer and if you love your group / don't mind banking, then stick around. But saying you'll make more in IB, won't get carry, or have to do MBA, isn't necessarily true
You’re comparing the banks’ record year to a standard PE year and PE will still pay more over a career at this point. If talented IB analysts start staying instead of jumping, PE shops will likely bump up junior pay to match. It just hasn’t been necessary yet.
I'm only an intern, but there's nothing stopping you from going back to IB. If you like your group and can see a career there, then make sure to maintain good relationships then try your hand at PE. If you don't like it, go back.
Since you're not gungho about PE, this gives you the ability to think very hard about the type of fund you wanna be at and be selective with where you interview since there is really no rush. You get the chance to really do your due diligence and vet the firm. If you don't like it, then you can go back.
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