Is MF PE overrated?

Really perplexed on why the hell everyone wants to go into MF PE. I genuinely think people end up gunning for MF PE because of prestige / exclustivity factor. 


Of the people that make it to associate at a MF, how many make it to VP/Principal at that same MF? 1 or 2 people?

 
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Inherently, yes it is. I don't have any specific distaste for MFs as a whole (considering I work at one) but I do think the 'prestige' factor is what people chase often. They like having the name next to their LinkedIn header, their business card, etc. In addition, I don't necessarily think this is a bad thing. It's very normal to want to have that kind of prestige in life, whatever it may be.

The issue comes when folks take prestige over quality of life and work product output. I've worked with many people at my MF who embody this. From a personal perspective, I know several LMM and MM funds where I'd be making more than I am now and have a higher position. I took the MF job as a lateral transition, and plan to stay here to build up my own knowledge of the industry. But having the brand name certainly doesn't hurt, and it'll set me up well in the future. 

One positive note of being in an 'MF' of any industry, whether it falls in the financial field or not, is the frequency of connections you can make. With a higher employee headcount, you have so many opportunities to meet people and grow from there - whether it be social friends you get some beers with after work, or the guy who left for a startup two years back that just went public. While sometimes you may despise your MDs/GHs, they have a fuck ton of industry and game theory experience. They can be remarkably insightful/thoughtful, and provide insight into a variety of your problems. You're just exposed to more people. 

But overall, from an objective standpoint, I believe MF PE is overrated. Subjectively, I like my job and I like who I work with. Maybe I'm one of the lucky ones!

Edit: I saw the second part of your question. I don't think ASO -> VP/D is the biggest hurdle, but a lot of them don't make it. However, this jump seems to be more like a choice and less by upper management decisions. Every firm will be different, but that's not the hardest path to crawl to. Once you're a VP, however, that's when moving 'up' is a lot less linear, and takes a LOT longer. The difference between an MD and a VP is bigger than the difference between a VP and an analyst, in my opinion. From there, getting even higher - Sr. MD, Principal, Partner, or any job in which you receive co-invest or leveraged equity within the company is hard as FUCK to get. I'd say 90% of people who see the associate's desk will never see the MDs. Some of this is by merit, some by choice, and some because they're just not cut out for it. Not being cut out for MD at an MF is also not the worst thing in the world, contrary to what I've seen some people think. 

 

I think this is similar to the argument of asking if Harvard or Wharton is overrated. Sure you may get the same or even better education at any other institution, but the brand name undoubtedly opens up opportunities. For schools, the major cost is monetary, but at a MF, you pay in lifestyle. That being said, there are certainly lower tier schools that cost just as much so it’s similar to how some LMM or MM firm may make you work just as much without any unique opportunities or rewards coming out of it. At the end of the day, it’s a personal decision and I don’t think you could say one path is 100% better than the other. 

 

That is very different from school lol. I can't name a single good thing or "unique opportunity" that you would get from a state school that you wouldn't get at Harvard or Stanford.

On the contrary, you might make more money at MM or UMM PE over the long run, VC, HF, or whatever etc because most people end of leaving MF PE anyways.... For example, if you go to MF PE for 2 years then get pushed out then go get your MBA, you're down 240k for the MBA cost and usually you wont be able to get in post MBA unless you're at H/S.

Meanwhile if you joined a MM PE fund you might be a VP already making a lot

 

You can make the same analysis about BB or EB.  

Banks hire a tone of analysts each year, but how many will stay long enough and perform to become associates? Answer, so few that banks will have to hire associated from Business Schools

How many associated will make it to VP? 

How many will make it to MD? (1 out of 50? maybe not even that) 

 

if your average analyst going to a BB wants to make it to MD, they probably have a good chance. The 1/50 figure is because everyone leaves IB for PE

if your average PE associate wants to make it to MF Partner, that is almost impossible

 

If you intend on being around the private equity industry in any capacity long-term, having the MF logos under your name on the team slide is a superpower. I was younger than my CEO and CFO by 20 and 25 years respectively in my last role, but there were no credibility questions about why I was there in every meeting with them during our sale process. It was understood I had the same level of sophistication even if I didn't have the experience to match.

Also, the MF partners themselves operate at a level of sophistication that blows MM partners out of the water. On things as simple as auction dynamics that any fund of any size should be phenomenal at, our partners were out-gaming MM funds for first looks when other funds had been around the hoop for years.

Don't even get me started in how large fund partners manage their portfolio teams. My current role is in the C-Suite at a portco of a MM fund after my MF portco role. Our MM partner has 15 years more experience than my former MF partner, but doesn't hold a candle to him. Knowing when to use a soft touch, how to poke and push for results, and when to come in over the top are crucial skills. My former MF partner boss would incept those things into the CEO's mind. The current MM partner always ends up overplaying his hand and extending the equity pool every time he needs something (not that I'm complaining). 

 

What about UMM funds - especially after an IB stint? Couldn’t it be also said that folks in UMM get a degree of sophistication and efficiency while being able to develop a wider range of skills insofar as their roles are less defined than those in MFs? I ask because while these UMM guys won’t have the same strength vis-à-vis brand name nor the same intensity of reps, they theoretically get a wide skillset. Seems to be a good balance imo as someone in the LMM realizing the sophistication point is real but also recognizing the space I’ve gotten to step up and learn by trying my hand at senior level responsibilities as a junior.

 

UMM is amorphous and oftentimes I seem them operating entirely like MM funds with more money until they slowly drag themselves, function by function, to the level of MF sophistication with key hires. So would be impossible to say as its incredibly case-by-case. I think Thoma did a killer job operating like one of the big boys very fast in the early to mid 2010s but Clearlake is sorely playing catch-up even now.

Also, a dirty secret of MFs is that you can "step up", but most people are busy enough and comfortable in their niche that they choose not to. When I was a MF associate and had 70 hours of other stuff going on, I was not spending my extra time on pricing analysis for one of my portcos if I can help it. I'm more liable to comment to my VP that I can ping our requisite McKinsey partner to see if their A-team has capacity to do a study because I have other priorities. MM funds don't want to spend the $1M for it on their $30M EBITDA portco while a $300M portco doesn't care. So MM firms convince associates it's "stepping up." The work itself is mostly people management, some project management and basic analysis. It's not glamorous to get reps on the grimy stuff. And I'm saying that as someone who does the grimy stuff for a living.

The true stepping up tasks are never going to get handed to you in MM. Why would an associate attend a conference with Fortune 2000 CEOs in a specific industry to pick apart if any of them plan on making moves in a niche market of interest where a potential asset will be trading in 3-6 months?

 

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