Is MF the only way?
Not a shitpost - I understand this will make some people mad.
Hearing that compensation is much higher at MFs (vs UMM, LMM), work is relatively similar apart from deal sizes, and WLB is non-existent no matter where you are (according to WSO posts, at least). And so I ask, as a naive and uninformed college student, is there any benefit to preferring MM opportunities > MF? Is MM just what’s left after MF spots fill up?
Sorry to degrade MM positions - will probably end up in one myself.
I wouldn't go in with the expectation that LMM / MM shops have the exact same hours as MF, if they do and have a comp discount, than absolutely there is minimal upside. However, what I've seen is that the peers who have gone to LMM / MM PE shops have had significant lifestyle improvements relative to their IB days or MF peers.
The day-to-day real life impact of 25-35% less work is significantly more than the quantum in isolation. Those extra hours are incrementally the most painful and knowing a bad night ends at 12am vs 4am & weekends are safe outside of deal sprints is a huge lifestyle gain (long-term PE career, health, family goals, social life, vacation plans, etc)
The fundamental issue is that it is really hard to know if those aforementioned advantages are present when choosing a firm so the default is quite rationally to go for the biggest PE shop that denotes prestige, high pay, career laterability. But of 4 peers who went the LMM / MM PE route, they have consistently been the happiest in their roles + staying in PE for a longer term career + had free time to have a social life. Meanwhile the MF PE folk have largely been talking about MBAs, start-ups, or HF investing which is a fairly indicative sign of their happiness
I agrée with this — if you find a LMM shop with actually good WLB (average 50-60 hours per week and generally no one is pinging you after 9 PM unless on a deal sprint), you will feel significantly better than being at a MF.
Also, one of the most under appreciated pieces of the LMM-MM-MF effort/reward analysis is COL and taxes. That $220k you’re making as a first year associate at a LMM firm in Dallas is the same as ~$450k in Manhattan (every COL calculator online confirms this). If we’re looking at this from a purely economics perspective and you don’t care about prestige/working with big, brand-name companies, you’re not losing anything by being at a LMM firm if the COL is significantly lower — you’re still saving the same $, sometimes even more.
Have worked ~55hrs/week at a FL-based LMM/MM firm for a few years now and can confirm...
Which LMM firms in Dallas pay that well?
Yeah kind of.
The dynamic here is higher level. Finance (IB/PE) has this brutal culture which is worth it if the stint you are doing is setting you up — paying a lot yes but also keeping your career momentum going toward some sky high payday. As you go down the ranking of firms that is less true. But culture is still brutal at those firms, there is
No direct relationship between exit opportunities and culture. So I do think there are some roles that are much less worth it than others.
MM is not what is left after MF spots fill up, WSO is the forum most full of those interested in MF opportunities out of all the IB analysts. From my experience, increasingly a lot of my analysts at my top 3 BB group are going to MM spots b/c a lot of people are looking for places where there is room for promotions, less bureaucracy, promotion opportunities without an MBA, and a slightly better culture/WLB. The promotion chances at any of the legacy UMM/MF firms are slim to none, and it's one of the most political environments in all of corporate America. The best seats in PE if you're a young professional or an ED/MD covering sponsors are the firms growing fund size rapidly: because they are the ones who are the most in need of banking service and also provide the most room for fee growth (for me) and promotion opportunity (for the juniors joining). I try to keep a very good relationship with my analysts, and so have talked to many about buy-side stuff and have also helped many recruit over the years by giving advice; over time I have noticed distinctly fewer people become interested in the legacy MF names. Anecdotal, but from my experience on the other side as a senior seeing/helping my analysts recruit, I would say the claim in your post title is false.
Also, a lot of these MFs are public now, which makes comp a significant downgrade compared to some of these UMM or even MM private names as a lot of the fees go to the broader firm and not for comp even for partners. The large-cap space is also far more competitive with fewer assets and returns are getting increasingly commoditized and shrunk, it's a race to the highest AUM for the legacy MFs and most of their returns reflect this over time as are their promotion cycles (or lack thereof). Lastly, to some people they are just more interesting; I am personally not one of those people as evidenced by the type of bank I am in; but they exit into primarily MM's given their interest.
Very irritated by this post.
1) Compensation: Largely linked to performance. You will be better off at a MM that consistently generates superior returns (eg HIG) than at a MF that barely scratches the hurdle rate (not naming any particular to prevent monkey shit lol). If you co-invest, performance will become even more important to you and fund size irrelevant.
2) WLB: Based on my conversations with people in MF and MM, MF have longer hours on avgerage. However, this is super fund & team specific. Simply because of greater competitive intensity at large cap level, one would expect work to be more exhausting.
3) Not MF vs. MM: Most guys I know that went MF aim to get a bit of experience under their belt and then leave for MM (for the above reasons). Simultaneously, if you look at Heads of XYZ at MF, you'll often find people that started of in MM you've probably never heard of.
Fyi not true on comp. Do your own research
What? Most of senior PE comp is based on carry. Large public MF's split comp amongst more people + return worse than top MM's like HIG + have to also split with public shareholders. Heindricks reports shows that the average MF partner gets paid more than the average JAMMBO partner, not the case for the good MM firms. Good MM firms are fairly easily to find, just see who is growing fund size and check returns, there is tons of discussion on it and if some of the large funds like CALPER's are LP's you can even access the return data online.
Also annoyed at this post, and agree with what you are saying. Think this way of thinking has been very harmful to a lot of analysts who just read WSO.
Just to elaborate even further:
Any decent MM has better comp than public PE MF's in terms of carry these days. The public funds simply have too many people getting parts of the carry and the public split is a huge % of the carry pool. A senior partner at a respectable MM that returns above average or even average will probably earn more than someone in the same post at a public MF. PE is all about risk-reward, a MF partner is certainly a very risk-adverse path to wealth, but it's an extremely political battle that very few reach and you can earn much more if you do really well in the MM space (or even better yet, if you are less risk-adverse success in running your own fund; even if it's a LMM). As a banker, it sucks when my connections at MF's go downmarket for a bigger slice or choose to spin-out since it doesn't make much sense for us to cover the smaller names, but totally understand it from the PE professional perspective
In my opinion, focusing solely MF only makes sense if you want to do MBA or HF. If you want to stay in PE, going to a MM that is well-performing is significantly better because of A) increased growth opportunities where you get promoted as the firm grows as the firm needs more seniors, B) yes, someone at a MF can go down market but it's still fairly hard and you never know what the market will look like + when it comes to lay-offs or promotions: someone with years of experience at a place and more senior mentors will almost always get the nod over a MF lateral, C) increased carry returns because a PE partner at a MM that returns well will almost always outearn a MF PE partner who performs average (law of large numbers means the largest MF returns are going to be within the range of average returns; exceptions obviously apply on both sides). I think you can make the risk-adverse argument; but if you are truly risk-adverse you should be in IB unless you lack all sales skills (even then, good luck getting to principle or partner at PE as you still need strong soft-skills and salesskills for that).
What’s cash comp at your level in banking?
A lot of coping from the MM folks as expected haha. As if you would turn down an opportunity to be an associate / principal / MD at APO or KKR..
I would 100% not trade a principal role for 30% more comp today knowing the political battling and type of people I’d have to suffer through at Apollo or KKR.
God forbid people want things different than just maximizing for pay/prestige in life.
These posts are asinine. Get into the most prestigious MF you can. If doesn’t work you can slide down. I worked at MM PE and people preferred to interview KKR/TPG for post MBAs because they were perceived to be better than their own associates who they didn’t really respect as much
This guy PEs. As an associate, sadly brand name matters the most to enable that fabled "MM" upward mobility. And you don't care what your firm returns in terms of carry, because you don't get carry anyway.
Different story once you are partner track.
The name of the game is securing a partner track spot anywhere period. You have the best odds if you do a MF associate stint. The more prestigious the better.
This discussion comes up way too often and the dynamic hasn’t really changed that much over the last 10+ years. I agree with the vast majority of what was stated above. I’ve worked very closely with a lot of PE professionals at all levels and at all fund sizes. A few things stand out:
Not all people share the same mentality towards pay and prestige. There seems to absolutely be a correlation between folks who work at larger funds and a focus on pay / prestige. You do see, from time to time, people wishing to move from MFs down to smaller shops in search of better cultures and WLB, but most of these folks rank pay and prestige very high on their job search criteria.
Conversely, people from the LMM and MM often times want to stay put in that segment of the market. Their dream firms are ones that have a positive company culture, room for promotion, and autonomy without micromanaging. Pay is often a secondary consideration and they rarely turn down a job offer on the basis of pay. Many of these individuals won’t even apply or accept interviews at firms that have reputations for tough cultures (HIG, Audax, and plenty of others).
I think what many people fail to realize is that their priorities are going to change over the course of their career. It’s really easy as a 25-year old to think that everyone in the industry is chasing money and prestige. We all sacrificed our social lives as junior IB/PE professionals and the trade off made sense. Fast forward to your late 20s and you accidentally meet the most amazing girl. She is dying to spend time with you but you have to cancel dates, cannot plan vacations, and even work through holidays. It’s a lot harder to sit in an office at 10pm on a Friday when you have somewhere you would rather be. It gets even worse when you are in your 30s, have a family, and your kids go to sleep at 8pm so you don’t even see them except on the weekend.
I used to love work travel. I was on a plane every single week to a different company / event. Quick 1-2 day trips. Then in 2017 I bought my dream condo. I had the largest private gym in the city of Boston two floors away, an in-building private movie theater, game room, olympic size pool and jacuzzi, and a ton of other things. All of a sudden hotel rooms started to feel a whole lot less appealing…
I encourage everyone to be open minded to the thought that people who work in finance have vastly different motivations, goals, preferences, etc. These also change over time. Don’t just assume that everyone thinks like you and would make the same choices.
My heart genuinely breaks for the parents and the kids of those parents that only see their kids on the weekends. At least be home to put your kids to bed and work after.
Thought the same thing in banking: always gonna chase the bag. Then I met a great gal, and banking got in the way constantly. She said “it’s cool if you want to do this, but I won’t be in it”. Shifted mentality even further when I had a kid. 2 kids best thing to ever happen to me and not close. Watching them smile and laugh brings more emotion to me than any bonus or carry check ever has.
Family doesn’t love you for your money, they love you for you and your time.
People optimize for different things. You know deep inside what you really care about. If you need to make it to a MF to be satisfied then by all means. But know that it’s possible to make very good money at smaller firms. Get as close to the economics as you can.
Qui suscipit corrupti vel dolor veritatis minus ut. Debitis est fugit iure tempora culpa id nihil iste. In voluptatem harum accusamus.
Alias dolor qui quisquam omnis qui quibusdam dolorem. Est in iste reiciendis dicta quia iusto nihil. Exercitationem ut et excepturi natus. Consectetur corporis et sed. Voluptatem ea ea quisquam cum provident repellat. Iusto suscipit quia praesentium ut eum quo.
Mollitia qui asperiores perferendis distinctio et aut. Deserunt officia mollitia recusandae dolorem voluptatem. Quis sit molestias magnam autem sed voluptatum. Eveniet dicta quia facere voluptas corporis. Quod quibusdam corporis aperiam corrupti aut et consequatur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...