Is prestige on the buy side a scam?
Been seeing a lot of these tier lists and part of me wonders whether the whole prestige thing really matters when you’re on the buy side. Like how big of a difference is it really if you’re doing PE at Macquarie compared to if you’re doing PE at Silver Lake or KKR? Surely at that point it matters more that you’re learning stuff and doing interesting work whilst getting paid roughly the same rather than having a flashy name on your CV? I get it on the sell side for exit purposes, but does it really matter on the buy side?
The whole idea of prestige is a scam. No one cares.
It matters professionally.
Until you are a Principal, PE is a game of musical chairs. It’s much easier to keep a seat if you start at KKR / APO than if you start at a MM PE firm people are unfamiliar with. If you are white / Asian man, you won’t get into GSB / HBS very easily to being with but almost impossible from a less prestigious shop.
Once you are a principal, your deal experience matters the most. There are VPs that have done one or two deals in their whole career. They probably cannot get another job in the industry.
But why exactly are people still opting for business school? It doesn't really make sense
Because they don’t have a choice. Most established PE firms will keep 0-1 associates without an MBA except at APO / KKR. The places that don’t require it will make you do the MBA time as an associate or a VP.
PE is a slowly melting industry & is oversupplied with labor. It’s a game of musical chairs to hold onto your job.
Once at HBS you’ll realize that unless you worked at a truly top tier bank / PE firm pre MBA you aren’t going to find a similar job after unless you have a return offer back. Over time, even fewer people will be allowed to stay without an MBA & fewer will have return offers.
No this is actually the opposite - going to the largest cap places is good for b school applications or hedge funds but almost hopeless if you care about staying on. Large cap funds also can be a double edged sword with deal flow. If you do do one it'll probably big and high profile but there's a high chance you don't close any which is hard to overcome. And no offense but you're a banking analyst? This is very dated advice; your best chance to have a career in this industry is to go to a lean, growing firm with good performance, and b school is becoming less and less common, if you're good you can usually get promoted directly. That's also the best path financially; grinding your way through 12 years of politics and bureaucracy at a large cap fund only to get carry in funds returning 13% is not that fun.
On the prestige point, I wouldn't say it doesn't matter but it's very different on the buyside vs banking. In banking you can come up with a short and pretty stable list of firms that are in all the big WSJ deals. In PE it's different; sure there are the large cap funds that are akin to BBs in banking, but there are also highly regarded smaller specialist firms that comp very very well and are absolute killers in their niches and this list is way longer than the 10 banks you need to work for to be taken seriously. No partners at my UMM generalist firm look down on partners at smaller places; they respect that there are all sorts of skills, relationships, creativity, etc. that it takes to be successful and that's what matters most at the end of the day.
Yes no partners at your UMM PE firm look down on partners at a small PE fund. That is not inconsistent with what I said. Once you become a partner (or principal / Sr VP) it’s different, you are above the worker bee threshold. I’ve just seen at HBS / GSB ppl who came from big cap PE firms having an easier time landing a post MBA seats than ppl who did true MM PE even at places that have been around for awhile (Oak Hill, TJC, the one in Charlottesville).
UMM PE is basically mega cap PE these days. Advent when I was an analyst was maybe not competing with BX but nowadays they could end up looking at the same stuff since the real mega cap deals are much rarer vs pre GFC.
Lastly, very few analysts in banking have real insight into fund performance. Unless you can find a fundraising deck pdf on RI pension website (not available for every fund) or worked at an allocator as a summer internship / have a close friend at one, how would you know? Most people have no ideas what performance is unless they are on the inside. Also just my experience, people in finance like to embellish their firm. “Oh bro we have this 7x deal in our last fund.” No mention of the fact that the rest of the fund is not doing well so it still comes out to 2.5x gross which is marginally better than the median 1.8x net every fund ends up putting up. If you know for a fact, there’s a fund that’s killing it and you can work there + they aren’t killing it b/c they went long one theme that’s now crowded, then yeah obviously go work there over BX. How many 23 year old analysts can say that confidently? Lmao the answer is 1% of them. So no, I’m not giving bad advice. Just realistic advice in case they don’t have a home run opportunity show up in front of them.
I no longer work in IB, I made this account 10 yrs ago and just never changed the title.
Prestige doesn’t mean anything after your first 2 years of employment imo
The job market is efficient and prestige is priced in. I run from anything considered prestigious or well known, you will pay for it in other ways
this
There’s going to be a big shift to MM and LLM, I suspect, as that’s where 90% of the alpha is.
Prestige is a fools gold that expires. What’s the point of prestige in PE - it’s the finish line…
If your plan is to continually jump around your entire career, that sounds pretty exhausting. Better to find a shop you like working at and hit a partner track, not get lured into climbing on the hamster wheel of prestige only to be passed up on for a promo 2-3 years later.
Pretty much
IMO yes.
I’d rather work for a no-name shop with good returns and culture than go for Apollo just because it’s Apollo and hate my life grinding up.
I think a good rule of thumb is that prestige only matters if you’re using wherever you’re at as a means to an end to get somewhere else. Since PE is the end game, there you just want the best situation possible.
That’s why prestige matters for schools or in IB, but not because anyone gives a shit that you work somewhere and rather since it opens more doors for your eventual lifelong career.
Dad is a SMD at a EB and the wealthiest guy in his analyst class (by multiple times compared to multiple PE partners including those at MF's) is the founder of a niche 1-2bn AUM LMM PE firm. That person never did MF PE, but still ended up doing far better for himself than his peers who stuck to banking at the top BB my dad started at and those who went into MF PE.
Life is all about evaluating risk with reward; MF PE is the lowest risk move but also it's almost impossible to get promoted to VP. The ideal spot for career advancement as a junior within PE is probably a growing MM/UMM, but that's hard to determine from the outside looking in.
He start at EB or move after building career at BB?
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