Leaving PE for IB? Am I crazy??
My history: banking at top firm for 2 yrs > PE at UMM fund for 2 yrs > PE / growth at LMM fund for 3 yrs
Unlike most, didn’t hate the banking experience as an analyst. Wasn’t a fan of mindless work but loved the clients I dealt with in my sector and worked on very big M&A ideas. People were great.
PE at the UMM fund was terrible, partly because awful people, partly because I was the sole associate in my sector and it was the pandemic - so incredibly sweaty and awful life. Rly damaged my health. I did love looking at deals in my sector, thinking strategically about how to improve the company, loved helping my portcos. Didn’t love the financial engineering but also didn’t feel like I was taught very well. Lifestyle was also bad - if I was up till 4 am,my principal was up till 5 am checking things and also cutting giantic VDRs while I built the model. Looking back I didn’t think I’d want my principals life, even though the partner job looked cool
PE at LMM - has been very cool because of how much ops I do and the cool brands I work with. But fund returns kind of suck given the sector. Boss is not generous on economics and has blamed me for a portco failing despite the fact I’ve pulled off miracles for it. Love being close to my founders /mgmt teams and giving them advice. Economics not great but lifestyle has been amazing and health has been great too. But I’m officially out of here as I’ve expressed many times how comp is way below market (have earned promotions that didn’t come with comp changes), but boss is blaming me for a portco not doing well and is showing me the door.
Now feeling anxiety about finding a job in this market. Have 6 months before I officially have to leave the job. I’m also not sure what I want to do. PE in theory sounds so cool, but if I’m being honest I’ve had bad teachers and don’t feel technically sound enough to do well at the sr asso / vp level in a new job (maybe imposter syndrome but I was very self taught in this current role as my joss didn’t teach). I’m questioning if PE in my sector (consumer) is where I’ll actually get my payday as returns aren’t the greatest and so a great carry outcome seems low probability. It seems like carry rly only hits for very few funds. I’m also scared that going to a larger fund will mean terrible work life.
I thought I wanted to go the HF route but am feeling like that would be very stressful mentally and take me out of being close to companies which is what I love. Actually turned down an offer. I also have the option to go back to my old IB, which I’m actually considering because the cash comp at my old firm is quite high (higher than PE unless you count carry that actually pays out…). Obviously banking isn’t operating businesses, but it at least lets me provide advice to clients and get close to them, and may be a better way to play in the consumer sector?
Ops is also an option but I do want high cash comp for the next few years, so maybe this is a later path.
Do you think it’s insane to consider leaving PE for IB? Would you let the IB offer at my old firm go to keep recruiting for buyside jobs? I would love to be a PE partner in theory, but the path to get there seems tough, low probability that it pays out too. FWIW I’m a woman in this industry.
Is PE even worth it anymore? Would love your thoughts?
I never worked in IB, but it sounds like going back to IB is a smart move. Cash comp is higher and it sounds like you enjoy working in larger teams. I doubt many new Sr. asso's or VP's are getting meaningful carry anytime soon. Interest rates can only go so low, and everyone overpaid in recent years.
Let's be real, your odds of becoming a partner in PE are extremely low. Especially as a woman. How many partners of your last two funds were women? The fund I'm at hasn't changed any of its partners in years and has only had one female partner in its history who got shoved out. Your best odds would be to leave and raise your own fund if being a partner is your goal.
Bump
And good luck!
If you like working closely with companies you should either stay in PE or go to corporate. Banking is a client services job first and foremost and you will only ever interact with the company at a theoretical level.
You should also consider venture studios - not sure the econs of them are great but they will be closer to the type of work it sounds like you want to be doing.
If you’re burned out, seriously think about corporate. It’s a lot more fun and sustainable but you will take a paycut.
I am a vote for a portfolio solutions or ops role at a PE firm. Maybe you take a small paycut, but if it is what you're passionate about and you are smart (which it sounds like you are) you are going to do well at the role and the comp will scale as your continue to prove yourself.
I mean it's obviously not crazy. Cash comp is great, promo opps are solid and if you kill it as a banking senior you do sometimes see them move over to buyside at senior level if you wanted that.
Seems like you care about comp so not sure you'd be happy in a chill corporate job when your EB IB equivalent is comping 2.5+x that for 1.5x the hours. Will probably only be worth it at a high paying EB type shop - seems like there's a lot of variance in mid level banking comp these days
Why don't you go operate
You could also take a risk and angle for a "right hand" person job at a hot growth company (Series B-C). Sounds like this is what you want and people with your background are in strong demand in these types of situations. If the company bet goes sideways, you can chalk it up as what could've happened to your carry anyways in the same sector. Very much an explainable move in the job market if you need to pivot back to IB/PE, but you're in a sweet spot to take this type of risk and still be safe from a career stage perspective.
I’m having a similar dilemma — work at a LMM PE firm and am the sole female. Maybe a little more diversity focused for me than yourself, but I feel twice the need to prove myself due to inherent biases around women at my firm and have been promoted slower/given less visible opportunities. My time in IB was a lot more balanced, I was worked very hard but felt more meritocratic so I have been considering moving back…
For me, the thought process in IB is there are always spots whereas in PE many people can stay for a relatively long time and politics with that become difficult to manage. I probably don’t have it in me to navigate some of these components, thought working hard was enough and didn’t play the political game and got screwed come promotion time.
I’m reading this and you sound like you’d be an excellent banker. The banker that can do the banking thing but actually cares about the underlying company can be a killer.
I’d also play consumer as a banker over a PE investor any day. The reasons it’s a crap sector for PE are the same reasons it’s great for bankers.
Venture is for u bro
I did this somewhat recently and am so much happier. Absolutely the move for me personally and have seen increasing number of people considering this
Switched to banking you mean? At what level and why are you so much happier? Do you feel like the job is less impactful?
Yup, went back to banking after a few years at a top PE firm. Keeping a bit vague but happy to DM.
Job is so much less stressful and I’m working with people I genuinely enjoy being around. There is obviously an element of politics everywhere, but it feels like so much more of a meritocracy here than my prior firm in PE. I have line of sight to MD track, and people are both generally competent and also more secure in their own careers (no one in my prior firm was confident in career longevity and had to grind day in and day out to prove they “added value”). Plus, cash comp is higher and you get more professional leverage at each rank, such that you actually get step changes in WLB.
Look, banking isn’t rocket science (but neither is PE or anything in finance). I found PE to be quite interesting, but often times spent countless hours on unnecessarily and indiscriminately granular diligence that didn’t change the answer. On the flipside, I actually find real fulfillment in my role, in particular on more bilateral, highly strategic transactions (I am not at a platform that pumps out sponsor sell sides) and find that advising a large cap company is in some ways way cooler than finding a way to build the 1000th roll up platform in a crowded blue collar services vertical
Any update?
No value to add unfortunately for you OP but would like to chime in and say above comments are of also 0 value-add — anecdotal and too many one statement liners with poor context. Think you are clearly very intelligent (EQ included given your self-realizations) and need to network with folks actually in the space to get to your best conclusion. Best of luck.
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