Lifer Banker vs PE Exit

New to the forum. All you read about is PE, mega funds, and exits.  I wanted to ask current analyst/associates that stayed in IB at BB/EB or left for PE:

1) What is the core difference when it comes to comp? Isn't carry egregiously far away for someone who just exited to PE? Is the job stability not far less in PE?

2) Assuming the work is of the identical interest, why not stay in banking (ignoring all hours, lifestyle, etc for argument sake) and recognize the more direct path to MD? I know the An1-MD % is small but doesn't mean you couldn't hop around until you made it.

3)If you aren't exiting to an Apollo, KKR, Silver Lake type of firm, is the comp really that much higher given the more prevalent job instability?

Comments (13)

  • Analyst 1 in IB - Cov
2mo 

1) not everything is about comp; if long-term you think you'll prefer advisory & having clients then stay in banking; if you'll prefer investing then go to PE

2) in terms of comp, broadly speaking banking wins in the 50th percentile and below, & and PE wins in the 50th+ percentile cases

3) job stability (& stability of comp) is higher in PE, not less; but getting promoted to partner in PE is much more difficult than making MD at a bank

headline is that obviously there's no right answer, do what you think you'll like more and be better at

  • 1
  • Analyst 1 in IB - Cov
2mo 

Why would job stability and comp stability be higher in PE? I know banking bonuses are low during recession, but in PE, is your comp not riding on an exit?

  • Associate 1 in PE - LBOs
2mo 

comp is based on management fees until you start getting carry - then yes that's when the exits matter much more, but up until you get to Principal level, (yeah you might get some carry as senior asso/VP) majority of comp is coming out of management fees.  Regarding job stability - look now, lot's of banks are cutting due to recession, so bonus's will suck and people will get cut. PE not as much tied to public markets/economy, a 10 year fund still manages all that $ and hence gets the management fees so comp is pretty insulated unlike banking (until you're a senior then yes the exits are where you get rich)  

  • Analyst 1 in IB - Cov
2mo 

Thank you for insight. Having a hard time deciding if exiting is right option. My end goal is just large comp, but stability clearly plays a role in that. Not anymore interested in PE than in IB. Current group not placing into mega funds or large players, so really not sure if exiting is a mistake given the pay bump in short term. 

  • Associate 1 in PE - LBOs
2mo 

I was in your shoes a couple years ago too man. Ultimately was interested enough in PE that I knew I had to at least try it while I was still young or I would always regret it,  especially given that I knew I was not in love with banking (didn't hate it, but also didn't see myself committing to the IB grind yet). The short-term difference in comp crossed my mind too, but ultimately realized our careers are marathons, so it made making the switch pretty easy. Am definitely enjoying PE so far, but the grind is still intense and I couldn't tell you where the hell I'm gonna end up in 5 years.  

  • Analyst 1 in IB - Cov
2mo 

Really appreciate all the insight man. Did you have friends that stayed in banking? I haven't minded the hours or the lifestyle because I learned early on nothing worth having is easy. After reading most of the IB VS PE forums on here it seems to be an impossible decision to quantify until you actually hit the point of D/MD or Principal and start recognizing the windfalls. 

Most Helpful
  • Associate 1 in PE - LBOs
2mo 

For sure man, happy to help. I do have buddies still in banking, and either fell into 1 of two buckets. 1) Just love the work and are in a good group and have no reason to leave.  or 2) Don't hate it enough to leave and are primarily focused on stacking as much cash as possible for a few more years then leaving finance entirely. Both of these groups make total sense to me and I applaud both of them. Sounds like you're in a good spot and not in any rush to leave, so don't feel pressured into following the herd. If you want to try PE or something else, do it because you want to, not because you think you're supposed to.    

2mo 
zoomafiazin, what's your opinion? Comment below:

Agree with all of your points. I'm almost 100% sure banking's median pay is slightly higher than PE's, which is kinda funny when you see everyone try to exit to PE from IB. The top 5% of PE's probably blows banking's out of the water though.

  • 1
  • Analyst 1 in IB - Cov
2mo 

Yeah I broadly agree, although I think it's more like the top 20% of PE crushes banking especially at the higher levels

2mo 
banananizer, what's your opinion? Comment below:

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