Mega fund vs UMM fund for non-target IB Analyst?
Hey everybody, so I have a bit of a dilemma.
I currently work at a top bank, am top of my class, but went to a non-target undergrad.
I chose not to recruit on cycle because A. I wasn’t ready and B. I wanted to work at a hedge fund. I’m now unfortunately realizing that my non-target status is actually dinging me in the HF recruiting process, whereas it didn’t seem to be as much or an issue for the few PE interviews I’ve done.
I’ve resigned myself to doing PE, and possibly an MBA to end up where I want (I may even end up wanting to stay in PE, who knows?), but I’m pretty late in the recruiting cycle at this point. My options are as follows:
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Accept the third year offer my bank extended me and recruit on cycle when the cycle kicks off
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Join a newer UMM PE fund (~$3-$5bn in aum) that a mentor of mine works at. It’s hard for me to discount this opportunity because he would provide a lot of direct guidance and mentorship, plus if I do decide to stay in PE, there’s a possible path to early VP promote, which would include carry… meaning all in comp of low 7 figures ~3 years out.
The second option sounds more attractive for a multitude of reasons, but I feel as if it doesn’t really solve my issue with branding.
Any suggestions from industry veterans?
Any thoughts or advice form industry veterans
At the risk of sounding gauche (as there are a variety of nuances to everyone’s life decisions that can never be conveyed through anonymous written forum), am I missing something?
You have the potential for a seat at a new fund >$1B, where you have an ostensible personal connection, and from the looks of it, a strong likelihood of a VP promote and (if all goes well) 7-figure carry participation in 3 years, and you’re resigning yourself to a recruiting dilemma over branding?
I can’t speak for everyone here, and I’m still very early in my career, but most analysts in your position would kill for the chance to have opportunity #2 even after a mega fund stint. In fact, I would venture to guess that over 50% of folks headed to brand name funds (that are interested in a long-term PE career) do it with the explicit intent of finding a seat exactly like one that’s been presented in your lap (albeit at a senior associate / VP level). This is all ignoring the fact that you already have a mentor at said fund that can serve as a needed coach (and cheerleader) through your journey to help you advance at the fastest clip possible.
Sometimes the blatant risk-aversion / prestige-obsession on this site makes me chuckle. You should obviously make the decision that feels the best in your gut. I’ve only shared my jerk reaction as someone that, at a surface level, is a little envious of your situation. Best of luck.
I definitely agree with everything you said.
My main point of reservation is that I’ve never really wanted to work in private equity. I’m not a fan of banking, and not much interested in transitioning to “Banking 2.0”.
I have friends that work at hedge funds doing much more interesting work (to me), working less hours, and without all of the aspects of the job I dislike (all the process oriented stuff, arbitrary deadlines, etc).
So, if I’m optimizing for something that will set me up to do the sort of work I want to do at the kinds of funds I want, does this private equity opportunity make sense? Will I be a better investor than staying in banking? Definitely. But will it help me get to hedge funds or do the sort of work I want? Hard to say. The fund is too new and there isn’t really precedent for that.
Ah, I see where you’re coming from. I’ve never made the transition from PE -> HF, so YMMV, but from older peers and colleagues anecdotally, I have heard that going to a BX / APO / KKR type place is one of the rare (and only) tested channels to an interview at a large tiger cub. If that is your goal, you’ve got an answer right there.
However, if you’re willing to look beyond those names for a public markets role, I’d imagine a more entrepreneurial seat at a new and sizeable PE fund where your role will likely go beyond modeling the nth business unit of a $10b buyout that will never close for two years (being facetious but you get the point) will not be looked down upon at all by HFs looking for talent. You said yourself you’re already at a top bank, and I’d imagine any GPs that had the track record to successfully raise a $3B+ fund are rockstars that are already well respected across finance broadly.
Who knows, you might end up liking PE and be lucky enough to have already locked down a seat many would claw over mountains for. The calculus certainly changes when mapping for a career in public markets, so maybe someone already in the HF world could better answer this question, but these are just my musings :). You’re in a good spot either way.
Just as a caution on the HF side, I have friends in the space and while they definitely work lower hours than PE (~70 on average) their stress is equal or higher. PE is a reasonably stable job, few things come down on you personally and if you're asked to leave you will have a long runway to recruit out - HF you are truly expected to individually perform on a short term basis and your seat is always at risk. It's basically expected in the industry that you'll lose your job once or twice.
Other thing here is you are assuming you land a MF as a third year, which is not super easy. The non target part isn't a dealbreaker to MFs, but the classes are just so small it's like you're a senior in HS only applying to Harvard and nowhere else. It'd be a shame to turn down an incredible UMM opportunity and also strike out with MFs.
Any thought towards doing the UMM, grinding out 3-5 years to make some bank, and then looking for a softer landing at a corp, SWF, family office etc? How important is the public markets part of this to you or are you just looking to get out of IB/PE hours and process?
All good points. My ideal career trajectory would be to go to a L/S fund and then perhaps switch to a long only fund, which may mitigate some of the stress in the long term.
In banking, I’m not a fan of:
PE fixes number 3, and maybe number 2 if you’re lucky, but not number 1. Also, for what it’s worth, I’ve seen a decent number of Corp Dev guys that come from hedge funds with some of the companies / strategics I’ve worked with / on. It’s usually someone who develops sector knowledge, ie a green tech analyst that becomes head of CD at an EV company, etc.
Based on this reply and your replies to others, you come off as very astute so props there. I think your path makes sense, maybe just keep the UMM warm if recruiting doesn't go your way.
My answer is based on my similar experience. I was at a good bank (by no means a top bank in the context of a GS/MS/JPM/EVR/CVP/LAZ etc) and went to a non-target and ended up going off-cycle to a MF. Candidly, if your goal is to join one of the large-cap MM HFs and you're confident you can land a big PE role waiting it out another year, you should do that. That being said, your second option gives you some pretty unique and unparalleled investing experience and mentorship which given the newer nature of the fund, could mean lesser investing experience due to a more holistic role in running and operating the fund - just something to consider.
The reality is that if you want to eventually get to a public investing type of role, any PE experience can yield you a seat as long as you come in with a knowledge of a specific sector or product as an investor. Yes, a larger PE name will probably open more doors initially and allow you a wider variety of interviews at HFs just due to the nature of HHs and how they recruit, but being an early employee at a sizable PE fund may also be an advantage as long as you position it correctly and reach out to folks in a timely manner.
From a career standpoint in PE, the second option to me is a no brainer. Having an existing mentor in place at a relatively newer shop with a 3-5bn fund is certainly advantageous to you for a number of reasons, potential progression being one of the largest.
Personally, I didn't continue in PE after 2 or so years given a multitude of reasons but I can honestly say as someone who did originally want to build a career in PE, the latter option would've been totally game-changing in my mind. But obviously this is super speculative.
What are you doing now after PE if you don’t mind me asking?
Went to the exec office of another bank working with the C-suite as the junior-most member of the team. Absolutely incredible learning exp
literally just take PE and then evaluate if you want to go to a HF after 2 years?
Is this not a common route anymore??
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