Megafund with chances of promotion
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apax
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None, it's the tradeoff you are making. The places that have the highest chances of promotions are the MM/UMM's that are rapidly expanding such as the places that have doubled fund sizes every new raise.
any good examples?
No commentary on the current state of these firms, but non-comprehensive MM/UMM names that have continuously raised sizable funds recently: Audax, Arline, TJC, GTCR, Genstar, KPS, Parthenon, New Mountain Capital, and Summit. Generally think increasingly the winners and losers of the PE world are being decided at this moment, and the ideal spot is finding a place where you beleive a firm has some kind of right to win + chances for growth (as partner spots only get created when they need more people because of growth or because someone left/retired/got pushed out).
Would you pick the aforementioned names over the megafunds listed above or no
It all depends on risk tolerance. I am not even in PE, nor did I ever want to do investing, so I cannot comment.
From my friends who went to MF's (vast majority of whom still aren't there, granted): I think the idea of going to an MF is basically pushing the can down 2 years... you know you won't get the promotion, but can at least convince yourself there is hope. So you go there because even if it doesn't work out you think you can go downmarket and find a place you can get promotions (yes, I am aware a lot of MM firms don't hire/very rarely hire external VP's VP's/only promote from within at this stage, but this was far less common when I was a junior).
One does not go to MFs with the expectation of being promoted these days, but to build the skills/resume to lateral downmarket for promotes or to leave for HF.
Stop being a lazy bum and get the most senior person you can to adopt you
I was adopted at my old firm…adopted at my new firm by the smartest senior but she also doesn’t play politics or big me up.. idk think I need to leave
What about silver lake
Some of the European large-cap funds seem to be more friendly when it comes to promotions, think CVC / EQT / Nordic Capital / Cinven, but to differing degrees.
The older school American MFs seem to be more strictly 2-and-out.
Wouldnt classify cinven / nordic as megafunds.
Didn't call them megafunds, would draw a distinction between MFs and large-cap funds.
MFs: BX / APO / KKR / Carlyle - firms that are diversified outside of traditional buyout, to the point where PE becomes only a small % of overall AUM
Large-cap funds: Cinven / Nordic / Veritas / LGP - firms that are focused almost exclusively on traditional buyout, whose flagship fund looks at $2bn+ TEV deals consistently
In this type of market I would probably underwrite not having much potential to stay on past the 2-3 year mark in the Associate program. A lot of firms are cutting headcount given lack of deals and underperforming funds. Also keep hearing stories where, out of a class of 10-20 folks, only 1-2 being able to stay on and ascend. I would go in cognizant it’s just for 2-3 years and if you’re not going to b-school then grinding hard on lateraling after the first year given the experienced market is quite poor right now.
If this is the case, what is the point of leaving IBD? Earn higher cash comp in most cases and have more stability in your career vs being pushed out
You raise a fair point and it depends on ultimately the type of work you want to do and the level of risk you want to take. PE work is more intellectually stimulating since you are taking on the risk of the investment (vs IB where you want to maximize the positive attributes of a Company to get the highest sale price). PE carry can also be very lucrative in the long-run (but that’s a 5-10 year view).
Unlike 10-15 years ago, it’s not a clear cut answer that PE is better. The work can still be very tedious and with less stability, there’s certainly an argument to stay in IB. Also, cash comp higher in IB so if you don’t believe in carry (which in today’s market is underwater for many funds), then IB might be the move.
Both are lucrative careers, try to figure out where you have the most runway and opportunities to move up (assuming you like the team and work, etc.).
I echo the other poster's thoughts and would say many Analysts are interested in PE just because that's what they think they want instead of actually taking time to assess whether it's the most educated decision. The IB Analyst to PE Associate path has been glorified for years and is considered the path you take if you are ambitious, successful, and want to make good money. Who doesn't want all of that if they're gunning for IB. These same personalities are the ones who jump to PE. What has happened recently is the IB programs have gotten better while the perception of IB to PE as the promised land has stayed the same and not corrected itself.
A decade ago the sell to go to PE was a lot better. PE comp used to be a pretty good step up from IB comp so the idea of making more money was real both in near-term and longer-term with carry. IB has raised comp to levels where the difference in near-term comp is small for most PE funds, the only exception being the MFs who have also raised comp accordingly. Longer term career prospects were also differentiated. PE grew significantly as an asset class in general in the past decade. Every firm was raising larger funds than before and there was a new firm or spinout every couple weeks. All these funds need junior resources so there were plenty of opportunities to join PE and build your career as the firm scales. These days a lot of PE firms are struggling to raise new funds and some have decided to wind down which is a phenomenon that is expected to continue. This contraction will lead to less PE roles and the golden era of exceeding fundraising targets constantly are mostly behind us. In addition, it looks like many IB firms like to extend A2A promotions now which helps retain IB talent, the A2A promotion wasn't as common back then.
There are still very good reasons to pivot to PE after your IB Analyst years. These reasons are best to be unique to your own situation and what you are ultimately looking for. The reason to pivot should be less "this is what everybody else is doing in my class so I will follow suit" but in reality it ends up being the main reason for a good amount of people.
Have seen a few cases of TPG / H&F / KKR PE associates (with associate programs ending in summer 2023 & 24) being pushed out after 2 years with nothing lined up, and are still in the market looking for roles. My guess is that they were probably discontent with settling for LMM PE or corporate roles, and didn't realize how tough the MF/UMM PE lateral market is until it was too late.
Others MF PE associates who were willing to make a big jump down-market (to $1-3bn fund sizes) were at least able to secure a role, but oftentimes have slower promotion schedules than associates who joined those smaller firms earlier and have less political capital within the firm.
The PE job market has been brutal and people don't see it getting better anytime soon. The best long-term risk-adjusted bet in today's environment is to join a more career-track friendly UMM PE that has the runway to promote you to at least VP+. Unfortunately, those spots are extremely tough to find and are probably even more competitive than MF PE, since career-track places tend to have much learner associate classes than the 2-year-and-out MFs.
Can you please provide some examples of these desirable UMM names with runway? Would be helpful
Are 1-3bn fund sizes LMM? Isn't that squarely MM?
If megafunds don't promote internally, what happens over time, do people lateral in? Or every so often they do promote to keep things working?
Some internal promotions but I feel like most senior people as post-MBA with prior PE experience or just lateral hires (either from other teams within the firm or other firms)
The post MBA is so stupid to me. Why have this person take two years off and get rusty when they could be performing for you? Especially with how useless the degree is
TPG does a decent amount of internal promoting depending on what fund you’re in. I’ve seen a good amount of associates in the impact and growth funds stay for 4 years and then get promoted to vp.
Anecdotal side note that I have friends and KKR/Carlyle and they are all forced to leave after 2 years.
insane luck needed for any MF promo. its a 0-10% chance for a top performer.
Completely disagree with this. I'm a VP at one of those funds and all of our top performers are wanted back as VPs. You can see it in the data; we don't hire externally, so the only way we have VPs is by hiring back our top performing associates. THere just aren't that many top performers, by definition
What makes a top performer in your opinion?
Please grab a newspaper and read where PE is heading. Maybe reconsider your question because doubt there will be much upward mobility in the following years. Every advice given is backward looking to periods and will not resemble by any chance the future of this industry (in a bad way).
Lol, is this a joke? This is like slathering your body in peanut butter and going camping in Yosemite and asking “what’s the best dance to do with a brown bear? A waltz? Or a foxtrot?”
Why don’t you get the job, show up on the job, then see how the reality of those few associate MF years feel on your malnourished rickety bones after 2 years. Then come back to us asking about promotion paths. It’s a fucking grueling 2 years.
To answer your actual question, Apollo for sure, Thoma/Vista most likely, maybe Warburg or KKR if the stars align.
Most of these places use the 2-and-out to force attrition given the scarcity of partner track seats. But if (1) you absolutely crush it, (2) they absolutely fall in love with you, (3) there is an immediate need they didn’t already plan ahead for 2-3 years ago… then you could get promoted straight through.
its 2 years of working in excel powerpoint and outlook. sure you work hard but "grueling", c'mon. sure apollo hard working but its not like a coal mine
I don’t think you know the word grueling means.
We're pretty good about it if you make certain work/life trade-offs during your two-three years here. Most of our associate classes self-filter out as opposed to it being super competitive to nail the midlevel offer if you want it from the jump. Very good reasons not to want it from the jump.
How does one show that they are committed to making those trade-offs not just in the short term, but also for a career? I've never had an issue with long hours or weekend work but it seems like those things are the norm anyway.
It's not really about hours as much as it is prioritization. By the time you get to MM+ PE, everyone has had two years of nose-to-the-grindstone banking and has the ability to switch that mode on at any given time.
But when you're 24-25 instead of 22-23, you kind of want to smell the roses a bit more: one of your relationships might be getting capital-s serious, you might realize that you've lived in the same city as your buddies from college but never see them so brunch (sober just in case) and dinner occasionally sound nice, you start to want to go to a museum or park or three. More importantly, you start to think about how one day you'd like all these things to be regular instead of occasional once in your late 20's to early 30's. And when you see your midlevels facetiming their young kids instead of logging off and going home to be with them after dinner, or when you notice their "hobbies" become more and more standard over time, or when you notice their vacations seem like competitive splurge achievements more than relaxation, it starts to add up that maybe your current firm isn't the one for you. (Culture is a lot more than hours, too, but I'll save that for another day.)
Basically, nabbing the promote / showing that you are willing to make trade-offs in the future isn't about just getting work done accurately and fast like banking; the "chaff" is much better in PE than in IB. But there's little things--are you willing to raise your hand to repeat a deal sprint with a grindy, cold team just after you've completed one? Do you get granular about Adj. EBITDA add-back reconciliations in your public company profiles in year 2 the same way you did in year 1? Do you start assenting to the filler slides the midlevel draws up to guess at what the partner wants instead of trying to push back or limit them? Do you take on that part of the process that is maybe more Principal-y than Associate-y (bank model questions, consultant readouts, operational stuff, QoE, tax impacts, etc.)? These initiatives range in value from completely useless and symbolic to a genuine shouldering of extra responsibility, but they're all harder to do while maintaining a semblance of a life than "just" the usual 9-8 during off times and all-out sprints during crunch times, even if you're perfectly technically sound and have great attention to detail.
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