MF Credit vs. MS/GS SA 2023 Offer
Hi all, I have exploding offers from MS/GS and a top credit shop (think Blackstone GSO / Bain Capital Credit / KKR Private Credit / Oak Hill Advisors / Silver Point Capital) for SA 2023. I want to join a MF PE shop as an associate and was wondering how should I think about the 2 offers? Here's my thought process.
MF Credit's advantages are:
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it's an investing role so I think I'll learn more than I will from banking.
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there are less seats so I think the firm and the role are more prestigious.
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Far fewer menial tasks and have been told analysts get treated like associates after 3 to 6 months
The disadvantages are:
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I'll receive less inbound from HH due to the unorthodoxy of my role + HH conflicts
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There's not a lot of data regarding analyst exits (since the sample size is so small) but people seem to gravitate towards HF. My understanding is that they are skipping private equity as opposed to not being able to recruit for private equity, but would appreciate your thoughts.
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Worried about my ability to recruit on-cycle. Will it be offensive to my firm if I recruit for another role 3 to 6 months into my 2-year stint? Will I be fired if my firm/team finds out I'm looking for another job?
4. MS/GS is the tried and true path. Not sure what the incremental reward is for taking on the above risks
- I'll have a much smaller cohort at my shop to shoot the shit with.
I'm leaning MF Credit but would appreciate hearing from people who 1: are in MF PE (and preferably involved in recruiting), 2: work at S/M L/S Equity shops, 3: are presently in credit and work at one of the above shops (or a related shop), and 4: prospects/undergrads who were in a similar decision (would love to hear what you decided!).
If you're an incoming/current IB analyst, please refrain from sharing your perspective. Not to be rude, but almost all of the people I have spoken with who are in IB have told me to take the GS/MS offer despite not being familiar with any of the above credit teams and did not furnish a coherent reason for why. If you are familiar with the above shops, feel free to share your perspective, but if you're not, then I'm not sure your comment will add value since I'm comparing 2 things and you're unfamiliar with 1 of them.
Incoming analyst at one of the shops you listed and I think Credit offer is a no brainer. You're spot on with the advantages. Fewer seats + investing role + excellent firm reputation.
On Disadvantages
Headhunters: Yeah, you'll miss out on a few PE firms due to HH staffing conflicts. However, I would say you have higher quality shots on goal at the residual firms you recruit at so it should not be too much of an issue. You'll have some issues if you work at Oak Hill since they use CPI, but for the rest of the listed firms, you should have no problem. You could probably reach out to the recruiting teams directly at the firms they cover to get into their processes.
Analyst Exits: Think most of the analysts at the firms you listed go to HF/Special Sits/Buyout PE. I would look into the historic analyst exits of kids from Bain Capital Credit and Silver Point since you can filter for that quite easily. Former GSO/KKR Credit analysts don't typically specify their group due to being insecure about not being in Buyout PE. Have not looked into OHA exits.
Can't comment on on-cycle recruiting or small cohort size. Would say the incremental benefit is you are viewed as much sharper for having a buyside gig at a reputable firm + have the option to skip PE and go straight to a HF + being a more interesting commodity at the PE firms you do recruit at. And if you want to do something that is a hybrid between credit and PE (i.e. Blackstone Tac Opps, Apollo Hybrid Value, ASOF, KKR Special Sits, Sixth Street, Distressed/Activist HFs), you're an excellent candidate.
Edit: check this link out. If your offer is from OHA, would probably pass on it since you won't be able to recruit at Advent, Berkshire, CVC, EQT, H&F, Insight, Ares, New Mountain, Providence, or Silver Lake. Otherwise, would stick with the MF Credit offer.
https://www.wallstreetoasis.com/forum/private-equity/2022-private-equit…
If you're trying to join PE then going to a MF credit group is completely moronic. Going to a top buyside seat has lots of merit, but settling for a seat no one from a top banking group would want is just being impatient.
incoming FT at one of the firms OP posted about above. Everyone in my SA class turned down top banking offers and I know multiple SAs in 2 other groups OP mentioned and they all did the same. I personally turned down an EB and mid-BB offer and withdrew from other processes.
Yes, PE is better than Credit. However, the debate is between Credit and IB. PC/Mezzanine/Preferred Equity Investing will teach you more than turning comments at a bank.
Then you made a mistake. It's way harder to recruit out than you envision. Many, many places will disregard your experience or view it as a negative.
The credit funds you listed are really different from each other. Silver point and oak hill are true credit funds that actively play in the distressed space. Analysts from these shops will regularly get inbound opportunities at top L/S managers. You'd have no trouble recruiting from there to any of the sharkier loan to own PE shops that play in the distressed space like Ares, Apollo, Centerbridge, Cerberus, Oaktree, etc. Honestly though that would be a pretty backwards step considering 90% of the associates at those funds would love to go work at Silver Point.
GSO, KKR, and Bain Cap are different animals -- all three have a ton of credit groups ranging from liquid performing stuff to special sits. The move from special sits / distressed credit to long / short is tried and true. A ton of people have done it, especially really young analysts. If you're doing direct lending (private credit), performing credit, CLO stuff, etc. honestly you're not gonna have many opportunities to go work at a top long short or PE fund.
Overall, if you're absolutely certain you want to be an associate at a MF PE shop in two years, it's really really hard to argue against the fact that GS / MS is the easiest, most visible, consistent path to get there.
I think you're off the mark regarding OHA. Pretty sure their analysts get almost no stressed/distressed exposure (despite being promised that) which makes OHA very different from SPC (which is a super sick shop).
Regarding GSO/KKR/BCC, see the most liked comment here: https://www.wallstreetoasis.com/forum/private-equity/blackstonekkrbain-…
1. seems like the jump to MF PE is not hard (even if you're mostly/only doing Direct Lending)
2. GSO and BCC have many pools of capital. Less familiar with GSO but I interviewed for FT with BCC and had a friend there who left last year. Apparently, the industry research analysts spend 1/3 to 1/2 of their time on distressed/special sits opportunities. In other words, analysts are not siloed into lower-yielding stuff and look at everything. Can't comment on GSO. I think for KKR you have 4 siloed pools of capital: leveraged credit (only public credit), private credit - credit solutions (MM Private Corporate Credit), Private Credit - asset finance (collateral-based lending i.e. aircraft, student loans, etc.), and their dislocation opps vehicle which stopped hiring SAs and FT analysts (not sure why) so not applicable to you.
For context, BCC participated in the buyout of Virgin Australia, did a PIPE investment in Icelandair, is investing $500 million in cold storage warehouses in the US, opportunistically investing in stressed/distressed real estate assets across Europe (with a focus on southern Europe), buying telecom fiber assets in the Midwest, underwriting minority investments in LMM/MM C&R businesses, providing mezz capital for LBOs, and so much more.
Check out their press releases and make sure you filter for Credit: https://www.baincapital.com/news?business=191
Unfortunately, I don't think GSO and KKR let you filter press releases by business unit but I'm guessing GSO does similar stuff (not sure which exact pool of capital does) and KKR's dislocation ops team which sits under credit does similar stuff as well.
Friend was in an industry research group at BCC (almost all of the analysts are) and spent 30-40% of his time on illiquid distressed/special situation opportunities and had no trouble exiting to a top notch L/S Equity Single Manager. If you go on LinkedIn and look at former employees of BCC, you'll see very strong exits to L/S Equity and Special Sits/Distressed Shops in addition to PE.
@ OP would say that Silver Point Capital and Bain Capital Credit are no-brainers. For KKR, make sure you're in PC - Credit Solutions and not leveraged credit or their asset-backed private credit group. Can't comment on GSO analyst experience since I'm not super familiar with them. If OHA analysts get good stressed/distressed experience, then take that. If not, then don't. The rule of thumb is basically you need Unitranche (L + 600), 2nd Lien (L+800), Mezzanine (10+%), Preferred/Structured Equity (15+%), Distressed (20+%), or buyout experience (25+%). The higher-yielding, the better (naturally). SPC, BCC, and KKR PC - Credit Solutions will get you that. Would do more reference checks w/ GSO/OHA analysts to figure out what the analyst experience is like and how much exposure they get to the above investment opps. See if GSO filters analysts by industry or product type and for OHA, ask how much time they spend on liquid vs. illiquids.
For background, I went from a megafund credit role to a l/s equity role. If you want to do megafund PE, 100% do banking. You face an uphill battle convincing recruiters and interviewers to give you a chance. Regardless of reality, they will assume that you don't have the right skillset to do PE. Maybe you can convince them, maybe not. You'll definitely get MM PE looks, but megafund PE is extremely competitive as it is - you might as well give yourself the best chance of making it. I would not count on being able to transfer internally.
For l/s equity - if you're in a group that does stressed/distressed credit, it's very doable to move to l/s equity. Not to say it's not difficult - again, you have to convince people you have the right skillset to look at equities, but I've seen many other people do it. Personally, I found hedge fund recruiting to be much more meritocratic - once you convince recruiters to show you the roles, it's up to you to nail your pitches and case studies.