MF PE: Associates from Banking programs vs MF Analyst to Associate
If you had to generalize, who performs better during the associate years? Can see a number of pros and cons for each
Trending Content - Private Equity Forum
Career Resources
Based on the most helpful WSO content, here's a detailed comparison of associates from banking programs versus those who started as MF analysts:
Associates from Banking Programs:
Pros: - Robust Skill Set: Banking analysts typically have a strong foundation in financial modeling, pitchbook creation, and project management. - Proven Experience: They have been through the rigorous training and workload of a banking analyst program, which is a known proving ground. - Career Mobility: The banking analyst stint acts as a foundational stepping-stone for various career paths, preserving optionality for future moves. - Network: Banking programs often provide access to a larger alumni network across numerous PE companies and other financial institutions.
Cons: - Adjustment Period: Transitioning from banking to PE might require an adjustment period to adapt to the different work environment and expectations in PE. - Depth of Analysis: Banking analysts might be used to working on more deals at a shallower level, which could be a disadvantage in the more in-depth analysis required in PE.
MF Analysts to Associates:
Pros: - In-Depth Experience: MF analysts often get involved in detailed aspects of deals, leading various work streams and engaging deeply in diligence processes. - Firm-Specific Knowledge: They are already familiar with the firm's culture, processes, and expectations, which can lead to a smoother transition to the associate role. - Risk-Averse Path: Starting as an analyst at a MF can be seen as a more risk-averse option given the intense recruiting environment and the favorable view recruiters have of PE analysts.
Cons: - Limited Initial Network: PE analyst programs are smaller, potentially offering a more limited network compared to banking programs. - Potential for Limited Deal Exposure: Depending on the firm, MF analysts might work on fewer deals, which could limit their exposure to a variety of transactions.
General Performance:
Ultimately, performance can vary widely based on individual capabilities and the specific firm environment. Both paths have their unique advantages and potential drawbacks.
Sources: Megafunds starting associates 6 months earlier, PE analyst at a megafund vs. banking/consulting, Q&A: 1st Year Private Equity Analyst at a MF (KKR, BX, TPG, SLP, WP), Q&A: GS/MS IB Analyst —> Megafund PE Associate —> HBS/GSB Business School, Bain Capital PE vs PJT RSSG
At a MF? Def the one who’s been there for 2 years
All else held equal, you think the MF PE associate with 2 years of MF PE experience is going to be worse than the guy moving logos in banking? If the banker is better than the PE A2A, it's not because of their banking experience...
MF PE Analyst here, so not entirely qualified to speak but 2c.
The banking guys are mostly better at execution-focused stuff no doubt (seen exceptions to this as well) and by virtue of hiring on cycle / selective groups and teams, they have their pick of the best groups with good deal flows. So the assoc has seen 2y of live processes, deadlines, knows what to stay on top of, how to handle a massive datacube dump, when to format the memos and when to just snip stuff
The MF PE analyst has sat in almost every IC since he begins, he's accustomed to the most minimum firm-specific formatting nuances and learns what a create multiple by Week 4. By month 3-6, he's asked "why did they do that if they've refi'd 2 months ago? can you add, then comment, on an equity sweetener and lmk if returns change to fit lender X's mandate?" This is all alongside churning out memos ("execution") work thats mind numbing and usually a lot of PortCo work, but you refine your hard skills well. The analyst has sat on every expert call, taken notes in all meetings (with generally "senior" guys), and people are extra nice as you get a grace period being fresh out of undergrad - the other nice benefit of being buyside, it isn't embarrassing to take you to every sell-side event/call there is, everyone likes it and you're able to get some incredible exposure that you may have missed in banking - I've managed to sit in almost every external or internal call since I've began on the deals I'm on. Overall this is all well documented on WSO, but just wanted to agree why I think being in that environment for 1-2 years is infinitely more useful than coming straight in from banking.
Take with a pinch of salt - just my experiences, I absolutely love working with my associates - they're incredible, teach me a lot and we work very well altogether. Constant learning on both sides
Edit: something very cool is that some of the work you do gets teared apart in IC which is pretty cool learning
What’s a create multiple
for our firm we use creation multiple to refer to buy-in TEV / current NTM EBITDA (or whatever metric suitable)
Depends on the MF. KKR prob not and have been told by partner level ppl that they prefer ppl from IB as opposed to KKR A2A. MF with established analyst programs (BX, WP, Bain, SLP) prob much better.
It depends more granularly than at the firm level / firm type level. It’s all based on the person and the team and how they were able to hit the ground running or not. The top top kids are going to be PE analysts. There is an archetype of PE analyst situation where the stars align and some kid basically gets to associate level productivity like 6mo to a year in. This is usually a Wharton kid who gets immediately crushed because of short staffing but is able to swim rather than drown.
But this is why you do interviews. A brief “case driven” interview (I.e. one where you just start doing the job with the candidate in the room and let them pitch in) will easily clarify a situation with the elite PE analyst kid that has basically been an associate for 1.5y, vs. the PE analysts that are more comparable to banking analysts, vs the ones that floundered without structure, which also exist.
Eum provident sit odio quisquam earum quia velit. Occaecati perspiciatis ut minus libero. Est ea nam atque eum. Et quisquam enim dolorem.
Eveniet adipisci sed et ullam. Vero incidunt quia quisquam et labore. Accusamus quae enim consequatur quaerat assumenda amet.
Hic laudantium repellendus id rem. Tempora quidem ex sunt ut provident praesentium.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...