Starting a thread for mid-career finance professionals. Where did you guys go after banking? I ended up in PE myself, but man, it's hard. Seems WSO is all about the younglings but I wanted to hear what you fellow mid-career guys are experiencing. It's quite amusing to see the many young WSOers wanting to get into PE but once you're here, seems it's nearly impossible to get carry unless your a founder/partner, and it's not such a clear path to get to that level at all. Lateral moves are possible, so keen to hear your experiences.
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I spent 10 years in S&T and IB. I left to found a digital health company with an ER doc 5 years ago. Running a startup is worse hours and way more stressful. That said, I hope the opportunity cost will be worth it. We are growing. I worked in sponsors coverage at a BB in NY and then moved to a tech boutique in IB. After dealing with PE funds, I realized I never wanted to work at one long-term.
Dingdong08 CompBanker TheKing brandon st randy SanityCheck
I believe all of those guys are in/were in PE, probably can comment well enough.
SSits jankynoname DickFuld Eddie Braverman ke18sb Martinghoul and the godfather himself WallStreetOasis.com could also comment.
I'm probably no help, I've been around not as long as techbanking, but I'm not going to ever leave PWM most likely, so my advice is kinda irrelevant.
curious to hear what kinda responses this gets though...
Work in distressed - operating under the life assumption that while laterals to other funds are possible...they are extremely difficult. Pretty much assume that in 5 years from now I won't still be on the buyside (not by choice) and stacking chips accordingly. Buyside is a bitch of an industry and moving up is damn near impossible in my jaded view. On top of that...we'll see how automation/passive investing changes things, as well as with so much money chasing deals on the PE side, I feel that returns have to come down (both in terms of "winners curse" and overall increase corporate efficiencies on a much larger scale - eventually run of of blood to squeeze from the turnip).
Honestly don't even know what jobs exist if you want to exit the industry (either by choice, fund closing, fired)...that makes me nervous to a degree...hence, again, stacking chips. My % of post-tax income to savings rate would make IlliniProgrammer proud.
All that said, I'm well grounded and realized these are all champagne problems.
I was in PE for a little bit and then moved on to a commodities trading position. Its not really a traditional setup, but we have basically an unlimited balance sheet and I get a piece of the P&L - both up and down - which to me is basically a partnership-lite position. Sucks to have to bring money to the table when you're wrong, but it definitely forces you to be sure when you're putting your money where your mouth is.
Some meandering thoughts.
I lateraled into IB from law in my early 30s. Key skill in the transition was my deal execution ability.
The role in IB was not advisory, but instead the merchant banking desk eg balance sheet into clients for deals (eg pre-IPO investment in a company where we wanted to take ECM fees on the IPO, bridge loans), lead club deals for PE investments, infra development deals in interesting sectors, buy up seed assets for funds we planned to start etc.
Great work, but most of the origination work was done by the advisory bankers, who then would hand a lot of the work over to my desk when the deal got traction and moved beyond the stage of courting the deal in a karaoke dungeon. This meant I spent my time in IB doing interesting stuff, making good money, but with almost no development on my client networking and origination skills. It didn't help that I was a white guy in Asia who didn't speak the languages, I had a sense of integrity that made overselling difficult for me and the region was clearly slowing down.
As I approached the end of my 30s, I looked around and it dawned on me that structuring and execution skills can only get you so far. As earthwalker7 aptly titled this thread, it was no country for old I-bankers who don't originate, no matter how good their deal structuring and execution. I went from staff reviews where I was showered with praise one year to harsh questions why I wasn't bringing in deals in the next. I couldn't blame this on gender discrimination, so started looking for exits.
I knocked on a lot of doors, many internal. What helped immensely was working in a large global IB and having cultivated good relationships with many different teams I worked with on deals. I was lucky that there was a risk management team that I had a good relationship with, I commonly dealt with the heads of that team for deal approvals and their work (credit review for equity and debt deals) used a lot of the same skills I used in my then-role.
I spoke to some recruiters, but didn't see much interest there. As a mid-career investment banker, if you don't have network that can originate, I'm not sure you're that much use unless you've got serious specialist geek skills in some area (eg being the ratings guy for a lev fin group).
It may be different for PE people who have more operational experience, because (in my view) that's more real experience that can be used (eg at a "CFO or CEO for hire" shop).
Corp dev may be an option, but I was in the wrong region for that and had zero network to find those opportunities.
EDIT: By the time you've worked at a shop for years (particularly a large IB), a large part of your value is your internal network and your ability to get shit done in that IB's framework and culture. Those values are not portable and your value outside your current IB is much lower than in it.
Thanks man. Yes, this seems to be that there's a real challenge once you're "older" - as in mid/late 30s even. Who knew that going in, am I right? If you have a great sourcing rolodex you're set, but otherwise, execution can be done by juniors, and there's a juniorization trend happening across the field. I live in Hong Kong, and it seems there's a lot of pushed-out ibankers hanging around. I'm curious what they do after. One of my mentors was the head of PE for a big bulge bracket - he became a serial entrepreneur. Others have started boutique financial advisory businesses. I'm darn curious because it's important to plan the next step, and if it's not in my current firm or a mid-level role in a lateral firm, then I'd best plan out an alternative. Indeed, no country for old ibankers.
My front office IB time was in Hong Kong. I think there's a lot of bankers in their 30's and 40's who get trapped there by the pay and lifestyle. 15% tax rate, live in Filipina maid taking care of the kids, incredibly convenient to get anywhere on the island, a Marco Polo points balance that will fly you business class to any resort in SE Asia for free for a weekend, living like you're in your late 20's around Soho, LKF and Wanchai while on a post-tax salary you wouldn't see until your late 40's in many other places. I think that makes going back to London, Sydney or wherever else very hard for many.
EDIT: If I was ever to post a thread about my experience doing PE in China, the title would be something like "The Chairman is always upset: Hurting the feelings of some of the Chinese people while trying to invest in China"
I started in banking ~10 years ago and went a more or less traditional route of IB --> PE --> MBA --> PE. Some thoughts:
The early stages in the career are well-documented. Afterwards the path and individual success factors vary widely based on firms, culture, style, etc. It is really up to each person individually to establish a path and learn what does and does not work. For some people, they become successful Partners because they have sector specific knowledge. Others are great "people persons" and can win over others with their likability. Some are fantastic analytically and can dissect a business incredibly well. Whereas we can probably all agree on the factors that make a good analyst (attention to detail, analytics, attitude) -- successful mid- and senior-level characteristics are much harder to define.
You mention that Private Equity is hard. I both agree and disagree. The job has its frustrations. The weight of having to deploy capital while doing good deals and juggling dozens of competing priorities - this can be quite daunting. At the same time, there are many aspects of the industry that can be quite enjoyable. It can be a thrill when you're getting deals done, portfolio companies are performing above plan, or when a distribution hits your bank account. Like many jobs, there will be ups and downs. To me, aligning yourself with a firm that shares the same mindset on how to look at opportunities and shares the same fundamental values can be the difference between a happy employee and a frustrated one.
In terms of carry, I have a fair number of data points gained from discussions with MBA classmates and former co-workers. From what I've seen, carry at all levels is incredibly dependent on generosity of the Partners. I've seen numbers that range from a few hundred thousand to up to $5 million for folks in their early 30s (values based on 2x return and include return of capital contributions). That said, carry is a blessing and a curse. I've been making capital contributions for six years across multiple funds and don't expect to see a penny of carry for at least two more years, maybe more. Expect to be paper rich and cash poor as a private equity professional as you work your way up through the mid ranks.
As for the path to Partner, this is also a very firm specific issue. Theoretically, a firm can make way for new partners as old ones retire or fund size grows. It is important to pay attention to this and establish expectations with the Partners early on (at least establish expected timing for your next promotion). If all the partners are in their early 40s and/or there are a lot of mid-level professionals ahead of you, expect either a long promotion path or for there to be some terminations as you make your way up the ranks. Other factors to consider are whether there are relatively few founders controlling the economics. If the founders separate themselves from the other Partners in title, management company economics, or carry -- then expect to encounter similar challenges when you become a Partner.
Lastly, you mentioned lateraling. I certainly see opportunities from headhunters every so often, so I imagine it isn't too challenging to land another job. That said, I suspect that lateraling as a mid-level PE professional is likely to set you back in your promotion timeline. Lateraling is difficult -- you need to learn a whole new portfolio, including past investments. You have to adjust to the culture of the new firm as well as the style of each individual. Even if the new firm invests in the same sector, it can get take awhile to be knowledgeable of the firm relationships and "history." That's not to say don't lateral, there are tons of very good reasons why one might choose to do so, just be aware that it has its own set of challenges.
I feel you, man. Story of many of our lives.
I'm always reluctant to post in the forums for the typical accusation that I'm selling what I do, but the fact is that I do what I do for exactly this reason.
Those of you who have read my Wall Street book, and know my story, get that I spent most of my career in investment banking at Goldman Sachs figuring out what I truly wanted in my career and life.
Starting researching these topics in 2000, sitting in the down and out tech group in Menlo Park, I made a number of moves to expand my options and set myself up for the buyside, but still not convinced that was my path, as a VP I resigned from Goldman to take time off, thinking that would help me figure it out.
It helped me a lot, gave me tons of time to reflect, gave me new experiences that helped me keep seeing it freshly, but it certainly didn't lead me to any miraculous realizations. Instead, it led me back to what I once believed was the better side of the street.
In 2007 it was obvious to me that buyout had seen its best days (as I had been in leveraged finance at GS and seen first hand it was only a matter of time before that credit bubble punctured), and so I went after jobs in distressed, ultimately joining the Carlyle Group.
It took me all of a few months to see that was hardly the business I hoped it would be (not for me at least), and investing in busted buyout deals during the credit crisis gave me even further insight on the problems with private equity.
Stepping back at that point, it became obvious to me that I had explored every angle I wanted on Wall Street and it was time for me to leave. Also, fortunately for me, I had discovered what truly mattered to me, for nearly 10 years I had been obsessed with these topics of how we figure out what we want and how to get it, and I set a course to leave Wall Street and share what I had learned.
Today some of my clients are bankers and private equity pros (founders who left shops to start their own). Truth is, there are very few "great seats" on Wall Street, and if you want to create an extraordinary career you likely must do more than just work for someone else.
The days of working for a HF or PE shop hoping to make excess returns are long gone. You can of course still have a fantastic and lucrative career in banking or the buyside, but if you want to be more than a taker of terms, well, you must set your own terms. You must own the equity. You must take the business risk.
Too many people today still believe that if they work for say KKR they will grow up to be Henry or George. What? They are who they are because they saw a career at Bear was limited relative to taking their own shot and starting their own firm. And no matter what firm you work for, there are always owners and employees, and the owners are never handing over the keys. btw, as TechBanking wrote, being a founder isn't some easy path of course.
As I opened my first book with: None of us joined Wall Street just to have a job, but believing that it would be a path to create a truly extraordinary career and life.
In many ways it still is. But, the days of joining a top firm and climbing to the top and becoming a king of the hill are behind us, if it ever really worked that way. If you want to truly win on Wall Street, and if you want to create the career and life you truly want, you must be willing to do more than be an "employee."
My advice is the same I offer in my book and to anyone who is serious: Get clear on what you want. Know what you are willing to do. Step back and create a plan. Every day take action to make it real.
and if you want to stay as an employee but get better terms, really liked CompBanker's thoughts.
Appreciate you sharing but this post (and the others you've made) really does smell like self-help bullshit e.g. "get clear on what you want", "evaluate your career on winner's circle".
Could you share some specific examples on your GS experience - or are you waiting for us to buy your book?
earthwalker7 Heading to HBS in the fall. I thought a great deal about whether PE was the end all be all for me, and while I considered lateraling, I found great value in "exploring my options" over the next few years in business school. As many people have laid out in this discussion topic, it's very tough, if not impossible, to make it to the top by being an employee. I viewed business school as a two year runway to fully vet my options before committing my career to the industry.
As an example, if I moved out of the industry for two years, maybe starting my own business or taking on an "ops" role, it would be much more difficult to break back into the industry. I did not heavily weigh the opportunity cost, as having 100% confidence in what I want to dedicate the rest of my life to pursuing is worth it to me. Joining an investment bank is as much of a prestige driven path as it is driven by the ability to avoid making any concrete decisions, just as the decision to pursue PE was, and just as much as the decision to attend business school. I truly think business school will allow me to consider all of my options, without having to consider the question "How will my next employer view my work experience when making a hiring decision?"
That being said, it could very well be that I will find myself in the same position a few years from now, but at least then I will have fully vetted my options and will have an expensive sense of reassurance. At that time though, I will be in my early 30s and on the precipice of having children and I won't have the selfish ability to make whichever decision best suits my need for career fulfillment.
I completely agree with all of the posters above, that reference how tough it is to find a spot that will suit your needs. Although I am not quite a VP, I have seen second-hand the value in the points CompBanker laid out above. Many LP investments are long-standing relationships, and although senior members may not participate in the deal-making process as much as they once did, they still hold the keys to the kingdom. I just hope that should I recommit myself to this path, that I am lucky enough to find a firm in the right location that has an industry focus, investment philosophy, "path to partner," and background that aligns with my desires. However, I am not naive enough to think this is likely, nor even remotely possible.
This is going to be pretty stream of conscious writing.
I have a pretty non-traditional path. Started at Bear Stearns in mid 2000s on the OTC desk supporting asset backs and CDS products (awesome first job out of a college, right?). After that collapse, went to a large Swiss investment bank briefly (hated it. People were great, but the products/work was awful). Went to Columbia in 2008/2009 in a one-year degree program. Then was in middle market pure sell-side and merchant banks until 2016 (made VP level) and am now in a large firm as a Management Consultant for financial services (basically helping with regulatory, cost cutting, financial due dili, and occasional front office strategy, but really you're loan staff). The hours are far more manageable and the base pay is higher (bonus see ya later), but in my early 30s, I'm more than fine taking home 200k+ pre tax and having my life back.
I got my MBA from Johns Hopkins (it's a surprisingly great program if you find the right professors and take advantage of the other grad schools under he Hopkins umbrella) and am gearing up for L3 of the CFA exams.
I had the misfortune of being an analyst 3 in 2009 when no PEs were hiring people like me. Now I'm sniffing around AM, VC, and some speciality finance shops.
My advice, don't think banking will set you for life. I know plenty of 40 something bankers on their 2nd marriage that pitch the same book of clients the same deals over and over. They make over a stick a year and they get equity in deals (some have actually gotten a full turn on their investments), but most of them seem miserable. Not a life for me.
On a more positive note, I have friends that launched their own funds and are dictating their own lives. Do they make KKR in the 80s/90s money? Of course they don't, but they do make in the top tax bracket, have carry, and get to choose investments. Sounds pretty great to me.