Overall PE Vibe Check
We all know WSO can be biased. What is general sentiment (in your opinion) among junior and mid levels at your firms?
I'm at MM fund in NYC. Morale is pretty low. Portfolio not great. Know multiple people actively recruiting for both laterals and trying to leave finance. Expect turnover / attrition to start picking up soon
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MF
Would summarize the overarching trend amongst Associates at my shop as "increasingly disillusioned". Reasons why:
Summarized perfectly. get out of PE dude, you're too smart for this shit
where are the guys who left now?
I've seen a shift of some people going back into banking to their old groups or more targeted products / groups since they are more aware of what they actually want to do (easier to figure that out at 26 post associate stint vs. at 21 chasing the internship with the "best exits"). Others have gone into the industry / corp dev or into startups.
OP
HFs, crossover funds, some more interesting iterations of private investing seats with more flexible mandates vs. MF PE. Couple to upstart PE funds (very thoughtfully selected - MM is crowded, more "founding employee" + start as a VP plays). Always a handful who go pursue an MBA or other advanced degree. Less common but have also seen some folks go to startup roles recently
Can you elaborate on or gove a few examples of the un-meritocratic promo process and politics? And what did those who successfully navigated it do vs those who didn’t?
www.wallstreetoasis.comhttps://www.wallstreetoasis.com/forum/private-equity/who-becomes-vp-at-…
Would you accept a $290k all in corp dev position?
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At MF rn (latest fund >20b) - vibes have been fine (not great, not bad). Our portfolio has held up better than others (maybe 1/2 names where we truly believe capital will be impaired) so that helps. Next fundraise also looking better than others so people feel like they can live to fight another day. Current fund has 3-4 potential standout winners so everyone hoping we can ride off of that for the next few years
Is yours tech focused? How do you feel about AI disruption
What sectors are you bullish on?
For those who are feeling disillusioned, where are you exiting to? Smaller funds? HF? Leaving investing altogether? Personally feel like I’ve seen more folks exiting to family offices.
MM $2-4B East Coast non NYC
Same vibes. Hamster wheel stuff. Spend more time on bad portfolio work, harder to sell, slower realizations, less fundraising. Future uspide capped. Path forward not as clear as it used to be.
I think everyone is feeling it.
I think more ppl would lateral around or make an adjacent (non PE) move if they could but there’s little demand for it (or employer risk willing to take on a slight pivot)
The MM is just screwed in PE unless you are one of the few high-flyers (but in which you are likely to grow out of MM size anyways). Too many 1-4bn funds with no diffrentiation or domain expertise. Hopefully you can get the senior associate or VP promote and gameplan from there.
Large UMM; am an associate 2 about to become a senior assoicate.
More and more convinced that the move is going to some AI-native start-up or at least work on something AI-related. AI is absolutely devastating the business services and software world's already. It will likely cause even more disruption in other sectors as agentic AI gets better at automating highly repetable tasks or labour-intensive tasks. AI is the cloud or internet revolutions of the past, but with even higher upside and far more of a technological leap. Just unsure what the best angle to approach it from a career perspective / risk-reward perspective. Heavily considering switching from accepting my promote to asking to go to a more AI-first portco (we are more growthy investors) for a chief of staff-type position.
Are you tech indexed? How do you feel about disruption to the potfolio
I am in tech investing. I think what we're seeing is that some portfolio companies are going to be huge loses (AI natives are likely to at the very least weaken their competitive moat), but others are drastically outperforming our underwritten case (i.e. a company we underwrote for rule of 40 is now rule of 60-70 because of AI-driven cost costs and revenue growth). Idt you can paint all of software as being bad; though I do think there needes to be a drastic re-evaluation of software portfolio's as terminal value equation has fundamentally changed, especially for not very agile companies or companies most prone to AI-disruption risk.
Same but definitely leave after promo if you can get it on the res. Will help with recruiting down the lineup
Agreed, going to take my promo and am then going to talk to my team about jumping to a AI growth-y portco that is doing well. I have enjoyed my experience and the team, and portco should at least provide a bit more security as the winners and losers are determined in the software world.
bro pe has always been an ass industry. let me ask you. where do you think you can capitalize on outsized opportunities with crazy leverage. near nowhere. the lucky ones are like kohlbert or kravis or schwarzman.
you're doomed to fail in this industry. all you've done is funneled pension money to yourselves. tbh greatest ponzi scheme in history. surprised the feds havent done anything. just goes to show how fucked we are.
oh the other crazy thing feds havent done is properly adjust fx rates. we're about to experience a new level of inflation in the upcoming decades never seen before.
well not we since i have another citizenship but yea good luck youre cooked af
also that other thread about net worths is so funny. bro youll have pennies in actual buying power when milk is 30-40$ a gallon thanks to mismanaged fx
What do you think abt roles in portfolio operations/restructuring consulting? Are they at least less saturated than they typical IB --> PE deal team pipelines.
Also if jobs in these industries are cooked, what else is there to do? I'm just a college student but all I've literally heard about for the past 3 years is IB, PE, and Consulting.
bro thats a gold pot imo if you are actually interested in finance. also look at pricing and valuation roles. kroll, duff phelps etc. not really considered, but they also do provide a lot of value. i think personally a lot more than the shit fuckery that is pe.
Are you in PE? This reads like it was written by a college student.
At a tech mf, real concerns on exit liquidity for tech assets we bought. How can you underwrite a five year hold reasonably when there’s so much uncertainty on what software will look five years from now? Seems like the whole tech pe industry is a slow motion train wreck
I see a similar dynamic in tech growth. Some companies are either completely going to be losses and might even be zeros.
At the same time, a subset of the portfolio is benefiting massively, what we underwrote as Rule of 40 might end up looking more like Rule of 60. If you are bringing a compnay from rule of 30 to rule of 60 company, you are still going to make money. The outcome increasingly comes down to whether those winners can generate enough MOIC to cover the laggards.
That’s why I’m more constructive on VC, true minority growth, and capital-agnostic investing model right now more than taditional PE. Traditional PE, where you need most things to work and are less agile, feels like a tougher place to be. Software PE is all about producing singles and doubles but in a rapidly changing AI world think it will all be either strikeouts or home-runs, which is simply not the world that software investors expected.
What characteristics do you see in the portfolio company that is benefitting from AI?
When you say tech growth are you in a Summit / PSG style software investing - bootstrapped businesses etc.?
I’ve written off my COVID vintage carry. Current vintage, who knows. Like many were going fund raising next year. If that doesn’t go well then the knives will come out even more undoubtedly
How bad has performance been
Anyone with carry from 2020 onward should assume they aren't getting a thing, meaning returns are under 8%. Said differently public returns likely crush PE returns writ large and the industry massively contracts (as it should, 98% of people in PE are nothing special and should be doing something else).
If you’re a principal or Vp today would you want to take
MM (1-2B) that’s top decile growing 50-100% fund to fund, lean headcount or
Large fund (5B+) that’s fully staffed and maybe 2/3 quartile but very established
When was the last fundraise for the MM? If you want to make Partner, the MM gives you a better shot.
Those fund sizes don't really differentiate the two that much. You are better off at the tails. Low end you bet on yourself, high end you do just enough to scrape by and rake in the checks.
For someone just moving into PE, this does not bode well. Just a sign of temporary cyclicality or more chronic than this?
Just some temporary cyclicality. It'll sort itself out over the next 10-20 years.
Tech Growth + Buyout in London.
Overall, growing disillusionment and increasingly feel it amongst my colleagues. PE used to be a cottage industry, now its completely commoditised with large caps morphing into asset managers. Firms that did well are top heavy, making advancement/Partner tracks feel less likely. Funds increasingly struggle to differentiate themselves meaningfully, even in their value add resources - which are table stakes and increasingly less likely to move the needle in a rapidly changing ecosystem (AI, geopolitics).
On the Tech/Software side, AI is slowly eating everything to varying degrees. The naysayers and luddites of 6 months ago are now holding their tongues. In B2B, each new apparerent layer of potential defensibility against AI is being destroyed by LLMs - arguably, the only sustainable one left is vertical/proprietary data, and even that's increasingly in question. UI/usability, workflow embedding, ecosystem integrations etc. no longer feel like true moats. Even vertical AI platforms in less complex and service-heavy industries (Rogo, Blueflame, Hebbia in FS; Harvey, Legora in Legal) arguably have their work cut out for them (*cough cough* Claude 4.6).
Deal teams are often drowning in heavy portfolio work as a result, without a real feeling that any of it will make a meaningful difference to the outcome. The age old adage of "flogging a dead horse" sadly hits.
On a more general note: people like certainty. Uncertainty breeds anxiety. At the moment, certainty feels like a scarce resource and is creating disillusionment in indutries across the board, not just high finance.
How do you think software bankers will do over the next five to ten years?
Software and tech-services banker here (I like to read PE forum because it is smarter than IB forum)
Very optimistic. Current environment is uncertain from business model perspective (vs. financial markets / liquidity issues) meaning that the impetus for deal making is higher than ever as my strategic clients try to defensively acquire vs. build their own capabilities. E.g., the pace of change is too fast and too far afield from their current model, so M&A is the natural lever. On the sellside, remarkable supply of smaller AI-native companies that are highly desirable for the same reason. We have to navigate challenges in bid-ask spreads as strategic acquirers trade down meaningfully but targets demand premiums for cutting-edge offerings, but that is nothing new in the post-COVID environment. Ultimately a very comfortable place to be an agent vs. a principal since we don’t take any risk. Good luck and god speed to you gentlemen (and ladies) who actually have to do the math on values vs. just finding the market clearing price.
Are you in the LMM (since you said growth + buyout) or a solidly MM fund? Would've thought they're less impacted than larger funds if you're investing in growthier deals but correct me if wrong...
What are people thinking of as the next step then at your fund?
My fund has been fine (no direct tech exposure thank god). Doing a few industrials and data center picks and shovel deals. With coinvest now can do deals 3x the size what we used to so think it crowds into larger UMM fund deals. Have to imagine same happened with UMM and mega funds which further compressed returns there.
LMM Industrials (Latest fund sub-$1B)
Things are fine at my firm. Spirits are high. Deal volume is fine, but the assets in the market are either shitty or gold star -- so you have to pick your spot carefully. Portfolio is doing fine but nothing crazy since we aren't over indexed to data centers.
Associates aren't working 70+ hour weeks. A nice steady state of ~60 for the past few quarters with no real reason on why it'd explode near term unless market gets exceptionally hot or portco implodes.
I’m LMM industrials as well. Well said, very similar dynamics at my firm. Quality deal flow has been a little soft to start the year but still enough to keep us busy
how is comp?
I am in consumer, specifically, we have a specialty that I think is going to rip with AI. If it goes on a heater the way I think it will, it will be a good time.
Thanks - any chance you could share your vertical in consumer?
It’s probably Amazon aggregators…kidding
classified listings?
Sector agnostic value / operational mid market buyout shop based in Europe
Basically we are seeing barely any deal flow, assets are either absolute turds that even struggle to work at our typical MSD multiple bid range, or they are high quality that end up being very competitive. We have never bought a software asset to my knowledge so think the portfolio is ok, some winners some losers. Consumer confidence is still suffering so ideally that comes back. Don’t really use AI myself so can’t say it’s impacted me at all, life largely continues for me as it has for the last three years. A bit of economic growth would be nice.
Currently work in MF PE. Vibes amongst juniors are extremely bad on long-term career outlook, yet fine for now as placeholder stint given (i) high relative compensation, (ii) strong learning, and (iii) good pedigree
Many reasons have already been socialized on this thread and across WSO boards.
The correct mental model is PE is lagging HF / IB that experience peak haydays in early 2000s and we are in a much more insitutionalized and codified investment industry. Not only are compensation outlooks worse, but the industry is much more rigid and less fun [ie deal cowboys mostly gone]
This is amplified by college friends who joined start-ups like OAI, Anthropic, SpaceX, ScaleAI etc. and have made $10-50M+ (not even including extreme equity outliers) working on much more interesting problems with better WLB and accelerated career earnings payoff, as nice to be rich young.
Reductively - like man - friends hit $20M Stripe payoff and now are launching own business or joining prominent VC fund... while I turn comments in deal sprint at 2AM on deal IC already hates but we have to run at it since there are only ~20 investible assets within this nuanced subsegment category of consumer
Good thing we conducted ~50 customer calls on top of Bain who ran ~200 to build strong N response rate (!) so VP can confidently show partner we have done requisite work over our T5/10 diligence questions
What’s next?
Independent sponsor route for LMM deals. If you can hit a homerun in one deal, it's highly lucrative since you're not tied to a fund hurdle. Also gives optionality down the line to start your own fund
Yea I have friends in SF who are decamillionaires many times over. Meanwhile I have like 1m, which is obviously great, but have worked so much more than them and given up more and been sadder and unhealthier. And carry feels like a myth.
Might go LMM. I’m large cap right now and it’s just terrible. So many zeroes in the portfolio it feels like we’re just cookies baking in an oven.
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