Q&A - London Megafund PE, one year in...

I did a Q&A before but I lost my login details. Here I am after a year in PE. This forum is a constant source of amusement/info so I am happy to answer any questions, with the caveat that anyone participating is a total loser like me who is on WSO during Xmas : )

Thanks for doing this.

1) Are there any other major headhunters for London PE / HF besides KEA, Blackwood, PER, Arkesden, Hinton Rose?

2) Any recommendation on how to make the jump to the buyside happen when not coming from GS or MS? Have been incredibly busy so far and had not much time getting in touch with HHs

3) How did you decide on what you want to do post banking. Was it clear for you that you want to go down the MF PE route? While traditional PE seems interesting, I could also see myself at a HF

4) What's your background - BB or boutique M&A?


above and beyond -

1 - Main HHs are Kea, Blackwood and walker hamill for PE. Shout out for Melrose partners also. Greenwich Partners does a bunch of random stuff which sometimes includes top PE funds. Then yeah Arkesden, PER, Nordbridge. Think carpenter faraday does Apax also.

2 - GS / MS are nice but not sure anyone really cares as long as you're coming from one of the BBs or elite boutiques. Any of those places should get you interviews if you have a deal or two to talk about / are somewhat prepared. Advice I guess is reach out to them when you are actually ready and don't fcuk them around. They don't work for you, they get paid by the fund doing the recruiting, they just want to put people forward who won't make them look stupid and ideally who will get the offer. They see dozens of turd bankers and consultants every other week and literally do not give a sh!t that you work for Goldman or whatever or worked on a big M&A deal. Based on my experience I would basically reach out to HHs when you are at the point when you would feel prepared to interview the week after.

3 - MF PE is a pretty easy/lazy choice I think as you keep a lot of optionality, but have to figure out what you want to do at some point, MF PE just kind of delays that decision for a few years. Didn't really feel like a decision to be honest, just a natural response to the horror that is banking. Don't regret it though, but don't feel like MF PE is a particularly enlightened thing to do after banking given it is commoditised by now and pretty limited upside if you stay in it.

4 - one of these boutiques / independent advisors

 don't feel like MF PE is a particularly enlightened thing to do after banking given it is commoditised by now and pretty limited upside if you stay in it.

Pardon my questions, I'm relatively new to finance (incoming BB intern). What exactly do you mean by "commoditised"? Why are the upsides limited (do you mean promotion/comp or getting to the peak?); what other kinds of PE firms would give the better "upsides" you are talking about?

Can you throw more light/ explain more about that highlighted sentence?

Best Response

keithape - best I think is meeting lots of absurdly wealthy, 'successful' finance-type people and seeing up close how dumb they are. Getting to see some of these funds from the other side and realising how dysfunctional they are is a relatively unique experience, genuinely think that is one of the most valuable things. Going through the investment process in disbelief and asking people at other big funds if it's the same, and yeah, it's the same..

Close second to be fair is probably the amount of resources you have in terms of bankers, lawyers, consultants throwing themselves at your firm to get business, learn quite a bit from basically working for a potentially significant recurring source of fees for the sell-side, but not sure how unique that really is to MF PE

Worst is probably realising people don't really, when it comes down to it, care that much what you think about an investment. MF PE at a junior level, just in case it wasn't already obvious, really is just process management / execution role. They've essentially in-housed a few bankers / consultants because it's more efficient. Realising that makes the job a little boring which is probably the worst part for me.

Shortmyshit -

Pay is actually pretty good / met expectations, career advancement is slower than I expected, industry at the top end isn't growing anymore (or at least doesn't feel like it is!) and there isn't much incentive for partners to leave. While pay is good, real fcuk you money comes with carry and that is pretty opaque, but also meaningful carry is a good number of years away. Banks have raised salaries in London recently so it's not unusual to hear of bankers taking pay cuts if they are associates, but numbers I've heard are £80-100k for PE associates, with most between £85-90k. 100% bonus seems pretty normal with some going above that (arguably to compensate for worse carry prospects?) Different places have different structures, but from what I understand you will struggle to get past £200k salary within your first decade in MF PE, though admittedly salary isn't that relevant as it's really all about carry.

BreakingintoIBD - Not sure anyone cares as long as you have M&A transaction experience. If they are looking for a specific skillset like FIG then maybe it would be an issue but don't see why they would really look much past the name of the bank otherwise

Starchitect - for MF probably not unless you've got prior M&A or consulting experience, haven't come across many LBS people, but no idea about MM. Not so much a reflection of LBS as MBAs in general in London in my view

Hiperfly - Big 4 types tend to replenish the analyst / associate classes at the banks once the graduate pool leave and then some also seem to jump into PE. Don't know about MM PE, but don't see why not, particularly if you pick up a year of banking on the way

FairValue - Real estate is seen as a bit niche I think and I haven't come across anyone who has made the move, but don't see why not, especially if you have 'normal' banking or consulting experience before. Have come across a few people from real estate PE who move to some of the big hedge funds as they build out their illiquid / real estate exposure. Any reason you want to make the move? Haven't done any real estate PE, but seems very hot right now from what I understand.

Haven't got much advice except to track down people who have made the move and ask them about it. Would be surprised if you didn't get a few interviews if you can convince the recruiters about why you want to move. But yeah, the longer you stay doing something specific like real estate, the more difficult it will become to switch I would imagine

Above_and_beyond -

Hours completely depend on whether working on a deal / towards a deadline

When chilling, turn up some time after 9am, then leave some time between 8-9pm with not too much weekend work.

When on a deal it can be anything really - one day can be 2am, next 4am, then leave at 7pm but wake up at 5am to catch a flight next day. Think it's pretty hard to generalise beyond American funds working that bit longer hours than the European funds, but yeah definitely better than banking.

I have no M&A/consulting experience so far, but am planning to do that after my MBA (2 years). Is there such a thing as being "too old" to break into PE? Again both MF/MM as I am not picky at all.

Starchitect - don't think there is such thing as being too old, the smaller / newer the fund the more flexible the hiring mandate so will have hustling to do I would have thought, but never say never

EE_cons -

Atmosphere is not too bad, about as much politics as you would expect of a large, institutionalised organisation but nothing out of the ordinary

Pretty sure it's better to try for before the MBA

Thanks for doing this Trashbat - what are your plans after this and how long do you plan on staying at this PE firm?

What's the precedent there (or generally PE in London) about getting promoted to VP directly after 2-3 years? Do you typically need an MBA?

Also, thoughts on Natural Resources PE (kind of similar to growth/VC type) to switching to traditional buyout PE?

IBBanker - think I'll see how it goes, but typically people seem to start to wonder if the grass is greener at hedge funds, whether event-driven or LS. Not sure if it is (particularly this year!) and there is something to be said for having capital locked up for years instead of quarters (or months..). But hard to shake the suspicion that working at a hedge fund is probably more interesting if (big if) your fund doesn't blow up.

Job titles are a little random, some places don't bother with senior associate, some go from associate to principal, some have senior principals, some have directors and principals. American funds tend to prefer MBAs, but not all. Common thread is that whatever the career trajectory, the fund will do its best generally to drag it out as long as possible before you get to MD / partner. Because of this promotion at a junior level isn't that relevant because you can easily stall at principal level or whatever for years.

Seen first reserve haemorrhaging people recently - not too familiar with the space, but yeah have seen some NatRes people switch.

Are there many associates in mega funds that have no IB experience and no MBA?

I am asking because I started my career as an infrastructure PE analyst (in big name, think Macquarie, GIP) then jumped to the top tier real estate PE for two reasons: a) because I wanted more value add / opportunistic deals and not vanilla regulated utilities I used to work on, and b) that gave me a chance to move to London from other European city.

So now I want to make the final move and reach the ultimate goal - to land in "normal" private equity (large cap or top notch middle market investor), and I need to figure out whether I should concentrate on MBA (would prefer not to, especially in Europe where it is not that critical) or else.

FairValue - come across people with consulting backgrounds or occasionally people who went straight into PE, but otherwise they tend to have IBD.

Unless the MBA is HSW not really sure it's worth it, but guess you just need to talk to headhunters. Gut reaction would be to concentrate on meeting people at the funds you are interested to see if you can get some off-market interviews.

You place emphasis on M&A transaction experience, is Leveraged Finance experience viewed equally as good? If not, will funds look for certain skills to be brushed up on?

Also, I noted your point on HFs, what do you think of credit/distressed debt funds? Do you see a future or have an interest in them at all?

Thanks for this!

kpmonkey - didn't do LevFin so not as familiar. Pretty sure LevFin would position you well for PE, would probably end up knowing more about PE than if you did M&A (maybe even enough to put you off PE altogether..)

Been a pretty bad year for credit / distressed. Not too familiar with the space, but seems very crowded in Europe now, lots of funds hiring / set up in Europe in anticipation of big pipeline in Europe which from what I hear hasn't materialised. With the way things are going in Europe these days though maybe distressed is about to get more interesting, who knows

Many thanks for the insight. When talking to headhunters, is it important to be sure if you want to do PE or go to a HF? Or could they open doors to both if you are a solid candidate?

mirus - Think if you're at a BB you should get interviews, but yeah rotating into less niche group would help if you want to do regular, boring, old PE. From what I've heard FIG gets some love from hedge funds so might be something to think about. Then again FIG is pretty notorious for being sh!t even by IBD standards. Also some of the big funds have FIG teams (Cinven, Permira come to mind)


mirus - Think if you're at a BB you should get interviews, but yeah rotating into less niche group would help if you want to do regular, boring, old PE. From what I've heard FIG gets some love from hedge funds so might be something to think about. Then again FIG is pretty notorious for being sh!t even by IBD standards. Also some of the big funds have FIG teams (Cinven, Permira come to mind)

Thanks a lot Trashbat2. So in your opinion or experience being in FIG is a disadvantage? Or what do you mean by saying it's notorious for being shit even by IBD?

Did you study at either Oxbridge/LSE or Imperial/UCL/Warwick or other ? How will going to a non-target or working at a certain bank effect your chances of getting into PE ? Is it possible to transfer offices from Europe to USA (if so how difficult is it) ? How are the hours like ? Is LinkedIn the only way headhunters contact people ? What were the exit opps of other people you worked with ? How tough was the application process ?

Thank you for doing this and sorry if you answered some of the question already.

Thanks for this great post!

Quick question on comp: Advertised packages seem to be around 80k+80k GBP for first year. How does that evolve during the rest of the Associate programme? Or is it fixed for 3-4 years? In this case, it would create a significant gap vs. banking.

Also, what are your views on growth firms (e.g. TA Associates)?

Thanks a lot!

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