Hi everyone, hope you are all doing well in this coronavirus season. Wanted to contribute to the community during this time with a Q&A. I imagine many of you consultants or college students are at home chilling, so thought this could be an interesting use of time.
Open to answering all sorts of questions about life in MM PE, my time at MBB, transitioning from MBB to PE, college to MBB, etc. I hope this is a helpful discussion on this forum.
For some brief background - target university, 2 years at MBB, and now towards the end of my first year as an associate at a MM PE firm in the US. Pretty standard background I guess, but willing to be a resource for people considering a path in consulting, PE, or elsewhere!
Big questions! Let me try to answer these.
For one, it's an opportunity to make a lot of new friends, especially when your college circles start to shrink (friends drift off, it happens to everyone). Second, the connections and friendships you make can have immeasurable value. I've seen partners source deals from their b-school friends/connections and partners mention in IC all the time, "let me check with my friend about this company, he's an expert in this industry". That network can work wonders 20 years later when it's your job to source and diligence deals (and bring real value to the firm). And three, the opportunity to travel, see the world, create lasting memories that will make you a more interesting person is really valuable.
Prep for PE recruiting - I did a couple case interviews, as this is the most common type of interview for PE firms that hire consultants. Also thought about standard questions like "tell me about yourself" and learned to explain the work I had done at MBB (especially things like operational improvements or strategic designs). That work experience is valuable and PE funds want to know if you've actually learned anything from the work you've done.
Recruited for a different city. Really doesn't change much at all. You do a couple rounds of phone calls with people and then if they like you, they'll fly you up on a Friday for a longer meeting. You'll not be at client sites on Fridays anyways (chilling at home office), so it works out pretty well.
How did I decide the firm?
I talked to associates and friends at a lot of different PE funds and you figure out pretty quickly that funds have a wide range of cultures. Some friends are dying in PE and others are able to manage a pretty good lifestyle with managers/partners/people at work who are caring individuals. I found a firm that had the latter and I thought that that was a pretty rare find. So I took the offer and I think it's been a great time so far.
Secondly, I think it's pretty important to work at a fund with really good returns. The whole point of being an associate in my opinion is to learn how to be a good investor. Obviously this is something that takes years if not decades, but I wanted to spend 2-3 years as an associate at a fund learning from partners who really know what they're doing. Didn't want to join a fund with 1.8x-2.0x returns. Wanted to join a fund with 2.5-3.0x returns consistently.
Thirdly, wanted to be a generalist. Think it's way too early to specialize and frankly didn't know what industry I would want to spend time in anyways. So that was pretty important too.
Really no right answer on firm selection. A lot of it will also just be where you end up getting an offer (that's true for MBB too, for example). But with PE recruiting, you can at least stretch out your own recruiting, if you really want to make sure you don't take an offer at a fund where you think you'll hate your life a couple years from now.
1) Are you at a fund that also hires bankers? If so, would you say you're at an advantage/disadvantage to them? Why / why not?
2) Do you want to stay in PE to the VP level or above? Why / why not?
3) Have you seen PE Associates with an MBB background able to become VPs at shops that don't typically hire consultants? Said differently, does your pre-PE IB vs. MBB experience matter when recruiting for a VP role?
Very thoughtful questions. 1. Our firm is all ex-consultants for the most part, so can't provide any real commentary on the differences. But at the end of the day, the job is the same, and you are going to need to do the full associate job.
Do I want to stay in PE and become a VP? That's something I'm trying to work through right now. At first glance, I do. I think it can be a rewarding career. Getting carry and really having aligned incentives with the rest of the partnership is something I would look forward to. As an associate, it's often still easy to feel like you are just an employee collecting a salary - you don't personally have millions at stake when you're evaluating each deal that comes through. Being a VP and taking that extra step up in challenge is something that excites me. However, at the same time, you realize there's a whole wide range of career opportunities that are opened up after MBB + PE. Joining a startup and growing it into something really successful one day sounds like it could be more rewarding, both personally and financially, and that's something that many of my friends are trying to do. When you're in PE, you talk a lot about backing management teams that you believe in, and I think being an entrepreneur or an exec at a startup can really put that to the test.
I don't think your pre-PE experience matters after you're an associate in PE. Like I mentioned in question 1, once you're a PE associate, you're expected to do the full associate job. Similarly, once you become PE VP, you're gonna need to do that full job, regardless of what your prior experience was.