Small cap PE Pay/Life/Exit?!
Currently, I'm a first-year student pursuing an internship at a (regional) boutique and I absolutely hate it. I'm doing a lot of research, power point, excel and a bunch of grunt work (I really expected IB to be more glamorous). Due to extensive research and networking, I have the opportunity of interning at some small/lower mid-cap PE funds with a high possibility of getting a full-time offer after finishing my degree.
Now I'm wondering if PE is more interesting and especially what the compensation is like.
The first fund only has 500 mio AuM, but will grant carry from day one. Also, it's relatively small (around 8 people with almost half of them either being Analysts/Associate). However, they want to raise a new fund next year and hire 2 new people. The country is located in a high CoL/Low Tax country (maybe 6% income tax). Internship pay is above average. They implement A TON of operational changes in their portfolio companies and the juniors get a lot of exposure (hiring decisions for portfolio companies etc.), also all of their employees come from target schools (LSE/HEC etc.) and have a great background (certainly enough of MM Banks, some even BB/EB). BUT an analyst there told me that the base pay is less than IB or MF.
The other one is a more established PE with about 1 -1.5 bn AuM, intern pay is average. Also it's located in a High Tax (almost 50% income tax) / Medium CoL country
I guess the smaller one might be more interesting, but do you think it pays as good as the other one? Also the other fund is quite big, therefore I guess the people there have better Exit opps. Is my logic flawed?
To be honest, if you absolutely hate banking, you're unlikely to like private equity. It gets a better rep, but you will be doing the exact same "research, powerpoint, excel and a bunch of grunt work." It's true looking at things as an investor makes things marginally more interesting, but your days as a junior-level employee are pretty similar between banking and PE.
For an internship, you would probably be doing more interesting work at the smaller fund, which return offer or not, would open more doors. I wouldn't stress out too much about comp for an internship. It's a drop in the bucket of your career and it's more important to get good experience early. Also, it's a small fund with a limited track record, but getting carry right from when you start full-time could be worth a ton...
Thanks for the answer! But are there really people who enjoy this kind of work?
Thanks for the insight!
How many years does it usually take to be eligible for carry at a 1bn fund?
There is no standardised answer to this. I also think your point on 1bn plus is silly - you made the same point in another topic, too. Think about what sort of deals (size, sector, geogrpahy) you want to do - then worry about how much AUM.
Generally speaking, at a larger fund your carry will come later than at a smaller or younger fund.
Carry is a difficult thing though - you are at your first internship / grad role, if i understand this correctly. Carry cycle is 6-8 years plus whatever carry you get in the early days is quite meaningless in the long term. So you are talking about a potential payment c. 10+ years out at best. Hence i would focus on finding the right place and being a rockstar vs. maximising long-term incentives.
It sounds like you want a lot of pay and economics to not work very hard and only do the interesting work. Are you gunning for a Partner position (although, even they have to do a decent amount of grunt work in finance)?
My advice: if you can't handle this now, IB/PE are probably not for you.
Sounds like you will absolutely hate pe dawg
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