Starting MF PE Soon But Should I Just Go Straight to HF Instead
Hi Folks,
Wanted to get the opinion of people on this forum who have done 2 years of PE and moved to a HF and also those who have gone directly into HFs from banking.
For context, I have an offer from a MF PE firm but my long-term interest has always been public markets, so I expect to end up in that world eventually. I’m trying to decide whether I should commit to PE for ~2 years first or try to recruit directly for HFs sooner or even reneg on my PE offer entirely.
A few questions:
- For those who went banking → HF: did you ever regret not doing PE first (even just to try it)? Or was skipping PE clearly the right call for public markets
- For those who did PE → HF: did PE meaningfully help you once you were in public markets (process, diligence, modeling, thesis work, special situations, etc.)? Did it expand the set/quality of HF opportunities you could access?
- Where is PE experience actually valuable vs mostly irrelevant in public investing roles (activist, SM vs. Pod, LO)?
- If I start PE this summer, when is the earliest reasonable time to recruit for HFs without burning bridges? How do funds/headhunters view leaving PE at 6–12 months vs 18–24 months?
Appreciate the help!
marginal utility, if any whatsoever, for pods. Necessary to even get looks for some SMs
necessary for some SMs? No lol
There are some shops where it’s basically a requirement yes
There are certainly some SMs that mainly hire from 2+2 backgrounds. While they may make a special case for a really incredible candidate, that is going to be a much harder path v. doing the 2 years in PE first.
OP - if you want MMs, just go now (though I'd argue doing PE first gives more downside protection / fallback option if you blow up in publics). If you go into PE, I wouldn't plan to leave before the 1 year mark and it probably just makes sense to try to stay close to the 2 year mark
Commenting for visibility - also interested.
I did IB > PE > HF and thought the PE experience was valuable. I knew I wanted to work at a HF but still decided to do PE first as there are plenty of SM funds that prefer PE guys. IB is good technical training, but in PE you really learn to do diligence, ask questions, and hone in on your technical ability. I cover pretty technical sectors in my role now so the intense modeling you do in PE was beneficial in that regard. PE was also great where you get to see the inside of a company, its operations, work with management teams, and this is an important aspect to understand in business generally. I was also still a little kid after finishing up my 2 years in banking and PE culture tends to be very buttoned up and professional, which I personally needed to set me straight.
Maybe PE is not as valuable for pods given they are more trade-y and I'm sure some anti-PE people working at HFs will say its useless (obviously the transaction and deal aspect part of PE is useless).
Super helpful!! Thank you! A couple of follow-ups if you don’t mind:
When did you start recruiting for HFs during your PE stint? I know many funds hire for immediate starts so were most firms okay with letting you finish your two years? How hard was recruiting while in PE?
I started about 1 year in after the new year as many analysts leave post December bonus and therefore hedge funds will start recruiting to pick up any people who are trying to switch firms. I told recruiters that I wanted to finish my two full years and would be willing to leave after I got my second year bonus but would be happy to sign with a firm pre-bonus with a start date post-bonus and this wasn't an issue with anyone. Hedge fund recruiting is extremely ad-hoc and there is no timeline so you have to be "recruiting" constantly and I was patient with finding the right firm. Recruiting was tough while doing PE but only the case study part. Interviews are pretty easy once you've done a few but trying to work on a case study while in the middle of a deal was not fun and without having your team find out you're recruiting. I was really only able to focus on my case studies during the weekend / at night.
But this is all very dependent on your team - i.e., if its a 2 and out program, how open they are with you recruiting while working, etc.
I interviewed at plenty of your well known multi bn SMs/MMs/LO over the past year when I was recruiting and here's what I found from speaking to HHs/looking at candidate profiles, etc.
Do you need PE for HF recruiting? No... unless you're aiming to work at pershing/D1 or one of the handful of the SMs that strictly won't interview you out of banking without PE. These seats also think PE makes you a better aligned investor... I disagree because of the banking 2.0 nature of PE but that's another conversation. That said, you shouldn't do PE solely because you want a shot at these seats.. wrong mindset given there will be tons of 2+2 candidates fighting for a handful of spots
There are plenty of SMs that will interview you w/o PE... these are still your multi bn lean SMs that either are very well known (or viewed as better seats than your above counterparts than ppl in the industry)/fly under the radar and are great seats. Some will even interview you without IB (as long as you have good HF experience).. though that's a higher bar to overcome.
If goal is MM... you can skip PE. Maybe it's additive for certain pods that might value that background, but MMs simply care about your ability to pitch/model/generate pnl so a PE detour won't necessarily make you a better investor here.
LO.. you're almost certainly not going to a T1 LO after 2+2 without an MBA so I'd drop that off your list unless you plan on MBA. Arguably MBA adds little value but that's just how it is... I'm close to a certain T1 LO and most of the 2+2 hires came through summer via MBA but laterals strictly had years (most cases near/over a decade) of public mkts experience and of the recent lateral hires only 1 even did IB let alone PE but both had stellar public mkts backgrounds
That said, PE helps you to create your cookie cutter background... most interviewers will find comfort in the fact that your base skills are solid due to the nature of the training you receive in the programs. Will it make you a better investor? Questionable, though the benefit is that you learn more about a certain industry.
You also have to be practical and consider your options on hand... is this MF program one that is viewed as a highly prestigious seat? If so, yes it's a 2yr detour (or basically a paid graduate program) but it gives you branding which in your 20s is extremely helpful, most likely give you a leg up over IB --> HF candidates in interviews. Do you have another equally great HF seat offer in hand? No.. then why risk reneging a good learning oppty, pissing off a HH that might be useful down the road, and risk going through a difficult year of HF recruiting over nothing? Considering all your options, you are better off just recruiting 12 months into your PE role.. it'll probably take you 6 months to even find a seat anyways so you might as well find a seat as you approach the end of your PE program
"unless you're aiming to work at pershing/D1 or one of the handful of the SMs that strictly won't interview you out of banking without PE." Even Pershing and D1 will interview you. And have hired from IB. Or would certainly hire from another HF if you went there first.
Know plenty of people at the well-known Tiger Cubs, Elliott, Third Point etc that didn't ever do PE (and some no IB)
Great, and I work at one of these funds and 99% of people do PE. Not sure why you're pushing this incorrect narrative. The best way in is through PE.
Doesn't seem like any of the Pershing folks have come direct from IB in the last decade so not sure how accurate that is. The path of least resistance / highest probability outcome is from 2+2 at a MF
If your goal is HF and public markets, PE is not required and can slow you down. You spend most of PE on process, not on generating trade ideas or following stocks, which is what HFs actually test. People who go straight from IB to HF just start building that skill earlier.
If you still take the PE offer, do not leave in under a year, that reads badly. Either commit for ~18 months or recruit now and skip it. HF cares more about how you think about businesses and catalysts than whether you closed buyouts.
Joined MMHF directly from IB. I don’t think PE would have given me any marginal benefit into public markets investing given they really are quite different. In my view, coming in from IB with zero investing experience meant that I didn’t have to unlearn any habits I would have picked up from a different style of investing. It is just a cleaner path.
do you need to be at a top BB/EB to make this move or its more skills based
lol
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