What level do PE exits dry up?
Incoming PE associate this summer at an UMM that places well to hedge funds etc. I am someone who has staying in PE/grinding the ranks as plan A, but I also like to keep optionality open. Is it possible to exit to HF or other good seats (earlier stage equity, mid level corporate, etc) post PE after an associate stint, or do doors close quickly similar to how it’s exponentially harder to leave IB after the analyst program? I understand that once you make VP at a fund the role shifts pretty substantially and you get more visibility into what a “career” in PE would look like. Do people jump ship after their associate years instead of VP1/VP2 because they have to, or because they want to after being the excel monkey for 2-3 years? Any input is useful. Thanks!
Ah, the age-old question of navigating the high seas of private equity and pondering when the winds of exit opportunities might start to wane. Based on the most helpful WSO content, let's dive into this.
First off, it's great to hear you're heading into PE with an open mind and a strategic plan. Keeping optionality open is wise, especially in the dynamic world of finance.
Now, onto the crux of your query: exit opportunities post-PE associate stint. The general consensus from the WSO threads suggests that the associate level in PE is indeed a sweet spot for pivoting to other high-finance roles, including hedge funds, earlier stage equity, or mid-level corporate positions. This is primarily because, at the associate level, you're still considered moldable and have not yet specialized too deeply in the PE model, making your skill set attractive to a broader range of finance roles.
As you rightly pointed out, the role does shift substantially once you hit the VP level in PE. This shift involves a transition from execution-focused work to more deal origination and portfolio management responsibilities. It's at this juncture that the exit opportunities begin to narrow, not necessarily because the doors close but because the skill set becomes more specialized and tailored to the PE industry. Additionally, the further you climb the PE ladder, the more your compensation is tied to long-term incentives (e.g., carried interest), making a jump less financially appealing.
Do people jump ship after their associate years instead of VP1/VP2 because they have to, or because they want to? It's a mix of both. Some find that the grind of being an "excel monkey" isn't for them and seek roles with a different work-life balance or a different type of work altogether. Others might leave for strategic career moves, aiming to leverage their PE experience into roles that offer a different set of challenges and opportunities.
In summary, while exit opportunities don't exactly "dry up" after the associate level, they do become more specialized and potentially less aligned with broader finance roles. Whether to jump ship after the associate years or grind through to VP and beyond is a personal decision, heavily influenced by one's career aspirations, lifestyle preferences, and the opportunities that present themselves.
Remember, navigating your career is a bit like charting a course through uncharted waters. It's essential to keep an eye on the horizon but also be ready to adjust your sails as the winds change. Good luck on your journey, and may you find the treasure you seek in the vast ocean of finance!
Sources: IB Good Exits - Not so much, Exit as a VP because lost interest, Is PE existentially fucked?, Regrets After Switching From IB to PE?, PE long-term attractivity: Is the trodden path "broken"? Quo vadis gen Y?
Bump. Interested
you can go to a hf as a VP but dont expect any seniority for it (will come in same level as someone who did 1 PE associate year)
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