Where do the 'bodies' of PE go?
There's lot of discussion here on the difficulties to make it up in PE. It seems like there's 1 MD for every ~3 - 5 VPs and 1VP for every ~4 - 10 associates. Mathematically, it means the majority of people won't make it up. Where do those that do not make it / choose not to continue go?
I'm personally interested in running my own business or in strategy at a startup. However, given I have a banking background, I worry that after PE I'll niche myself to finance / strategic finance at best at a startup
HFs, Corporates, Start-ups, back to IB
I wouldn't expect a lot of people to go to HF. It is a niche industry with much much fewer seats than PE.
I think it’s a fairly common move for pre-MBA associates that leave PE, although this be more frequent for those at megafunds / UMM
isnt HF more competitive than PE? Is it easier to climb the ranks at HF over PE?
ranks at an HF? I swear they're the flattest orgs in all of high finance.
Have seen a couple go back to IB but wouldn’t say it’s common
Have seen a couple go back to IB but wouldn’t say it’s common
Is it hard to go back to IB?
Not really
Seen a lot of folks go to the asset management / LP side, the hours and lifestyle are much better and it’s beneficial for the AMs to have people with direct experiences in the asset classes they invest in
I am somewhat of a body and ended up at an activist hedge fund
I am just a body
,
I have all the characteristics of a human being on the outside...
.
Is it possible to work at one of these hedge funds if you’re not coming from a mf/umm background?
Yes if you get hired very early like out of banking. It's very hit or miss though there is no defined pathway to these roles
how many end up at a hf vs stay in pe
Business school >> ????? >> profit
But what if you've already made VP or Principal when the guillotine comes down?
Most likely would go to a smaller fund / start-up fund
I have absolutely no hard data to back this up, but I suspect the proliferation of small / start-up funds means not as many junior people are forced to leave the industry altogether as the train of thought you went down might imply. This is highly anecdotal, but looking at 30-40 of the recent "alumni" of my current and former funds (both upper MM NY-based funds), the lion's share of them are still in PE or in some other principal investing role (e.g. family office). Given the availability of dry powder over the past ~10 years, there are a ton of relatively new middle-market and lower middle-market funds all across the U.S. that seem to love to hire former associates and VPs from larger funds. Unless you totally suck at the job, are actively looking to leave the industry, or started at a small fund to begin with, it seems like the overall growth of the industry has allowed those who want to stay in the industry to do so (even if not at the fund they originally started at).
Oh they all end up being rockstar PM's at Tiger cubs... ahahahah
Is it tough to grab exit opps from a LMM PE analyst (out of undergrad) position? Curious about general moves to UMM/MF PE, HF, VC, Corp Dev and startups.
I was a LMM PE analyst, nontarget background and no banking experience.
Coming from ~$200M fund, I was able to get interviews at decent lower-to-mid market funds ($500M-$1bn fund size). Didn’t have much luck converting to an offer, but once you have the interview it’s more on your performance than your background.
F500 corp dev typically ignored me, although admittedly it wasn’t a focus of mine, but I had good responses from larger PE-backed platforms for Corp Dev / Bus Dev / Strategy roles (often in the $500M-$1bn revenue range). Recruiters pretty much never reached out for hedge funds, but I got decent responses from funds in the area when I reached out to learn more (that said, this also wasn’t a focus of mine).
Ended up going A2A at same fund for a sizable increase in comp and a verbal commitment for carry in our next fund (naturally, I value this at zero until it’s in writing, but it’s a nice upside case)
Was PE your first job out of ugrad or did you lateral from a different job?
i aspire to be a body someday!
Senior associate here at a large PE fund. From what I’ve seen recently with friends and peers, there are lots of lateral opportunities for associates and senior associates that aren’t getting the VP nod at their current fund. Lots of new MM and LMM funds are popping up and there’s just a ton of capital flowing into this industry right now. Plus you have family offices and other organizations that are trying to get into private equity and are desperate for experienced hires. You might have to go to a smaller or “less prestigious” fund, but there is no shortage of VP roles out there in my view.
Now, for experienced VPs and Principals, unfortunately I don’t have a good perspective on that level. But I imagine it’s the same dynamic (join a smaller or new fund, join a family office, etc.)
How difficult is it to raise capital for your own fund ?
Recently saw a "body" of private equity go into undergrad teaching. Looks like a good win for the college, can't imagine a much more qualified background for teaching an M&A class.
From MF PE world, I’ve seen very high proportion go to H/S and to lesser degree W, and then back to PE on partner track; some back to the same MF, some elsewhere. It depends on their performance, their group’s needs, and the firms growth trajectory.
Broadly speaking, securing a partner track role at a MF/UMM has historically viewed as getting the golden ticket and so people latch on if it’s available to them. I’ve also seen people go to other PE firms. From the MF world it’s usually to large European PE (CVC, EQT, etc), a SWF (eg GIC) or to other PE seats. Some leave bschool to go to a (typically) great start-up seat, or to a growth equity/VC seat.
You also see a bunch (with or without H/S MBA) for a top HF if they can get it. This is even harder to come by than partner track MF seat. Basically, Lone Pine, etc. And a bunch go to smaller but still sizeable HFs. These are more volatile seats and could be very very ruthless on your career trajectory.
I don’t know that I’ve seen anyone do anything outside of those paths (from the MF world).
I have seen people go back into IB (e.g. at smaller banks and boutiques), small consulting shops and corporate roles
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