Which is better to break into Direct PE role: PE Co-Investing or MM IB?

Title basically says all.

A little background, I come from a B4 consulting background (CDD, ODD experience) with some FDD experience before that. While I am actively in various IB processes, my ultimate goal is to break into a direct investing PE role - or at least open up myself to that possibility if I don't burn out by then. I'm primarily gunning for MM IB roles since that's usually where people from my group go to.

I have come up on a few co-investing roles/interviews, however I have very sparse information on the co-investing space. From what I've researched, I know that breaking into a direct role from secondaries or FoF is very hard, if not impossible. But whenever I look up information on co-investing, the few posts I see are usually people going from direct to co-investing or people grouping co-investing, secondaries, and FoF together, which isn't helpful for me. 

My questions really boil down to this:

1) Is Co-Investing as viable as IB to move into a Direct Investing PE role?

2) How do the exits from Co-Investing look? And how do they compare to IB exit ops?

Hopefully a dedicated thread on the PE Co-Investing role will clear things up. I appreciate and welcome any and all advice!

Comments (8)

Most Helpful
  • Associate 2 in PE - LBOs
May 12, 2022 - 8:00am

There have been countless threads on this exact same topic you can simply search so I won't go into detail. IB is easier from any reputable MM bank and is much more of a known quantity for PE firms. Co-investing is still relatively new in the world of PE so the number of firms that even do it is still growing. There's a smaller sample size of people that have made the switch, but yes it's possible. I made the move myself (and know others that have) and it wasn't easy, but firms will drill down on your transaction experience and the level of diligence your firm does as well as modeling skills. Typically will only be able to move over to LMM and some MM firms, but not UMM or MFs. IB is still the easiest route, assuming you went to a good school, are in a good group, at a solid bank.

May 12, 2022 - 8:14pm
AnotherCoolThrowaway, what's your opinion? Comment below:

Thanks for even taking the time to write this out. I have done further research after better figuring out how the search bar works, just needed to put more elbow grease to it. My further research does seem to correlate to what you've said here too, but you've really nailed it on the head here. Sorry about that, wrote the original post at 3AM.

Do you mind if I PM you the job description of the role I am interviewing for? I don't want to dox myself and want to absolutely make sure that the skillsets from this role have transferable skillsets to a direct investing role, since it does seem it has some level of modeling and DD work to it. 

You've been absolutely helpful thus far, really appreciate it.

May 13, 2022 - 12:13am
BoutiqueBaboon, what's your opinion? Comment below:

Same experience (although I left PE shortly after), and agree with everything written here.

One important factor is whether you are co-investing for alpha (e.g., in a dedicated vehicle), or co-investing for fee mitigation (e.g., typical of US public pensions). Haven't seen anyone go into direct PE from the latter.

2020 Update: recounting my experiences in PE and sharing thoughts on recent deals at https://leverup.substack.com
  • 1
May 13, 2022 - 11:40pm
AnotherCoolThrowaway, what's your opinion? Comment below:

Why did you leave PE if you don't mind my asking? Also would asking about whether the firm co-invests for alpha vs fee mitigation be a valid question to ask during the interview?

May 17, 2022 - 4:15pm
AnotherCoolThrowaway, what's your opinion? Comment below:

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