Okay, there might be some shops where the hours are better but in general, I feel like PE is just IB 2.0. Why does everyone want to go into private equity? Is everyone that obsessed with money or so impressionable that they're making career choices based on what everyone tells them should be their next move? I don't get it.
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Even at the shops where it is like banking 2.0, at senior levels you have slightly more control over your time, and PE has higher $$$ upside than IB.
But don't you also have more time as a senior in baking? I understand that you may have some more cash in your pocket but overall it doesn't make sense to me the way people jump at PE. It seems like college students are jumping to climb to the ladder to PE but with only marginal benefits.
You could be right, but I'm not sure what led you to believe you have more time as a senior in banking.
IB MDs have to mainly take care of their clients, so their time isn't up to them. PE Partners have to mainly take care of their investments, which allows them to be a little more flexible with their time.
To be clear, the long-term earning potential is typically higher in PE, but many are cash poor for a quite some time until they start receiving economics as funds make distributions.
That being said, top MDs, group heads, etc can make into nine figures over their career.
Higher upside $$ but less seats. So unfortunately 80% of people gunning for IB->PE-> Partner just don’t won’t make it and get pushed out to some shit job.
What job do people get pushed out to?
This is true for the most part - although that’s probably for UMM/MF PE. It’s certainly more difficult to become an MD at an EB/BB compared to a Partner at a LMM/MM PE, which still pay great, just not MF great.
And the “shit job” this guy is referring to is probably corpdev or something. Massive pay cut but at least you get your life back.
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3 words: money, power, prestige
Because - broadly speaking - you can make substantially more money at any given level of competence, you are able to touch on more of the deal process, likely ego and hubris, potentially a genuine interest in the work, a greater degree of ownership over a deal and the work you are doing, and a marginally-to-slightly better work-life balance
Personally, I want to go to PE so when I’m on the other-side I can grill my current IB seniors on the EV bridge for the 15th comparable in the appendix and why the stock performance chart doesn’t include 2-month, 6-month and 9-month performance
Look forward to learning how those things will drive value for my future fund!!
Because they read that everyone wants it on WSO and then convince themselves that's what they want, ergo all the comments on whether X group had "modelling experience", when they don't even know what they're saying, e.g., asking if DCM has modelling experience lol.
When I was applying for internships, I did not know WSO existed (so I didnt know what PE was), I was using the Student Room. My goal was to get into banking and stay in banking long term. That's still my goal. I don't want to go to the buy-side.
The students on this website are super cringe.
What makes a successful Partner at a PE shop is different than what makes a successful banker. People tend to go towards what they think they are better suited towards long-term.
A banking MD can move to a PE firm if they want to, and a I've also seen MDs at top PE firms/HFs come to banking.
work-life, generally speaking, is pretty shit in both but most people like that PE isn’t a client role
One thing void of any WSO discussion are the people who actually work in finance because they find the work interesting, fun and intellectually stimulating lol
I’m 2 years into IB now and looking into exit options. Money is the LEAST of my concerns when looking around - I will be making more than enough whether it’s in IB or PE or somewhere else. What I’m contemplating is what kind of skills and exposure I would like now that I feel I’ve learned what I went into IB for.
What I want now is more strategic and operative exposure - I wanna be in the board meetings and work woth entrepreneurs and mgmt on developing companies beyond the transactions I work on in IB.
PE is a great place to keep nurturing my interest in finance while also getting more exposure to business development and strategy - all while working closer with management and owners
Wow! Great answer
Granted I think your answer makes sense, but at the senior level of IB you do get great exposure to business operations and strategy since you start interacting with clients
Interacting with clients is not at all comparable to being the owner of the business. That’s like equating Rob Kraft’s role with the Patriots to Alex Guerrero, Tom Brady’s health guru.
It's more interesting to work with a company to help build and grow it than it is to sell one and move on to the next.
Why most kids THINK they're going for PE is because of higher comp upside / career trajectory. Why most kids actually go for PE is because it's been drilled into their heads ad nauseum. My experience has been that 1/5th or less of PE associates make it to principal (at the same shop). Some will churn out into smaller shops, others will go into jobs they could've had if they stayed in banking. Many of these people who don't make the cut (ie the 80%) would've actually had higher comp if they stayed in banking. But everyone labours under the delusion that they're in the top quintile of everything. I've been top bucket consistently in banking but if I went to PE, nearly everyone would've been top bucket at their banks to begin with - not looking to compete with that because statistically I'm more likely to fail.
Nice thing is we can boomerang back to IB anytime at higher levels lol so good upside low downside
while theoretically that may be true, practically it almost never happens. not sure why, it's probably the idea of having to be more salesy that doesn't appeal to senior PE folk anymore
People tend to pigeonhole themselves since IB is the highest paying career right out of college with an undergrad. The hours are terrible and the only skill set that IB sets you up for is work ethic and corporate finance. There are other investing avenues besides PE that pay well and offer WLB but the golden handcuffs are a real thing that not many 16-24 year olds on here can imagine. You could work in the RE arms of PE firms or Infra and the hours are significantly better with a 20% paycut to Corp PE. There's also Corp Dev that can cut hours to 45-60 a week and still very well paid. The "problem" with those career paths is that younger kids want to make millions of dollars because that is what is deemed successful to them as set by society for their age group. There's a point in your late 30's that people are bragging about how much sleep they got and that they are going on a trip with their family to just relax, not about how many millions they might clear if they pull another 3-5 years of all nighters.
I can genuinely say that if you are lucky enough to be in Consulting, PE, IB, Corp Dev, or RE as a career path on the finance side of things, you will be better off that a vast majority of Americans and will live extremely comfortably. You will never get your youth back, but you can always earn more money by going to work another day. Don't sell the best health and most energy you'll ever have in life to a company that wouldn't notice if you didn't work for a month straight. If you aren't happy in IB working that many hours, don't think that PE is the best or only solution. Check out other avenues and you'll find that you can make great money and still have time to be happy outside of work.
Completely agree on RE arms. Much better WLB and still good comp, would consider it the most underappreciated career on WSO as it's not as prestigious as traditional PE. Also offers far more entrepreneurial opportunities.
What do you mean “You could work in the RE arms of PE firms or Infra and the hours are significantly better with a 20% paycut to Corp PE.”? Do you mean 20% pay cut to buyout PE?
In the RE PE sector they typically buy assets (apartment complexes, office towers, malls, etc.) and not operating companies. Some places like BX are buying whole operating companies because of the cost efficiencies to divest under performing or over-valued assets in the portfolio to have an arbitrage play and expand their RE portfolio massively. But, most REPE firms are buying anywhere from $30-150MM individual properties at a time. The difference in the arms of PE is that RE buys the assets of Real Estate themselves, where as Corp PE buys out companies that produce goods or services (Tech, retail, industrials, etc) where the Real Estate aspect of those businesses are expenses and not cash flowing assets for the most part. Buyout, growth equity, and VC would fall under "Corp PE".
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