Why The Grass Isn't Greener: The Private Equity Associate Crisis (PEAC)

A post inspired me to explain the dynamic of the private equity associate crisis (PEAC) that occurs to most people. I think this post might be helpful for readers to understand PE and what happens after the 2+2+2 and could maybe even help a few people having their PEAC's or readers considering private equity as a career. I'm a longtime generally anonymous poster and have both had the PEAC and talked others through it.

First a few things I believe and the bull case for PE/IB:

  • 2 years in IB is worth it for a lot of people. It definitely is not worth it if you become suicidal, but almost every other case it makes sense. You get credentialled, learn intensity, pressure management, how to manage up, basics of ppt, excel, email, and finance, M&A, value creation, and more. Are there jobs like consulting or some PE roles that are similar? Sure. But I'd argue the training, learning, and credentialling achieved through making it through an analyst program at a bank discussed on this forum basically gives you a salary floor and skill set where you are employable at a lot of places and can be paid a pretty penny. It's also very well recognized with a great deal of optionality. People that argue you are limited to corp dev and PE don't really get that even though you might be paid less, really almost all entry level jobs and those advanced jobs are open to you. This isn't true for most roles.
    • Further, you get paid a lot very early on, which if you budget, allows for a down payment, job loss safety net, grad school payment or more. This is huge and can give you lots of life flexibility.
  • PE expands on the pros gained in banking. You gain further insight into companies and investment decisions, get deeper finance understanding, more professional presence, more credibility, higher salary floor, additional contributions to your nest egg. You are packing your resume to be viewed as legit by most anyone you talk to.
  • Prestigious PE firms give a great path to a top MBA program. Some firms are overwhelmingly represented among top MBA class cohorts and even have special relationships with admissions at those schools. The forum gets very fixated on an HBS or bust mindset, but for any normal person any m7 degree is reaching the pinnacle of the business world and IB + PE makes getting into an m7 program almost certain.

What is the PEAC and Why it Happens:

The private equity associate path is different than the banking path for a few reasons that younger readers don't commonly game through and have a hard time understanding. It then hits all at once. Early recruiting doesn't help this and often PE associates end up having a crisis where they get deeply unhappy midway through their role. This is normal and I would argue a good thing in the long run, but really unfortunate in the short run and if you didn't plan for it.

First, the differences between an IB analyst and PE associate:

  • PE Associates have worked a grueling job for 2 years. It is hard to explain the toll this takes until you have done it, but generally IB does the following:
    • It makes you in worse physical shape
    • It gives you less free time which deteriorates your hobbies, dating life, and social life
    • It gives you less time for introspection
      • I think an accurate way to describe the analyst role is while being a banking analyst, you generally don't have time for much else. Some groups are better than others and some times are better than others, but it's a demanding time intensive job that comes at a cost. At the start of a banking stint, you haven't paid the cost. By the end of one, you will have.
  • PE associates are signing up for a role with a different timeline. I would argue generally PE associates sign on for 2 reasons 1) To leave after 2 years for business school or a hedge fund or 2) To be a long term private equity investor 
    • In the first case, there tends to be idealization of specific firms or schools and there is 4-5 years of sacrifice pent up to achieve results than many times are highly impacted by random chance. There is also a failure to acknowledge the chance game being played. This is setting yourself up for failure. Many people take the GMAT and one or 2 wrong questions take them out of their target school range. Or their respective profile due to race, gender, firm, or some other variable, doesn't resonate with an ad com member or interviewer and they are left with their second choice. As a result, they feel they failed and 4 years of sacrifice wasn't worth it. They then compare others who sacrificed less and ended up at the same school or firm and get deeply unhappy. Or, my favorite, people get into wharton and decide to not go because they scoff at any non-HBS or GSB degree. To me this is like defining your life happiness and success by a coin flip.
    • In the second case, the road ends. There is no longer a goal or end timeline. Instead, associates are tasked with a endless road and the realization that they are going to continue to work long hours and sacrifice a great deal, as they have for the last 2 years, for eternity. This begins to terrify many people.
      • I will add to this, there tends to be an expectation that PE will bring work life balance and be different than banking. There then is a jarring realization PE is banking 2.0. I remarked to a friend once, this is like the saying, "if it looks like a duck, swims like a duck, and quacks like a duck, it is probably a duck". If a firm is almost all ex-bankers, working on the same transactions, hiring with the same advanced timelines, paying the same, and in the same industry--it probably shouldn't surprise you that the role is very similar from a treatment perspective. 
  • PE Associates Are Older
    • "I'm built different" you say as you enter IB. "I have sacrificed my whole life and don't mind sacrifice." This might be true, but as you age you realize "sacrifice" eventually becomes trade-offs. This is jarring and eventually a brutal realization occurs as those trade-offs begin to hit against your other competitive goals or your values. You can't actually have it all on the path you are on. A few examples:
      • At 22 not having a partner doesn't matter, you have time to have it all. However, when you start going to weddings or hear about engagements at 26, 27, 28, and you haven't even begun a long term relationship, things get scary. Assuming you want to date for 2 years before getting engaged, are engaged for 1.5 years, and wait a year to start trying for kids, that takes about 5+ years from start of a relationship to your first kid. It is advised to wait 1.5 years between pregnancies. "Oh shit", you realize as a single 27 year old, you only have 3 years to find a significant other or you probably need to limit the amount of children you have. Your dream of raising a family of 4, might not be possible with the track you are on. Also, reality sets in that you have been out of college for longer than the 3 years you have left before finding a sig other and you start to panic. It feels like just yesterday you were in college. Shits getting real.
      • IB is stressful, so you don't see your non-NYC college friends during your stint, or you maybe see them once. Then the PE years hit and you happen to see a non-NYC friend at a wedding. This guy was liked by everyone. The type that was a womanizer in college, but somehow stayed close friends with every girl afterwards. He tells you he's getting engaged soon. "What?! To who?" He explains the story and you slowly realize the guy you lived with in college has had an entire relationship and is now getting engaged and you have never even met the girl he's talking about. He discusses the different people who were there at the engagement and you realize you were left out and truthfully not as close as you once were. The guy continues, "Yeah, so who would have thought this girl would have my heart and I'd turn into a big softie. But anyway, what have you been up to man? Still in New York?"  You try to fight through the question throwing in a self deprecating joke about selling out and "the money being good". This is a common experience with PE professionals I know. I even had a bach party where all the PE guys I know were joking about it.
  • PE Work is More Stressful Than IB
    • ​​​​​​​Younger posters tend to underestimate the stress involved with deploying capital. They imagine the PE role more like being Mark Cuban in shark tank where cash is thrown out at good ideas and operational advice given like a big boss man, rather than the reality that PE associate work is much more like a hard math test where if you get something wrong you are thrown out of the class. Also, sometimes the test is very unreasonable and there is no possible way to pass.
      • The work in PE is less process oriented mundane work and more analytical than IB. This seems enjoyable, but in PE you need to do analyses and defend them as people higher up grill you on the details. It is much harder to go through the motions as you can in banking and you always need to be on as people pick apart your analyses. This can be fun in the right environment, but is very stressful in the wrong environment. Unfortunately, PE culture isn't generally one where people like to explore hypotheticals and debate. Rather, it is one that is adversarial, critical, and sharp elbowed. Further, if the people higher up don't agree with you, you are wrong in the eyes of the firm. This can become dicey because the role is often playing a game of telling people they are wrong or advocating for yourself without causing an insecure personality to turn on you. This becomes especially complex when there are several levels as is the case in many large PE firms where a partner wants to see something, a middle manager has something they think articulates that point, and you need to run the analysis, but don't agree with the middle managers approach. Sound familiar? It's a lot like banking, but you are given more ownership of your work and rather than getting grilled on slides it tends to be more analysis based and at times more personal. Going a step further, many times a great deal of analysis is done, the investment case isn't there and you need to continue running further analyses even though it doesn't make sense or you run a ton of analyses only to lose the deal because someone else outbids you. Then seniors get mad for "wasting time"
      • Ops work is very not glamorous. I think IB analysts picture ops work like being employee 5 of a startup when the scenario is more like the following:
        • A portco is struggling and PE partners want to fix some critical issue. It could be legal, HR, or margin related.
        • The associate is tasked with assisting to resolve the issue and be "the adult in the room"
        • The associate is resented by the staff of the portfolio company or the staff of the portfolio company are less motivated, so it is hard to get them to assist with resolving the issue.
        • The associate learns the issue is hard to fix and is either a very labor intensive problem or not as easy to fix as it seems. The issue also could be structural and near impossible to resolve. In my experience, there likely is a reason there is an issue and it never is an easy fix.
        • Partners (especially whoever made the investment) become very angry at the poor performance of the investment. They also get pressure from others for being dumb for making the investment. They reiterate and push against the PE associate to resolve the issue. The PE associate feels the heat.
        • The result is the PE associate works extra long hours trying to fix an issue while resented by portco staff or surrounded by less motivated people. Then, the time it takes to fix the issue is never fast enough, so the partners who made the investment become increasingly angry at the associate for not fixing the issue timely. Lastly, the company itself isn't a winner, so no one cares if you make it better and you don't feel proud of your work it's just various levels of making shit smell better. In your heart, you know it's still shit. The reality is the investment probably shouldn't have been made. You are pushing on a rope or taking buckets of water out of a sinking ship.

How To Fix The PEAC

I wish I had a simple answer, but in my experience, the PEAC is telling you it's time to make a change. It could be the firm sucks, it could be the career isn't for you, it could be you need more free time. What I do know is once you hit the PEAC it's time to start forming an exit plan. I don't know anyone who hit a PEAC and "it got better"--it usually just gets worse. I find the cause of the PEAC is usually a lack of goals or direction. Feelings of hopelessness, "so what", or just general lack of excitement about life and your job aren't a way to live. I recommend the following:

  • Make a list of why you are in private equity. Ask yourself if you could get these things elsewhere and if these goals are tangible or never ending. I find generally PEAC's occur because the goals aren't concrete. For example, common reasons are:
    • Money--It pays well and better than other people and I don't want to take a paycut since I'm paid so well
    • Interesting Work--"My work is interesting"
    • Prestige--I want people to respect my job and to feel like I am at one of the top firms
  • Make the goals concrete. For example,
    • Money--I want to save $1 million dollars by 30. Or, I want to buy a house in the Hamptons, which requires x in my account.
    • Interesting work--I want to feel intellectually stimulated x hours a day, or I want to be around x Smart people and have 3 people I look up to and want to be like in my organization.
    • Prestige--I find this one is hard to justify concretely. Trying to write down the rational reason for prestige often boils down to, "I am insecure and afraid I am a fraud" This isn't a reason to stay in a job and certainly won't give you a happy life. If you are living your entire life insecure and believing you are a fraud you will be unhappy.
  • You need free time. The solution to the PEAC is often found through soul searching and how you spend time if no one tells you what to do--that is where you find your passion. Sadly soul searching is very inefficient, stressful, and requires idle time to try things and stew and process what the point of everything is and why you are here.
    • For many, Bschool provides this and it is why people articulate B School as a life changing experience. I would argue the free time is more valuable than the brand when it comes down to it. Finally, kids who grew up with activities programmed from middle school all the way to their late 20's are able to let their hair down and hear about alternate perspectives without a demanding schedule. For many, this results in meeting a spouse, friends, or memories that they don't forget. Many students at top B schools even drink for the first time--not kidding this is actually a common thing. 
    • However, don't think Bschool is the only way to get this. Taking any role that allows for free time can give you the ability to process and soul search. I think it is counter intuitive, but in my experience PEAC's happen to people who haven't had enough free time. I challenge someone going through a PEAC to envision working a 40 hour week. 9 to 5, Monday to Friday. What would you accomplish from 5pm to 1am every day in a year including weekends? That's 49 hours a week or basically a whole additional job that you can spend toward exploring your passions. Might you find a spouse? Get in marathon shape? Travel the world? Join a rec league? Create a company? I think people going through PEAC's underestimate that as hardworking people with a credentialed background, their value isn't in their job, it is their brain, experience, and ability to work hard. Don't underestimate what you might accomplish or learn if you could choose where to direct your time instead of being told what to do with every waking hour. You have the skillset and credentials to fall back on a 200k role, you will be fine.

In Summary:

  • PE Burnout occurs because people are already burned out, they are older, goals are less concrete, and the work more stressful
  • PE work can really really suck when the firm is political or when portcos are struggling
  • Escaping feelings of unhappiness can come from writing down why you are in private equity, making the reasons concrete/absolute rather than relative, and then getting free time in your life
  • People underestimate how much they can accomplish and learn when they are able to direct their own time rather than have every waking moment occupied by work or recovering from work
    • Having free time is stressful, but exploration is how you learn how to be happy. Staying in PE, if you don't like it, is like only eating rice because you are afraid other foods will taste bad, meanwhile others around you have tried fruits, vegetables, meat, and desserts and found their favorite foods. I promise, the rice will probably be there when you come back. It might be a different brand, but I don't know anyone who left a PE associate spot that wasn't able to come back in some capacity.
  • You should probably make a plan to leave private equity if you don't like it, it's not going to get better, it's going to get worse. 
 

Thank you. Disregard title, an Associafe in PE as well. Too many people that want to just get into the industry at the most prestigious firm with the highest pay and don’t vet or care about the culture until they’re getting destroyed and ultimately end up leaving PE.

 

OP, thank you for write up. Could you talk about your career background?

 

Amazing post…I’m a junior and I did a F500 internship this past summer to see how the Corp Dev/strategy lifestyle would be and I’ve realized the 9-5 is too slow paced and I have always been someone super ambitious and I feel like the corporate life is much less demanding than I want. I am doing banking next summer and am looking forward to the NYC experience.
 

However, I do not want to end up like the sad example you gave of letting my 20s pass by just grinding strenuous work weeks/going to the gym/getting drinks a couple times of week and rinsing and repeating and missing out on amazing experiences or a relationship. What can I do besides vetting the PE firm culturally during on cycle? Obviously organization is key, but what else?

 

This is a seriously high-quality post written by someone who has more than a few years under his/her belt. Younger monkeys would do well to listen.

For the record, this part is also applicable to hedge funds, so don't necessarily think you can escape the challenges of PE by moving to public markets:

Younger posters tend to underestimate the stress involved with deploying capital. They imagine the PE role more like being Mark Cuban in shark tank where cash is thrown out at good ideas and operational advice given like a big boss man, rather than the reality that PE associate work is much more like a hard math test where if you get something wrong you are thrown out of the class. Also, sometimes the test is very unreasonable and there is no possible way to pass.

The work in PE is less process oriented mundane work and more analytical than IB. This seems enjoyable, but in PE you need to do analyses and defend them as people higher up grill you on the details. It is much harder to go through the motions as you can in banking and you always need to be on as people pick apart your analyses. This can be fun in the right environment, but is very stressful in the wrong environment. Unfortunately, PE culture isn't generally one where people like to explore hypotheticals and debate. Rather, it is one that is adversarial, critical, and sharp elbowed. Further, if the people higher up don't agree with you, you are wrong in the eyes of the firm. This can become dicey because the role is often playing a game of telling people they are wrong or advocating for yourself without causing an insecure personality to turn on you.

The caveat with hedge funds is that there are fewer layers of bureaucracy and middle management, but I would argue more analytically stressful than PE. I'll repost this quote from another thread rather than poorly rewriting it myself.

High turnover and toxicity with unpredictability. HF managers all expect their analysts to be the smartest of the smartest, and so any issues are infinitely magnified. It’s true that the HF space probably has a higher intellect requirement than IB/PE just because you’re not doing a “process-driven” job, and instead requires you do genuinely analyze. But that doesn’t mean people don’t make mistakes, and this lack of forgiveness is shocking at times. The worst part of it all is when you literally did all you could, and the stock still goes down 20% because some CNN guy found that the CEO does cocaine, and you’re getting heat from your PM.

 
Funniest

What is with these essays that people write?

I know that when you flame out there is salt and cope, but my goodness whats the point of these?

You act like working in PE as a mid-20’s kid and getting paid 500k a year is way more stressful than being a cop or a low paid teacher in a public school or a short order line cool that has to work 15 hour days, 6 days a week just to pay rent on a crappy one bedroom.

Is it because when other cry babies give you an upvote it’s like a dopamine hit? Is your self worth tied to your upvote ratio?

Like who are you trying to help? How can you actually believe working in high finance and getting paid is worse than so many other high stress jobs where you get paid so little?

Have you ever worked retail? Stocking shelves in a grocery store? Working at a subway with the lower bands of society complaining, yelling at you and not tipping? How high up in your ivory tower do you have to be to actually believe the copium you’re writing that high finance is so brutal and so hard to pivot from?

Or is it a humble brag that you have PE experience and want to show off? You can’t outright brag, because you won’t get your precious upvotes. So your frame it like you are trying to give advice to others, because you’ve made it but the sacrifice wasn’t worth it and you want to save others?

Get over yourself.

The only people in high finance who don’t have a long term partner, are the same tools who would be single anyway. The chubby, fugly dudes who can’t crack a joke. Don’t blame finance for the reason their alone. Look in the mirror and blame yourself OP.

 

Two things can be true Mr. Smoke Frog. 1. A rich person can be unhappy. More money more problems. Sometimes an essay like this can help someone introspect and see life beyond the desk. 2. We have it better than 99.999999% of the world. We should be grateful and stop complaining.

 

Gonna disagree here…having worked as a grocery store in that exact role. Almost none of those jobs are 80-90h/week with long bouts of high intensity.

Additionally we all know MDs who have gotten divorced or don’t know their kids because the job takes too much out of them, they chose to stay and work hard, and as a result they don’t have the time or energy outside of work.

That being said, this is the trade off we make for high risk adjusted comp. No free lunch. I like this post because it lays it out how it is. It’s up to you whether you want this trade off or not, but some people are under the illusion that you can have everything, which people realize very quickly is not possible.

 

This 100%. Will you work harder than some people at the upper levels of PE? Of course. 65-70 hours a week is busier than many, but still gives you enough time to spend time with family. No, you won't be able to coach little league, but you are the problem if you can't block off at least 4-5 hours each weekend to spend with kids/family.

I know countless number of middle class people around NYC capped at a 200-300K salary working in insurance/accounting/etc. They spend 90 minutes each way commuting in from central NJ, eastern LI, etc, on top of working ~50 hour weeks (coming to 65 hours a week including commute). The PE MD working 70 h/wk but living in Manhattan won't see their family that much less. (And I personally would spend that extra time in a comfortable high floor office over a cramped NJ Transit train.)

 

Hate to break it to you, but spending 4-5 hours with your kid once a week isn’t being a parent. Your children will view you as an aunt or uncle. Not a parent.

Life is more than dollars
 
Most Helpful

OP here. 3 things can be true:

  1. There are so so many worse jobs out there
  2. There are a ton of pros to the banking and PE roles
  3. A ton of people shouldn’t go into PE that do and a ton stay that hate it because of the reasons above

I started the post with the fact that there are some amazing pros to banking and PE. It is undeniable there are some awesome perks. It was great for me. I find on a long timeline, both roles tend to be very problematic however. The website doesn’t talk about why they are problematic from the perspective of an adult, it’s generally just whining.


Attribute this post to whining and that’s fine, but I think it’s different. The point is more explaining to younger posters rationally why someone could leave PE and really breaking the spell that PE is some promised land that will solve everything. Most the people I know who stayed in PE at large shops are very unhappy. 

Why did I write this? Because I got off a call from an individual who is what everyone on this forum is striving for and they are a personal mess. This also has been the 5th+ call I’ve had of a friend realizing they think they screwed their 20s by going all in on a career that they don’t even like.

The point isn’t PE sucks, it’s that if you aren’t having a concrete reason for staying in a job, you should leave. The problem is PE with the allure of money and prestige is hard to leave. I’m trying to get more readers to have a plan going into the role rather than just firing from the hip and realizing at 28 they are making a lot of money, but made a bunch of decisions along the way on accident that had a cost.

 

Also, I literally say I think analyst IB is worth it for almost everyone that doesn’t get suicidal—that’s a pretty glowing endorsement and a far cry from saying it’s worse than stocking shelves. I’m saying it’s better than about any job you can get. 

Summarizing further, life has trade offs, I think irrational greed where no amount of money is enough, and insecurity of prestige drives people to have life regrets.

The beauty of IB and PE should be it allows you to find a role you are passionate about and have a nest egg and salary floor—but people should think about the end game to know when to hop off the train.

Lastly, a PE firm with good culture or a growing shop is not a bad end game at all. As a poster noted, there are some really fun roles in finance, they just aren’t the firms people have heard of, they are unique situations, firms, and roles where people have it all.

 

Private credit is the prefect middle ground given the stability associated with this asset class. Tends to lend itself to better WLB and solid comp

 

I second this. I’m routinely out around 6 pm and then text my PE buddies to grab dinner and drinks but find that they will be stuck in the office and can’t make it out. They do earn more than me but given my 40-50 hours a week and usually no weekend work, I could care less about the comp difference when I’m already making great money.

 

Yea plus private credit is growing into a larger industry year after year. My sister works in PC and her MD is making $600-800K annually depending on the firm’s performances, with great hours as well.

Not a bad gig to me at least…

 

Solid post and while I’m mainly with you on most points, I think the below is pretty far off…

"Oh shit", you realize as a single 27 year old, you only have 3 years to find a significant other or you probably need to limit the amount of children you have. Your dream of raising a family of 4, might not be possible with the track you are on.

If you are a man, being in the top 1-2% of earners (and probably also true for the top 20% tbh) in this country extends your timeline well past 30 and into your mid-40s (if not later). I’ve seen tons of examples of guys above me in that age range find happy, healthy relationships with women in their mid- to late- 20s.

If you’re a female, I think the math in the equation becomes more difficult because of general biases towards hypergamy and the biological clock. Even still a woman in this situation has more than enough resources to navigate through this but I’d agree that a family of 4 is probably unlikely.

 
BullEagle

Solid post and while I’m mainly with you on most points, I think the below is pretty far off…

"Oh shit", you realize as a single 27 year old, you only have 3 years to find a significant other or you probably need to limit the amount of children you have. Your dream of raising a family of 4, might not be possible with the track you are on.

If you are a man, being in the top 1-2% of earners (and probably also true for the top 20% tbh) in this country extends your timeline well past 30 and into your mid-40s (if not later). I’ve seen tons of examples of guys above me in that age range find happy, healthy relationships with women in their mid- to late- 20s.

If you’re a female, I think the math in the equation becomes more difficult because of general biases towards hypergamy and the biological clock. Even still a woman in this situation has more than enough resources to navigate through this but I’d agree that a family of 4 is probably unlikely.

Yea exactly lol what ?? I am 30+ but like mildly pay attention to what I eat and so have not gained any weight post college and basically you can easily meet girls in their early to mid 20s who are accomplished / good women (Ivy League, good family etc). What kind of joke is this lmao??

 

Y'all lucky then, because for a lot of 30+ guys in PE that I've seen, their only attractive thing left about them is the money. Can't say personality since if they're working hard all week they're not spending time with their SOs

 

Here’s some math:

Meet someone at 32, date 2.5 years, get engaged, have a kid 2.5 years after getting engaged. You have your first kid at 37, you should wait 18 months between pregnancies. So your next kid is at 39, then 41, then 43.

We are assuming you either incurred the expense of freezing eggs or the woman is way younger so that you aren’t having autistic, down-syndrome kids. In this case, you still are 50 years old chasing around a 7 year old. You are going to have to go to your kids high school sports at 60, walker with tennis balls at the end and all!

Look it’s possible, but talk to older parents and they will tell you it sucks. You just don’t have the energy as you age and balancing a bunch of young kids and a career becomes so much harder and less pleasant.

 

My dad had me at 50 and was the only dad out on the hot baseball field throughout the summer. Granted he loves baseball/me and goes to the gym 6 days a week even in his early 70s. It is possible, but of course more challenging than being 30.

 

And who exactly wants 4 kids? What’s the distribution of number of kids nowadays? 4 is an outlier. If you want a lot of kids obviously you need to start sooner, not exactly insightful

 

Here’s some math:

Meet someone at 32, date 2.5 years, get engaged, have a kid 2.5 years after getting engaged. You have your first kid at 37, you should wait 18 months between pregnancies. So your next kid is at 39, then 41, then 43.

We are assuming you either incurred the expense of freezing eggs or the woman is way younger so that you aren’t having autistic, down-syndrome kids. In this case, you still are 50 years old chasing around a 7 year old. You are going to have to go to your kids high school sports at 60, walker with tennis balls at the end and all!

Look it’s possible, but talk to older parents and they will tell you it sucks. You just don’t have the energy as you age and balancing a bunch of young kids and a career becomes so much harder and less pleasant.

I think the point was you can easily find someone younger. And the point of the gig is you can easily afford help for the more mundane trappings of parenthood

 

Great points. I do think a large part of the cognitive disconnect and jarring realisations come from the utterly INSANE recruiting policies in the US. I am based elsewhere as you can guess, and I can never understand the stupidity of giving PE offers 2 years in advance. In my mind it benefits exactly nobody - the candidate has NO idea wtf they are doing (besides interview guides) or if they even LIKE the work, and the firms take on a huge risk as they really have no clue over performance - there is a certain degree of self-selection that occurs over analyst/associate years as people realise this is not for them, whereas in the US they are basically locked into a PE job from the womb. Absolutely insane. 

How can people have time for the introspection that OP observes when they are locked into this horrible path? In Europe/London, things are way more fluid. People do multiple masters degrees, analyst classes have wide age-ranges and so on, PE recruiting isn't limited to a 6-week window in your first year lol. All of that time allows people to consider their choices and avoid this crash that seems to happen after 2 + 2, when the spoonfeeding stops and one has to make their own path.

And yes, even after all that, your enjoyment in PE is EXTREMELY firm dependent. Which sucks as it is very very hard to diligence from the outside. 

 

I think quite a few people are missing the point of this post and other similar posts on this forum. PE and high finance in general is a fantastic career if you can stick it out over the long run. Sticking it out over the long requires tremendous patience, perseverance, and most importantly a genuine interest in what you're doing. The issue is most people either burn out or get pushed out and then realize they were never particularly interested in investing/finance in the first place. They just chased the initial money and prestige. Now that they've experienced a major setback, for maybe the first time in their lives, they don't know what to do. 

Take professional sports, most kids' dreams growing up. The benefits are vast if you manage to have a long career, but most players get cut in training camp and even if they do make the team, many ride the bench for a couple of years before getting released. Now, they're stuck at a crossroads and don't know which direction to go. Oftentimes, this is a very depressing and dark period for them. However, the few who truly love the game will do anything in their power to stay on the court. They'll go to the EuroLeague. If that doesn't pan out, they'll go to China. If that doesn't pan out, they keep trying, and trying, and trying despite the failures and low pay.

Hell, I have a friend who's working at an early-stage VC fund and currently making less money than his peers in IB/PE. Yet, he never wants to leave. Why? One, because he has carry (let's be honest, the likelihood that it turns into anything worthy is miniscule), but really he just loves the job. He loves meeting founders and is fascinated with emerging tech, in particular quantum and AI. He knows that he'll never work at Sequoia or a16z, and the failure rate of emerging funds is extremely high. He just doesn't give a shit. If his fund collapsed tomorrow, he'll go right back into early-stage VC. That's the difference between someone who knows what he wants to do and why and blind sheep following the herd 

TLDR: The reason why these type of posts are so common and popular on this forum is the vast majority of people go into finance for the money/prestige. When they encounter the first massive hurdle, they realize that this path is littered with massive hurdles, so they decide to quit and pursue something else (the coveted exit opp which oftentimes is similar to the work they're already doing). The problem is, they've never reflected on what they actually want to do, so now they feel bitter and stuck, resulting in them venting online or writing a 10,000 word post warning prospects about IB 

 

I would push back on the above in some form, as I know plenty of people (like myself) in PE (or even in other careers like law, etc.) who enjoy aspects of the job but dislike the sheer amount of office politics and poor office cultures that pervade these firms. Talking to some of these people, they enjoy the inherent job itself (investing, due diligence, coming up with a thesis, doing expert calls, etc.) but don’t like all the extra baggage that this job brings (always on edge because your VP sets fake deadlines that you realize weren’t needed later, always having the play the political game with your bosses, the extra admin work that often times isn’t needed like recreating slides into banking format for qualitative market or product slides even though most people are fine just reading the screenshots, etc.) I would note these aspects are firm dependent, but in general I don’t think most firms are that different from each other. 
 

It’s like most things I would think in life - PE is perhaps not as awful as it’s portrayed here initially but by no means is it great. Truth is often in the middle. 

 

This is a very accurate post. A lot of ppl in my cohort experiencing this. To counter some of the haters on this thread, multiple things can be true at the same time.

(1) IB and PE are great jobs and worth doing for a short period of time for most people able to land the roles. Get a nest egg, pickup skills, and gain a perspective on what you might want to do for rest of your career.

(2) The narrative, and therefore expectations, of a PE career path is wildly inaccurate and painted too optimistically by people who have chosen that path and "made their bed" because they are waiting on carry. You sell your soul for a potential partner seat decades away in return for deferred compensation - this leads to a lot of bad outcomes that don't get written about in the WSJ or 30u30.

(3) The hard truth that mid-career PE professionals don't admit is that there's a lot of merit to getting the initial nest egg in IB/PE, the skillset and then finding a career that you like more and still get paid very competitively w/ relative to PE - especially on a cash basis. PE lifers have made their bed and can't look at it rationally.

 

This is a very accurate post. A lot of ppl in my cohort experiencing this. To counter some of the haters on this thread, multiple things can be true at the same time.

(1) IB and PE are great jobs and worth doing for a short period of time for most people able to land the roles. Get a nest egg, pickup skills, and gain a perspective on what you might want to do for rest of your career.

(2) The narrative, and therefore expectations, of a PE career path is wildly inaccurate and painted too optimistically by people who have chosen that path and "made their bed" because they are waiting on carry. You sell your soul for a potential partner seat decades away in return for deferred compensation - this leads to a lot of bad outcomes that don't get written about in the WSJ or 30u30.

(3) The hard truth that mid-career PE professionals don't admit is that there's a lot of merit to getting the initial nest egg in IB/PE, the skillset and then finding a career that you like more and still get paid very competitively w/ relative to PE - especially on a cash basis. PE lifers have made their bed and can't look at it rationally.

Who else is gonna pay me 700k plus stock options ? Sign me up 

 

I think these are quite useful insights. Whoever made the professional sports analogy is very spot on. A lot of people in finance from the early years are high level performers throughout their life (high school, college, etc) and have basically never failed, just as a lot of athletes are usually the best from their town / region as they continue to compete in higher levels. Unfortunately, there's only a few spots at the top for the very best, and you start seeing the limits of how far you can get based on hard work and tenacity vs more intangible factors (ability to navigate office politics). A lot of it is frankly luck of the draw in your development - beyond just firms, the individual managers you work for have a huge impact on your career. 

People have already hit on this, but the way to get around slogging through a job/career you don't like is picking a niche and running with it. You might not get as many oohs and aahs from casuals, but the best right guard in the NFL gets paid very well, just as elite DCM advisors or secondaries investors. The division of labor is real at every level of the game, and the earlier you find your niche and run with it, the better. This by the way usually involves working less hard and more smart - you're not trying to compete with everyone else trying to do the same thing. We're all optimizing between what we're good at, what we like, and what makes us the most money - being thoughtful about the most efficient way to do that is very important.

Last thing I'll add - learning to manage a bureaucracy both internally / externally are very valuable skills no matter what you do in life (including working for yourself). This is something you get extensive experience in both banking / PE. Office politics suck, but learning to manage them is an invaluable skill. The social skills required in an office to interact and maintain cordial if not friendly relationships with different types of people are very important.

 

This is amazing thread - didn't realize I was so caught in such a common trope (PEAC). 

I'm curious about OP (and others) thoughts on exit strategy. Specifically, I'm <12 months away from the VP promotion. I'm 100% certain that my current firm isn't the place for me long term, but is it worth sticking it out for 1 year to get the VP promote and weather a bit? Will that open more doors in non-PE roles vs. just leaving now? As context, I have been physically and mentally pushed to my limits and contemplated walking out the door with no backup plan multiple times (don't have time or energy to go full bore on recruiting process, and not sure what else I'd want to do). That being said, I've come this far and I think it is worth being prudent, as long as I keep moving in the right direction for my life.  

 

OP here. A frustrating answer for a frustrating problem--it depends. I personally side on leaving sooner rather than later--point of this thread is people don't understand what is out there and the fear of the unknown has them in a suboptimal outcome. The question of when you should leave depends on your endgame.

Factors I would consider:

  • Finances--what is your savings situation like. If you moved to another firm and took a paycut would it be a drop in the bucket or give you substantially more life flexibility. Model out the home you want to afford, how many kids you want to have, and education expenses. Be concrete with how much of a paycut you will take and how much it will matter.
  • Type of role you are searching for, if you don't know what you want, spend a weekend connecting with ex-colleagues or a recruiter. Just get the ball rolling. I get you want to be prepared before interviewing, but right now just gather information. Have informational interviews with people your age or a few years senior. Point blank ask a recruiter how much the promote matters. If you leave finance entirely, it probably doesn't mean shit. If you are lateraling somewhere very competitive or hired as "the guy" doing M&A, it might matter.
  • Personal life--dating situation and location preferences are relevant imo.
 

I love how this post highlights a very important message about knowing what you want when you go into PE. That's very important. However, everything in life has trade-offs, and PE and higher finance allow an ordinary guy (not a celebrity) like me to reach the top 1%-2% of earners in the country.

There are far more mentally and physically demanding jobs than high finance positions. Before entering the industry, I used to work in a freezer warehouse job to support myself through college. I can tell you, hands down, that job was way more mentally and physically taxing than high finance positions. The workers, mostly foreign immigrants, used to work long, grueling night-to-morning shifts. They would be on their feet non-stop, engaging in heavy lifting for 10 hours straight with an hour break in between. All of them would come home with frostbite all over their bodies, sores on their feet, and serious back issues. Some of them would even tell stories about how they hadn't seen their wives in months due to their differing work schedules. Bear in mind, this was all for just above minimum wage. I have all my respect for them because after seeing that, I thought to myself, 'How dare I even complain?'

Obviously, you should prioritize your mental health, but in my opinion, people who complain about earning 250k+ and having to work hard for it are jokes. You are in one of the hardest industries to break into in the world, and your employers are paying you top dollar at a fairly young age. Do you honestly think the work is going to be somewhat relaxing or not mentally stressful? Imagine if the people working low-paid jobs for minimum wage to support their families had the opportunity and skillset to break into the industry. They would surely not be complaining about half the stuff I see people on here complaining about.

Also, comparison is the biggest joy killer. Of course, your life is not going to be the same as your buddy who got a marketing job in L.A. straight after college. Sure, it might seem on social media and when he speaks to you that his life is great, and from the outside looking in, it seems to be progressing. But, in life, he is probably going through mental battles on something else. Maybe he is having problems with his wife or girlfriend, perhaps he can't pay the bills this month, or maybe he feels unaccomplished within himself when he looks at your life and what you have going on in terms of working for some of the most recognizable companies in the world. How ironic, right?

All I'm saying is that, in my opinion, I believe that a majority of the stresses that come with jobs in high finance are privileged stresses. When we look at other people's lives in this world and realize how brutal and tragic life can be for others, we start to be grateful for the stresses we have, especially when we have brought them upon ourselves through our career goals and ambitions.

However, I acknowledge we are all individuals and have different breaking points, and it's crucial to look after your own mental health because no one else is going to look out for it. This is why the message in the OP is so important. We need to start realizing why we are entering this field and if the individual is an overall good fit to succeed in high finance positions, which should be based on more than just their technical ability for the job.

 

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