Pls educate me on this. It seems like every datapoint on this industry is negative or downtrending. Individual experiences at top brand name funds, by word of mouth, seem largely abysmal. I.e., probably 90% of my friend group at top PE firms hate their life.
I got the old deal. Grind a few years, move up the ladder, get the carry. This contract seems completely broken?
A large part of the unpopular answer is that people do not really have that much else to do. Most finance people follow the very standardized/cookie-cutter type of path that rewards one handsomely in exchange for cruel hours and almost no personal life.
The same path, however, also limits optionality. People often act as if finance would open any door, also outside of the traditional recruiting paths of private markets.
I remember (when I was looking for exits) that jobs like "corp dev", "portco ops", were thrown around like they were just up for grabs. Thre reality could not be further from the true. Nobody waits for a junior/mid-level finance professional in a top corporate dev. role. If this is a somewhat reputable company, there will be a gazillion of desperate people lining up to fill it. Same as for operational related roles. Those are just perfectly geared towards consultants.
So taking 1+1 together. If you are used to earning a high salary, have build your social circle in a finance city (i.e., NYC/LDN) it is just the well-trotten, risk-averse and very plannable path to go and stay on the buy-side.
Even if it sucks - and yes it does - there is not so much optionality to do other (good/exciting) things.
I am struggling with this right now. Have zero idea what I want to do.
Really just trying to optimize for upside and monetizing my social skills / network.
you could learn the PE craft and then, for example, go to Cambodia, raise some funds, use your own savings or borrow, and start acquiring companies that are run inefficiently and professionalize them. You could use one company as an acquisition vehicle, pursue add-ons, etc.
this, for instance, would be exciting if you were to ask me
but the reason many do not consider this an option is that the field predominantly attracts pussies who have never taken a risk and therefore cannot even fathom this possibility
there are always options, it is just a matter of how heavy your balls are.
It sounds like your balls are pretty heavy LB
I do think this is actually a good career gamble for PE people to pursue, especially if they have some ties to a developing country. But if you don't have ties, I think it's much harder and not super realistic to move to a non-English speaking country to do this especially if you don't speak the local language.
Is there anything ~similar to this but that you can do in the U.S.? Like doing an HVAC roll-up but moving to bumfuck Idaho or some other rural state/area that has less competition?
As Associate 3 (below) just said, this is actually something people (somewhat) do. See this play out with:
- European colleagues who work in London for years but often have some sort of an anchor taking them back (I am talking less of Germany, France and more Portugal, Italy) or smaller regions still
- People who came for MBAs from East Asia or LatAm returning to their home countries and try this playbook
Comes down a bit to some degree of familiarity with the region too.
I cannot overstate how on point this response is. People treat the "IB / PE" induced optionality as if it is some perpetual, free call option. In reality, the optionality has a clear temporal element to it: An IB analyst with 2 years of experience straight out of university has more options than a post MBA associate.
Why? Pretty obvious at least to me because seniority truncates options (in all roles) and the IB kid has good office training which is transferable. The experienced associate's skills are no less transferable but the issue is that with each year and exponentiation of division of labour and specialisation (and industry maturity + where we are in the economic cycle), it becomes harder and harder to justify paying a premium (from employer's perspective) to hire someone who has "added experience" but not *exactly* the same added experience that the employer wants. So if you are better at project management / modelling / managing clients through your associate to VP years, then if you are applying for CorpDev that may or may not have further traction because the incremental skillset that you bring compared to an Analyst 3 or 2, is marginally helpful at best.
One of my favourite topics and I can write a lot about it. But as much as things change, they remain the same. I believe there is merit in "picking" what you want soon-ish instead of using the IB, PE cycle to keep kicking the can down the road because you do get "typecast" somewhat. And I promise this not something that "brand name" IBankers are impervious to. The inertia you encounter is very real. As with most "pivots", it becomes a matter of landing your "first new one". Yes, things ease after that but if you are someone collecting "experiences" in a wait and see manner, it can be somewhat counterproductive as multiple factors then enter the fray.
On the other point about lack of other jobs, it's also about the pay cut. Not that there are no other jobs but if you are going to take a pay cut (which btw I am all for) then you want to be upsizing on some other variable: WLB, geography / proximity, seniority (possibly moves in the other direction but can be possible to escape the bitch work of IB), future growth, career reset or intellectual stimulation. The last one is my main screening criterion (along with WLB) for which I am generally happy to sacrifice slave wages from IB / PE land (sorry not sorry for being jaded haha). But not all jobs provide this degree of velocity, so the notion of swapping something only to take a cut in money and brain use is.... a bit of a difficult proposition.
I will however say there are a lot more routes that exist (depending upon your expectations of long-term comp) than PE. I do feel I have only scratch the surface on these types of things and it helps to see how the next percentile lives.
Please educate you?
There are millions of smart and motivated people and a limited number of high paying job.
God what an idiotic question. Stop acting like you have a bounty of options between PE, corporate America and AI start ups.
Hey guys, PE pays way more than an average finance job, why would anyone do it? You can only make millions now, not multi millions. So what’s the point guys?
If you can make money, do it. If you can’t, don’t. Nothing really has changed recently besides interest rates going from 0% to 5%. The industry started at like 15% rates. Still plenty of money to be made if you are actually good. If you suck and just want to keep sucking, then yea go suck somewhere else. Peace
risk adjusted return is good - sacrifice is just sleep.
people are idiots and actually dont know what they wanna do in life. 95% of high finance people shouldnt have been here in the first place. they are basically equivalent to accountants. mega funds arent real btw - you are just indexing with some leverage.
(1) You like the job.
(2) You like the pay.
Where else are you going to make a low risk +/- $500k/yr in your late 20s?
Just be a sales Chad
That works too if you've got that dog (Chad) in you
Cuz they are risk adverse and follow the herd and like being told what to do. Even startup founders are just herd followers they are reactive and love being told what to do.
IMO there are 3 types of people who want to do PE long-term: 1) you actually like the job, or at least enough of the day-to-day that you don't really want to be doing something else, which is the rarest group, 2) you're at a fund that's a genuine culture fit with real room above you, which is more common than people think and more in your control than people admit, since nobody knows where a fund is 5 years out but real diligence on strategy, fundraising trajectory, and how the seats above you actually clear will tilt the odds a lot, and 3) you're in it for the prestige and the dream of carry and aren't willing to take the pay cut to leave. Most likely, if at a large-cap or old firm, they get kicked out anyway, vast majority of associates are out within two years at large-cap funds simply because there is far too many mid-levels at most UMM/MF's.
Seats above you don't grow linerally with years and fundraising has been rough for PE. No principal or partner is realistically leaving given the loss of carry, so basically have to wait for retirements or people being forced out (takes a very long-time). For what it's worth I like my fund's mandate, my sector, the people, we're growing, and carry has started materializing, so I have no reason to leave. If I'd stayed at my MF I'd probably already be out, either forced out in the senior associate to VP jump or because of lack of carry potential, since my friends who stayed have all accepted they'll never see any meaningful carry payments.
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