A2A at EB -> Recruit for Buyside?
Going to be working at an EB (PJT/EVR//LAZ) that is known to pay top of the street. There have been recent discussions regarding how Associates at EBs can actually earn more than PE Associates. Given that, would it make sense to do A2A at the EB and then recruit for PE/HF later on? For context, the group I will be in has great culture and decent worklife balance, but I am interested in gaining investment experience later on. Mainly interested in figuring out how difficult it would be to try to recruit for PE/HF as an Associate who went through A2A
You willing to take a pay cut then?
Idea is to maximize earnings by working as an associate in banking (since there's no carry at that level anyway) and then switch over to PE/HF after a year or two as an Associate at the EB. The pros I see of doing associate in IB at the EB (vs. 2 years of banking then PE/HF) are potentially better comp, better worklife/balance, already an established reputation, opportunity to work on some interesting transaction from an Associate perspective. The downsides I see are that it may be a lot more difficult to recruit for buyside as an IB associate (vs. analyst), a year or two of less investing experience, less time to establish rep at the fund, harder time for MBA admissions at a top program (?)
It is all a trade off, I don't think you can really game the system. If you decide to leave IB as an associate, you'll very likely be hired into the same Pre-MBA type of associate buy side role (and taking a pay-cut) that you would be hired into if recruiting as a banking analyst as well, only with more difficulty doing it. Unless you're at a very experienced level of banking (above VP), it would be extremely difficult for you to break into a buy-side role at a more senior level. So I don't think your earnings stream actually increases. Have done some very high level math down below:
Case 1 (usual 2+2 IB to PE to MBA back to PE), all indicative numbers over 8 years
8 Year Earnings Potential: $2mm
Case 2 (2 year banking analyst, 2 years associate, 2 years PE, MBA), all indicative numbers over 8 years - Banking Analyst: 400k (200k/year) - Banking Associate: 700k (350k/year) - PE Associate: 600k (300k/year) - MBA (or try to lateral directly to Sr. Associate)
8 Year Earning Potential: $1.7mm
Not worth, also top PE/top EB pay is pretty much the same
Yeah I guess the concern would be that the WL balance at the top funds (BX/KKR/APO) is significantly worse than my EB, but the comp at the funds with similar/better WL balance is lower and there's also the pressure of getting kicked out after two years
Don’t know about the US and how receptive HHs/PE funds would be to that story, some would argue that you were not good enough to make it to PE in the first place.
But in Europe it is common for people to do 2-5 years of banking before moving to the buyside. Yet even with 5 years under your belt you’ll likely recruit as an associate 1 on the buyside, taking a pay cut and lose in seniority. If you’re willing to be a junior in finance for 8+ years sure you’ll maximize your earnings but at this point you may as well stick to banking and get the VP comp and try to make MD.
Wow thanks, didn't really consider the fact that you lose seniority and take a pay cut when transitioning. Do you think there would be some stigma attached for IB associates going into PE, or is it not that bad?
don't know how big the stigma would but there will be some for sure
How would you navigate recruiting as an Associate, especially with your firm [i.e. hide it from your employer] ? I'm assuming they wouldn't be helpful/responsive to you recruiting if you just signed on to go A2A and then leave after a year.
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