Q&A- Undergrad to PE (Ask me anything)

Your first question might prompt a good debate of why IB vs. PE, so I'll just provide my own thoughts: 1) Having been on the IB side briefly and now being on the other side, my firm typically views bankers as people who are really good marketers and know how to drive a competitive process (if they're good bankers). I knew that IB was going to be a transition career into PE, so my if I didn't get into a solid PE firm for FT, then I would have gone back to IB and did my two years and recruited then. To be honest, the work I do in PE assessing deals is far more complex and "impactful" than what I did in IB (spent many more hours turning purely cosmetic comments on decks....)

There are pros and cons to going into PE out of undergrad (M&I has a good article on this as well), and I'm happy to discuss that if you're interested. Overall the nature of the PE firm is really important.

2) My firm had a formal recruiting process for its core target schools (where most of the mid-level to senior people graduated from or have connections with). My school wasn't one of them, and I was the only one in many years to have got in through just cold emailing. Literally just emailed someone from the firm's website and managed to get a superday after a phone conversation. You might be surprised at the response rate you get from cold emailing if it's right during recruiting season.

It's not a requirement per se, but ideally you'd have a junior summer internship in either a reputable bank in a front office role, management consulting, or some other interesting intership that shows who are you are a person (e.g. Venture for America or an unique startup). The other who interviewed for my role, and those we have interviewed the year after have all come from various IB/consulting/PWM/S&T backgrounds.

Unfortunately every year things get more and more competitive. It's easier to stand out now if you have a more non-traditional background (e.g. studied CS or dual majored in engineering and finance), because the technical skill set you might be able to bring to the firm is different than those who came from strictly accounting/finance programs. That said, those do have a distinct leg up in terms of the day-to-day work.

I don't think I had anything special on my resume, so I think being able to get that first call is really important, and it comes down to distinguishing yourself in the interview. Clubs matter less after your junior year, I've found.

I got my offer at the end of August two weeks after my summer internship ended. This was a slightly accelerated process as I had some exploding offers, but due to how early banks recruit now, we have also started recruiting earlier. I cannot tell you the number of sophomores/juniors who have called in the last couple of months who are trying to network into a potential FT position here.

I did a little networking during my junior summer, but it was all remote (you have very little time to go anywhere as a banking intern trying to get a return offer) and through alumni, though I didn't network with my current firm at all.

I've actually worked at my current firm for a year now, but thank you! It's a MM PE firm with a decent amount of AUM ($10bn+) and a strategic focus so would say it's on par with analyst exits. There are so many more MM PE firms for every MF, after all.

Superday interview consisted of 5-6 rounds and also a social round so you end up meeting a good portion of the whole firm. The interviews for PE analyst roles typically involve a paper LBO / consulting case study and stops there. The PE associate roles at my firm, however, are much tougher (i.e. excel modeling test for a few hours based on an abbreviated CIM, and have to write up an investment recommendation afterwards). When I was debating whether I wanted to take this offer versus a BB offer, something that came to mind was the fact that associate interviews would be significantly tougher, so it would be good if I get in while the interviews are still much easier.

To getting the offer? There is always an element of luck in your interviews. I connected well with the firm and believe a few people were instrumental in pushing me forward.

The responses I received as well as conversations with others are pretty consistent. Credit PE is typically more predictable, better hours, but the work might not be as interesting. Credit PE firms often get a lender model from PE firms (though they do their own modeling), and it's a simpler exercise to try to find out how likely the company will go bankrupt or not return their dollars.

Quite frankly, a friend recently left credit PE to come to normal PE and said he felt bored in credit PE. The compensation upside is also much higher in PE (taking on higher risk to seek higher returns, after all). That's not to say credit PE isn't ludicrous or interesting, especially on the distressed side, but it's probably easier to go from normal PE to credit PE than vice versa.

Certainly. We've interviewed some people with asset management and consulting experience, and one person who came from credit (but buyside, not sellside). The hard part is probably getting the chance to be interviewed, and using the resources available online to prove yourself (which is by no means easy). The reality is that there are very few open spots in PE, so sometimes you might have to trade down a position (i.e. worked for 3 years and still come in as an analyst or whatever entry-level position).

I also know off-handed of someone who got to a superday stage with a very well known megafund PE (but not the standard ones who finish on-cycle on a weekend) with a credit underwriting/slightly DCM background.

You're listing a high range of amount. Base is a bit higher, though bonus is lower, since there's a performance bonus cap that you can reach. It tends to be that PE in its lower tiers comp less than IB, but at the higher levels it all depends on firm performance.

I would say that typically most PE firms promote at most a very small subset of associates in a 1-2 year program. My firm doesn't do that, and people have historically stayed on and got promoted, which is a rarity in this space. The reason is because the funnel is small and someone new receiving carry means someone needs to give some of their own carry.

How are you liking your PE job now, if you're still an associate?

Well, analyst to associate was 2 years historically, though now it's 2-3 years depending on how good someone is. If someone doesn't make associate they just stay as an analyst. We haven't had that many people leave the firm in the past, and the vast majority of those who left left PE entirely to do something else for various personal reasons.

Very valid concerns. I wouldn't have picked my firm if 1) the firm seemed to really value coaching its members, and 2) we had just finished fundraising for a new fund that was double the size of the previous fund so that meant more chances of closing a deal. In the grand scheme of things, an additional year isn't really a concern, I've seen.

I really can't speak to that since there are so many more elements to getting a full time offer that has to do with group dynamics, performance, and how many spots there are. My personal view is that it's easier to get a full-time offer from BX (unless one is in a group that primarily doesn't take analysts, structured like Apollo's internship) than at a BB possibly due to BX not likely to overhire its summer interns.

I would ask your friends at the end of their summers and get their views.

Pre-full time postings may be found through your school's recruiting portal, applying to firms online, or just reaching out to someone at the firm (since most firms won't actually have an application portal). Beyond that headhunters will be your primary point of contact if you're trying to target many firms.

Every firm interviews differently, but typically the more senior people want to ask you consulting-type questions to gauge how you think about industries and companies, potential investment risks and merits (More true for firms like Warburg). They might also ask you more behavioral questions to get to know you as a person.

VP and associates would tend to ask more technical questions