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2 monkey shits to you for wanting to be helpful
guys - no need to worry. If we (including my mods) find you giving good advice and getting shit thrown at you from a few abusive users it takes about 2 seconds to reverse their actions and/or award you Silver bananas as compensation.
-Patrick
Why do so many people here hate capital markets? So odd. Seems like a cool area from what I've heard of it.
It all depends what you're looking for, desk jobs are great in that they are usually less hours and it's easier job function. If you work on a pitch with a coverage group, you send of the pages and they just drop your pages into the book. Execution is minimal too, since the group is often just an intermediary. I think it's a good spot if you want an easier lifestyle and still be under the IBD umbrella (at most banks). however, cap markets groups often get hit hard in downsizing.
I think it gets hated on because, the exit opps from a capital markets group make it tough to have a broad reach in terms of buyside recruiting.
If you're in ECMG you might have a shot at some fund that has a strong foothold in receiving IPO allocations or if you specialize in the convert product you may end up at convert arb fund...
If you're in DCMG you might end up in a debt fund or a HY trading fund...
So it essentially limits your exit opps. A guy/gal from M&A / Sponsors will be more sought after and will get 5x as many interviews.
Sure. This is open-ended, but...do you like your job?
If so, why?
I'll compare and contrast my current job with my prior jobs.
The benefits of working as an analyst covering a sector(s) is that you have free reign in how you approach your investment ideas. You attend trade shows, sellside conferences for both debt and equity, talk to research analysts and company management and you choose how to allocate the majority of your time. Your job essentially is to pitch your ideas to a fund manager or whoever gets the allocation of your sector and hope they bite. Assuming they do allow you to make the make the trade you better hold onto your seat because its a wild ride, since public securities are marked to market.
The diligence is on public information for the most part (unless you're dealing in a private deal), and your information may be incomplete at times. This can be annoying as you'll have to spend alot of time doing research, talking to analysts, asking questions on conference calls etc.
In private equity (especially at a large fund) you're managing tons of moving pieces and you're responsible if shit goes wrong (as an analyst in banking you might get bitched out by someone, but more often than not you're not the last line of defense). First you're responsible for the financial model, which is going to be detailed beyond believe and you'll have to layer on tons of cases and cap structures, since you'll be working with McK/Bain who will help validate your drivers, you'll have banks, hedge funds, Mezz funds, offering you financing packages and you'll have to mix and match the best cap structures and quickly toggle and tweak each component. Then you have to deal with diligence and you'll have benefits/pension consultants, legal diligence accounting diligence and you'll be running around doing site visits and multiple management meetings.
The thing that sucks is half the time you lose in the bidding process unless your firm was lucky enough to get a jump on the process, partner with another potential buyer, etc. Working with another PE firm is annoying since each side thinks they are way better than the other team even though you're both at top firms and the information flow can be fucked up.
Also the deals in PE take much more time and are often much more draining in terms of getting the deal to the finish line.
However, monitoring and valuation of the investment can be less stressful since valuations are quarterly and you're not watching share prices move daily and hunkering over sellside research and investor calls. If the privately owned company hits a bump in a quarter you may monitor it more closely but you aren't shitting bricks because the share price fell 25%.
Personally, I like the fast paced action of working at a hedge fund, we can pull the trigger 100x faster than in PE, which takes much more time doing diligence, going through multiple ICs and you may not even end up winning the deal.
Oh yea Hedge Funds Pay $$$
Hello,
I will be in a tech M&A shop next year. However, this is not MS or GS, more like a tier below the top boutiques.
Since I am not going to have headhunters knocking on my door, do you have any advice on how i can reach out to tech buyout shops or pe growth shop?
Since I don't know all the details I'll lay out some scenarios and you can dive into one if you see fit.
Tier below top boutiques (Moelis/Blackstone.... Lazard/Evercore/Greenhill/Gleacher/Centerview)
1) You're at JPM/CS/BarCap/UBS' Tech M&A group, you'll be fine headhunters will still get you interviews and you'll be in the running for most jobs. You'll have an edge at the Franciscos, Vectors, Accel/KKRs, TCV, type gigs since (they're tech focused)... Silver Lake, Elevation, are more picky in terms of pedigree so they may not offer you an interview... I for a fact know that SLP cares about school and bank.
2) You're at Wells, Cowen, Thomas Weisel, RBC, Jefferies, Montgomery, etc. You're going to have to reach out to the headhunters and let them know who you are. Your friends at bulge banks will get contacted (since the headhunters get the analyst facebooks) so you're going to have to ask them to forward the analyst data sheet. Fill it out and get a meeting with the headhunters. They usually host meeting days at hotels in various cities or at a minimum will give you a phone call.
3) You're bank is obscure and unknown, then you're going to have to pitch them a bit talk about your deal experience and your school is definitely going to come into play here. It's tough to break into the buyside with no name / no school. But it can be done, you're going to have to be able to show that you understand the deal process, use of leverage, and be able to show that you can think like an investor. It helps if your shop also works with debt alot of M&A boutiques just are sell-side shops, which will make it a little tougher.
Very informative thread. Just curious, how exactly did you land this gig at the HF ? Were you actively looking to move into a more markets oriented role ? Also, where do the Analysts junior to you typically come from ? IB ? ER ? other L/S HFs ? Are they the ones reading the footnotes and helping you prepare your thesis ?
Thanks
I worked with alot of the headhunters during the Pre-MBA recruiting process and had alot of them still in my rolodex (outlook). However, they're the ones who start reaching out based on your candidate profile.
If they know you took a job and are approaching your 2nd year they'll start asking you for an updated resume, what interests you have... bschool, stay in PE, interests in hedge funds, etc. I knew my Pre-MBA role was going to end so I started recruiting for both PE and HF and thought I'd like to give it a try after going through the recruiting process.
Noooooo!
?
Tech Buyout, I have a couple really good friends who are/is working at a smaller hedge fund & at 28 are running their own books and are making a ton of money. Most guys trying to pursue the whole PE route at that age would be back at biz school at that age. If you feel your quick enough on your feet to work at a HF is it a much better choice? For the longest time my goal was to do venture capital, but seems like it takes forever to get paid (most investments in VC aren't realized for 5+ years). I have an engineering degree which I've heard is favorable in the HF world; but I've been so hell bent IBD->Start Up->Biz School->VC that I wouldn't know where to switch/start at. Do I need to try to get a job on a trading floor? Also I was also thinking that working for a smaller MM PE fund in my hometown (Denver) after my 2 yrs in banking would be nice, but what would the pay be like? Would I become a country finance bumkin from there on out?
I was your typical IB-->PE-->Bschool type guy, but during my PE stint realized Bschool would be retarded if I could just get a job. 1) in a big PE Fund you're comping close to $700k-1mm after carry during your two years and bschool would be a cash outlay of 150-200k depending on your lifestyle. Also during those two years I could make good money doing another job for a few years whether it be a non-career track position at a PE fund or a hedge fund. So I decided to recruit and if I didn't get a job just travel for awhile and spend the money I racked up being a modeling/diligencing fuck.
I think VC and HF are very different animals. In VC you won't see large pay at the junior levels unless its more of a late stage shop like General Atlantic or NEA's growth equity fund. Most VCs like the Sequoia's, DFJ's of the world don't really pay their Associates top dollar. If you want cash go for a good hedge fund.
IBD->Start Up->Biz School->VC (This is hard as hell to do), so this is not a great plan unless you got serious connections or stellar start up experience.
As for MM Pe I know there is KRG partners in denver but can't give you comp figures, since I don't know anyone who has actually went there.
Would I become a country finance bumkin from there on out? -- You should be able to recruit to similar firms.
What if I joined an established VC backed start up that was doing well in a biz dev role? Hoped from one start up to the next for a while & produced results, is that a different scenario? I know a lot of tech analysts from BB exit to larger funds (summit, TA) into a sourcing role for a pre-MBA position; however of all the MD's backgrounds I've researched at more successful funds have extensive operational experience. Much less "climb" the VC ladder starting from banking. Would you say this is correct?
On another note, it seems VC is becoming less and less of an attractive investment class. Do you think the industry is in Peril or will it always be there?
You can generally find a fund that fits your experience. A tech buyout has stated, a lot of our experience will not only give us deal expreience but also teach us how to approach a problem and that varies from fund to fund. IF you have a relevant set of qualifications, you should form an opinion about what kind of fund you think / want to join and go after those first before casting a much broader net
Any general advice for incoming analysts?
From my experience the best analysts were always very organized, prompt and dependable. The next level is being able to process the workload efficiently, with minimal errors.
As an analyst these are the key things to leave with: 1) modeling skills, 2) relationship with your team in tact (ditching a program early can end up fucking you later), 3) recommendations
Also don't think any work is beneath you, I've made plenty working group lists, ordered dinners, couriered blackberry holsters to people at airports (even though buying a new holster would be 1/10th the cost), etc. Just realize you're some kid getting paid a shitload of money and will reap the benefits 2-3 years down the line.
Can you get HF experience inside a traditional BB?
Most large banks have proprietary hedge funds, but some are more robust than others. However it's typically hard to lateral into those groups even from within the bank.
Not true. Almost all the banks have either eliminated or greatly scaled back prop trading groups/internal hedge funds. Most do take what I would consider propietary trading risk but they do it from their sell-side desks. This is a subject i know quite well since I used to work in a propietary trading group at a major bank and left to go to a hedge fund because that bank was eliminating prop.
Given your background at MS:
Say one starts at MS NY, is the general expectation that you work at your office for two years before moving to another office like Menlo? and is that only if you get a 3rd year offer?
Also, not sure if there is a norm or pattern, but where do MS analysts usually end up after their 2-years based on observation/hearsay?
I'd either ask for a transfer before you start or give them your two year commitment.
90% of the guys in M&A end up in good PE jobs (KKR, TPG,BX, Apollo, Providence, Carlyle, Silver Lake, Cerberus, Tommy Lee) some end up at shops like Francisco, Welsh Carson, Lindsay Goldberg, etc.
The guys in SF sponsors ended up at H&F and General Atlantic in 2006.
One guy in SF Corp fin ended up at Calera and a bunch of tech guys ended up at TCVs and the like.
Are you still on the WC? If so, how are your hours given that you're in a more market driven environment? Up at 4:30AM ?
Yes, and no because I'm not a prop trader.
Sorry I'm a noob, but can someone answer a quick question for me...
Is it common to go from S&T-->HF? I'm a junior and currently applying for SA positions and I think I would be more interested in S&T than IBD, but my long term goal is to work in HF (the DE Shaw people came to my school and really impressed me. they rock)
There are different strategies, so yes it's possible to get onto a prop desk. However, you will most likely not end up in a very research centric fund
I'd say 80% of the buyside PE funds (LBO, Mezz, HY, Distressed, Growth equity) have better hours than banking. But be prepared to work hard at deal time at any fund.
For MM PE, I know that most on average have better lifestyles than banking or mega buyout.
These are funds I know current/prior Associates at and that have commented on "better" lifestyles, but take this with a grain of salt please. I'll just give you west coast, since I can speak more to it.
SF: Calera Genstar GI Partners TA Associates TCV Vector Capital TPG Growth TPG Credit Management KKR Financial Elevation Partners Fremont Partners Thoma Bravo Weston Presidio
LA: Oaktree HY, Distressed (heard PE gets worked) Newstone Capital TCW Distressed TCW/Crescent Mezzanine Tennenbaum Freeman Spogli Gores Group Platinum Equity Brentwood Canyon Black Canyon Carlyle Special Situations Carlyle Mezzanine Ares Private Debt Group Ares Capital Markets
3 questions:
1) Why don't people talk more shit about restructuring then? Better modeling skills? 2) Seems like M&A/Sponsors and cap markets are on two ends of the recruiting spectrum. Broadly speaking, where do industry coverage groups fall in terms of exit opps?3) How much does gpa matter in the buyside recruiting process? I will be coming from a lower tier bulge and semi-target school - So I'm not worried there. However, I lost all of my ambition after I got an offer and received a horrifying gpa this semester. My gpa was fairly mediocre before that anyways. A bunch of people at school told me it doesn't matter after the first job, but I saw some posts saying that it does. If so, what are my options for redemption other than a good analyst rating? - GMAT, CFA?
1) Restructuring provides a very strong understanding of capital structure (more so than cap markets groups) and also provides significant modeling experience as you are analyzing different packages for creditors/debtors (whichever side you're on) and you'll have to be able to easily shift cases and analyze recovery rates, etc. Also alot of it is focused on valuation like looking at value through certain pieces of paper, equity is almost always wiped out.
So Sub unsecured guys will argue that they have value through the sub debt, using various valuation methodologies, while the term guys are boxing them out for control arguing that value stops at the senior. Great experience and will lead to alot of special situations type opportunities.
2) Coverage groups can place well, assuming you are in a reputable bank/group. There is no right answer here, but bank name and deal exposure, roles in the deal process and your interviewing skills will get you over the recruiting hurdle
3) Well it depends on the firm that's recruiting. Alot of PE firms will go for bank before school, but alot of firms care about school/GPA/SAT (that's why its on the headhunter recruiting sheet). Funds can be highly selective and metrics are an easy way to filter out the mass quantity of analysts trying to get into buyside roles.
However, you shouldn't be discouraged, there are tons of guys from state schools at good funds, but they may not have been the right profile for KKR or Blackstone. But that doesn't mean you can't end up at a good top tier middle market fund in a regional market (like in SF, LA or Chi).
I think you just need to realize that some profiles won't get you interviews, but if you're persistent there will be a spot for you at some fund.
SAT is very important for alot of hedge funds, my hedge fund has a 1500 cut off with 750 Math minimum. GMAT may mitigate a low SAT score, but at my fund it won't.
Ouch... I didn't do that well on the math SAT. I guess I can kiss my HF ambitions goodbye
i know there is alot of discussion of capital markets.....do you have any thoughts on Private Placements (banking group at some BBs)...and the sort of exits (if any) and skill sets? Also you mentioned converts, is convert arb shop pretty much the only option?
This is not the group you want to be in for PE recruiting, since it's primarily marketing to funds. I'd switch groups for a 3rd year.
It's extremely hard to prove any real skillset.
How seamless did you find the move from PE to a HF?
Generally speaking, how do the hedgies view associates coming from pe firms. Let's say from a top tier PE (KKR, BX, TPG, Apollo) to a value focused HF of similar stature (Tiger Globlal, Eton Park, Viking, Lone Pine, etc).
Also, given that most associates at these PE firms were making 400-500 in their second year, would there be a slight decrease in comp if they were to move over after their second year?
I found that the biggest transition was moving from a process oriented structure in PE... which was roughly, read a CIM, discuss with deal team, build a model, line up financing sources, take a management meeting, write some memos to the broader team, comb through the data room, make a bid, make it to next round hire McK/Bain to do some research, hire accounting/legal to do their thing, refine model, refine diligence list, refine model, make a bid.
I didn't really know what to do so I just read research reports and kind of read prior investment pitch material, etc. Everyone has been pretty cool, it's not like analyst programs where there is the 20% who try to out-do the rest of the analyst class at all costs.
No i made great money in PE and my comp should be higher, assuming i don't get shit canned... can't speak to the value funds though.
Coming from a JPM/CS/Barcap/UBS tech group in SF, do you think it would add value to do NYC M&A for a third year to get more exposure to east coast/generalist opportunities and get more m&A experience?
Or do you think that if I go east coast the competition will be greater and I lose any edge i had in SF? At this point, although I do like tech I am open to being a generalist in a PE as long as I get the best opportunity.
Is there no flexibility in the SAT cutoff? What about 790m/700v....
Look, i'm sure its not 1500 or bust, but that's what I was told by Dynamics Associates (the headhunter that called me up)
--Also everyone confirmed that info that works there.
what kind of fund are you at, if not a value focused fund? Figured most pe associates get into long/short, distressed or event driven type funds, which are all mostly value focused.
Also - did you get guidance on comp?
Q1: L/S and yes your statement is probably correct. I only looked at L/S Q2: Yes, take my large fund PE comp and add about 35%
Glad you're still answering questions. good man.
Hey - I've read some of your posts on the hedgies and wanted to ask you a few questions if you don't mind. My background - went to a top 20 law school out of undergrad. While in law school I started working for a mid-market PE shop in NYC (was in the law school's night program so I was able to work during the day). After law school I was at a BB in the tech M&A group for 3 years (in my 3rd year). Now, like everyone else I'm looking at going to the buyside. I'm really more interested in a L/S tech focused hedge as opposed to a tech buyout shop primarily because of the reason you mentioned --> that they can pull the trigger alot faster that buyout shop and it seems like the process is less tedious.
Appreciate your thougths. Thanks!
I think this was also in your PM.
O look he's back. When will the next dramatic goodbye thread be?
What if the best group at my bank by far is the financial sponsors group, can I still exit to a good L/S hedge fund?
Yes, you should have some opportunities. Just fill out the info in your recruiting fact sheet.
Not sure if you have info b/c things might work differently, but for MS HK:
Do you recommend industry or product groups? Which industry groups are solid overseas? Anything to avoid?
My goal: Hedgefund or megafund PE
Also, can you make more at a hedgefund or PE? I'm guessing PE is a safer route?
MS HK has a great ECM team. Their tech team is also really good
How do you analyze and come up with your ideas? What sets you apart from other average analysts in this regard?
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