Comments (54)

Apr 12, 2014

Bain Capital has quite a few strategies. In any case, I'd say Apollo for better MBA prospects.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.

Apr 12, 2014

interested

Apr 12, 2014

Hope this is a joke...Apollo just raised the largest post crisis fund in record time, Bain struggled to raise $6bn. The only PE firm I'd debate taking over Apollo might be BX

Apollo associates also make a shit ton more than any other megafund associate

Apr 12, 2014

Bain is in the same position as TPG after blowing up their last two funds. This is an easy decision.

Also Apollo's offices are way sexier

Apr 12, 2014

Apollo, they've done a lot of smart investments, pay is great, working hours maybe not so much but for a pre-MBA position that's probably not a key criterion.

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Apr 14, 2014

Apollo doesn't hire full time for PE out of undergrad, only for summer internships

Apr 14, 2014
urchin24:

Apollo doesn't hire full time for PE out of undergrad, only for summer internships

But they do hire Pre-MBA Associates from banking analyst programs...

Apr 14, 2014
LHDan:
urchin24:

Apollo doesn't hire full time for PE out of undergrad, only for summer internships

But they do hire Pre-MBA Associates from banking analyst programs...

Oh,I misread the question haha. Yes, you're right, and in this case, definitely Apollo since they've been doing extremely well recently whereas Bain Capital has struggled

Apr 18, 2014
urchin24:

Apollo doesn't hire full time for PE out of undergrad, only for summer internships

Says you

Apr 18, 2014
Bloyd:
urchin24:

Apollo doesn't hire full time for PE out of undergrad, only for summer internships

Says you

Not to deviate from the main discussion, but in which continent do they hire for FT out of UG?

Best Response
Apr 14, 2014

They both often invest in semi-distressed companies, the only difference is that in Apollo's case, its intentional.

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Apr 16, 2014

Would fund performance in and of itself be a deciding factor in your choice? I mean I know it impacts carry, but fit, location, fund size, atmosphere, workload, mentorship, investment style were all more important for me.

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Apr 14, 2014

One of Apollo's previous investments filed for bankruptcy yesterday lol

They seem like smart guys though from my limited experience with them

Apr 14, 2014
Going Concern:

One of Apollo's previous investments filed for bankruptcy yesterday lol

They seem like smart guys though from my limited experience with them

Every megafund has zeros in their portfolio from investments made in '05-07. Not all of the companies have filed, but the investment should all been written down already.

Apr 14, 2014

Well technically the portfolio company that filed is a combination of a 2004 investment and a substantial 2010 bolt-on.

Almost all of the large buyouts done leading up to the financial crisis that would have gone bankrupt already have.

You can chalk this one up to an investment that went sour (much more so than a macro-driven event).

On another note, I'm not so sure I agree with the b-school argument for Apollo. My instinct is that Bain places better. Apollo generally promotes associates straight through and therefore hires less from the Post-MBA pool. HBS favors the elite PE institutions that come on campus and routinely hire their MBA students, Apollo isn't nearly as high on that list as a Bain would be and so the unspoken reciprocation of admitting Associate applicants from elite PE firms that are a friend of the business school (i.e., they hire almost exclusively from HBS) isn't quite as strong for Apollo as it is for the Bain's of the world.

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Apr 14, 2014

They also invested in Lyondell, which subsequently filed for bankruptcy as well... and they still made a boat load of money on it. So I wouldn't count them out just yet. It's also a pre-packaged deal... so won't be as value destructive.

Apr 16, 2014

This is a really helpful thread! Thanks everyone.

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Apr 16, 2014

Apollo is structured much more as a distressed platform with a strong focus on other strategies besides PE. They are in some aspects like a hedge fund in others more like a traditional PE firm. Very technical in terms of what you would be doing as an associate, very smart guys, small teams and lots of firepower. In addition they pay very well so I would def choose them.

Has been mentioned many times before but Bain Cap has many former consultants, totally different culture and investment approach. Stereotypical but they do emphasise a lot the operational aspects of a business and are in a sense more academic about the firms they look at (if that makes any sense).

I would always go for Apollo, not sure which one places better in BSchool but imagine both would be comparable

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Apr 16, 2014

for what its worth, apollo has a 4 year associate program and the best second year for 2 years running left for hedge funds. comments around pay is overblown (it is coming back to street btw with yoy trending down), the reality is pay is good but still a fraction of what talented people can make at a hedge fund at a very young age (kid left for pershing because hes making 3x as much). its also public so part of your comp package is in stock, not great if you join the firm at peak valuation levels. so a place like Hellman is gonna be more attractive from a comp perspective, all in assuming 3x gross / 2x net value (conservative for H&F) on shadow would give you a first year pay package approaching 450-500k.

apollo is also a fairly sexist place. only female investment associate on pe side is a joke.

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Apr 16, 2014
bunkerbanker:

for what its worth, apollo has a 4 year associate program and the best second year for 2 years running left for hedge funds. comments around pay is overblown (it is coming back to street btw with yoy trending down), the reality is pay is good but still a fraction of what talented people can make at a hedge fund at a very young age (kid left for pershing because hes making 3x as much). its also public so part of your comp package is in stock, not great if you join the firm at peak valuation levels. so a place like Hellman is gonna be more attractive from a comp perspective, all in assuming 3x gross / 2x net value (conservative for H&F) on shadow would give you a first year pay package approaching 450-500k.

apollo is also a fairly sexist place. only female investment associate on pe side is a joke.

haha someone's got a bone to pick with Apollo. You were clearly affiliated with the firm in some way given how much you seem to know

There's no question that hedge funds pay more, but most people going from banking to megafunds probably decided at some point they prefer PE to HFs even if the former pays less.

Apr 16, 2014
abcdefghij:
bunkerbanker:

for what its worth, apollo has a 4 year associate program and the best second year for 2 years running left for hedge funds. comments around pay is overblown (it is coming back to street btw with yoy trending down), the reality is pay is good but still a fraction of what talented people can make at a hedge fund at a very young age (kid left for pershing because hes making 3x as much). its also public so part of your comp package is in stock, not great if you join the firm at peak valuation levels. so a place like Hellman is gonna be more attractive from a comp perspective, all in assuming 3x gross / 2x net value (conservative for H&F) on shadow would give you a first year pay package approaching 450-500k.

apollo is also a fairly sexist place. only female investment associate on pe side is a joke.

haha someone's got a bone to pick with Apollo. You were clearly affiliated with the firm in some way given how much you seem to know

There's no question that hedge funds pay more, but most people going from banking to megafunds probably decided at some point they prefer PE to HFs even if the former pays less.

haha no bones to pick, but just trying to be informative. i am one of those people that left pe for hf. i think a lot of people choose megafund pe at the outset for a couple of reasons, 1) given timing pressure, getting a job over a weekend seems more attractive than a pro-longed 2 months process with no guarantees at the end of the tunnel and 2) the higher paying / more prestigious hfs tend to hire 2+2s (viking, pershing, etc) or 2+2+bschools, so you are not really "wasting" time by going to a megafund (well comped, good experience, good brand, etc). i don't know if you can say the same for mm funds though, unless hbs / gsb is in the cards. even then, you are competing with thousands for a job at viking through on campus recruiting.

that said, hf recruiting has gotten ridiculously competitive especially given a what a great year 2013 was (ie the fund that was paying a mil to a 26 year old is now paying 1.5 or 2)

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Apr 16, 2014

Agree with @"abcdefghij", you're clearly biased.

That being said no Associate leaving Apollo or any other PE firm has a demonstrated track record that would warrant a comp package that is 2-3x what a 3rd year associate would make (at Apollo is this ~$500k) suggesting they would be given a $1m-1.5m package at a HF... yes, maybe there isn't the same ceiling there would be at a PE firm, but the base package (i.e., Base+Standard Bonus) is likely modestly above what you'd get in the same seat at Apollo. The difference is the performance based bonus is based on investments you come up with, whereas at Apollo you can't generate and take ownership of your own investments at a junior level.

Second point you made about making $450-500k as a first year at H&F, that is complete nonsense, I don't know where you got your info from, but it is way off.

Third, the entire industry is sexist get used to it. If you go to each of the megafunds, you can count the female investment professionals on one hand.

Apr 16, 2014
Marcus_Halberstram:

Agree with @abcdefghij, you're clearly biased.

That being said no Associate leaving Apollo or any other PE firm has a demonstrated track record that would warrant a comp package that is 2-3x what a 3rd year associate would make (at Apollo is this ~$500k) suggesting they would be given a $1m-1.5m package at a HF... yes, maybe there isn't the same ceiling there would be at a PE firm, but the base package (i.e., Base+Standard Bonus) is likely in-line with what you'd get in the same seat at Apollo. The difference is the performance based bonus is based on investments you come up with, whereas at Apollo you can't generate and take ownership of your own investments at a junior level.

Second point you made about making $450-500k as a first year at H&F, that is complete nonsense, I don't know where you got your info from, but it is way off.

Third, the entire industry is sexist get used to it. If you go to each of the megafunds, you can count the female investment professionals on one hand.

You could believe it or not, including shadow equity and applying a 3x gross MOIC gets you to numbers I outlined at H&F. Regarding hedge fund pay, you can choose to believe what you want, but the performance based bonus is based on the fund's performance and how "well" they perceive your personal performance is, whether that's generating 10 new ideas or covering 4 names. Comp is comp at the end of the day. I do recognize the volatility point though, and you are on a short leash, but the people I know that got "pushed out" of prestigious funds because of a bad bonus ended with decent gigs elsewhere - this is for entry level though, you don't want to be bouncing around in your mid 30s

Apr 17, 2014

"Congrats to our friends at Bain Capital on reaching a final close for fund 11 with $7.3 billion of capital commitments - $6.5 billion from third party limited partners and $800 million from Bain related investors. The close is above the target of $6 billion and just below the hard cap of $7.5 billion."

Apr 17, 2014

H&F comp is broadly correct. They're extremely lean and do give pre-MBA associates shadow carry.

But please, carry on with your uninformed disbelief and snark.

Apr 17, 2014

H&F math outlined above is correct. 300k cash + 75 to 100k of shadow which equates to 150 to 200k at a 3x gross MOIC over 5-7 year horizon (if you think this is too aggressive, check Calsters or something for recent H&F returns). obviously everyone has their personal discount rate on future cash flows, but the tax benefit of cap gain vs. ordinary income makes up for it in my calculus

More detail on apollo numbers, the trend is as follows for 0.5 year stub: $390 all in 2-3 years ago --> $360 all in last year --> risk adjusting for joining at peak valuation levels when stock is up 100+% on date of grant and / or leaving early (thereby foregoing vesting) cuz you dont want to be a prisoner associate for 4 years --> low $300s which is only slightly above most megafunds. would you want to make that extra 50k over your buddy at Bain Capital who works half as much as you and makes $275k?

hopefully this provides some transparency to misinformed monkeys

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Apr 17, 2014
bunkerbanker:

H&F math outlined above is correct. 300k cash + 75 to 100k of shadow which equates to 150 to 200k at a 3x gross MOIC over 5-7 year horizon (if you think this is too aggressive, check Calsters or something for recent H&F returns). obviously everyone has their personal discount rate on future cash flows, but the tax benefit of cap gain vs. ordinary income makes up for it in my calculus

More detail on apollo numbers, the trend is as follows for 0.5 year stub: $390 all in 2-3 years ago --> $360 all in last year --> risk adjusting for joining at peak valuation levels when stock is up 100+% on date of grant and / or leaving early (thereby foregoing vesting) cuz you dont want to be a prisoner associate for 4 years --> low $300s which is only slightly above most megafunds. would you want to make that extra 50k over your buddy at Bain Capital who works half as much as you and makes $275k?

hopefully this provides some transparency to misinformed monkeys

Not the numbers I've been told, but regardless--it's more about the value of Apollo on your resume vs a Bain/TPG. Whether it's fair or not, the performance/reputation of the PE firm you work at will play a role in future career prospects. I doubt pershing for example is actively interviewing Bain associates.

Also, every firm has a 4 year associate program, it's just some force you to go to business school whereas you can skip that at Apollo.

Apr 17, 2014
chemicals:
bunkerbanker:

H&F math outlined above is correct. 300k cash + 75 to 100k of shadow which equates to 150 to 200k at a 3x gross MOIC over 5-7 year horizon (if you think this is too aggressive, check Calsters or something for recent H&F returns). obviously everyone has their personal discount rate on future cash flows, but the tax benefit of cap gain vs. ordinary income makes up for it in my calculus

More detail on apollo numbers, the trend is as follows for 0.5 year stub: $390 all in 2-3 years ago --> $360 all in last year --> risk adjusting for joining at peak valuation levels when stock is up 100+% on date of grant and / or leaving early (thereby foregoing vesting) cuz you dont want to be a prisoner associate for 4 years --> low $300s which is only slightly above most megafunds. would you want to make that extra 50k over your buddy at Bain Capital who works half as much as you and makes $275k?

hopefully this provides some transparency to misinformed monkeys

Not the numbers I've been told, but regardless--it's more about the value of Apollo on your resume vs a Bain/TPG. Whether it's fair or not, the performance/reputation of the PE firm you work at will play a role in future career prospects. I doubt pershing for example is actively interviewing Bain associates.

Also, every firm has a 4 year associate program, it's just some force you to go to business school whereas you can skip that at Apollo.

Really? They would not interview associates from Bain because their predecessors ran low-level execution on mediocre deals 5 years ago?

Apr 18, 2014
bunkerbanker:

H&F math outlined above is correct. 300k cash + 75 to 100k of shadow which equates to 150 to 200k at a 3x gross MOIC over 5-7 year horizon (if you think this is too aggressive, check Calsters or something for recent H&F returns). obviously everyone has their personal discount rate on future cash flows, but the tax benefit of cap gain vs. ordinary income makes up for it in my calculus

More detail on apollo numbers, the trend is as follows for 0.5 year stub: $390 all in 2-3 years ago --> $360 all in last year --> risk adjusting for joining at peak valuation levels when stock is up 100+% on date of grant and / or leaving early (thereby foregoing vesting) cuz you dont want to be a prisoner associate for 4 years --> low $300s which is only slightly above most megafunds. would you want to make that extra 50k over your buddy at Bain Capital who works half as much as you and makes $275k?

hopefully this provides some transparency to misinformed monkeys

Although some of this lines up with the numbers I've heard, I have to comment on your incredibly generous treatment of H&F shadow vs. your punitive approach to Apollo comp. You impute positive alpha in your H&F shadow (i.e., assumed returns exceed the discount rate), then call into question the valuation of Apollo stock comp (i.e., assumed returns fall short of the market's discount rate). There is no "personal discount rate" in this calculation, the proper discount rate is the risk-adjusted expected rate of return on large-cap private equity investments.

Both comp structures have advantages and disadvantages, viz.: Apollo stock holds underlying value at the date of vesting (assuming Apollo stock isn't worthless) and is taxed at capital gains rates for any applicable appreciation, H&F shadow is worthless at date of issue and gains value only commensurate with ROIC, but all outflows are taxed at capital gains rates. H&F shadow has a much greater risk of being worthless than does Apollo stock, but also much more upside. In my mind, these pros and cons offset and it's all a wash.

Given the variability in career paths, the fact that your income is rapidly rising (thus an incremental dollar in 5-7 years is likely worth a lot less to you than a dollar at age 24) and the uncertainty of future returns, I'd approach the value of any non-cash compensation with due skepticism. Your long-term compensation at either fund will be highly dependent on the performance of the firm; this individual factor overwhelms any tax arbitrage on your Associate equity comp may present. If Apollo outperforms H&F, you'll quite likely be much wealthier in 8 years working there than you would have been at H&F, regardless of how your Associate stock comp performed (ignoring that it too likely would have appreciated). And vice versa.

Apr 18, 2014

If you are interested in HFs definitely consider Bain Capital - Sankaty Advisors though. They are gold standard in the credit space.

Apr 18, 2014

Bain cap PE and sankaty hires undergrads

Apr 18, 2014

Both Bain and Sankaty hire out of UG. Bain usually takes around 5 analysts from MBB consulting / banking internships. Sankaty performance has been bad... seems to ride the coattails of the Bain name

Apr 19, 2014
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