BB IBD Associate --> PE

Rank: Monkey | 35

People say it's incredibly difficult to go from being an IBD Associate to PE. But can you ask to go into PE in a pre-MBA analyst role (take a title and pay cut)?

Comments (25)

 
6/14/12

Not really, it's very uncommon.

Learn More

7,548 questions across 469 investment banks. The WSO Investment Banking Interview Prep Course has everything you'll ever need to start your career on Wall Street. Technical, Behavioral and Networking Courses + 2 Bonus Modules. Learn more.

 
6/14/12

You could, but it is very unlikely anyone would be interested in that. The thought is good because it shows you are willing to make a sacrifice in order to further your career, but at the end of the day, there is too much risk of you searching and potentially leaving for a better opportunity. One of the reasons PE roles are hard to come by is because there isn't a lot of turnover at individual shops. From my observation, a PE firm might hire someone new every few years, as opposed to multiple people every year like you find in IB. The issue is, they may not need to fill a post-MBA role for a number of years, like when they raise a new fund, so you could be sitting there thinking, "Damn, I'm making half or 2/3rds of what my peers are making and I don't know if I even have a shot at getting promoted and moving up in the ranks at this firm, I guess I'll look and see if I have opportunities for advancement elsewhere."

Anyways, those are my thoughts. Maybe someone else has some better, less anecdotal reasoning.

Who knows, you can always try and see what happens but I've seen a large number of PE 'analyst' type positions advertised and a good portion of them will specifically say, "MBAs will not be considered".

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

 
6/14/12

So basically the only way to get into PE is to be in a top IBD group and recruit as a 1st-year Analyst, otherwise you missed your chance forever?

 
6/14/12

I was an investment banking associate (direct promote from analyst) that moved into PE. I think my story made a little more sense because the "traditional path" would have been to move to PE after 2-3 years in banking...which for me happened to be summer 2008. Needless to say, PE hiring was in a bit of a freeze at many funds, so most places didn't find it unreasonable that I was interviewing as an Associate.

Having said that, during my time here, I've interviewed dozens of candidates for incoming pre-MBA positions and only 2-3 have been IB Associates (and none have received an offer).

 
6/14/12
BananaStand:

I was an investment banking associate (direct promote from analyst) that moved into PE. I think my story made a little more sense because the "traditional path" would have been to move to PE after 2-3 years in banking...which for me happened to be summer 2008. Needless to say, PE hiring was in a bit of a freeze at many funds, so most places didn't find it unreasonable that I was interviewing as an Associate.

Having said that, during my time here, I've interviewed dozens of candidates for incoming pre-MBA positions and only 2-3 have been IB Associates (and none have received an offer).

If you don't mind sharing, what size fund are you at?

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

 
6/14/12

For pre-MBA associate positions, good PE funds prefer individuals with analyst experience who performed at the top of their class. There are few enough spots at these funds, and enough top banking analysts, that there's no need to go outside of the box. Given the choice between hiring the analyst or hiring the associate willing to be paid the same as the analyst, I'd still pick the analyst.

As for post-MBA associate positions, good PE funds are looking for individuals who have had pre-MBA PE experience (following IB or consulting). Once again, more than enough qualified candidates that going outside of the box is not necessary (for most well-funded, legitimate sponsors with good track records).

There are exceptions to every rule. But by and large, the answer to Banker88's summary question is yes. The one very large exception is that at a very senior level, PE funds hire executives from different backgrounds (for instance, CEOs or division managers with strong operational experience, MDs who headed groups at banks, or well-respected attorneys often get brought in at the partner level of PE funds).

 
6/14/12
Learn More

7,548 questions across 469 investment banks. The WSO Investment Banking Interview Prep Course has everything you'll ever need to start your career on Wall Street. Technical, Behavioral and Networking Courses + 2 Bonus Modules. Learn more.

 
 
6/14/12

bump. i'd like to know this too.

If you work a non-PE job pre-MBA, then obtain an associate job what are the exit opps?

 
6/14/12

I'm pretty sure this has been discussed before, ad-nauseum. Short answer: it's possible but not likely. You're probably between 27 and 30 by the time you start the associate position, and you're looking for exit opps? Sure, there are the occasional few who go to hedge funds or F500 biz development roles, but more often than not, I see associates and VPs just move to other banks.People generally go into associate roles at banks (post-MBA) as a career and to follow he track of associate --> VP --> SVP --> MD. It's definitely not the same as an analyst stint where everyone knows that you'll probably leave.

As a post-MBA associate with zero private equity experience, it is a definite uphill battle. You're more expensive since you have the MBA but you really have nothing to bring to the table (no industry expertise, no contacts or network, no pull with senior bankers/lawyers/etc.). It's a different skill set between a post-mba associate/VP at a bank and a post-mba associate/VP at a private equity firm. Personally speaking, I've seen some senior bankers (MD-level) come through my shop, only to be gently nudged out since they couldn't execute on making investments.

 
 
6/14/12

I mean it's possible but unlikely. I've mentioned before that some associates I worked with got PE interviews w/o pre MBA IB/PE experience.

The real problem that people don't talk about is that PE isn't really a long term career option unless you're already in PE. First you have to get into IB (no stroll in the park), then you have to get into PE (difficult at best), then you have to either have landed in a partner track role or somehow get promoted into a career track position. None of that is easy.

 
6/14/12

It's pretty hard to go to a reputable PE firm as a post-MBA associate. I have known people from my associate class go to LMM funds. However, there is always some "catch" to it -- e.g., bad location, first time fund, personal relationship, etc. However, if you are outside of the U.S., then that's a different story.

 
 
6/14/12

I've seen it happen. It seems quite possible to me but you're kind of wasting time the longer you stick around because your pay scale resets. That's one reason why I think even staying on as a third year analyst is best avoided if possible. I'm in IB so treat my presumptions on how they'd deal with pay with due skepticism.

 
6/14/12

Thanks. This is helpful and I appreciate the post. Could you perhaps elaborate on the steps those individuals took to transition to the buyside? I agree with you that it seems logical (why would a PE shop not take a moment to evaluate a qualified A-A from a BB), but everywhere you look people seem to shoot down the idea. After all, Wall Street is big on tradition.

 
6/14/12

I don't have that much detail to be honest. I think post-MBA associates and associates with more experience will have a much harder time. I think they just followed the normal path of working with headhunters and networking. In my conversations with headhunters who recruit exclusively for buyside shops, they wanted to know names of associates in my group. Accordingly, it is probably more common than you think.

 
6/14/12

Seen it happen plenty of times.

 
 
6/14/12

It's much easier if you're an analyst promoted to associate instead of a post-MBA associate.

 
6/14/12

1-Click to Unlock All Comments - 100% FREE

Why do I need to be signed in?
WSO is a knowledge-sharing community that depends on everyone being able to pitch in when they know something.
+ Bonus: 6 Free Financial Modeling Lessons with 1-Click Signup ($199 value)