I've received a few PE offers, one with a top 5 presence in my industry. I am considering declining and staying on as a banker long-term. Am I insane? Is the money that different down the road?
My decision is being influenced by a few factors, primarily I enjoy the work I'm doing now and love my team. Secondly, I under no circumstances want to take on the debt load of getting an MBA to try to fight my way back into PE - it simply sounds foolish to me.
Interested. How do you already have offers? Assuming you're a first year
2nd year
Skipping MBA is much more popular now - just food for thought. Senior associate roles are far more plentiful now than in years past (either direct promote or lateral -- can even go slightly upstream sometimes)
Five years ago that point would be worth more.
Your first point makes sense though, you never know if you will like PE until you start it.
I would take the PE position, assess if I like it and worst case scenario is you go back to IB as a 2nd year associate if you do not like PE. Senior (and even mid) level positions in IB are much different than analyst years.
On the other hand, if you truly love your team, your deals and satisfied overall, why leave?
I would take the PE offer, put in two years, and decide if you like it. I'm not so naive that I think a PE career these days is far superior to banking in a good group. However, being on the buyside, even for a couple years, will give you valuable perspective if you choose to return to banking. You'll understand how the buyside thinks, which is extremely valuable. For example, it will help as you're putting together a CIM to kick off a sellside. It will help you in negotiations with funds during a transaction. It'll help you identify where a fund is in its life cycle and the acquisition targets that make sense at that stage.
I'd even frame it to your senior bankers like that. Basically, I love this group. I enjoy the work and working with you guys, but I'd like to get a couple years of buyside experience so that I can come back a better banker. They may even leave a seat warm for you come back to.
Keep something in mind: The work you're doing now will bear little or no resemblance to the work you are going to need to do, day in and day out, if you are going to be a career banker. Lots of people like - and even love - modeling, powerpoint (ok, fewer people love powerpoint), deal execution, and the other stuff that consumes your time through the VP years.
But after that it is 90% sales. Are you extroverted? Do you draw energy from people? Do you enjoy meeting with clients? Will it be okay with you to sacrifice time to yourself and with your family for client related travel, dinners, golf events, etc?
By the way if this PE offer is truly strong and you do well there, they might pay for your MBA, or the $ you borrow for one will be insignificant a year or two into your post-MBA career, whether its banking or PE.
I don't disagree, but how is PE any different in this regard? You have to pitch LPs, constantly meet with LPs, meet with bankers, meet with prospective portfolio cos., meet with your port cos. at least quarterly, etc.
That's true, but for all of its challenges (no one saying PE is easy) PE is not a client service business. The investment professionals are not interacting with LPs that often - nowhere near as much as bankers interact with clients - and as for bankers and existing portcos, it is the PE person who dictates when and where those meetings will happen. Chasing prospective targets is hard, but I wouldn't say it's as hard as being, for example, one of 10 banks pitching to lead an IPO or sellside.
don't
I'll limit my comment to one point you raised. It's great that you like your team a lot and get why you value that. But I'll ask, how certain are you that will continue to be true for very long? Banking naturally has a lot of turnover, so I'd think it's hard to predict the makeup of your team beyond the next year or two. Fit is very important, but I'd hesitate to make a decision affecting your long term career trajectory based on the current makeup of your team.
Want to second this. Teams change over time, and if you really have it that good, there will come a time when you long for the "golden era" of the group that you are in. Happened to me at a place I used to be in.
It will be particularly hard to lose the people you came up with in the Analyst program.
IMO take the PE offer. You can always go back to banking, but there's no chance you can get that same offer a couple years from now.
Assuming you’re doing off-cycle recruiting as a second year, how have you managed to get more than 1-2 offers at a time? How long are they giving you to decide?
I decided to not go into PE (despite having opportunity to do so) and stayed in IB for ~10 years and don't regret it. I left to start my own operating company, which was always my plan. PE as a long term career choice just wasn't that exciting for me, and I didn't mind being in IB and was able to advance my skill set from analyst type work to senior banker. I also never wanted to pursue a MBA due to opportunity cost.
The one exception that I'd make in your case relates to market cycles. There is going to be a downturn at some point in the near future. If you are at a BB, there will likely be layoffs if the downturn is severe enough. PE is more stable during a recession because their funds are locked in. As said elsewhere in this thread, you can always go back to IB.
I'd recommend going to PE if your gut is telling you that we will see a decline in the economy within the next 24 months.
on that note, how likely is a downturn in the next 24 hours? if so, what about PE vs Banking vs corporate development at a tech firm?
24 hours is pretty low, but over 24 months it is pretty high from my perspective.
As I said, PE is generally more stable during a downturn (assuming the fund has dry powder/has recently raised a new fund) than IB. Corp dev at a tech firm is much more idiosyncratic based on performance of the company. I'd peg it somewhere between IB and PE from a stability perspective. As soon as the market crashes and deal volume freezes banks will start laying people off rapidly. It happens very quickly from the two major downturns that I've witnessed 2001/02 and 2008/09. Large operating companies move more slowly, and PE is primarily dependent on fund cycles. Downturns are also good for PE because entry prices into new deals drop.
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