Comments (64)

Nov 18, 2007

Main exit ops are to hedge funds or other asset managment. I'm not sure about consulting but I have heard that you limit your chances of doing PE by doing research.

Nov 18, 2007

I have a couple of friends in ER who went on to hedge fund. Don't know any ER guys who went on to PE.

You can move on from ER to consulting, but you may have to take a cut in seniority, unless you do an MBA which evens things out.

For PE, I only met one guy in carlyle who has ER background, but he's in an asian office where I heard that PE backgrounds are a bit more diverse than here in the US.

Nov 18, 2007

pe will be limited

Nov 18, 2007

-

Dec 3, 2007

Not really PE, more hedge funds and buy-side in general, some consulting and some corp fin.

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Dec 9, 2007

very difficult to make the transition from research to PE, but it's definitely possible. i know it's possible because i've done it. as far as PE is concerned, they definitely care a lot about pedigree, i.e. definitely demonstrate that you did well with a career in research, great undergrad degree and other interesting extracurrics, and just have a good story as to why you want to do private equity. also, it goes without saying that you should know how to build LBO models and make sure you're prepared for private equity case studies. finally, fit is also very, very important in private equity, so you really should have a very strong idea of why you want to do PE and that you have the type of personality that would succeed in PE.

most of the time people leave research and go into asset management or hedge funds because that's more of a natural transition, but keep in mind that it's far from a given to get into a good hedge fund -- you still have to be competitive, and you really have to know your coverage space well and demonstrate that you know how to think like an investor. oh, and make sure your case is so bulletproof that they'd rather have you instead of an investment banker.

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Dec 9, 2007

Numi - I know you've been looking into PE for quite some time. Did you finally make the jump? How's that going for you? Did you switch into a PE shop that is in line with your previous industry coverage?

Dec 25, 2007

Does this same sort of generalization apply if I'm starting at a well-regarded buyside shop after interning on the sellside? Also, Numi, how did you go about securing a PE position? I won't be working in NYC and am worried that I might be left in the dust when looking the next position. Ratul, is it possible for me to get into consulting without having to return to Bschool?

Oct 7, 2011

Sorry for this bump, but I'm definitely interested in hearing more about this. Do BB ER people usually go into big IM firms or long/short equity hedge funds?

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Oct 15, 2011

Depends a lot on if you are referring to Associates or Analysts. In my experience, Analysts tend to hang around on the sell-side because its very difficult to maintain their pay level unless they cover a very esoteric industry. A sell-side analyst is getting paid for a lot of relationships and things that have nothing to do with security selection, so his value add to the buy side is less clear. A great BB Analyst is likely going to comp north of 1MM all-in, and it is extremely difficult to find non-PM roles on the buy-side that will pay 7 figures. The Analyst effectively has to be willing to take a cut and massive job loss risk (much harder to get canned on the sell-side than buy-side), in hopes of making it to PM and the big pay day.

Associates, on the other hand, move all the time, though I have not observed any higher likelihood of L/S HF vs. big IM firms. The challenge I have seen with going to a L/S HF is that because the overwhelming majority are too small to employ a bunch of industry-specialized analysts, the associate leaving the sell-side has to demonstrate he can handle a much larger universe or even a generalist capacity. Hope that helps...

Oct 15, 2011

Mary Meeker made the jump. Not a typical case, just say'in...

Oct 15, 2011

Besides going to the buy side, you could go to one of the companies you covered or another company in a finance, strategy/biz dev, or investor relations capacity. Business school is also a common exit option for younger associates.

The communication and analytical skills you acquire in research are easily transferrable to any of the above. It's a harder sell to switch into a product management role or anything that involves managing a lot of people or producing a product.

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Oct 15, 2011

An MD at BofA's healthcare IBD started out in equity research. Thought that was an interesting move.

Oct 15, 2011
h.e.pennypacker:

An MD at BofA's healthcare IBD started out in equity research. Thought that was an interesting move.

I wonder how many people know Mr. T.R.

Oct 15, 2011

This topic has been addressed often.

Use the search function.

Oct 15, 2011

Assuming you are sellside and you want to go IB just contact someone in IB and let them know. You must know a few of the IB associates by now. IB is always looking for bodies. Know more then a few that I have made that switch for a year. If your buy side, look for job postings or contact friends from B-school still in.

Getting into PE is possible but tough because they generally want someone with transaction experience which you usually lack in the equity markets. Same kind of things goes for getting into corp dev. Most want transaction experience hence why I know people that have done the one year IB gig.

Pretty easy to swing corp fin or fin analyst, especially in sector you cover. As for making it to CFO , no career path is going to gaureentee that I am afraid. Lot of different ways to get there but a lot of luck involved as well. Let that be a long long term goal
And focus on being the best and brightest in whatever field you are in.

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Oct 15, 2011

why would the exit opps have changed?

Oct 15, 2011

In about 2 years in BB ER I've seen: boutique M&A, hedge fund, Asset Management, move to competing BB/boutique ERs, corporate in the sector covered (eg strategy division). Also seen a person leaving for a startup. Internal moves in the bank include to specialist sales and switching offices or sector coverage teams.

Oct 15, 2011

I've also met a number of investor relations at covered companies who used to be BB/boutique ERs themselves

Oct 15, 2011

What could have possibly changed to have an "up to date" discussion about this? Like did PE all of a sudden become an exit opp for 90% of ER analysts? I hope you ask better questions on earnings calls.

Oct 15, 2011

First of all, I'm sorry to inconvenience you by creating this thread, but I clearly was not looking for snarky comments. None of the previous threads discussed specific exit opportunities to the degree I wanted and, as this is a blog, I found that reason enough for bringing up the conversation again. Additionally, I wasn't asking what the exit opportunities are as much as I was asking what people thought the most natural transition would be (i.e. what career path benefitted most from the skills learned in ER). So, thank you for nothing, and in the future please hold your tongue unless you have something mildly useful to say.

And thanks @er_dude.

"As they say in poker, 'If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy.'" - Warren Buffett (1987)

Oct 15, 2011

Continues to be buy side (HF and AM), lateral to ER at another bank, bschool, industry (strategy or IR)

Oct 15, 2011

HF
AM
IR or management at a company you covered
MBA and then switch to whatever you want
Attempt to lateral into your coverage banking group for your sector
Institutional equity sales
Other stuff...

Oct 15, 2011

Is it possible to go to PE post-MBA after ER without any previous PE experience? same question for HF?

Oct 15, 2011

Common exit opportunities include the buy side at a hedge fund/mutual fund, etc, venture capital (not quite as common but I know a number of folks who have done this), a strategy or biz dev role in a company you were covering, or investor relations. You'll have deep industry expertise, very strong analytical skills, a great understanding of what investors are interested in. These are marketable skills. Business school is also an exit for analysts or young associates in some cases.

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Oct 15, 2011

They haven't changed much, if at at all. Exit ops include: other shops, AM, HF, etc

Oct 15, 2011

I've seen people do 2 year ER out of ugrad -> 3rd year sr. analyst IB -> PE/corporate dev and what not.

Oct 15, 2011

When do you guys think is a "good time" to make the switch from sell-side to buy side?

Also, I have heard that people make the jump into the companies they cover. Are these top corporate levels?

oldmansacks, is PE really possible? I have heard HF and AM as stated by DM, but have heard that making the jump to PE is not really feasible.

Oct 15, 2011
unknown4ever:

Also, I have heard that people make the jump into the companies they cover. Are these top corporate levels?

You mean eventually right? As in after a decade+ of covering the company, becoming ii-ranked, having global recognition for being a thought leader in the sector? You don't mean executive level VP after a 2yr ER analyst program right?

Oct 15, 2011

just want to make sure I am talking about sellside analysts here

Oct 15, 2011

Exit ops are generally encouraging for the buy side.

Some situations I've seen:
-associate with 2 years of sell side exp leaves for buy side junior analyst role.
-associate with 3-5 years sell side exp leaves for b-school, gets CFA and then go to buy side sr. analyst role. on the way to PM.
-analyst with 10-15 years sell side experience leaves for buy side PM role.

Oct 15, 2011
Bodhis:

Exit ops are generally encouraging for the buy side.

Some situations I've seen:
-associate with 2 years of sell side exp leaves for buy side junior analyst role.
-associate with 3-5 years sell side exp leaves for b-school, gets CFA and then go to buy side sr. analyst role. on the way to PM.
-analyst with 10-15 years sell side experience leaves for buy side PM role.

With all due respect, this is way too optimistic from what I have seen. I am starting to get involved with screening resumes for laterals/prelim interviews at one of the top traditional AM shop, and the transition is pretty low compared to the number of sell side research professionals trying to lateral over. I mean we are one of the biggest and our investment staff is around 300-400, which includes all researchers across equities and fixed income, all portfolio managers, traders, investment risk professionals, asset allocation strats. It is also very common for people to work 10-20 years at the firm. There are only a couple openings every year.

Also, the scenarios are a little off
For scenario 1, you will be entering at the senior associate/associate analyst level at most.
For scenario 2, you will be entering at the junior analyst, and at the very most analyst level; you wil also not be on the way to PM. There are a lot of junior analyst at the company that are gunning for those positions, and they have a legs up on a lateral from sell side.
For scenario 3, you will be a senior analyst most of the time, on a career analyst path. No one is going to just hand you the PM role without a track record managing money, regardless of how hot you are on the sell side. If you look at the investor material that large AM distribute to clients, they usually have a stats "Average XXX years experience in Asset Management/XXX years experience in investment position at XXX Asset Management Company"

Oct 15, 2011

What-to-do-What-to-do-

What do you think is an "optimistic" outlook for exit opps for sell side analysts?

Oct 15, 2011

DurbanDiMangus

Yes i mean after gaining a respect in my field

Oct 15, 2011

PE will typically want transaction experience, so not an easy move unless perhaps it is an industry specialized PE fund aligned with your coverage.

I have seen several associates break into S&T, but am speaking of MM and smaller boutiques; not sure at BB.

In general, the exit ops are more likely HF/AM or Corp. Dev. inside a company in your universe. I have also seen a number of ER associates go to business school and come out as bankers.

I would also note it seems experienced associates are usually in high demand, so you could climb from one shop to another in ER if you are merely looking for higher comp. This would also make you more visible for good buy side exit ops.

Oct 15, 2011

use the search function. Quite a few debates about this before. Durban basically says ER sell side research is SHIT for exit opps, and another user (don't remember his/her name) says ER is THE SHIT for exit opps.

GL

Oct 15, 2011

Read the M&I article on ER.

jbno1qb is correct (I work in ER). The thing I would add is that in more "technical" industries such as energy or mining, you will see more people from ER (and industry) lateral to IB as the industry is shifting toward more technical knowledge.

Oct 15, 2011

Off the top of my head - Institutional Sales, Portfolio Manager, Trading

Oct 15, 2011

Thanks for the answers ! =)

Now about the job itself , is it mathematical ? Or is it more accountancy focused ?

Can we say that it's between IBD and S&T ?

Oct 15, 2011

ER you need to understand the financial statements/build models but more about having unique/timely insights into your coverage universe. I wouldn't say its mathematically challenging but it helps to have those skills.

I think its idiotic to generalize the 3 industries but IBD isn't any more math-focused but is more accountancy focused. S&T is the opposite.

Oct 15, 2011

I would say you can never be too good at accounting for ER. Very little challenging math, though it is so tough to generalize about demands of ER because it varies so much by sector and analyst.

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Oct 15, 2011

/rant Also, accounting skills help even more if you work with companies that report in Canada. Prepare to be mind-fucked by the financial statements and ready to pepper management/your accountant friends with calls as the new IFRS accounting standards that were rolled out this year make things pretty confusing. I even called my old accounting prof. once pretending to be a student. /rantover

Oct 15, 2011

Thanks for the inputs !

Is it possible to break into the industry with an international business administration degree ?

Oct 15, 2011
Takanome:

Thanks for the inputs !

Is it possible to break into the industry with an international business administration degree ?

Anything is possible. I have an english degree with an economics minor and no one really gives me any problems on that. Try to shoot for some type of minor where classes may overlap and you have already taken the entry level courses. I'm sure you'll have to take some finance classes anyways for int. business anyways.

Oct 15, 2011

For sure , but is that sufficient ? I mean there is a lot of management in international business , is that really necessary or is it a pure waste of time ?

Since it's not quantitative , it might close some doors ... I've been told that recruiters are more likely to hire a guy with a quantitative degree such as maths or economics ... Isn't an economics degree mandatory for ER ? It's called "research" so ...

Oct 15, 2011

I'm a senior analyst in ER and will tell you my firm (MM) will generally only take associates with econ majors if they have highly relevant internships and some decent acctng and/or has passed CFA I.

There is very little high level math in ER, and it can get relatively heavy in the acctng; no analyst wants to spend time teaching his junior acctng.

I have never heard of econ being preferred, much less mandatory for ER and have worked both buy and sell side...that is unless you are seeking a strategist role I suppose, but that would need grad degree.

Oct 15, 2011

Same story here. We only have 1 econ. major in my group and he worked for the Bank of Canada for quite a few years before moving over to banking.

Any time an econ major makes it to 1st round (including a few phd candidates I recently interviewed) they get asked why they didn't do finance/accounting (which every Canadian university offers) or get a CFA. Very few will be able to convince the analysts/associates to teach them basic accounting.

Oct 15, 2011

Thanks !

There is something I don't understand : how is it possible for an ER associates to move in Sales if he doesn't have clients ? Same for trading and the maths requirement ...
I've been told that ER associates can move to prop trading ...

Is it the field which has the widest exit opps ? It seems like one of the hottest job in IB isn't it ? Great pay , less hours than traditional banking and nice exit opps , where's the problem ? :)
How is it viewed in general ?

Yes I've read the M&I article , numi managed to move to PE right ? So it's possible even without transaction experience ?

Oct 15, 2011
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Oct 15, 2011
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