ER vs M&A for L/S Eq Megafund

mca2k4's picture
Rank: Monkey | 62

If you had a choice between:

middle-ranked BB ER industry team (think #5 or 6 in the top 10 II poll)
vs.
BB M&A team with significant modeling experience but which has not closed many deals in the last 1-2 years

1) which one would you choose for moving into a long/short equity HF megafund?
2) after how many years of experience do ER sell side analysts usually move to HFs? (e.g. in IBD it's by end of 2nd year, what about ER?)

Many thanks in advance.

Comments (7)

Oct 20, 2011

uhhhh

which BB M&A team has not closed may deals in the last 1-2 years hahaha? Because they have somehow managed to delude shareholders, management, and the general public into thinking that they're adding any value...

Oct 20, 2011

Would prefer not to use names - it's just for making the point that it would be good for technical skills but not great for having closed deals on your resume.

Oct 21, 2011

This is a good application of Linkedin stalking. Pick a few funds you're interested in and try to figure out where junior and mid-level people came from.

It will vary fund by fund whether they pursue to ER, bankers, or both. Different places have different cultures and investing styles, and different backgrounds for the existing team, which in turn impacts where they recruit.

In general if I were making the decision I'd take M&A. The skillset is more diversified and will allow you to keep doors open for PE, other hedge fund strategies, etc.

Oct 21, 2011

When I worked on the sell side I used to think it was crazy to recruit M&A analysts for L/S hedge fund jobs over SS ER associates. Now that I work on the buy side and do the hiring, I think it would be crazy not to hire M&A analysts and/or CPA types. IMO the sell side is sort of worthless -- doesn't mean I wouldn't consider a SS ER associate, but if all they know how to do is guess next quarters EPS in Excel, they wouldn't be someone I would hire. I want people who can understand businesses and industries at an indepth level and my experience has been that M&A kids are better at that. Obviously, it varies significantly between funds.

Oct 22, 2011
Ravenous:

When I worked on the sell side I used to think it was crazy to recruit M&A analysts for L/S hedge fund jobs over SS ER associates. Now that I work on the buy side and do the hiring, I think it would be crazy not to hire M&A analysts and/or CPA types. IMO the sell side is sort of worthless -- doesn't mean I wouldn't consider a SS ER associate, but if all they know how to do is guess next quarters EPS in Excel, they wouldn't be someone I would hire. I want people who can understand businesses and industries at an indepth level and my experience has been that M&A kids are better at that. Obviously, it varies significantly between funds.

Just curious, what's your opinion on hiring consultants?

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Oct 21, 2011
GreenwichForLife:
Ravenous:

When I worked on the sell side I used to think it was crazy to recruit M&A analysts for L/S hedge fund jobs over SS ER associates. Now that I work on the buy side and do the hiring, I think it would be crazy not to hire M&A analysts and/or CPA types. IMO the sell side is sort of worthless -- doesn't mean I wouldn't consider a SS ER associate, but if all they know how to do is guess next quarters EPS in Excel, they wouldn't be someone I would hire. I want people who can understand businesses and industries at an indepth level and my experience has been that M&A kids are better at that. Obviously, it varies significantly between funds.

Just curious, what's your opinion on hiring consultants?

I can't say that I've ever met an ex-management consultant in the hedge fund space (this is solely based on my experience). Most of the Big 3 consultants I know, while extremely smart, are not very knowledgeable regarding public market finance concepts and especially with detailed financial statement analysis. On the PE side they can fit in because it's more about sector and operational research, organizational change, and sheer hustle/work ethic and you have a very different relationship with the concept of "information" when you have bankers and management working on the transaction as well. Building an LBO model is very different from combing through everything a company has ever posted on EDGAR.

Oct 20, 2011
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