Say you are evaluating two first year analyst IB offers, one from a MM Bank like RBC, Jefferies, or William Blair in a coverage group, and one from a boutique M&A shop that works on $25M - $350M deals. Pay is the same for base, likely a little lower on the bonus, and the boutique M&A shop works more like 60 - 80 hours/week.
When it comes time to start trying to break into MM PE, which is going to be the best experience? Clearly, it seems the MM is the best choice. But why? How many MM PE funds want you to have experience working with $1B+ deals? I would think that working on smaller deals that are more in line with potential investment size with more involvement would be preferred, and you could rock an interview if you spoke along those lines.
If you have two years of experience at a smaller M&A shop and get an MBA, are you really going to be at a disadvantage when moving to MM PE?
MM firms are not working on Billion dollar deals all day long
Many times smaller M&A shops have strong track records of placing analysts in MM PE, but it varies greatly by bank. During recruiting, talk to the current analysts about their exit ops and where past analysts have gone after their tenure. I don't know what boutique you are referring to, but if you are working 60 hours per week you might not be getting the kind of experience that will make you attractive during PE recruitment. It is far better to have 5 $50M deals under your belt than 1 $1B deal.
what if the deals are mostly ECM or DCM and, while a lot of experience, it is not focused on M&A?
Also, moving to any PE job post-MBA is extremely unlikely unless you have pre-MBA experience in PE.
LBO2: Thanks, great info. I have a lunch soon with a couple of the analysts there and will be sure to get additional details. I focused on getting into IB and that now seems likely, but I am pretty fresh on the breaking into PE stuff. So the normal path 2-3 years IB then 2-3 pre-mba PE? I knew that was possible/common, but I though 2-3 years IB, MBA, and post-MBA associate was as well.
$25M - $350 is a very broad range. If most deals that you will be doing are on the upper end of this range, you will be just fine. If most deals you will be doing are on the lower end of this range, there certainly will be more impact on your buyside recruiting.
Thx Ukon. I would say most of the deals are on the lower end, and it seems like exit ops were more on the corp dev side for the smaller firm.
how much does deal value matter? (Originally Posted: 04/21/2011)
an older analyst told me that for PE recruiting you should in the best scenario have at least a $1billion+ transaction under your belt (preferably announced). i've also heard that deal experience doesn't matter as much and that bank/performance/recs are key.
anyone have any experience with this? since the top funds recruit so early i can't imagine an analyst would have closed a multibillion transaction in his first six months...
if you're at a reputable BB or boutique there's no way you wouldn't be on a $1b+ deal in your first 3-6 months...
and I don't think closing a deal matters as much as the WORK you do on a deal
Example: I worked on a deal this summer that absolutely fell apart and went nowhere, but for a while the deal was hot (multiple interested sponsors and financing options). We worked it to the point where it was dependent on whether or not someone would be able to step in to fund a key portion of the deal and how much leverage our IBD risk officers would be comfortable with. Throughout the deal, I had access to the sponsor's models and data room. At one point I actually suggested adding some mezz and my VP told me to just run with it for a while (eventually axed). Even though this deal crashed and burned, it has been a GREAT talking about in all of my interviews so far (why did the deal fall through? why did you suggest adding mezz to the deal? what/why? etc).
So in short--doesn't really matter if you close or not. Closing a deal is a function of a lot of things you can't control as an analyst. However, it's much better to be the only analyst on a $300mm IPO than the 50th guy on the ATT/Tmobile deal i.e. the guy who only updates term sheets. PE firms generally want to see you close deals because it means you have the full range of deal experience (rather than just pitching). Just my personal opinion.
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