How often do prior associates from IBs enter PE?
Is it much more difficult to enter PE after your associate? Will you be in a role two years behind your peers who switched after their analyst stints (entering as an associate)?Currently at a bank and thinking of staying on as an associate but am afraid of getting locked in.
Have heard of it happen in the industry, but we don't do it.
Speaking broadly, the problem is first year PE associate pay is a nice pay increase from a 2nd year analyst comp, but is either flat or slightly down from Banking Associate 1 or Associate 2 comp. So the banking associate would have to be willing to take a lateral or perhaps backward step to go into PE.
Banking associates don't have the skillset to be PE Senior Associates or VPs, I'd much rather hire an experienced PE associate laterally for those roles.
Would the lack of skillset apply for an A2A banker?
Is it possible for them to then take a pay cut and then recruit to join as an associate? Are they looked upon more favorably than analysts they may compete w as they have more experience?
Most switch at Associate or after MBA. The Director role at a bank and Principal role in PE are very different. The Analyst/Associate role is more similar, which makes lateraling more common,
I can't say I've ever seen it actually happen at a UMM/MF. Associate -> HF is must more doable.
Happens all the time
I've seen it happen most commonly in a couple scenarios: (1) analysts wait until their second or third years to recruit and get on-cycle offers and are titled associates by the time they leave; (2) industry specific funds that are willing to hire IB associates from the relevant coverage group; (3) new funds that have trouble hiring top-tier analyst talent.
For most associates making $300-400K at reputable MMs or BBs, the idea of moving to a MM fund to start at the very bottom of the totem pole all while taking a substantial pay cut is hard to swallow. If an associate candidate is able to tell a compelling story, explain why they haven't made the move until now, and get past all the technical components of a process, I don't see why a fund outside of the MFs / UMMs (or any fund with a very structured, on-cycle process) would bias against an IB associate candidate. The problem is that in practice, associates tend to be a harder sell for those very reasons, getting cold feet at the end or even after offer stage (i.e. suddenly realizing they don't want to move cities, or that they actually don't want to leave a team with a great mentor, etc.), and so it becomes a negative feedback loop to funds who then feel like they've wasted precious time and resources.
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