How real is the pigeonhole?

AtomicPenguin's picture
Rank: Monkey | 65

Hey guys need some insight here: so I'm a second year analyst at a BB power group at the moment but have the opportunity to move internally to another group. They're just starting out a junior team at this office and so I'd work directly with a super lean vertical and closely with an MD.

Thing is it's in energy, which I fear may pigeonhole me further, being that I was already at a niche industry group. If I'm looking at PE roles outside of these industries at the end of my two years, say industrials/consumer/generalist, would I be further pigeonholing myself here? Or does it not make a difference since I'm still in my "two-year analyst stint"?

Thanks guys - appreciate any insight.

Comments (46)

Nov 9, 2018

Im curious of WSO's opinion as well but from what I've heard you just need to be aware. For example, you''ll always have a 'tag' of being the energy guy but if you lateral to a different product or industry group after that you begin to weaken that association.

The exception to this from my understanding is if you were to go into real estate which is another pigeon hole and you may be seen as the REPE guy.

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Nov 9, 2018

I think your group certainly anchors others to think that you are an "energy/power" guy, but not to the extent that it will limit your career options. If you were a VP that'd be a different story, but as an analyst, the skill sets you develop in energy/power vs. consumer/industrials are pretty similar (i.e. analytics, interpersonal, management). So your core offering to a future employer is equal to those of analysts in other groups.

The biggest thing to keep in mind in my opinion is that as you try to move out to other industries, be able to 1) communicate why you enter energy/power (could be because you liked energy/power or could just be that you met great people/mentor-worthy seniors), 2) communicate why you want to move to a different industry (why industrials for example, and 3) in conjunction with #2, be able to draw parallels (or contrasts) from your past experiences in power (for example, heavy asset base across power and industrials, but different nature of recurrence of "sales" and product development cycle etc).

I think if you can clearly lay out 1-3 above, you should be good to go. I'd say explore early and figure out the story later.

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Nov 9, 2018

TBQH, pigeonholing is very real in the energy/FIG space if you hit past year 3 so be careful. I was in FIG ER for <2 years and tried to GTFO as soon as I realized I didn't want to stick in the sector. That said, as a junior I'd argue the benefit of having the BB brand name and a good team outshines your sector focus and you'll have flexible opportunities in the beginning if you leave before year 3.

There was an associate above me who tried to get out but after being >3 years in FIG, the pigeonhole stuck so he/she had to back to b-school to rebrand.

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Most Helpful
Nov 10, 2018

I speak from experience when I say this- I highly recommend AGAINST going to energy. The pigeonholing aspect is real. I think the other people who've commented above are trying to be nice about this but let me state this in no unclear terms- avoid energy/real estate/FIG like the plague if you want to go to a generalist PE fund. Your team may be super lean and you may work closely/directly with an MD, but honestly that won't matter to the PE fund you're going to or the recruiter (aka gatekeeper) you're talking to. I hope you take my advice seriously and stay put where you are.

The only situation I'd recommend making this move in would be if you were going from a no-name shop to a BB but you don't have that problem and there's not much upside to this (despite what's being pitched to you).

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Nov 10, 2018

why avoid energy/real estate/ and fig ?

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Funniest
Nov 10, 2018

Because you get pigeonholed, I.e. the topic of this post

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Nov 14, 2018

wtf

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Nov 12, 2018

Thanks for the insight - is this something that can be overcome though? People told me the same when I went into Power, yet have interviewed with quite a few generalist funds. Just wondering if this makes it worse by any means.

Nov 12, 2018

I don't agree that Power really pigeonholes you. Probably doesn't make it as easy as TMT, but it's certainly not the worst group from that perspective, and I'm not surprised at all that you received interviews.

Whether it's something you can overcome or not, sure you probably can by hustling enough. But the question is why would you want to do that? It sounds like you're really set on making the transition and are trying to justify this move to yourself. What I'm saying is something different- don't make it. That will eliminate the need for this line of reasoning/questioning. I hope this helps.

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Nov 14, 2018

Im going into a BB IBD FT programme with 2 years experience. I actually have all of those experience you listed .. (energy/re/fig) .. how likely am I getting put in one of those groups in the group selection if i dont put them down as a preference? I don't mind FIG and energy so much but RE is a no go for me.

Thanks!

Nov 14, 2018

Having covered energy (OFS & E&P) in the past, I can tell you with certainty that can't think of anyone I know in these roles that has switched coverage or industries...same with financials and to some extent RE

Nov 14, 2018

Yeah but is that because they can't or because they don't want to?

Nov 20, 2018

A good number of energy IB analysts that want to do generalist PE try to get OFS staffings and make the move successfully.

"Anything less than the best is a felony"

Nov 14, 2018

This is it

Nov 15, 2018

is M&A and TMT the safest group if you don't know what industry to specialize in ?

Nov 15, 2018

I'd say those and LevFin/Sponsors (although you have to be careful you're not placed in the capital markets version of that team - make sure you'r on a team that owns the models)

Nov 18, 2018

Don't agree with you mate, depends on what kind of PE you want to do.
If you want to do energy, power or infra PE, you need to come from a specialised background. All the big PE shops have energy and infra teams, and there are a lot of focused energy / infra only funds out there as well.
Can't say much on real estate, but I know the CORE team at my old BB was not where anyone wanted to go, but that could have just been the team. That said, I'd avoid FIG in general, as there doesn't seem to be much for exit opportunities in any direction.

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Nov 20, 2018
overpaid_overworked:

That said, I'd avoid FIG in general, as there doesn't seem to be much for exit opportunities in any direction.

Why is this and is this just for PE?

Nov 12, 2018

I would also argue that for FIG it depends on the coverage. If you cover banks or insurance, you are more likely to get pigeonholed. For other areas, it might actually give you a decent exposure to Fintech (payments, financial admin. services, trading infra, and other software-oriented fintech companies). With that said, it really depends more on you and your story. Most FIG people at my BB with banks/insurance background went to all sorts of buyside funds from large cap consumer PE to VC...

To answer OP's question, I think if you are determined to get out before the end of your analyst year, you will be fine. The question I have, though, is how hard is it going to be when you start recruiting, given it is going to be a lean team? Recruiting requires a full commitment and your MD will probably notice. Also, if you are going to start looking at the end of the second year, there are scarce opportunities available, requiring you to be even more committed. Why not recruit now?

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Nov 13, 2018

It is real. In the end, headhunters and other funds just want to put you in a box. If you are the RE guy, you get put in the RE box. If you are the FIG guy, you get put in the FIG box. In the end, it is ridiculous because your first job should not determine the rest of your career, and it's not like an analyst from FIG is not capable of doing a generalist PE job. But there are just too many candidates to choose from so it's their way to whittle down candidates to a more manageable level.

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Nov 15, 2018

Don't generalist PE cover RE/FIG/energy?? I don't see why a headhunter would skip the above candidates for a generalist role?

Nov 15, 2018

While the fund may be generalist, teams are usually broken off into sectors (i.e. Blackstone Energy IPs invest on behalf of both the flagship BCP fund and the energy-focused fund).

FIG is the least likely of the three to be pigeonholed so to speak.

There is little crossover between real estate and generalist funds. Real estate is really it's own assset class when it comes to investing. Investors wanting real estate go to a real estate fund, investors wanting PE (with PE returns) go to a PE fund.

My two cents: if you really want to move to a different sector from IB to PE it's all possible, but realize you may have to compromise on someothing else. The path of least resistance is of course staying in the sector you were covering in IB.

Nov 13, 2018

Here's my quick 2 cents.

Not all energy is the same. Try to figure out where your group falls in the energy universe - energy is a very broad term. Few groups cover it all and most focus on one or two subsegments.

E&P, A&D of assets is very niche. You learn a specific skill set that doesn't really transfer to other industries (Well economics, NAV, etc.). The modeling, lingo, market drivers, etc. are all different and unique. 3+ years in this type of work and you're stuck. Avoid if you're worried about being pigeonholed.

Oilfield services, think HAL, SLB, etc. are a bit different. They provide products and services to E&P customers. They do not own any O&G assets and their business model is not that different from other B2B companies. Obviously, market drivers are unique because most of their revenue is generated from E&P capex and opex, so highly levered to oil price and current economics of drilling and completing O&G wells. I have seen people successfully lateral out of this segment of the energy market to generalist funds with little to no exposure to energy. Not saying it's the easiest thing in the world, but you can definitely convince them that your skill set is transferable.

Not as familiar with midstream and downstream. Initial thoughts are that midstream is pretty unique and I could see being pigeonholed there. Lot of MLPs and other structures unique to the space. Probably less niche in downstream if you're on the services side.

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Nov 13, 2018

is real estate skillset transferable to other industries ?

Nov 29, 2018

Depends on what your covering within RE.

Most RE groups also cover gaming and hospitality-related assets which would be directly applicable to other industries.

Straight RE is generally comparable as well as you are still using similar valuation techniques (albeit different metrics such as FFO).

I went from a RE group to generalist focused fund and really focused on pitching the hospitality / leisure / gaming deals I worked on vs. RE deals. Felt my experience was directly applicable to prepare me for what I do now. With that said I wouldn't recommend that you go into a RE-related group if you didn't want to pursue that longer term because I definitely was not getting looks for certain funds since headhunters could use the group as a quick and easy way to begin to weed out candidates.

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Nov 14, 2018

+1. Solid question mate.

Work hard, work clean, & most of all do not give up.

Nov 14, 2018

Echoing above, if you want the "everyone gets a participation trophy" answer, then pick the group you like the most.

Real answer: avoid real estate, FIG, and energy groups for generalist roles.

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Nov 14, 2018

Goldman FIG places very well into a variety of top funds (in other sector groups or generalist programs). Can't speak to other FIG groups across the street.

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Nov 14, 2018

You can move from energy to other areas but you can't move from other areas into energy.
The energy folks know that the skillset and financial landscape is different and the non-energy folks don't beleive them.

All that said do NOT work for a new group. Take it from someone who knows.
(Not in IB anyway. Hedge Fund, Asset Management, Corp/startup,? Yes Yes and Yes. IB - just don't do it to yourself. You are signing up for more downside without any upside compensation. And don't fool yourself into thinking that you are getting paid in 'experience'. You're not in college anymore.)

Nov 14, 2018

what do you mean new group ?

Nov 15, 2018

sounds like he is advising not to switch coverage groups during your IB stint

Nov 16, 2018

Definitely understand your perspective and worries about getting pigeonholed here. Speaking from experience (i.e., recruiting in PE, interviewing candidates), it makes a difference which group you work in when you're trying to recruit with specific funds (general, consumer, etc.). We obviously prefer to hire someone who has the relevant experience and is familiar with the businesses we look at, but that doesn't necessarily single you out from an opportunity - you'll just have to work harder to spin your experience/interest.

Agree that energy, oil, real estate, etc. are very specific industries where it doesn't directly translate to certain PE funds. If I were put in your position, I'd think about the opportunity in the following way:
1) If I'm already in Power, is there a great benefit to transitioning to Energy? This should also way the type of funds you are interested in for the future
2) If not and I stay in Power, what are my chances of getting into my desired PE fund? The thought here is if you don't into a fund your 2nd year due to relevant experience, do you have the leverage to switch into a group you're interested in as a 3rd year (builds the right experience to recruit and spin for the next cycle)

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Nov 16, 2018

Energy/Power & Utilities has some of the most detailed modeling from what I've seen. Try monthly 100-year models for large portfolios of hydro assets with contracted and non-contracted revenues, detailed debt sizing and sculpting, etc.

Not something I'd consider a waste of time, but it may indeed label you. As I've tried to point out with the above, it isn't such a bad thing though.

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Nov 17, 2018

You are going to be pigeon-holed whatever you do, but don't let that scare you. Power and utilities is super niche. Oil and gas is also niche. The modeling for both require some-pretty specific knowledge (I spent my time in E&P, hence the name). That being said, the grass is always greener. If you are already at a BB, you are in a good spot, and the more types of deals you can list, the broader your future opportunities and network. Recruiters want to do the least amount of work possible. So they are going to show you roles that make it easy for them. That doesn't mean you don't hustle yourself and go find the perfect role. As you go up, it will only get more competitive. However, all it takes is one deal (doesn't even have to close) for you to become the "insert industry here" guy (or girl), and as you move to buyside roles, you will see a host of different deals because the teams just aren't big enough to have experts in every vertical, save for the very largest funds. If the energy team needs someone, and you can be a team player and really help them out, and people see that you're a quick learner, who is willing to do what it takes and is pleasant to be around, people are always willing to make intros and help out.

Nov 19, 2018

But headhunters tend to focus on the most recent deals? I've been involved in tech, infra, energy, and RE, with RE being the most recent. I've gotten mostly headhunters for RE roles :(

Nov 25, 2018
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Dec 7, 2018