Impact of PE Analyst Programs
Not sure if this has been addressed, but how are the rise of MF PE analyst classes (KKR/BX/Bain/Apollo/Vista/Warburg/Silver Lake/etc.) going to impact associate recruiting for those coming from banking? These firms already don’t take very many people so I’m worried that those of us that went the IB route now face an even harder battle, even more so than it previously was. These mostly started the last few years so in theory a lot of those analysts should be getting the associate to promote soon meaning the impact of them should just now be visible.
Are these analyst positions in addition to traditional associate spots or in place of? Is there something I’m missing?
IB analysts feeling the pressure because there are increasingly few associate positions available due to these PE analyst programs will hopefully encourage more people to pursue what they want to out of school rather than settling for IB. MF PE is overrated anyways and there are plenty of MM and UMM places that pay well and offer excellent training... hope to see people taking analyst roles at these places and leaving the Top IB -> MF PE path in the rear view mirror
I agree with @ReallyJammedRn, with these large pe firms offering a viable path to pe out of undergrad I can't think of a good reason why anyone would want to go slave away in ib for two years. Its also likely in a few years that most of the other reputable firms across the spectrum (mm/umm/etc.) will start opting to do analyst classes opening up more spots for individuals to bypass ib and thus sucking the talent out of the industry. My prediction is that associate spots and recruiting decrease substantially as a result of this new phenomena and that direct promotes in pe increase (not forcing people out to school). Anyone else have thoughts on this?
Analysts programs have been around for a long time (Silver Lake and BX well over a decade). TPG tried and failed. KKR had one before, removed it, and now brought it back. It's not a new revolution.
Regardless, the hours for a PE analyst are comparable to banking (depending on the firm), the pay is less, and it reduces optionality to an extent.
Things are different. IB less and less attractive every year with fee compression on the M&A side, alternatives to IPO’s putting pressure on underwriting revenue, trading divisions losing ground (doesn’t affect IB directly but not good for BB’s), and talent seeking greener pastures.
IB is still a fine place to learn skills. But there are plenty of other industries to learn transferable skills and build networks... particularly important as other industries become increasingly relevant.
Don’t agree that PE limits optionality. Teaches analytical skills that are useful anywhere. And understanding the relationship between operating and financial profiles makes you valuable to many, many businesses.
Long story short - the days of going to GS/MS out of school being the slam-dunk best option are over. Many better options within finance and outside of it
Agreed - you have to like PE given they pay less with comparable hours.
Over time, people will pursue what they want directly rather than taking intermediate steps. Companies will do the same. People who want to invest will go directly into investing, whether it’s at KKR/Blackstone/Bain or something else. And companies won’t rely on banks to train their talent. They’ll get kids out of school and do it themselves. Hard at first but cheaper over time and creates more loyal employees
One element this thread hasn't touched on is the social aspect. Working as a junior at a PE firm is very different from being an analyst at a bank. You generally have to wear a tie every day, your class will be very small (only a handful of analysts total) and you will almost never work with other analysts because deal teams tend to be one person at each level. PE and any investing role is far more solitary than banking. For some people, this fits their personality very well - after they graduate, they're ready to enter the "grown up" working world, and thrive in a place where they work alone a lot but have a lot of independence and know it's what they want to do.
On the other hand, having spoken with analysts at my EB who interned at top PE shops their junior summer, the solitude and lack of comraderie started getting to them after a while. You can't let your hair down as much or horse around in the bull pen, etc. and you'll rarely have a wild night out with colleagues. Again, just different, some people like a slower transition from college to the real world, others don't. The megafund PE analyst programs are for the people who go to top targets, knew they were doing finance from day one, and would have ended up at the same place anyway on cycle. However, a lot of kids who go into finance do it because they're smart and ambitious and go to a top school and aren't sure what they want to do long term. A bank offers a lot of benefits in that exits are broader, there's more hand holding, there's a bigger social element and in many cases the pay is better. Again, just tradeoffs.
I really don't think it's fair to say that just because KKR has an analyst program this year that all the analysts at GS, PJT, whatever are going to be shitty going forward. By and large there are vastly more competitive candidates than there are seats for both top buyside and top sellside opportunities. The other thing is, both banks and PE firms will make mistakes. These are kids fresh out of college; most people don't know what they want to do yet. As some of the posters above have pointed out, analyst programs at banks and PE firms are very fluid - people end up in all sorts of roles. The idea behind having an analyst program is to take some of the x factor out of the insane accelerated associate recruiting process, and hopefully snap up that one kid who might have ended up at KKR instead of BX (example). Hope this is some helpful perspective.
Similar argument as ---> "I'd rather go to Penn state than Yale since Penn state is more fun and Im not ready to grow up and enter the real world, I want to have fun and get messed up with my bros!"