Let's be honest about PE

How many of your PE friends actually enjoy their job more than banking? I have heard countless stories of longer hours, tougher work and pay pretty much in line with banking for the first couple of years. Most people I know in PE miss their banking jobs. My question is, why do it?

I want to open up an honest discussion where people who have moved over to PE can anonymously tell us if their experience was worth it, and if there was anything they would do differently. I want this to help people that choose to change jobs do so with the full picture in mind, as I am unsure whether leaving banking for PE is worth it. Any opinions welcome.

Comments (203)

 
  • Associate 1 in PE - LBOs
Nov 30, 2020 - 2:11pm

Here is the negative side. If you don't want a bunch of woe-is-me crap, skip the post. It is a bunch of woe-is-me crap. Don't comment saying "that was a bunch of woe-is-me" crap. Don't say I didn't warn you.

 

I regret coming to PE. My hours are worse. The culture is worse. People are not as friendly or collaborative. Lots less fun.

 

The job is not as intellectually stimulating as my last job. There is lots of processing (just slightly different tasks than banking).

 

I am sleep deprived, and getting fat. I used to be hot - so long six pack (facetiously, but sentimentally true). 

 

I was way happier even with less money. It has made me realize friends and family are what make you happy, not money. Besides, there is plenty of money in alternative careers that are fun, good hours, and still pay well (I should know, I used to work in one of them).

 

I am trying to leave here to go work at a Tiger Cub. Maybe that is out of the kettle and into the fire. I might go beg my old employer for my job back. I may go to venture.

 

Who knows. All I know is - it literally could not be worse. I have not watched TV, seen my friends, exercised, indulged in my hobbies in ages. I only live once. Why live life this way? 

 

 
Nov 30, 2020 - 4:51pm

"I was way happier even with less money. It has made me realize friends and family are what make you happy, not money. Besides, there is plenty of money in alternative careers that are fun, good hours, and still pay well (I should know, I used to work in one of them)." 

Exactly how I feel and what I've come to realize after 5+ years in finance.

 
  • Associate 1 in PE - LBOs
Nov 30, 2020 - 5:33pm

Thanks for taking the time to echo my sentiments here. It is a lesson I wish I would have learned sooner...

 
Dec 16, 2020 - 12:34am

Are you me bro? Exact same situ. Went to large-cap PE with an arguably unlucky group which decimated every piece of happiness and hope I had left after banking. So I left for greener pastures (and yes when you're in my situation everything seems like and is a greener pasture)

 
  • Associate 1 in PE - LBOs
Dec 16, 2020 - 11:11am

What did you do? I am about to jump ship but I am pretty alone in my thinking and don't have any mentors or guidance.

 

Taking a plunge off "the track"... it's scary. I worry about my employer looking to tarnish my reputation. I worry about getting into H/S/W after leaving a feeder. Man, honestly, it seems like such small beans to somebody looking in from the outside, but, I feel fear, mainly.

 
  • Consultant in Consulting
Nov 30, 2020 - 2:31pm

Highly variable and depends on what you want. Know people at MFs that see it as IB 2.0 without WLB improvements or deal calibre. If you come from a LMM IB and land a MF role by miracle, then perhaps deal calibre and exposure will be somewhat attractive. Then again, I know people that have landed at reputable MM/UMM shops and have 60h weeks on average for a significant pay bump; they love it. They also get more exposure to internal company operations/workings rather than being a deal monkey at a fund that has seemingly infinite funds. Bottom line is, do you DD, choose wisely and speak to as many current/former employees as possible.

 
  • Intern in PE - LBOs
Dec 1, 2020 - 9:00am

How's the career progression for associates at large-cap funds? Do people generally stay on for VP or get washed out?

 
Nov 30, 2020 - 2:47pm

here is my take:

- I like large-scale operations like banking, PE is smaller. therefore smaller culture, different politics, smaller dynamics, small-scale people.

- Hours are the same or better for me, on average. However, there is a lot more travel. which is something I like.

- Culture overall is worse than banking, some people have weird things about them that makes me wonder whether they left or were kicked out before.

 
Nov 30, 2020 - 2:54pm

PE can be tough at times, the hours can be long, the responsibilities can make it much more stressful and parts of the work sometimes can be tedious, but there is no way I miss banking or would like to go back. I have of course thought of trying a HF instead, going earlier to VC / GE, but in the end the job is a pretty decent one, the exposure and responsibilities are great and I like our investment style and the crew at the office.

Only thing I really miss about banking is having a large number of mates at work to get drunk with and talk BS about the MD or VP (and just the camaraderie in banking in general) as PE is a more serious place, but that's about it..

 
Nov 30, 2020 - 4:41pm

I have a few friends who work in PE and it seems the hours are not much better at all. They are more predictable in the sense that you don't have clients demanding random things on a Saturday afternoon, but the pressure/total hours are about the same, if not more, than IBD. I think there is a huge misconception that you will go through hell in IBD and then get to the other side and be in heaven at a PE firm, but there is no free lunch. If you want to get paid 350K in your mid-twenties than you are making a sacrifice: give up time, hobbies, other pursuits, health, sleep for money. Everyone should know what they are getting themselves into. 

 
  • Intern in IB - Ind
Nov 30, 2020 - 4:58pm

What type of VC fund were you at and would say the different ranges (and corresponding traits) are like that of PE? for example many often cite the differences in MF PE rather than MM PE (latter with better WLB essentially) - is there some type of range like this in BC as well?

 
Dec 1, 2020 - 12:17pm

Agreed, venture is amazing and a much better job than PE for sure but sourcing can be stressful and is arguably a lot harder than in PE/GE.

Obstacles are the things you see when you take your eyes off your goals.
 
  • Analyst 1 in IB-M&A
Nov 30, 2020 - 5:47pm

Is growth equity the sweet spot? Seems like hours are better (60-70 on average) and comp is only marginally less than buyout PE. Would anyone agree/disagree?

 
  • Intern in IB - Gen
Nov 30, 2020 - 5:55pm

Would anyone be able to speak about overall happiness in the Private Credit / Direct Lending area? Have heard that hours tend to better than PE, but with lower comp as well. 

 
  • Associate 1 in PE - LBOs
Nov 30, 2020 - 5:55pm

Maybe this is because I came from a bank with a miserable culture, but I enjoy PE so much more than my prior job. As someone else on here already mentioned, I think the sweet spot is finding a MM-range fund with a good culture that's in an industry that you're somewhat interested in. I will admit that I am working more hours than banking right now, but I think some of that is a consequence of COVID / everyone wanting to close prior to year end and don't think this is how it always will be. Yes, stress levels are definitely higher because you have more accountability (especially since the team usually trusts their associates and will take their word, so your work needs to be right the first time), but I think that the majority of the analysis I do is infinitely more interesting than analyzing the hypothetical mergers I knew were never going to happen while in banking. At least now, most of the work that I'm doing is going toward a real opportunity, and I also have a lot of opportunities to voice my opinion and develop an investor mindset along the way (which is the complete opposite of what I experienced in banking where I was discouraged to say anything). I think I also got really lucky that nearly everyone at my fund is easy to work with and they've developed a great culture with some really nice people. I can see this being worse for those who spent your two years in IB at a non-sweatshop with a solid culture, but it's night and day better vs. banking based on my experiences. It's without a doubt a harder and more stressful job than banking, but also think it can be more mentally-engaging and rewarding, and I don't think anyone could pay me to go back to banking honestly. 

 
Nov 30, 2020 - 11:09pm

Well once again the MF credit arm or larger players in the space end up with the same hours and very similar pay. They don't do just high level modeling or some downside case and approve, the ICs are intense, the monitoring is intense and besides Mezz, the direct lending churn is major so it can be quite the grind.  

 
Dec 3, 2020 - 12:53pm

I worked in private credit/mezz and recently moved to PE--many of my friends from the private credit world moved to middle market PE as well. I liked the investing side of private credit better--also could find some more proprietary deal flow which lent itself to much more interesting conversations on the sourcing side (finding an unbanked PE platform deal is virtually impossible these days--we dont even try anymore). Personal preference, but on the credit/mezz side, you get deep enough into a company/industry to satisfy intellectual curiosity, but not so deep (as you need to in PE) that you end up loathing the company by the end. 

Culture: my private credit shop was a big one, vs. my lower middle-market PE fund. Credit at that particular shop was more fun from a culture POV, it was a little more like banking. PE firm is much smaller, more serious, and there's definitely still a bunch of internal politics (in my experience, there's actually more internal politics at smaller shops vs. bigger shops.) 

Hours: credit hours were better, though both ebbed and flowed based on deals. On the credit side, though, in my experience, we usually didn't dig too far into a deal until we knew we were likely to win it (less true on the direct lending side when youre dealing with PE, but i was primarily touching proprietary deal flow), so the time felt well spent. PE expects you to fully underwrite the thing before even getting exclusivity. Some friends at larger credit shops (like KKR, Macquarie) still put in crazy, PE/banking like hours. 

In hindsight,  I think choosing between the two first comes down to preference on getting in the weeds, and then the difference in hours comes down to the team/culture of the individual firm. 

 
  • Associate 1 in PE - Other
Dec 4, 2020 - 1:25am

How difficult was the transition out of private credit / mezz into a private equity type role? What size of funds did you and your friends get looks at? How did they view your background as a private credit professional? Was the ramp up period difficult from private credit to private equity? Any insight here would be helpful, thanks!

 
Dec 5, 2020 - 4:11am

Firm dependent but keep in mind private credit firms naturally see/close more deals per annum than PE.. so while the diligence process may not be as intense as PE, you're still running diligence on likely more deals at any given time. Also, pre-COVID the credit market was very competitive and Sponsor/Borrower friendly which translated to a lot of fire drills/sprints to try and win deals.

 
Dec 8, 2020 - 10:19am

That might be true, but having worked on a couple of deals with some brand name PC shops, I would not discount the DD difference of PE vs. PC. The PC diligence felt more like diligence of a LP co-investor and was on a really high level. Basically it was some calls with the PE deal team, a model, access to the DD reports, some Q&A and that's about it.. cannot be compared to the data analysis, mgmt interaction, time spent in the weeds, etc. you get on PE side but I can see the allure as i) you do way more deals, ii) still learn a ton about the company + industry and iii) don't need to deal with day-to-day monitoring tasks with mgmt team (MIP, how do I do this reporting, what about cash pooling, change of SAP, etc.). Personally I thought it was a level too high for me, but I am sure it can be a great career as well.

 
Dec 16, 2020 - 12:57pm

Can give some colour, although am not in PD/DL but at a credit fund (mix of public/private markets, credit ops type of mandate with some pocket of capital dedicated to 15-20% IRR hence usually in the distressed space). Lifestyle better vs banking by miles, almost full control over one's time, 8-6pm type of schedule (much better during the pandemic, lots or 8-3pm days tbh) and intellectually stimulating. However, comp is significantly lower from VP onwards unless you manage risk directly / have negotiated a good comp package linked to own P&L. Speaking about the UK market, good luck finding a VP-type analyst seat for ~£350k plus in this space, based on network's feedback. Yes, recruiter's reports will show otherwise at times and comp seems higher in the distressed/special sits credit space, but these guys tend to work longer hrs / worse culture, similar to banking.

 
Dec 16, 2020 - 1:11pm

And want to add a further caveat: the calibre of people in the space PE, yes there are H/W/S MBAs here and there (even in London) but generally see less impressive profiles in this space vs top PE/HF shops 

 
  • Associate 1 in PE - LBOs
Nov 30, 2020 - 6:00pm

Anyone else really frustrated with the amount of process work? I feel like so much of my time is pushing compliance and legal paperwork around and negotiating contracts with consultants, lawyers, etc. I feel like somehow there is more of this in PE than there was in banking.. anyone else have this experience?

 
Nov 30, 2020 - 7:27pm

Thank you. There is a lot of truth to this. I deeply regret leaving investment banking for private equity. Biggest career mistake I ever made. There is a lot more variance between each one of the PE firms to each other. The banks tend to give a more uniform, high-quality experience to employees. I'm not saying banking was perfect. It was certainly very imperfect. However I underestimated what PE would be like. It is not the land of big money and blow jobs. It's stillHard, boring work, helping somebody else make money, through your finance drudgery.

 
  • Analyst 1 in IB - Gen
Dec 7, 2020 - 11:37pm

At least dinner and your ride home can be expensed

 
Dec 7, 2020 - 1:27pm

If you were a top performer at your bank before going to PE, I'm sure they would gladly take you back after you fulfill your commitment to your new fund. I know a couple people who have done this. Valued comradery and culture over "being on the buy side" and went back to banking after a 2-3 year associate stint. The key is to do it in a way that doesn't negatively impact the bank's relationship with said PE fund.

-- sm
 
Nov 30, 2020 - 11:28pm

Honestly, it's a mixed bag, and the reality is everyone's experience will differ for a few reasons:

1) All banks are different. I feel pretty fortunate to say I worked at a bank / in a group I didn't hate - good people and good deals overcompensated for pretty bad hours at times. This is not the norm at my fund - most of the associates I came in with or have seen a year up/down had worse experiences in banking than I did, and some of the cases sound pretty extreme. There's direct correlation with how much you hated your last job - for those of us who didn't hate our lives before, we aren't as jazzed by the PE day-to-day, but for the kids who sound like they broke out of internment camps, they think it's pretty awesome.

2) All funds are different. I feel pretty fortunate to say I work at a fund where my input is valued. There's a legit culture of debate, and even the most senior partners recognize they aren't always going to get what they want - an associate and principal both pushing for one outcome outweigh the vote of a partner 9/10 times. That is absolutely NOT the case at 75% of the firms my friends work at. It's all a spectrum, and whether or not you feel like you have an impact every day... or whether or not you can hide every day while making $300k, depending on what type you are... makes a huge difference.

3) Related to the second point, everyone has different strengths/likes, and not all funds hit those. Some people really value the comradery of banking, which is definitely less present in PE (even at firms with above-average culture) but for some people it matters less. Some people enjoy the "rush" of a deal sprint, while some absolutely dread/abhor it. Some people really like getting to work closely with a CFO / Head of Strategy / General Counsel to see how the sausage is made at a PortCo... some couldn't care less and feel that drudgery is worse than making a pitch deck (it is admittedly much more in the weeds and being right actually matters). I'd say I like 2/3 of what I do now more than I liked banking, but 1/3 I like noticeably less, but it's important to recognize that's not an applicable brush for the whole PE industry - various funds will align with certain folks better than others, and it's really hard to navigate that during on-cycle recruiting, but the impact is real and noticeable once you hit the desk. 

 

For my overall experience, it's largely been as-advertised. My worst weeks are worse than banking, but my best weeks are better. The work itself is substantially more taxing - no one checks your work, you're responsible for a lot more, you have to lead senior people + target/portfolio companies through analyses/diligence sessions/etc. and be responsible for every single number/methodology/source/etc. - but it's also substantially more interesting in general (still some very mundane tasks that I dislike immensely). I miss the comradery of banking, and frankly the opportunity to switch on/off when I did/didn't care in banking (it's easy to check out when you have your next gig lined up and check back in when you're doing something cool), but I like being treated like a real member of the team even if that team isn't drinking together every Thursday/Friday in the bullpen or the bar around the corner. It's overall better than banking but I have newfound respect for career bankers and have completely lost my juvenile view that being a career banker means you're not smart enough, not diligent enough, not x enough to hack it on the buyside, and I completely see why some folks would do it long-term if they were in a good shop. 

 

There isn't much I'd do differently, but a couple things to think about as you go through the process:

1) really seriously listen to what the folks at these funds say, and prioritize based on how you jived with them, not their AUM/latest fund size. I remember meeting with a senior principal on the verge of MD promote from a fund who literally said some form of the words, verbatim, "we're really good at making money" 12x in a 45 minute breakfast meeting, looked like he constantly had a cold, and had zero hobbies aside from occasional walks in central park with his kids. I couldn't run away from that fund fast enough. At the fund I'm at now, I talked with a partner about their undergrad alma maters chances in march madness and some associates about their favorite places to rent a car and go hiking upstate/in the berkshires. It should be obvious which will have better culture.

2)   if you work in a group with good sponsor connectivity and are close with any senior/quasi-senior people, genuinely ask them what they thinks of a few of these firms (casually, of course). You'd be shocked how many MDs think the guys at X fund are idiots, at Y fund are flaky/cheap as hell, at fund Z raised too big a fund and are blowing it on crap, but at W fund are actually good folks with a reputable track record. Sometimes bankers hold vendettas, but more often than not they have a pretty good view of who is reputable / likeable and who is running Dante's 10th circle. 

3) try to suss out how your time will be spent at a fund. Every fund says "we're operationally focused" and every associate says "yeah I do a mix of new deal and port co work" because they don't want to go through a long explanation of their job for the 900th time, but try to nail down a view what that the time breakout looks like. Are you reviewing 100 CIMs a year? How many first round and final round bids does the fund do a year? Do you support your CFO or does your CFO just give you numbers for quarterly valuations? Do you have an in-house operations team, or is McKinsey on retainer? Do you have a "playbook"? How much time are you helping your portco with strategy/GTM vs. updating the company cap table for the newest hire? How much of your latest fund is deployed relative to how recently you raised it?

Good luck.

 
Dec 1, 2020 - 6:09pm

This. I'm at a LMM fund and have had a good experience. We are a lean team so everyone's input is valued which I realized matters a lot to me. I didn't love getting told what to do or how to make something look on a pitch in banking, especially by people who I didn't think justified their seat. There is going to be some work you don't enjoy in PE, same in every job. I think the key is to minimize the bad and maximize the good while giving weight to things like culture, outlook and who your co-workers may be as human beings. 

 

Contrary to what students and banking analysts think, AUM / latest fund raise number isn't going to get you through your associate stint if you hate everything else. To be honest, those numbers really only matter to an associate so you have a sense of capital to deploy. Even if you are granted carry (unlikely), you won't be seeing payouts for far after your 2 years as an associate.  

 
Dec 3, 2020 - 6:41pm

Does anyone have any advice for withdrawing from a process due to culture fit? Currently in MBA and got invited to a final round at a fund where everyone seems just so blah. Haven't decided yet whether to turn it down but having a hard time seeing myself be happy there based on what I've seen so far. Have heard horror stories though about getting blacklisted from recruiters when you do turn something down.

Array
 
Dec 3, 2020 - 6:55pm

Others should definitely opine, but from my limited knowledge of how to handle this I'd recommend letting the recruiter know sooner rather than later unless you're mid/deep in other processes and can use this one as leverage (i.e. basically convert it and then say to all parties "I'm actually enjoying my process with x fund better and I'm deep there so I'm going to prioritize that"). If you don't have other active opportunities I'd get out now - as long as you have a legitimate reason, everyone will appreciate you not wasting their time in the medium term even if it stings initially. It will require an awkward conversation with the recruiter - they probably don't want to hear that one of their clients has terrible culture - but you can use it as an opportunity to ask about other firms with higher mid level retention, more focus on xyz traits that appeal to you, etc. I had one of these talks with a headhunter after my example above (they were about to kick-off interviews, recruiter called me to let me know, and I just said I didn't see myself fitting in with the culture as much despite their excellent track record etc.). Even though that recruiter didn't have the relationship with the firm I ended up at, it still was received productively and led to some good lead generation. 

 
Nov 30, 2020 - 11:47pm

It's common knowledge your stress levels will be higher as a MF PE associate. This is 100% without question unless you had some anomaly culture issues at your IB spot.

 

^ this also applies to everyone who is hell bent on being in the rate race. The stress levels will be higher as you go up. The pyramid narrows for the spots everyone wants.

 
  • Analyst 2 in IB-M&A
Nov 30, 2020 - 11:56pm

I generally have only heard those in MF PE say their new role is as bad or worse than in banking, but I also come from a bank with a poor culture. There are always exceptions, but in general you can choose the money or the culture, not both. MM = Culture/hours, MF = Money. My personal experience is similar hours to banking, better culture overall but less camaraderie at the junior level, and more insightful work.

 
  • Associate 1 in PE - LBOs
Dec 1, 2020 - 11:15am

From a purely financial standpoint, it probably makes more sense to stay in banking, at least in your more junior years. I'm pretty sure I took a material salary cut going to MM PE from an EB vs. if I were to have stayed and gotten promoted to associate.

 
Dec 1, 2020 - 4:56am

If you want to have a good MF experience you have to do your diligence. Some of the following places are pretty nice to work at:

- Carlyle DC office groups except A&D or long-term fund

- Mainland European KKR offices

- SF-based TPG groups except healthcare and technology

- Bain Capital in Boston but not for main fund

- CVC Growth outside Europe

It basically comes down to finding the right mix of group/geography that causes low deal activity but enough to justify having an office so you work 50 hours a week, do one deal during your two years, a bit of PortCo work, and relax.

The guy whose career I am most jealous of was at the same bank/group as me, but was staffed on only slow-burn large public M&A deals so he got to see relatively interesting work but never spent more than 60 hours a week in the office. He also worked at one of the places I mentioned above and had a very relaxed experience. Now he's been at a family office in an awesome location for a couple years. He wants to eventually spin out the new category he's building for the family into his own fund but wants to give himself a chill 10 years to have a family and build his reputation first. Guy's lived the charmed version of the finance life.

 
  • Analyst 2 in IB - Ind
Dec 3, 2020 - 5:05pm

Thanks for the insight. What have you heard about TPG tech / HC and the US KKR groups in particular? I'm very interested in both but would prefer not to get killed lol

 
Dec 1, 2020 - 9:34am

PE gives you more exit optionality and that is frankly why banking analyst go into it.  Everyone I know (myself included) who did a few years of PE exited to other buy-side roles or into corporate fairly seamlessly.  If you stay in banking beyond the analyst level, your skill set become silo'ed (or at least people think of you that way) and you basically have no way to exit until perhaps you become a successful senior-level MD guy, when maybe PE will tap you to go do biz dev for them. 

 
Dec 1, 2020 - 10:30am

Is this really accurate? There's another thread from a guy who was in banking for ~10 years (director) and he details some pretty attractive corporate opportunities that were available between the associate-VP years.

 
Dec 1, 2020 - 11:45am

Out of my immediately set of friends no one has remained in PE, but all are fairly successful in their own paths (one is deputy-CEO of an SMB that will be acquired by PE). I have a few acquaintances that did 2 years of bschool and then went to smaller PE funds than where they were associates and have grinded their way to the principal level. 

 
Dec 1, 2020 - 9:50am

I can't speak to banking because I have never been one, and the ones I met / worked with were mostly sleazy and I didn't like them. I went from a family office to a strategy/M&A role at a corporate to a growth equity shop. Additionally, at my firm I was one of the founding employees and every team member has a mix of ops and finance/investing background so the culture is ops heavy and i would say i spend 50/50% doing heavy lifting at portco's and deal execution.

 

I happen to like the portco work a bit more and I think it also made me a better investor, as I am simply not inputting numbers in a cell but rather i understand the nuances of expansion, growing a business, on boarding a team. So i can make better judgement calls when i receive a pitch with promising growth based on making 5 new transformational moves. So all in, I am very happy where I am and I wouldn't want to be a banker. Like i see those poor kids at meetings some time where they all look like they lost the will to live ! and I wouldn't wish it on anyone. 

Also out of the people I have worked with over a 10 year career now, I always learnt more from those who came from consulting. They were used to managing people, managing projects, giving feedback, mentoring, etc. If I wasn't in PE i would consider consulting. 

“Self-control is strength. Right thought is mastery. Calmness is power. ” - James Allen
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Dec 1, 2020 - 11:26am

I am not sure - also i am not based in the US, so wouldn't know - but from the looks of it there seems to be some good ex-consulting guys who are senior enough at the consultant friendly shops.

Again I am speaking from experience of working together with people and being developed/mentored by them. They understood the dynamics of being a team on a deal, had no issues rolling up their sleeves and cranking slides with the more junior people under pressure etc. Plus they always seemed more organized, had things under control that i rarely felt rammed with work. They anticipated stuff way better and were able to block and tackle more effectively vs. bankers.

“Self-control is strength. Right thought is mastery. Calmness is power. ” - James Allen
 
  • Associate 1 in PE - LBOs
Dec 1, 2020 - 5:10pm

Yea my fund can't make money for shit and it's frustrating

 
Dec 1, 2020 - 8:03pm

Quant hedge investment strategy meetings sound like, "Beep Boop Bop Beep Bop"

Array
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Dec 3, 2020 - 3:29pm

How does a comment like this get monkey shit? Whoever threw MS definitely wears vests in the late Spring and considers Gucci loafers a personality trait. If you're working in PE / IB, your chances of getting into the Jane Streets / AQRs of the world are slim to none (and probably always have been). 

"Rage, rage against the dying of the light."
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  • Associate 1 in PE - LBOs
Dec 1, 2020 - 7:41pm

Does anyone else wonder if LMM is better because the DD budget is smaller? My fund spends about $1mm on a typical DD pre-binding offer and then obviously more to get to closing. This results is I have to process so many god damn NDAs and negotiate a half dozen consulting agreements whenever we advance to the second round and it's such a slow death... I feel like I would prefer to work for a LMM fund that had no money to spend on DD and just did the work themselves rather than having consultants validate every fucking viewpoint my MD has... 

 
Dec 1, 2020 - 9:27pm

Grass is greener, man. Being free of a diligence budget doesn't make it easier, it just makes it different.

"Son, life is hard. But it's harder if you're stupid." - my dad
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Dec 2, 2020 - 12:23pm

Being responsible for those streams will teach you so much. Think about being 25 years old and in charge of a multi million dollar budget yourself. That process stinks at first but overtime it really does bring your skills as a leader to the next level

 
Dec 2, 2020 - 2:52pm

I think there are two things at play here. We still bring on advisors in the LMM, granted BCG isn't running our market study it will be xxx firm. But having more responsibility cuts both ways. Sometimes I wish we had advisors to do more pure data analytics because it's not my area of expertise or preference, but I don't have a choice and I've had to learn how to do it myself and do it quickly so I can handle the other streams as well. 

At the end of the day the first comment had it best. Different, not necessarily easier, it all depends on how you view it. 

 
Dec 2, 2020 - 3:42pm

I'm in the LMM and totally agree with this comment.  Sometimes I get jealous of the bigger funds that have the ability and budget to just completely outsource everything that I'd have fingers on the keyboard analyzing myself.  But I don't know that I actually would make that tradeoff myself beyond a fleeting wish...I definitely feel much closer to my businesses as a result of how deep we dive than some of my friends at larger funds.

 
Dec 3, 2020 - 3:01pm

I'm in the LMM and at first, I was annoyed by having to do a lot of things myself but I try to view it as a good learning experience. If I can do the nitty gritty now, if and when I go upstream (not particularly a goal), it shouldn't be too hard to coordinate another few work streams if that means I'm not doing it. 

 

Agree with what others said - just different. I have also found that smaller consulting / accounting firms can be more practical and malleable with their approach vs. the standard stuff you get at larger shops. 

 

 
Dec 2, 2020 - 12:21pm

If this was not during covid I don't think we'd be having this conversation. Everyone's hours across the industry have been terrible. On top of that, there's been zero opportunities to meet management teams and travel. The things that make the job interesting are gone and the process work is the only thing left. Would say that banking right now is miserable and the grass is always greener. Your exit options after doing two years of a solid fund in pe are literally endless. You also will have had more responsibility than most 50 year olds ever get. That sort of power and self confidence if at the right fund will really make a difference in your career If you let it

 
Dec 13, 2020 - 9:44pm

WallStreetMemes

Your exit options after doing two years of a solid fund in pe are literally endless. 

What are common post-PE exit opps other than b-school? How valuable is the PE experience compared to IB and Corp Dev experiences?

Array

 
  • Associate 1 in PE - LBOs
Dec 2, 2020 - 1:13pm

I wish you were right, but I honestly feel as though I'm learning nothing and contributing nothing. Thinking about the amount of basically pointless work that I am creating in effect through this DD (for KPMG, law firms, market consultants, etc.) is depressing. "The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul." The fact of the matter is that we will probably lose the deal and regardless, most of the findings and analysis will be read by few and quickly discarded because IC will already have a view about the investment and the entire Q&A is just going through the motions and covering the deal teams ass. I will write multiple investment memos summarizing the CIM, and then re-summarizing the CIM and then summarizing the "findings" of our DD and consultant reports. The majority of the work will be tedious and boring and then eventually the process will end and none of the dozens of us working on this transaction will get our holiday back.. blah blah blah.. 

 
  • Associate 1 in PE - LBOs
Dec 3, 2020 - 5:35pm

I'll bite. Despite the title, I'm a VP at a big-ish fund ($10bn+ latest fund size). Definitely agree with a lot of what's been said here - lot more responsibility in PE, less of a banking bullpen culture, work is still banking 2.0 50%(ish) of the time. But I will say, my life has improved significantly since my associate days (even if hours don't follow in precise lockstep). One thing I'd encourage all of you to do is look up a level or two and see if you like that lifestyle and work. Again, I know there's a ton of dickhead mid-level people who work a ton, ignore their families, treat associates like shit, etc. But I've worked with a fair amount (me included, hopefully) who have a more balanced perspective on life and actually find the work much more interesting than in associate days. In general - I don't have to deal with the worst parts of the job (PIBs, models, the majority of data pack creation, portfolio company requests, IR requests, etc) and I get to do the more interesting parts of the deal. Am I still a cog? I mean yeah, sure. But a much more interesting cog than when I was an associate. 

I'm also sort of realistic about the broader picture. Is this my dream job? Fuck no. But like, not so bad in the grand scheme of things. I make a ton of money (with millions more hopefully working in the background), I'm surrounded by generally smart, motivated people, I get to learn from c-suite teams who've spent their lives being good at the businesses they run. There are worse ways to spend your working life. 

I guess what I'm saying is - I hear all of you guys frustrated with your lives. And in some scenarios, that won't change in 5 years depending on firm culture. But I'd encourage you not to use your associate life as a barometer of PE - see if people a few years ahead of you are (relatively) happy or satisfied or motivated, and factor that in a bit. Not a perfect job by any means, but once you get the hang of it and build a rapport with the people around you, I've found it to be a pretty nice risk / reward / interest of work mix. For what it's worth, I was pretty frustrated with my associate years. Nowadays, when times are bad, my frustration is similarly high and work hours similarly bad. But that isn't most of the time, and in normal times, my work life is far better and what I do on a day to day basis is much more interesting. Just my two cents

 
  • Associate 1 in PE - LBOs
Dec 3, 2020 - 5:58pm

Can you describe your VP lifestyle please. I look one level up and am horrified. A post-MBA just got a divorce. We are also in a COVID environment so I have no other barometer. If you would elaborate that would be very helpful for everyone following this thread. Thank you.

 
  • Associate 1 in PE - LBOs
Dec 3, 2020 - 6:27pm

Thank you very much - seriously

  • Hours relative to associate experience, how the weekly hour breakdown is different (which leads to pt. 2)
  • Flexibility to control your own time (e.g., I am working all night Friday and Saturday and Sunday nights and because I wait for reviewal of items end up having free time during the day, back in my old job I had autonomy and could push things forward on my own schedule)
  • How much less "random bullshit" work you do (e.g., random asks for IC decks that won't matter at all - I'm sure you remember this from your ASO experience
  • How much more you enjoy the role no longer being the model builder; the high level deal stuff is interesting but the last year of making tiny little random model changes when we're going to have to pay a market clearing price anyway... makes me shudder
  • Do you have friends and hobbies (honestly - now that I'm in the role, when do I have time for that)? Has your personal life deteriorated? Do you find this sustainable?

 

Anything along these lines. All very genuine questions asked earnestly so thank you again. What I'm wrestling with is that I can stay but am not sure if I want to stay. Don't really care about the money honestly.

 
Most Helpful
  • Associate 1 in PE - LBOs
Dec 3, 2020 - 7:58pm

No problem.  

- Hours are better, both in terms of absolute hours and stuff I do with those hours. When I'm busy on a deal, all bets are off - 70-100 hour weeks (pretty typical for anyone principal and below on a deal team, I'd imagine). That's maybe 20% of the time. The other 60-70%(ish) of the time, it varies, but typically 9am-7:30pm, with an hour or two at night for reading / reviewing and other random tasks. Weekends vary but again, typically a couple of hours each day on random things (could be talking to a banker or management team, could be drafting a memo, could be getting ducks in a row on internal pipeline management, who knows). I guess that adds up to 60ish hours, give or take, which feels about right. 10-20% of the time is easy and I'm not touching work on the weekends and not doing anything post 7/7:30pm. The work itself still has random flashes of frustration (I want to smack IR every time they ask for bullet points or paragraphs on our latest views on various industry trends), but generally speaking, most of my time is spent on evaluating opportunities and portfolio management. So think reviewing models, coming up with structures for presentations (I usually don't do much in the way of chartmaking / analysis, more so messaging and framing), drafting and or proofreading any written investment committee materials, getting on the phone with CFO / CEO and talking through performance, latest on M&A, talking to bankers on random opportunities, brainstorming deal pipeline with principals / partners, etc. Some people still find that inane (and to be fair, some of it is), but I contrast it to the garbage that I spent a lot of time doing as an associate, and it feels far less onerous. This hits on one of your other points - but the substance of work is just so different now versus when I was an associate. Not being tasked with running the model is a huge relief, and frees me up to spend time on more interesting things. It also means I don't feel dread every time someone (me included) says "hey let's run this case or change this variable." I don't think I'm a dick about those type of asks, but as we all well know, sometimes even small asks just feel so tiresome when you've been iterating for a while (and unfortunately, it's a byproduct of the industry. Some places waste a lot less time, mine included, but there's a degree of useless iteration everywhere and you just have to resign yourself to it). I also find it hugely freeing to not deal with all the random bullshit associates have to put up with - I don't update stupid internal banker fee trackers, or LP requests on portco stats, or theme decks that the partner wants to present to a prospective LP. All of that garbage adds up, and when you throw modelling duties and being at the bottom of the totem pole on it, the associate job is pretty taxing. My job now, in contrast, is very much directing associate traffic and effort and running deal teams during processes. 

- I have control over my weekend time pretty much most of the time, except when there's a live deal. Then all bets are off. There was an 8 week period earlier this year where, other than attending a wedding which i was not going to miss, I cancelled pretty much everything else on my personal calendar. That's the trade off and it's one I'm willing to make because I like the work and I think it's interesting, but it also doesn't happen to me a majority of the time. If that was my schedule 70% of the time, I'd quit. Weekdays are a bit trickier even during non deal times, but generally speaking, if there's something I really care about (going to a dinner, seeing a friend's med school graduation on a random Friday afternoon, you get the idea), I can make it happen 90% of the time. 

- I still deal with a fair amount of random bullshit (e.g. IC asks that are going to get shot down, putting together a term sheet for a deal that is both stupid and going nowhere), but that usually takes me personally less time because I'm not responsible for the majority of the work creation (I don't go pull trading comps, i don't build the model, etc.). It's frustrating, but again, helps not being the primary creator of materials on a project (if you can't tell, i think the associate job is more or less garbage... necessary garbage for reps, but still garbage). And having a staffing like that means 10-25% of my time is on that--versus when you're an associate, putting together an IC deck is going to take 50% of your time. So the frustrating crap inherently occupies less of my time even if it crops up because i always have some leverage beneath me. 

- I have friends and (some?) hobbies and generally get to see them. I definitely don't see people much during the week, but to be honest, i don't really want to. I think that's a big part of why i can tolerate this - I have zero desire to go to dinner or drinks every night, or socialize multiple nights in a row. I love grabbing friday/saturday drinks / complaining about my fantasy team over beers on Sunday as much as the next guy or gal, but find the notion of doing it 5 nights a week extremely boring. I think it also helps that most of my friends are not in finance, so i end up not talking to them about the same old shit. I will say personal life deteriorated a fair amount during banking, and then less so during associate years, but the big change has come now, where i have more control. 

Here's my advice: if you truly don't care about the money, don't stay. It's too much work otherwise. If you kind of care about money, but also care about working with largely smart people, and not being in client service (ie banking), then stay (this is where I fall in). I couldn't imagine myself working at a typical company. I know this will make me sound somewhat arrogant (and I fully own up to that and am trying to be less of an ass) - but i'd find the concept of 9-5pm and working with non-motivated people so dreadfully soul crushing. I'd rather have sprints on deals and no life 25% of the time than have 9-5pm 100% of the time but not be motivated. Obviously that's an extreme - and there are tons of companies out there with a better balance (tech companies? pension funds? i'm dim on this and sure there's a big list), but i like the fact all my coworkers are very smart, i like the challenge, i like getting to interact with c suite folks that frankly no one my age should have any business interacting with, i like the money. If you don't care about multiple things on that list, and don't think you can live with sacrificing 25%ish of your life full time to this job, probably not worth it (again, these are vague approximations). 

If i worked at a place like apollo/cerberus/name your favorite shit fund, i would quit yesterday. can't sustain that. part of this job is figuring out where your pain thresholds are and hopefully finding a place that works for you. It's definitely not easy and takes patience. I will readily admit that i got very lucky and am grateful to be at a place where i've found balance. Has nothing to do with internal fortitude and being smarter and all that other garbage people always talk about - those are necessary but not sufficient conditions. The real key is getting lucky and settling into a routine at a place that matches up to your preferences. And i promise they exist - of my analyst / associate classes, i'd say half of those who went into PE half stayed, and about half of those are actually happy / not miserable. Take that for what you will

 
  • Associate 1 in PE - LBOs
Dec 3, 2020 - 8:01pm

one other thing, and someone else mentioned this - covid environment sucks for associates the most. You just get staffed with no interaction. I hate it but honestly it's not as bad for me, as it's made my life more efficient and i can do personal stuff more easily. But i also miss catching up with folks, i miss being able to sit down with and teach / work on problems together with coworkers. it also means no travel to see management teams and businesses and the like, which is again (in my opinion), one of the more interesting/rewarding parts of the job. So as tough as it feels now, i wouldn't judge PE by this environment. it's the worst i've seen in my (admittedly limited) career

 
Dec 4, 2020 - 10:29am

I think there are two separate questions here: 1) is life better in PE than in banking (especially at a junior level), and 2) how good of a job is PE intrinsically, regardless of the comparison with banking. Let me try to provide a transparent, fact-based answer to bust some of the myths (both positive and negative) around PE. Sorry for the long post!

On the first question (PE vs. banking), here's my take:

I joined a MF right after graduation and have been working here for a couple of years. I did two internships both in M&A and PE during my studies and I decided to try to join a PE fund right after graduation to avoid 2-3 very tough years in banking. I have never regretted the decision to skip banking for PE: I've talked to multiple friends at multiple banks and I have always considered myself lucky compared to their situation. PE wins by a significant margin on what I believe are the 3 key criteria that define a good job: interest / intellectual stimulation, working culture / work life balance, and compensation.

Interest / Intellectual stimulation: I have felt intellectually stimulated 60-70% of my time in PE. One of the key differences with banking is that you have time to go deep in the business model of the companies you're trying to buy. You spend time understanding how businesses make money and assessing how this is sustainable. Your job is to talk to all the knowledgeable people in an industry and gather as many insights as possible. If you're intellectually curious and genuinely interested in business this is just a fantastic learning experience. We can outsource at lof the comps / data crunching / admin tasks to banks which frees up time for more interesting stuff.

Working culture & work life balance: this is obviously a demanding job (see more below), and I have spent several weekends in the office. But I just want to give you a few stats that show that the hours are definitely better than banking (and close to consulting I believe, except the weekend work): for the past 3 years, I have finished work past 2am less than 15 times and had to produce some work over the weekend ~1 weekend out of 4. I feel like I have been able to maintain good sleep routine and have been exercising (think 1-hour rides, swins or runs) 3-5 times a week. This is much, much better than my friends in banking who rarely get a week without a 2am fire drill and who have stopped all form of exercising for most of them.

Compensation: let's be honest for a second – the compensation in PE is extremely high. Of course, you could make more money launching your own business or joining a hedge fund, but within the universe of safe jobs with guaranteed salaries this is for sure one of the highest-paying. For the last 3 years I have been paid 25%-50% more than my friends in banking and 2x more than my friends in consulting. Nothing to brag about, just sharing the facts.

Now the second question – how good of a job PE really, regardless of the comparison with banking?

I reckon I am still very early in my career but here are a few observations.

I am not sure if people dreaming about PE realize how complex and time-consuming it is to acquire majority stakes in large businesses, which is the core of PE. There are literally a dozen of workstreams to cover before closing a deal: figuring out the growth in the market, assessing barriers to entry, performing QoE and Net Debt analysis, negotiating the financing structure with banks, marking-up the SPA and negotiating the key legal clauses, assessing the management team and potentially looking for additions / replacements, underwriting your exit multiple… Of course, you get advisors to help you on each, but you have to manage everyone, come up with a coherent investment thesis and execute the transaction. This is much, much more complex than organizing a data room and running some comps.

There are two main consequences:

  • All these workstreams are very time consuming and do put a significant amount of pressure on you (and I am not talking about the fake pressure from an MD wanting to see a deck in the next 20' for a random pitch call). This pressure gets bigger and bigger as you progress in the hierarchy and also as you start putting your own money at risk through deal carried.
  • You're going to be forced to do stuff that you don't necessarily like doing. PE is much broader than just running some LBO models and doing some cash flow reconciliation. You'll need to be good at seducing management teams and at identifying the key issues in an SPA, things that you don't learn at school or in banking. If you're a real introvert and really enjoy pure analysis and modelling hedge funds are probably a better place for you.

Also, even though the job entails many responsibilities, you're still a cog in the machine and your personal power to influence things is limited. You can spend hours putting together the greatest investment memo and the fanciest financial analysis, sometimes your IC will just kill the deal because they don't like the sector or there are potential ESG issues. I believe entrepreneurs / CEOs can feel much more empowered / in the driving seat.

And at the top levels luck plays a big role in how much you make - you can be sitting a $1m+ of carried interest from a potential 3x deal in the travel / leisure / events space at the beginning of the 2020, and suddenly a pandemic will strike and wipe out your carried. You can buy shitty businesses that some strategic will end up acquiring 5 turns of EBITDA higher because they want to grow in a specific region / area and they have a ridiculously low cost of capital thanks to the FED.

TL;DR: PE > Banking by a large margin, but definitely not a job when you can safely make a ton of money without putting in too much effort.

 

 
Dec 6, 2020 - 11:46am

I've found that most of the cookie cutter kids that took the 2 yrs IB/ 2 Yrs PE/ 2 Yrs MBA back into PE at large cap sponsors are the ones who are really bummed that the joke is on them for advancing to the "most prestigious" route and realizing that it doesn't matter if you make $500k at age 30 if you're still sweating out 70+ hours a week. 

ADVICE: look for a smaller/ MM PE shop that has a great culture and an attitude of "we work hard when we are busy, but we aren't busy facetime isn't required". Also look for a partner hierarchy that shares economics. It amazes me how many people get to the VP+ level and just start thinking about carry, only to realize the one or two managing partners are keeping 95%+ of the economics (which is very greedy and unsustainable to keep talent and performance IMO).

 Also, unsure if I am an anomaly, but I am very happy since switching to private credit: salary and bonus is very similar to PE. The carry checks are obviously smaller until you get to scale ($1B+ fund size), but remember when we said money isn't everything? 

 

 

Life is more than dollars
  • 2
 
  • Analyst 1 in IB - Gen
Dec 7, 2020 - 5:46pm

How does the level of "complexity" / "intellectually-stimulating work" in private credit compare to private equity in your opinion?

 
Dec 7, 2020 - 5:52pm

I work at a junior debt shop where we invest equity alongside the sponsor, so we are doing equity-level diligence and evaluating returns from a blended credit/ equity perspective. That being said, we do expect to leverage the sponsor to get comfortable with certain things, given the sponsor has almost always had more time with management and around the business. Senior debt funds can be a bit dry and often turn into a pricing war. Not my cup of tea. 

 

Life is more than dollars
  • 1
 
Dec 10, 2020 - 8:52pm

Also if the cookie cutter kids just stuck it out in banking by the the time they are 30 they would be up for director promotion, making 600k-700k annually with no opportunity cost incurred bouncing around, calling all the shots mostly, and enjoying a relatively great lifestyle.

Sorry to all the PE hardos on here but I just don't buy the PE pipe dream these poor / naive kids get roped into. Maybe if this was still 2004...maybe. It's not.

 
Dec 10, 2020 - 10:27pm
Life is more than dollars
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