MM IBD (Analyst) > MM PE (Associate) > MM PE (Senior Associate) - Here to answer any and all questions!

Started off at a non-target state school, but fortunate enough that some of the better known MM banks (think Moelis, HW, PJC, etc.) recruited on-campus. After an absolute cage fight to claim one of the ~3 opportunities available for a SA gig, I spent the summer working across healthcare, industrials and technology verticals. It wasn't my favorite thing, but PE was always the goal and you more or less need to pay your dues to get there. I ended up spending two years working as a FT analyst in a industry coverage group, before making the switch to a larger value-oriented fund (think Sun Capital, Gores, etc.) Pretty quickly into my Associate stint I realized that I absolutely loved the industry, but wasn't necessarily enamored with the firm at which I was working. That, combined with the fact that my firm only hired VP-level candidates that were post-MBA were the two major motivators for making a move.

Lateral PE recruiting is a very different beast than post-IBD PE recruiting. Out of banking, you are just looking to find a fund that will take you in order to avoid the dreaded third year as an analyst. Out of an Associate gig in PE, I was significantly more selective and focused on fit. I wasn't interested in moving somewhere that didn't have long-term potential. I also wanted to find a fund with a narrower focus (i.e. dedicated industry, focus on auctions vs. owner-operator transactions) and most importantly, a great culture. I was lucky enough to land an offer as a Senior Associate with a "its yours to lose" attitude to internal promotion. Candidly my hours are worse than when I was an Associate, but doing meaningful work at a firm where you have a future easily outweighs having to stay an hour or two later some nights.

Carry is pretty rare when you are

Long answer short - yes, I absolutely did. Nobody truly loves the analyst stint (and those crazy enough to do so usually never leave IBD), but I was fortunate to work in a great group with excellent analysts who became lifelong friends. Yes there will be all-nighters and meaningless work, but at the end of the day (i) long hours are an occupational hazard of working in any deal-oriented environment, and (ii) a couple years of your life right out of college is a small price to pay to gain access to buyside recruiting. That stamp of approval of spending time as an analyst at a reputable shop is invaluable and I cannot speak enough to how important it is - even if you are able to swing a PE gig coming from a non-traditional route, you often may find yourself in an uphill battle against ex-analysts who are fluent with financial statements, understand how the M&A process works on both ends, and have interacted with management teams before.

Congrats on the offer and best of luck going forward!

Assuming you are referring PE recruiting during your analyst years, it largely comes down to a couple main points.

1. Most of the top shops recruit on-cycle (e.g. 12-18 months in advance) so you need to decide if you are comfortable doing a third year as an analyst. If you want to leave asap, it is best to recruit your first year to maximize your chances at landing at a good fund.

2. Deal experience is pretty important in the recruiting process, and one big challenge for analysts recruiting in their first year is that they often just don't have deal experience yet, so definitely a balance. It is not impossible to successfully recruit without deal experience (we understand you haven't been working in IBD all that long), but its just one of those things that definitely helps.

I started preparing just a few months in. I was lucky enough that my group was actively solicited by headhunters, so I largely didn't need to leverage my own network. Headhunters typically have the best access to the best funds, so they are logical place to start. I would liken HHs to on-campus recruiting - it is a confusing, irrational and counter-intuitive process but one of those things you just have to go with.

Absolutely - in my opinion, IBD is largely a stepping stone to PE / buyside recruiting. Is it helpful to have that experience? Absolutely. Is it necessary? Absolutely not. If you are looking to stay long-term at your current role, nobody at your firm will care one way or the other if you have IB experience, as long as you are doing a good job. From a lateral perspective, I would imagine it is still a great stepping stone (especially if you are coming from an Ares, Silverlake type analyst role), but I can't really speak to how it is viewed from a no-name shop.

That being said, the easiest way to make yourself competitive in lateral recruiting will be to get a deal or two under your belt at the current shop - no IBD analyst in the world can make a claim to playing an active role in a platform acquisition from a pure PE deal team lens.

To be perfectly honest - it is hard. PE firms effectively want analysts that are extremely competent in MS Office / have a lot of deal reps, but are still malleable enough to be taught how to think from an investment perspective (or as my firm calls it "beat the analyst out of them"). Unfortunately Associates are often viewed as being IB "lifers" that are too far along the sellside path. There is an additional perception that with no prior-PE experience, you would need to be hired at the Associate level, but given the MBA you are likely to be viewed as overqualified.

That being said, don't give up! I know a number of IB associates who have made it far in PE recruiting processes / landed PE roles after hard work and perseverance.

As mentioned, the firm I did my Associate with was a value-oriented fund, and paid a bit below market. I still saw a significant bump when I switched to my Sr. Associate gig, but in my eyes Sr. Associate is the level at which annual cash compensation starts to level off slightly (still seeing major jumps Y/Y) and carry / co-invest starts to become an increasing component of your compensation package.

This one is harder to answer, as coming out of a reasonably well-regarded group meant I was probably going to get interviews regardless (and once you are in the interview, GPA doesn't seem to matter all that much). This goes doubly so for Sr. Associate recruiting when you have already (hopefully) proven yourself at two shops already.

That being said, one data point was that a couple analysts who had relatively low GPAs seemed to have a little more trouble getting through the resume screens. At the end of the day, I think it is pretty important, but not a dealbreaker for post-IB recruiting - more of a "check the box" that you are 3.5+.

1. Analyst 1: $70/$50 Analyst 2: $85 / $85 (this was when the whole market went crazy on analyst comp in 2014/2015) Associate 1: $95 / $95 Associate 2: $105 / $110 Sr. Associate 1: $135 / $135

2. I wouldn't worry too much about the PE-landscape now. You will learn this ad nauseum making buyer strips, running auction processes, etc. over the next two years. Additionally, rather than reading about fund reputations and "prestige" from college juniors on this website, learning the landscape while an analyst will also allow you to really understand how various firms are viewed, the culture at each fund you interact with, how funds act on a deal (i.e. how much work upfront vs. post-LOI), and most importantly the type of fund and work you actually want to be involved with.

3. Go for it.

See my answer earlier to Keinishikori

And please, speak as you might to a young child. Or a golden retriever. It wasn't brains that brought me here; I assure you that.

AmoryBlaine:

OP - thanks for doing this. Very similar background to you, so curious to hear your thoughts on the following: - Now that you've had a chance to get under the hood in PE and form your own opinions, how do you view the long-term attractiveness of the PE industry? - What factors do you think are going to drive the internal promotion route the most? And how do you think this is different than lateral moves or gaining a promotion via joining another firm?

I'm not the OP, obviously but I thought these are 2 very interesting questions I ask myself pretty regularly as I grow in the MM PE space:

1. I don't think there is much room to grow in the MF or even top MM PE space (from both a return and professional development POV), but there are definitely exceptions out there like LGP. I think from a pure returns prospective, lower MM build and grow strategy is, in my view, the best way forward. I eventually want to start my own fund some day and hell would have to freeze over before I move up market. In today's environment, I just don't understand how some shops are bidding 15x EBITDA and swallowing down banker's numbers just to get a mgmt meeting. I think this is both intellectually dishonest to your LPs and a very short horizon approach, which PE is NOT. As all PE pros understand, the transaction part is actually easy... It's what you end up doing with the business after buying it that matters. If you are buying at a fully-priced (or even premium) multiple, not much wiggle room. However if you view this from a GP POV, booking assets = fees, and dollars coming in pocket today > earning carry. Incentives are a bit misaligned, IMO. I am a firm believer mgmt fees are definitely necessary but getting deals done for sake of fees = no go and sets you up for failure. American Capital is a great example of this

2. I will speak for myself since this is very situational. I think if you want the VP promote, you really need to step back from the models and all that shit, it should reduced to maybe 30% of your overall attention and you need to start trusting your senior associates to get it right. At the end of the day, you can't manage a business in a financial model, i don't care who thinks otherwise. as VP, you need to QB the deal process, including negotiating legal docs, on the transaction front. where you REALLY need to step up is the day-to-day mgmt of portfolio companies. you need to be able to move from a board observer to an active board member. Anyone can do a deal, but again, its what you do with the business afterwards, and that is either going to make you a hero or an asshole. if the partners can trust you to lead a portfolio company, you are essentially in the ranks of the partnership

i really hope this makes sense. fires in california is fucking with my brain and lungs