Offer: PE FoF or IBD - Any advice?
1) PE FoF: 3-month internship with potential conversion to FT Analyst - Small lean team - MD mentioned looking for candidate to groom to Director level - Paycut: 60% IB pay for 2 years at Analyst level, IB pay at Associate level - Starts immediately
2) IBD: Analyst - 1 year with a pre-selected team - Post 1-year will be joining general M&A pool (seemed like an afterthought and there was uncertainty post 1-year) - Starts midyear
Which should I choose? Long term I would like to join the direct PE industry. I've heard that experience at PE FoF is not directly translatable to direct PE shops? Future of IBD uncertain?
Appreciate any advice from PE/IB bankers. Thanks
interested in this too
Whatever you do, make sure you go to a place that's not going to fire you in your first year (or worse, before your first year). The uncertainty you mentioned at the investment bank would make me nervous...
Take whatever's safer at this point. You could do FoF to MBA to PE for instance.
certain FoF also do co-investments which involve some of the responsibilities taken by investment associates at buyout shops.
maybe possible to work with your GPs/LPs, build a network and lateral over to the buyout shop.
when i was interviewing for PE, a couple of the interviewers came over that way.
so if ur firm does co-investments, you may want to look into get into that side as well.
The world has changed. And we must change with it.
Thanks for the responses guys. The FoF does not do co-investments so this is purely a FoF experience.
Just to provide some additional information, I will join the IB as a Graduate for 1 year where my cost is borne by HR, and post 1-year I expect that I will have to fight for a group placement, however the pre-selected team which I am assigned to has made it clear they are unable to take me on due to headcount issues.
Some advice I have been given from individuals: - Snr. Associate in IBD: take the IBD offer as it's good for 1 year - Ivy 4.0: FoF would help with differentiation for bschool admissions
Personally I think I would learn more from the FoF experience, but the uncertainty of FT conversion and paycut are the 2 major sticking points.
I would like to hear the perspective of people in the PE industry - how does FoF experience contrast with IBD, and which would provide stronger exit opps to bschool?
And from people in IBD whom are familiar with group placements post Graduate Programme, would my experience in a particular sector make it difficult for me to be placed in other teams post 1-year?
Much thanks.
For the PE one, it depends on whether it's primary or a secondary experience as they vary greatly...
Its a secondary experience.
I would really like to know simply - is FoF experience considered an upgrade to IBD or is it ranked lower than IBD?
Anyone from the PE industry can comment on this. Thanks
Well, typically these FoF shops recruit ex IBD candidates...
In my opinion the experience these days will be better if you think about it: I-banking boutique with minimal dealflow and crappy process work versus securing private equity interests/portfolios from entities desperately cash strapped or facing future capital call issues... Dealflow over the next two years will be heavy. It is a very niche space and not as easy and mindless as people think. I think if you can reasonably explain your choice of FOF experience and choice of such a profession you should be fine... Also, should funds perform poorly, you can act to remove GPs and take control of re direct portfolio, so the Fof is a double threat for a direct fund as they have finance knowledge/ legal knowledge and power to influence less powerful and experienced LPs in their favor...
Just my 2cents about the experience... Great experience for future MD/partner type stuff to know fund structures & bylaws & valuations
I think you may get some biased opinions here since jr level positions never truly understand the need/relationships direct funds have with FoF... I can tell you that even the biggest buyout funds bow to large FoF LPs and not cocky associates but bsd MDs
this is definitely a tough call. I worked in IBD and PE but not a FoF so I'm not sure what your day-to-day would be like or what your options would be post. You can always go to b school and try to jump into primary PE but it probably won't be easy from either.
I would also go with whatever position seems more "stable"...tempting to take the IBD bc they basically guaranteed at least 1 year, but that also makes it that much more likely that you are gone after 12 months and back into this tough mkt.
Good luck, patrick
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IBD fo sho.
A few things...
In respect to someone mentioning certain FoF hire ex-IBD guys... I don't think this is the case for this particular FoF. Reason being OP mentioned 60% of IBD comp.
First off, no ex-IBD guy will take a 40% hit on his comp; second if the 40% hit is only at analyst level and an ex-IBD would come in as an assoc., this would mean they would get competitive salary to IBD. I find it unlikely a FoF is paying an analyst 84K(60% of 140K which no IB analyst is getting these days anyway) and an associate 250K. This would mean your first 4 years are as follows Analyst1: 84K, Analyst2: 94K, Analyst3: 104K, Assoc1: 250K, even Assoc1: 200K. Highly unlikely. Unless its a very well known company and their comp schedule is also very well known, or it is outlined in writing for you, I'd be skeptical. Typically you find a firms paying competitively at the assoc level will pay competitively at the analyst level as well. I haven't come across many firms paying you a BO salary as an analyst and a FO salary as an associate. I could be wrong.
Also, the MD mentioned they're grooming someone for the Director level? Thats a bunch of recruiting bullshit. No MD decides an analyst is a good fit to become a director over a Superday. Every firm is "grooming" hires for MD positions when they hire you, since they will pick candidates with long-term leadership potential over others.
I did the FoF thing for a bit. And generally speaking, it is VERY VERY seldom transferable to the principal investment area of PE. If you want to get into PE, take the banking job. FoF is notorious for pigeon holing people, once you're there, its very hard to shake the typecast. Plus, you're not learning many transferable skills. You'll possibly learn quantitatively how a PE firm operates, but you can do that by keeping abreast of the market and key players.
Marcus - you convinced me. I vote IBD.
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Now that I think about, your FoF is probably just as likely to blow up as your IBD, if not more.
Surely there are more nuances to this question than have been presented? For one, getting an experience from Pantheon, Coller Capital, Paul Capital Partner, or GS PEG at a time like this wouldn't altogether ship-wreck your career. After all, these groups cover the entire umbrella of fund-of-fund investing (primary, secondary LP/GP, co-investments) and in an environment marked by a dearth of primary fund raising, the secondary market is teeming with activity. I believe GS PEG just closed a $6bn vintage fund that buy-up LP interests and synthetic secondaries. Some of these transactions make for great business. If I'm a secondary fund purchasing LPs with guaranteed IRRs of 8-10% at a discount corresponding to 15% IRR, I'm a happy camper. Beats the returns achieved currently by most PE firms, let alone the HF community. Which begets the question: who cares how you make your returns? Investing in pork-bellies or FX might not be the most glamorous gig, but who cares about glamour if your risk-adjusted returns are superior to the most 'sophisticated' of investment strategies.
In short, you'll get transactional experience working for a FoF (provided the fund engages in secondaries and co-investments). Granted the transactions will differ greatly from the kinds you would encounter on the sell-side, and indeed for principal investing. You'll also pick up due-dilligence skills (which job wouldn't impart those skills...) and sourcing for investment opportunities, be they primary, secondary, or co-investments.
But on a different note. I'm a smidge peeved by the arrogance exhibited by some members of this forum. While I do not work for a FoF, I can at least respect their business thesis (at least for the PE asset class). As Marcus points out, yes, you may be typecast working for a PE FoF, but by whom? Industry professionals? Unlikely. By your peers? More likely. Why? Because they have been inculcated with the belief that the traditional route into PE is through either IB/Consulting. And that makes sense. There are far more analysts in IB/Consulting versus, say, fund management.
At the end of the day, my advice (whichever gig you choose) is: work hard. Don't feel entitled. Working for a PE FoF might land you an interview. So might the IB gig. At that stage it is up to you to convince your prospective employers why your experience at the FoF (or IB) uniquely equips you to add value to the firm.
i don't know enough to comment on most of what uff said, but the last paragraph is frameable.
[quote=Marcus]I did the FoF thing for a bit. And generally speaking, it is VERY VERY seldom transferable to the principal investment area of PE.[\quote]
Out of interest, what job did you lateral into after your FoF stint?
Uff, perfectly said.... Your post reminds me of a saying and reasoning by michael milken, he said: he didn't do junk bonds because they were glorious, M&A was glorious at that time, he did junk bonds because no one else wanted to door and he could profit... And he did it gloriously cashing out a $500m bonus in the '80s...
Which would you choose? Regional IB vs PE Secondaries vs PE FoF (Originally Posted: 04/24/2012)
Hi all,
I've seen a lot of discussion on PE FoF and PE secondaries on this forum these days. I now have this opportunity to interview with a fairly large FoFs, but am having trouble prioritizing multiple opportunities on hand. Here’s 3 analyst positions (all in Asia) that are presented to me and I really need your view on which of these gives a more promising long-term career. The first and the second are almost confirmed, the FoF is still in interview process.
Regional IB: The firm is not a global player, but has strong presence in the region (think CIMB, I am international student if you are wondering)
PE Secondaries: a fairly large PE secondaries investment firm with top-quartile AUM and global presence(think Adam Partners)
A Private Equity FoF: USD ~5B AUM, investment focus mainly in emerging markets
Any comment is welcomed!
P.S. I need to decided by this weekend. Thanks a lot! If you need more details on the firms, I can PM. Hope this also provides helpful information for other job seekers this year. Job market is really tough these days.
3.
1
2 is probably best as you will likely get direct company analysis opportunities when diligencing the portfolios that you are looking to acquire. Typically at a pure FOF you will diligence the manager's performance but not the underlying companies. You want direct company analysis opportunities as it will provide you with greater latitude of options later on.
With analyst positions you refer to full-time employment, right? Also, you say that you have the chance to interview which makes me wonder why you can't go to all interviews or reschedule so that you can go to all? Do you look at this decision as an opportunity to learn and eventually move to direct buyout firms/investment banking/long-term career in the chosen area?
Generally I would follow the same logic as TechBanking and go for 2.
Boutique Investment Bank or Top PE FoF (FT) (Originally Posted: 01/25/2017)
I'm a college senior and I have two offers for full time right now.; an offer at a European investment banking boutique in their NY office, and an offer at a top PE FoF.
The NY office of the European boutique is small, but has been growing rapidly since the office opened last year. I'll be working in an M&A role.
The PE FoF also has a secondaries and co-investment arm. I'll probably be working on co-investment opportunities if I were to join the firm.
I am interested in PE / HF exits, but it's not that important to me.
Which offer would you guys choose?
Just wondering, is the bank you're talking about a Spanish boutique investment bank?
It's not.
I saw that you're an analyst at a boutique. I was wondering which one you would choose, especially now since you do have that experience in banking.
Do not go into FoF at your level. You will spend most of your day doing DD on managers (PE funds) and looking at secondaries (buying out existing LP interests). Very hard to move more granular down the line, meaning Pension fund/endowment, FoF, PE fund, operating company. I'm heading off to bschool in order to get closer to the assets (where the money really is IMO).
Strongly agree. Although OP specifically mentioned he'd be focusing on co-investments but I'd still say go for the boutique.
M&a all day over bs fof
I work at a small US office of a European investment bank. Get to see a wide variety of deals, and the benefits are great: 4 weeks vacation I can actually use, large 401k match, relatively reasonable hours for IBD.
I would say go for the boutique. More strategic exits than getting stuck in FoF, as you could always (A) lateral to BB -> PE MM or MF, (B) pursue something different like VC or corp dev or whatever.
Thanks for all the responses so far. I'll be making my decision soon; and was wondering if anyone has any differing opinions.
Offer: PE FoF or IBD - Advice from PE/IB bankers please (Originally Posted: 02/18/2009)
1) PE FoF: 3-month internship with potential conversion to FT Analyst - Small lean team - MD mentioned looking for candidate to groom to Director level - Paycut: 60% IB pay for 2 years at Analyst level, IB pay at Associate level - Starts immediately
2) IBD: Analyst - 1 year with a pre-selected team - Post 1-year will be joining general M&A pool (seemed like an afterthought and there was uncertainty post 1-year) - Starts midyear
Which should I choose? Long term I would like to join the direct PE industry. I've heard that experience at PE FoF is not directly translatable to direct PE shops? Future of IBD uncertain?
Appreciate any advice from PE/IB bankers. Thanks
of the fund of funds? would they happen to have a co-investment team?
I would really like to know simply - is FoF experience considered an upgrade to IBD or is it ranked lower than IBD?
Anyone from the PE industry can comment on this. Thanks
is oonsidered a lower rank than ibd. you do not develop the same skill set that you would otherwise develop in ibd. hope this helps.
Working in co-investment and secondary funds would develop a good modeling/transactional skill set. A straight fund of funds isn't nearly as quantitative.
If you're willing to work the hours, IBD keeps more options open. You can always go to a FOF from there, but it doesn't work the other way around.
Absolutely agree with themarshall; after 1-2 years of IBD you can move to FoF but would be exceedingly rare to go the other way. At junior levels it's better to be versatile and flexible. Up to this point it's a no brainer.
That said, if it's a solid FoF, they're offering a career-track role and you love the group, location, etc. only then can I see how this would even be a question.
I was in consulting and came down to a role at FoF or F100 Corporate Strategy team and chose the latter. FoF was more $$$ at associate level, but I didn't think it would offer the learning opportunity and positive branding that would benefit outside that universe.
If you're really left questioning, in this environment I'd consider how secure the role is. How is the FoF doing? Is the IB well known and have a pipeline of business?
good luck
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