Out of Undergrad: PE or Top IBD?

Obligatory already used search engine/not trolling -- I'm trying to hear some current opinions on doing sell-side banking immediately vs. trying for the buy-side out of undergrad. My school historically places a handful of people into BB's/globals and has recently gained a couple of undergraduate options for PE summer positions.

For me personally, I was stuck thinking that my only opportunity was going for the glorified 2/2/2 out of undergraduate and trying to snag PE at a later point. I know that LGP has come in the past and it's rumoured that SLP could be coming this year. In aggregate, would those be preferred to a top BB/elite boutique? It seems like blasphemy that I'm even asking, but is turning down SLP for a summer position in favour of an IBD role just a terrible decision?

Expecting to investment banking to have:
- Larger scale environment
- More structured training/mentorship program
- More proven history of recruiting success/predictable outcomes (e.g. not just a one and done program for the summer)
- Actually having an analyst class/peer group
- Greater optionality in going to different career paths afterwards?
- In a 10 week time frame, more likely to be involved in a deal than in PE?
- Get paid less???
- Hours differential = ???

Please advise :)

Comments (37)

Dec 15, 2013

Probably will get paid roughly the same UG PE vs. BB IBD. Hours likely will be better with the PE shop. There is another thread about GS vs. KKR (analyst position) where a lot of this stuff is discussed- shouldn't be too tough to find (I think it took place end of summer/September, but not sure).

Dec 15, 2013

This. I believe consensus was top BB was better option (although many disagreed), and that was KKR.
If you're talking about LGP, I think the consensus reached is even truer for this example.

"Success means having the courage, the determination, and the will to become the person you believe you were meant to be"

Dec 16, 2013
nontargetPSD92:

This. I believe consensus was top BB was better option (although many disagreed), and that was KKR.

If you're talking about LGP, I think the consensus reached is even truer for this example.

What? That was most definitely not the consensus...

Dec 15, 2013

It depends on what you want to do after banking. If you want to end up doing tech PE, you would be stupid to not take SLP. If you are able to get SLP out of undergrad, chances are you don't need the formalized training that investment banking programs would give you. The people they take out of undergrad are top notch, know their shit, and is able to hit the ground running.

If you want to do PE in LA and/or PE focused in the consumer/retail space, you would be stupid to not take LGP. Great team, awesome culture, interesting work, good responsibility. The analyst program isn't too structured, but they are trying to build it out. Choose a BB if you want to end up doing HF work or have other PE shops in mind.

Dec 16, 2013

generally agree, but would take this a step further -

if you want to work in PE, then get in asap. will give you experience earlier on, plus will make you competitive if you want to go to another PE firm after 2 years or bschool

if you are undecided, then look into banking

doesn't sound like you are in a position to decide at this point, so probably best to prepare for both, then evaluate

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Dec 15, 2013

If you go to PE right out of undergrad as an analyst, are you typicaly promoted to associate after 2 years? Or do these analysts leave for other PE shops/business school

    • 1
Dec 15, 2013

I honestly don't understand why this is a discussion. Maybe I'm clueless, but I'm pretty sure the choice is very clear if you're fortunate enough to have offers from top PE and IBD.

Just to take SLP for example - I'm pretty sure you'd be stupid not to take it under almost every circumstance. If you're not interested in tech investing, they will not give you an offer - it will show in your interview. So if you got an offer, chances are you're interested in tech. Now between GS and SLP, you're never guaranteed TMT at GS so the only way you'll be guaranteed a place in tech is at SLP.

Let's say you want to be an entrepreneur. I feel like investing in companies, doing portfolio-support projects, and sitting in on investment meetings at SLP is more valuable to your future than building M&A models for multi-billion dollar companies (basically irrelevant experience).

Now with a broader PE shop like LGP, BX, or KKR - people say that IBD gives you more options. I'm very skeptical about that. Let's say a headhunter is recruiting for corp dev at Google - does the KKR brand name hold less value than GS IBD? I don't think so. At PE shops, the investment team is ultimately responsible for the operational side of the portfolio companies as well, so you'll help run the companies as well as source/research potential opportunities. In effect, you'll have operational experience in addition to great investment experience and a solid technical foundation.

Also, people say you gain better modeling skills at an investment bank, but I'm skeptical about that as well - PE recruits out of IBD because of the modeling background, so I highly doubt you will be sitting around doing qualitative stuff all day. You will model a lot as a PE analyst.

Let's talk then about hedge funds. Chances are you'll want L/S, distressed debt, or something along those lines. The only reason HF recruits so heavily out of IBD is because they think there are smarter people. Would a headhunter assume that, because you chose to join KKR out of undergrad, you're stupid all of a sudden? I doubt it. And I doubt they will view with any skepticism your ability to model or evaluate opportunities.

And maybe I say this naively, but I'm pretty sure IBD does nothing for your investment skills. It gives you a solid financial analysis background but that doesn't mean you know anything about what makes a company fundamentally undervalued. At the end of the day, investing acumen comes from investing, which you gain on the buyside. In PE.

Idk, maybe I'm completely off base, but I don't see how this is ever an argument unless you are very interested in actually doing IBD for the rest of your life. And I highly doubt this 'structured training program' is a big deal at all. Buyside shops are not going to have you churn out models or participate in the investment process if you have no idea what you're doing. They don't want to lose money - they will make sure you will develop the skills to perform well.

Although one reason to take IBD is the culture - long hours yes, but you do have (much more) camaraderie with your fellow analyst class. Not so much at a PE shop. This is of varying importance to different people.

Dec 15, 2013

If you want to work in PE eventually, take the PE job. Simple.

Best Response
Dec 15, 2013

I remember having a friend that would always ask me whether he should take GS TMT over JP Blah blah blah, how he would never even consider BAML or CS for the downgrade in prestige and the inability to get to the MF blah blah. I remember when on campus recruitment came around the kid got flat out rejected at any BB for first rounds and ended up settling by cold calling random boutiques across the country (huge humbling moment). Before you get ahead of yourself and anticipate getting both a coveted spot at a PE fund and a top IBD spot, why not see which offers you get first and in the low chance this happens (and I apologize in advance as I don't know your credentials you could be the son of Warren Buffet for all I know) you then consider this alternative. My 2 cents.

    • 4
Dec 16, 2013
hayjaykay:

I don't know your credentials you could be the son of Warren Buffet for all I know) you then consider this alternative. My 2 cents.

whoa son of a buffet, must have great exit opps into either the mashed potatoes or fried chicken (chicken and broccoli if it's a Chinese buffet)

speed boost blaze

    • 1
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Dec 15, 2013

If you are 99% sure you want to do PE as a career do PE after undergrad. If you are thinking of any other buy-side exit opps or entrepreneurial route, IB will give you a better rounded network and skillset.

I did PE after undergrad and don't think it was the right call.

Dec 15, 2013

depends where you went. was it a shop comparable to SLP?

Dec 15, 2013

Get the offers, then we'll talk.

Dec 15, 2013

All but one of the LGP/SLP analysts I have talked to had already done elite boutique or top BB internships in their freshmen and/or sophomore years. The resume you posted a while back isn't bad, but I highly doubt it would give you a shot at a buyside SA program, especially if you go to school in Canada.

Dec 16, 2013

Why are some people saying you will get good modeling experience in PE? Anecdotally, that is completely false. Why do you think they test associate recruits for modeling skills? It's because the associates are building the models. Analysts (generally speaking and from what I've seen first hand) are NOT regularly building models in PE

Dec 15, 2013

Fryguy is right, I didn't get that well-rounded modeling exp as a PE analyst. 2 other friends I know who did PE/VC out of undergrad said similar things. I had to prep a ton for the associate interviews.

Dec 16, 2013

Thanks for the responses guys.

And of course I don't want to put the cart before the horse and get ahead of myself, I know I'd be incredibly fortunate to be presented with either opportunity. I just wanted to do my due diligence before entering recruiting so I'd have a better idea of what to expect. Also, I've heard too much stuff about exploding offers that I was worried I wouldn't have enough time to generate a good discussion.

I did notice looking through the SLP site that it seems like everyone there is a complete all-star from Wharton/equivalent with prior experience from a BB/other PE firm. That adds to my worry - I do have finance experience, but don't have those credentials. However, I've also spoken with the SLP guys who have said that they do intend to take "1 or 2 people" (more like 0 or 1 in my opinion) from my school for the summer program.

For me personally, I'm not 100% sure what the future holds. I don't think I've had enough actual experience to know whether I'd prefer HF/PE or B-school/not B-school at this point.

Can anyone comment on what the "typical" route (if there is even such a thing) is for people who immediately enter PE is? Any substantive evidence from PE -> HFs? Do SLP folks have more access to tech opps like Google Ventures or silicon valley corp dev?

Dec 16, 2013
LiquidMarket:

Thanks for the responses guys.

And of course I don't want to put the cart before the horse and get ahead of myself, I know I'd be incredibly fortunate to be presented with either opportunity. I just wanted to do my due diligence before entering recruiting so I'd have a better idea of what to expect. Also, I've heard too much stuff about exploding offers that I was worried I wouldn't have enough time to generate a good discussion.

I did notice looking through the SLP site that it seems like everyone there is a complete all-star from Wharton/equivalent with prior experience from a BB/other PE firm. That adds to my worry - I do have finance experience, but don't have those credentials. However, I've also spoken with the SLP guys who have said that they do intend to take "1 or 2 people" (more like 0 or 1 in my opinion) from my school for the summer program.

For me personally, I'm not 100% sure what the future holds. I don't think I've had enough actual experience to know whether I'd prefer HF/PE or B-school/not B-school at this point.

Can anyone comment on what the "typical" route (if there is even such a thing) is for people who immediately enter PE is? Any substantive evidence from PE -> HFs? Do SLP folks have more access to tech opps like Google Ventures or silicon valley corp dev?

Both analysts at SLP NY from Wharton were #1 in their class. Just anecdotally, they are on a totally different level from most people (briliant guys) and probably had their pick of any job. There was another intern last summer who was more of a start-up guy, and he's off doing his own thing right now. I think a lot of the analysts stay on as associates, but I know that one guy left to start a printing business in Brazil and one girl went to LinkedIn corp dev -> HBS, so I'm sure there are lots of options. The guy from Ivey wasn't hired directly out of undergrad.

In terms of putting the horse before the cart...well, if you have any doubt about your competitiveness (as in, you're not one of the very top people in your class) then your odds probably aren't great.

Dec 16, 2013

Double post

Dec 16, 2013

Not sure who would choose banking over private equity if given the opportunity. No one cares that you were a banker literally anywhere.

Dec 16, 2013

I'd probably go with PE, under the assumption that PE is harder to get generally. (alot of shops don't even take undergrads) Also, the lifestyle is probably a bit better. But it depends on what you actually want to do.

"Even if you're on the right track, you'll get run over if you just sit there" - Will Rogers

Dec 16, 2013

You can't tell the girls at the bar you work at the Goldmans if you work in PE

Dec 16, 2013

classic!

but this is not even close - if you can get the PE job w/a reputable firm, I don't see reason to burn 2-3 years as an analyst

Dec 21, 2013

Averaging 70-80h/week, comp well north of $150k, exit opps at least as good. IMHO, you would be a fucking idiot to choose banking.

Dec 15, 2013
Cruncher:

Averaging 70-80h/week, comp well north of $150k, exit opps at least as good. IMHO, you would be a fucking idiot to choose banking.

PE analyst salary+bonus is not going to be anywhere near 'well north of 150k.' All in probably runs somewhere around top bucket IBD (possibly slightly higher).

Dec 21, 2013
Black Jack:
Cruncher:

Averaging 70-80h/week, comp well north of $150k, exit opps at least as good. IMHO, you would be a fucking idiot to choose banking.

PE analyst salary+bonus is not going to be anywhere near 'well north of 150k.' All in probably runs somewhere around top bucket IBD (possibly slightly higher).

Jun 15, 2014

Yeah, pretty sure that all-in comp for a PE analyst is quite a bit above $150K

Dec 16, 2013

Situation is a little more relevant now -- any other opinions?

    • 1
Dec 16, 2013

.

Jan 17, 2014

Why is this necessary? Get an offer first.

Dec 16, 2013

.

Jan 26, 2014

i would recommend u talk to ivey career management!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! or reach out to ur fellow WIC analysts and execs. we all have

Jan 26, 2014

PE out of undergrad pays about the same as top bucket BB. Even Blackstone PE pays the same as M&A the first two years.

Jan 26, 2014

What kind of dumb fucking question is this? If you have TO ask this question you probably won't get into Silver Lake out of Ivey. Fucking Ivey kids.. Your such a joke.

Dec 16, 2013

agreed, if this is a question, you don't get it..

Jan 30, 2014
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