Overwhelmed by Buyside Recruiting

Subscribe

Hey everyone. 1st year IB Analyst here who just joined the desk. Like most of my class, I don't have any desire to stay as a career banker and took the job in order to learn as much as I can and then get on to the next thing.

However as the title would suggest, I'm feeling a bit confused about what that next step should be. I am lucky enough to be in a spot where a lot of different opportunities will be available to me but I really have no idea which would suit me the best. I have been involved with investing for a while and know that's where I'd like to end up but having to choose between HF, PE, VC, Growth Equity etc. etc. seems a little asinine when I just started a couple months ago. Additionally, I can make a compelling case for why I would enjoy any of those investment vehicles or many of the sub-strategies included under their umbrella. 

I know the traditional advice is to wait for the headhunter process to come around again during my second year but I feel like I'm going to get left behind. That said, I also don't want to just hop onto the bandwagon of traditional PE just because that's what everyone else is doing. 

In any case, I was hoping you guys could tell me a little about how to start thinking more critically about this process. Was there a moment you realized you wanted to do one thing or the other? Anything you read/watched that made you think about something in a new light. 

Tl:dr I just started as a banker and can't figure out where I would fit on the buyside. 

Comments (16)

 
Sep 23, 2020 - 9:05pm

The best way to handle this since recruiting is so early is to talk to people / friends / analysts who left from your group and see what their experience is like. Ask them questions like what they like about their job / investing style, what they dislike etc. You'll become better informed and your own interests will develop as you have these conversations. Then figure out what you want to do, tell headhunters your interest, prepare, and go interview when they bring you interviews opps. This is Option 1. 

Option 2 is do what everyone else is doing - just recruit for the best large funds like the rest of your group and hope it works out and you like it when you get there in 2 years. This is a safe option but delays your decision making process about what you really want to do until later. You can still hop relatively easily to other buyside positions afterwards though it starts to become harder. For example early stage VC and Megafund PE are at extreme ends of the spectrum so would be tough to go from one to another. PE to L/S HF is do able since they are looking for strong modeling skills and that will have been refined by 2 years of IB + 2 years of PE. Corporate Development to a Distressed Credit HF may be tough. Nothing wrong with Option 2 either - this is what most people do and just delay their real decision by another 2 years.

IB is still the best node point that lets you evaluate all of the different opportunities.  

 
Sep 23, 2020 - 11:53pm

undefined:

The best way to handle this since recruiting is so early is to talk to people / friends / analysts who left from your group and see what their experience is like. Ask them questions like what they like about their job / investing style, what they dislike etc. You'll become better informed and your own interests will develop as you have these conversations. Then figure out what you want to do, tell headhunters your interest, prepare, and go interview when they bring you interviews opps. This is Option 1. 

Option 2 is do what everyone else is doing - just recruit for the best large funds like the rest of your group and hope it works out and you like it when you get there in 2 years. This is a safe option but delays your decision making process about what you really want to do until later. You can still hop relatively easily to other buyside positions afterwards though it starts to become harder. For example early stage VC and Megafund PE are at extreme ends of the spectrum so would be tough to go from one to another. PE to L/S HF is do able since they are looking for strong modeling skills and that will have been refined by 2 years of IB + 2 years of PE. Corporate Development to a Distressed Credit HF may be tough. Nothing wrong with Option 2 either - this is what most people do and just delay their real decision by another 2 years.

IB is still the best node point that lets you evaluate all of the different opportunities.  


Agree with the first half of this but not the second. Starting with ex-members of your group is a good place to start as there should be a nice dispersion of exit ops (and potentially telling where people have not gone). Leverage those people / school connects for additional touch points, if you make it clear you're purely looking to understand industry vs looking immediately for a job people will be more likely to pass along additional recs.

I wouldn't jump right into the recruiting frenzy if your heart isn't into it. You really get one good shot at it so if you're going to do it be sure you want to do and it know why. I wouldn't worry about being left behind - plenty of interest for qualified 2nd year analysts and simply stating I didn't recruit last year because I wasn't sure what I wanted to do is a very valid reason.

 
  • Analyst 1 in IB - Ind
Sep 24, 2020 - 11:53am

Cool your jets. You've barely even started in banking. Of course you want to move to the buyside, you're currently learning how to align logos and format Excel spreadsheets correctly, while recruiters and the rest of WSO is telling you that PE is more "interesting" work and that the grass is greener, when in fact it often is not. 
 

I'm just starting my second year now. I recruited during my first year two months into the job, received an offer, and actually turned it down because I didn't get along with the team and I realized it wasn't in the location I wanted. I also remember feeling "left behind" at that point. But since then I have had late stage / superday interview processes with three firms, and still continue to receive many interesting opportunities from recruiters.

If you're overwhelmed and don't know what you want, sit out recruiting. Seriously. If you don't have a convincing answer to explain exactly what you want, you're going to strike out in buyside recruiting anyways. Plus, waiting gives you a chance to see if you like banking. I actually ended up enjoying the negotiation and deal structuring process of M&A quite a lot, and can genuinely see myself staying in banking long term, even when I came into the job as a "buyside or bust" guy.

So many people are afraid to be happy and it makes me laugh. The grass isn't always greener. Unless you're certain on PE, sit out recruiting for now, do a good job at your IB gig, and reconsider buyside recruiting down the line after giving your current job a chance.

 
Most Helpful
Sep 25, 2020 - 5:37pm

Note that this is all just from my experiences in banking, and is largely from an M&A context.

My colleagues who have stayed in banking love doing deals and care less about the companies with which they are doing deals, while colleagues who have moved onto PE love the process of deals and analyzing companies, but care less about the actual closing or quantity of deals.

Banking

Let me elaborate. In banking, you are hopefully closing 2-3 deals a year. You don't really care about the companies that much. You don't need to get too far into the weeds of the company, you just need to know enough to be able to build a pitch deck / financial model, and sound intelligent enough to pitch the opportunity to potential investors before handing them off to management for a meeting. You probably have many of these deals going on at once, so there's only really a certain threshold of intelligence you can gather / require / need on a company to get through this phase

Once you get through the outreach phase is when my definition of "bankers" really start to come out. When a term sheet / LOI is received, that's what bankers look forward to. They will start negotiating key aspects of the term sheet, thinking about deal structuring, thinking about how to justify a certain valuation, and ultimately negotiate between the seller and bidder to get to a point where all parties are in agreement. The people who want to stay in banking enjoy negotiating things like deal structure (merger or asset purchase), consideration and form of consideration, nuanced working capital definitions, indemnification, closing conditions, and other key deal terms. You're basically a hybrid of a banker and lawyer at this point. Note that none of these items really require any super specific knowledge of the company, but it requires extensive knowledge of the nuances in different terms, a knowledge of what is considered "market" for said terms, and an ability to know your shit while negotiating on behalf of your client with a bidder.

This environment appeals to the person that truly enjoys doing deals. They don't really care much about what the company does, but they love negotiations and deal structuring, so staying in banking makes the most sense as you are able to get a high volume of deals and negotiating reps closed and completed. People in banking also generally like the gratification that comes with "closing a deal".

In summary, someone in banking (at least in an M&A capacity) likes analyzing deals more than analyzing companies.

Private Equity

People in PE have to love the "process" of a deal. Going into PE, you are going to turn down the overwhelming majority of investment opportunities that come your way. You are going to get to a point in a deal on the buyside where you are negotiating some of the terms I mentioned in the banking section above infrequently, as you are likely only going to be closing maybe one deal a year. Many Associates don't close any deals at all during their two year PE stint. So it's important to like the process of evaluating an investment.   

This evaluation process includes thinking about a company or industry thematically and coming up with an opinion on the space. A widely agreed upon opinion is that SaaS companies make good investments as they have recurring revenue and captive customers. In software PE, you would become strong at evaluating SaaS companies and determining whether the company is a strong investment opportunity or not. Once you have determined that the company is strong, you then have to submit a bid, hope that your bid is appealing to the seller, survive the first down-selection of bidders, enter confirmatory due diligence, hope that there are no skeletons in the closet during confirmatory due diligence, submit your second LOI, hope the seller chooses your LOI, complete the definitive documents, and then acquire the business. Congratulations, you closed the deal. However, there were a million different points in the process where you could have (and often will) turn down the opportunity. For this reason, if you're going to succeed in PE, you need to enjoy the process of evaluating investments and not just closing deals, because you are going to be closing deals on a much more infrequent basis when compared to banking. 

Additionally, assuming you close the deal, you then have to manage the company in your portfolio. I have not worked in PE and have no experience with managing a portfolio, so will let somebody else comment here.

In summary, the person who succeeds and enjoys PE does not care as much about closing deals. They like analyzing companies more than analyzing deals.

Conclusion

Anyone else in this thread, feel free to correct me on any of what I said above, but that is what I have noticed from my experience.

 

 
Sep 25, 2020 - 7:15pm

In my experience, the "buyside or bust" crew (note this doesn't include people who learn about the job and eventually recruit, i'm only referring to the people who recruit within the first 2 months of starting the job) vs. everyone else is driven largely by prestige and the peer pressure of what you're supposed to do next. I've met a very small, but memorable, segment of IB analysts who legitimately seem like they wanted to be investors first and then found out that they had to go through banking to make that possible. 

 
  • Analyst 2 in IB - Ind
Sep 28, 2020 - 1:32pm

I don't think anyone on this forum can help make that decision for you. Questions like this are why you shouldn't jump into recruiting, but instead spend some time focusing on your current role, what aspects of it excite you, and what you feel like you're missing. After working on a few sellsides / buysides / IPOs, you'll get a much better sense for what you're passionate about. More importantly, you'll also get a much better idea for what the different opportunities entail by actually working with the different funds and having conversations with past analysts. 

Start Discussion

Popular Content See all

Biggest Regret in Undergrad
+44IBby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
Virtual Summer Interns - which banks sent you WFH gear?
+16IBby Intern in Investment Banking - Industry/Coverage">Intern in IB - Ind
Meal plan in IB
+11IBby 1st Year Analyst in Investment Banking - Industry/Coverage">Analyst 1 in IB - Ind
Making the first move as a woman?
+10OFFby Intern in Investment Banking - Generalist">Intern in IB - Gen
JPM vs. CS offer decision
+7IBby Intern in Investment Banking - Generalist">Intern in IB - Gen

Total Avg Compensation

October 2020 Investment Banking

  • Director/MD (17) $704
  • Vice President (49) $326
  • Associates (265) $228
  • 3rd+ Year Analyst (36) $168
  • 2nd Year Analyst (147) $159
  • Intern/Summer Associate (136) $141
  • 1st Year Analyst (583) $129
  • Intern/Summer Analyst (558) $82

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.4
2
Jamoldo's picture
Jamoldo
98.3
3
Secyh62's picture
Secyh62
98.2
4
CompBanker's picture
CompBanker
97.8
5
redever's picture
redever
97.7
6
Addinator's picture
Addinator
97.6
7
frgna's picture
frgna
97.5
8
bolo up's picture
bolo up
97.5
9
NuckFuts's picture
NuckFuts
97.5
10
Edifice's picture
Edifice
97.3