4/10/08

There are a lot of random questions in other threads about the ability to go directly to PE from undergrad. It appears highly unlikely, but those who make it seem to have great connections / good resumes / experience, etc. However, I wanted to get a sense of the following things:

  1. Which firms have hired directly from undergrad? The following come to some target schools to recruit most years: Blackstone, Cereberus, Audax. The following have taken undergrads by exception: Silverlake, Goldman PIA.
  2. What is the compensation like?
  3. Is the work the same as those who lateral from ib / consulting?
  4. How long of a commitment? Are you forced out to do an MBA?
  5. Do those who get hired do the normal recruiting process one year later for other PE/HF?

Thanks.

Comments (158)

4/10/08

Blackstone, Cereberus, Audax -- those are the big ones. I've heard KKR comes for the Summer and FT now at every select places. Bain Capital Ventures has been recruiting for the past 2 years. I heard from a friend at Harvard that Goldman's Infrastructure PE was hiring this year.

On the other hand, sometimes certain firms send out 'one-time opportunities' to undergrads. There will be a posting from your school's Career Services -- XYX PE firm is looking for someone. e.g. Monitor Clipper Partners was recruiting recently.

I got my break by cold-calling Principals and VPs at my current PE firm. I got really, really lucky.

  1. Compensation: base seems the standard 60K everywhere. That's what my friend who goes to Audax is getting. Bonus is variable. I've heard the Blackstone guys get up to 200K or more. Audax told my friend that bonus should range between 100 to 120% of base. Bain Cap Ventures has some sort of "deal fee" or something. If they invest in a company you source, you get money.
  2. I should think so.
  3. Blackstone is a 3 year contract, heard this first-hand. Mine is a 3 year contract. Don't know about others. You probably need an MBA to get promoted.
  4. I guess it depends on the firm. I don't plan to and I don't think the BX guys will either. Audax is a great firm and I don't see why they would, but I heard the lifestyle is nuts. My guess is that his is all over the place based on personal preferences.

Private Equity Interview Course

4/10/08

Audax is MM - not even close to large-cap status.

Sounds like Bain Capital Ventures has a similar recruiting profile to that of their fixed-income fund, although the BCV fund is much, much smaller than any of Bain's core PE funds.

4/10/08
smuguy97:

Audax is MM - not even close to large-cap status.

Sounds like Bain Capital Ventures has a similar recruiting profile to that of their fixed-income fund, although the BCV fund is much, much smaller than any of Bain's core PE funds.

What do you think of Sankaty? How is the comp -- in line with top HFs or more like PE? Or less?

I know a fella who turned down multiple BB offers for Sankaty. Didn't know it was that good...

4/10/08

Don't know what Sankaty's comp looks like.

I was doing a third-round interview for Bain Capital's traditional PE group and one of my seven interviewers was an MD at Sankaty Advisors. Not sure why he interviewed me, but during the course of our discussion he told me about their analyst / associate dynamic (since I'd have two years at MBB under my belt when starting, I would have come in as an associate). I suppose if someone knows that they really want to work for a fixed-income fund it could be a nice gig, but it's not like people transition from Sankaty into other groups at Bain Capital.

4/10/08

Blackstone pe recruits undergrads from wharton and harvard; any other school represented in their pe group's analyst class would be an exception.

Silver Lake started hiring undergrads formally in the fall of 2006 (i.e. the first kid they took is nearing the end of his first year) and did so more extensively in this past fall of 2007 where they hired 3 analysts, all from wharton. it is not that they hire by "exception" but just that they have started doing it recently and only at W.

KKR's PRIVATE EQUITY group does not formally hire undergrads. what curiousmonkey is referring to, and what a lot of people i've heard be confused about is that kkr FINANCIAL, i.e. their debt hedge fund much akin to sankaty mentioned above, has begun to hire SA and FT. this is a completely different opportunity than PE and although interesting in its own right, it should be clearly differentiated from the true PE experiences coming out of undergrad which to my knowledge are Blackstone, Silver Lake, audax, with various smaller shops and other one-off opportunities like cerberus (heard about a kid at harvard and a few others over the years, but i don't think their analyst program is formal like the 3 i just mentioned).

hope this clears some of this up.

4/11/08

Are KKR Financial hires for San Fransisco (headquarters) or NY?

4/15/08

KKR Financial hires go to SF, if I remember correctly

6/4/08

any other PE firms that hire straight out of undergrad, besides the ones already mentioned?

6/12/08

I know there are a few guys on the board who jumped to PE from ug - it would be cool to hear about their experiences doing this, and maybe what they did the summer before.

6/12/08

Hey all,

Came across this thread and thought I'd offer my insights. I went directly from undergrad to PE (I currently work for a small MM fund). The larger funds mentioned above hire undergrads so few and far between that I'd advise you look elsewhere if you're really intent on skipping a 2-year banking stint. That being said, here's my advice:

  • Make sure you focus on the type of fund you'd like to work at. So many people automatically want to work Blackstone PE because of its prestige. While its undoubtedly top notch, there are tons of other opportunities in PE besides large cap buyouts. There's firms like The Riverside Group who invest in smaller mid market companies. There's firms like Audax who are true middle market players. There's a ton of others who specialize in specific sectors. Simply saying "I'd like to work in private equity" is like saying "I'd like to work at Goldman, but I don't care what division".
  • Be as opportunistic as possible. PE jobs directly from undergrad are not commonplace. As such, network with everyone you know (friends, family, alumni, etc). I know everyone says this, but it's simply the most effective method of landing a job. You might sit down for coffee with an MD who takes a liking to you, and grants you a formal interview even though that fund wasn't initially looking for another hire. You just never know.
  • Do your homework. If you're granted an interview, you've got to be as impressive and knowledgeable as possible. That doesn't mean being able to recite the DCF section of the Vault interview guide. It means being able to formulate a well thought-out opinion, and having the confidence to back up your assertions. In PE, you need to be able to think like an investor; unlike banking where a lot of the work is repetitive and monotonous.
  • If you land a job in PE out of undergrad, congrats. That being said, you need to remember that you know nothing. You might strongly disagree with the investment thesis laid out by your MD, but there's a reason he lives in a penthouse on Central Park West and you live in a studio on the Lower East Side. I'm not saying your MD is always right, I'm saying that he's right more times than you will be. Essentially, be humble and learn as much as you can.

I know this is pretty brief and I'm sure there's a lot that I didn't cover, but I need to get back to work. If anyone has any specific questions, feel free to ask or PM me.

6/12/08

Only kid I know going top tier PE had a fall semester internship (term off) at a top 3 BB in FIG where he was one of only 3 interns and at one point logged 140 hours in a single week. He had to go through 16 rounds of interviews and network to get that PE gig and that is only for SA. He'll be a senior at an Ivy in the fall and has a stellar resume so... it's not easy.

6/12/08
turtles:

at one point logged 140 hours in a single week

Bullshit.

MM IB -> TMT Corporate Development

6/12/08
SECfinance:
turtles:

at one point logged 140 hours in a single week

Bullshit.

well it might be but that's just what he said. otherwise he was averaging the normal 80-90 hours

6/12/08

If you go to Wharton Silver Lake Partners recruits some undergrads

6/12/08
dogboo:

If you go to Wharton Silver Lake Partners recruits some undergrads

most analysts of any reputable PE firm (from what I've found) but nearly all summa from wharton

6/12/08

A decent-sized fund ($1BN +) interviewed at my school for SA. I got an interview without any IB experience or anything through networking. My past internships included BB PWM and a HFoF. I didn't get the job and I don't know if they took anyone from my school, but it is possible without prior IB/PE experience.

I would be able to demonstrate that you have some modeling skills though because I can guarantee your competition will.

6/12/08

Yes, top funds recruit from top schools. I have seen post from top PE firms on my career centers job posting, but they are always looking for the very very top students--think almost perfect transcript +Work EX+ extracurriculars

6/12/08

Blackstone recruits here at Cornell. I know a person who got REPE and he (she?) worked in IBD during junior summer.

p.s. I'm pretty sure it's REPE...definitely PE I'm just not that sure which group

6/12/08
bumpthethread:

Blackstone recruits here at Cornell. I know a person who got REPE and he (she?) worked in IBD during junior summer.

p.s. I'm pretty sure it's REPE...definitely PE I'm just not that sure which group

I also go to Cornell and know who you're talking about. She - I have no idea how you forgot her gender (wtf??) - worked in IBD at DB last summer like an absolute animal. She put in ridiculous overtime. I forgot which group she worked in. She is going to Blackstone REPE.
I know one other kid from Cornell going to PE but those are the only two I'm aware of

6/12/08
gammaovertheta:
bumpthethread:

Blackstone recruits here at Cornell. I know a person who got REPE and he (she?) worked in IBD during junior summer.

p.s. I'm pretty sure it's REPE...definitely PE I'm just not that sure which group

I also go to Cornell and know who you're talking about. She - I have no idea how you forgot her gender (wtf??) - worked in IBD at DB last summer like an absolute animal. She put in ridiculous overtime. I forgot which group she worked in. She is going to Blackstone REPE.
I know one other kid from Cornell going to PE but those are the only two I'm aware of

lol sorry. I don't know her personally. I just know that it's a senior in the hotel school (heard from my friend) - didn't really know the name.

6/12/08
bumpthethread:
gammaovertheta:
bumpthethread:

Blackstone recruits here at Cornell. I know a person who got REPE and he (she?) worked in IBD during junior summer.

p.s. I'm pretty sure it's REPE...definitely PE I'm just not that sure which group

I also go to Cornell and know who you're talking about. She - I have no idea how you forgot her gender (wtf??) - worked in IBD at DB last summer like an absolute animal. She put in ridiculous overtime. I forgot which group she worked in. She is going to Blackstone REPE.
I know one other kid from Cornell going to PE but those are the only two I'm aware of

lol sorry. I don't know her personally. I just know that it's a senior in the hotel school (heard from my friend) - didn't really know the name.

Yea, she beasted. REPE only goes after hotelies though, no? I don't know anyone from AEM who has gone from UGrad to PE in any capacity.

6/12/08
IBTeaching:

Yea, she beasted. REPE only goes after hotelies though, no? I don't know anyone from AEM who has gone from UGrad to PE in any capacity.

I don't think AEM places well into such intensive roles to be honest, though it is hard to generalize, since PE recruits are such a small sample. The other person I refer to above is Econ (I'm pretty sure, def not AEM).

6/12/08

Heard of a couple people at my school and also Berkeley go to Blackstone / KKR straight out of undergrad. Either this year or last year.

6/12/08

One of BYU student will go to Blackstone as well this year

6/12/08

I met one person, who went to Wharton and did GS TMT during junior year and got into KKR.

6/12/08
TheKid1:

I met one person, who went to Wharton and did GS TMT during junior year and got into KKR.

JH?

You sure that person's not BX?

6/12/08

I know about guy who got in Blackstone PE in London. He says he was the only one in PE straight from undergrad in the office, at least that year. Long distance acquaintance though, so not really sure hoy reliable the info is. The guy did have an incredible resume, like MM IB, GS and MS IBD internships, num 1 in grades from num 1 uni in the country, extracurriculars bla bla bla

6/12/08

Don't personally know, nor can I track anyone, from my current school (Yale) or past school (Columbia) who got megafund PE straight out of undergrad. However, I can see a couple people from each having gone to Audax/Pegasus, etc. and then later to Carlyle/TPG.

That said, I think BX PE recruits a Wharton or Harvard student every year. Last year it was a Wharton girl who graduated with a 3.9+ and interned at GS TMT the summer before OCR. You need to be very well-connected and extremely high-acheiving (3.85 minimum).

Either way, it's doable. People have gotten much more lucrative gigs post college than mega fund PE. I'm not sure if you know the Dartmouth kid who landed a position at Paulson & Co. out of college a few years ago. Bought a place in NYC in his first year most mega-fund VPs could only dream of. :P

6/12/08
seedy underbelly:

Don't personally know, nor can I track anyone, from my current school (Yale) or past school (Columbia) who got megafund PE straight out of undergrad. However, I can see a couple people from each having gone to Audax/Pegasus, etc. and then later to Carlyle/TPG.

That said, I think BX PE recruits a Wharton or Harvard student every year. Last year it was a Wharton girl who graduated with a 3.9+ and interned at GS TMT the summer before OCR. You need to be very well-connected and extremely high-acheiving (3.85 minimum).

Either way, it's doable. People have gotten much more lucrative gigs post college than mega fund PE. I'm not sure if you know the Dartmouth kid who landed a position at Paulson & Co. out of college a few years ago. Bought a place in NYC in his first year most mega-fund VPs could only dream of. :P

You transferred twice?

6/12/08

Ya it is JH, who is BX.

All in all, it is very tough. High GPA is pretty much a must along with baller internships

6/12/08

There goes my dreams... I did multiple Internships at a pe fund filled with ex goldman guys and thy gold me I wouldn't get a full time offer

6/12/08
couchy:

There goes my dreams... I did multiple Internships at a pe fund filled with ex goldman guys and thy gold me I wouldn't get a full time offer

http://images.wikia.com/gyropedia/images/a/ae/1327...

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.

6/12/08

my friend from OSU interned his junior year at GS ER and now he is doing PE at Maq in NYC and austrialia (its based out of there)

I want a lady on the street, but a freak in the bed,

Go Bucks!!

6/12/08

GS ER in NYC?

Ambition:

my friend from OSU interned his junior year at GS ER and now he is doing PE at Maq in NYC and austrialia (its based out of there)

6/12/08
blueslord2910:

GS ER in NYC?

Ambition:

my friend from OSU interned his junior year at GS ER and now he is doing PE at Maq in NYC and austrialia (its based out of there)

yep

I want a lady on the street, but a freak in the bed,

Go Bucks!!

6/12/08

That is so cool!

Ambition:
blueslord2910:

GS ER in NYC?

Ambition:

my friend from OSU interned his junior year at GS ER and now he is doing PE at Maq in NYC and austrialia (its based out of there)

yep

6/12/08

There are posts on this website that indicate some lower ranked schools, such as UVA and UT, send one student a year to some big PE funds. Alas, those posts are from pre-crisis days and may not hold true anymore.

Tangentially related question: Do the people who get megafund PE out of undergrad get to go to HBS, Stanford, or Wharton after just two years?

6/12/08

I know that Jon Gray joined Blackstone REPE right after undergrad at U Penn. He has spent his entire professional career there, was co-head of real estate investments along with Chad Pike where he was responsible for the HIlton Hotels acquisition. He is now global head of real estate and on the board of directors.

Too late for second-guessing Too late to go back to sleep.

6/12/08

Are these elite firms the only place you can work PE out of?

6/12/08

Off the top of my head, the following places have hired summer interns from Wharton

BX
Apollo (REPE)
Sankaty
GSIP (posted, not sure if they took anyone)
Silver Lake
Ares

All of them hire FT. Other places that I know have hired FT include Audax, Leonard Green, Oaktree (not sure if for PE specifically) and Pegasus. Banking is basically a prereq, but the guy interning at Silver Lake this summer has a lot of startup experience. Obviously most of these people are brilliant and did "everything right".

6/12/08
TurquoiseHexagon:

Off the top of my head, the following places have hired summer interns from Wharton

BX
Apollo (REPE)
Sankaty
GSIP (posted, not sure if they took anyone)
Silver Lake
Ares

All of them hire FT. Other places that I know have hired FT include Audax, Leonard Green, Oaktree (not sure if for PE specifically) and Pegasus. Banking is basically a prereq, but the guy interning at Silver Lake this summer has a lot of startup experience. Obviously most of these people are brilliant and did "everything right".

Does GSIP have a PE component? I was under the impression that they are entirely a l/s hedge fund.

6/12/08

You're right, my bad.

I remember people saying they weren't using one of their three choices to apply for GSIP because it's such a crapshoot and figured that it's the PE arm.

6/12/08
TurquoiseHexagon:

You're right, my bad.

I remember people saying they weren't using one of their three choices to apply for GSIP because it's such a crapshoot and figured that it's the PE arm.

You can only apply to 3 positions out of Wharton?

6/12/08
gammaovertheta][quote=TurquoiseHexagon:

You can only apply to 3 positions out of Wharton?

This is crazy if its true

6/12/08

You can apply to three positions at Goldman, if I'm not mistaken. So three different IBD locations uses up the three, or one S&T/ER/IBD or whatever.

6/12/08
TurquoiseHexagon:

You can apply to three positions at Goldman, if I'm not mistaken. So three different IBD locations uses up the three, or one S&T/ER/IBD or whatever.

3 per firm. This is reasonable. I wish they had this at Cornell, in fact

6/12/08

GSIP = HF
GS Capital Partners = PE

6/12/08
HarvardOrBust:

GSIP = HF
GS Capital Partners = PE

this.

6/12/08

I'm from a non-target undergrad and I'm working first year out of college at a $500M+ VC firm. I did 3 internships - one in boutique PE, one in Bulge-Prop and one in boutique IB.

I also know another kid working PE at MD Sass NY from SUNY Binghamton.
I know 2 kids out of BYU working at Huntsman Gay Global Capital and CS PE.
Also, CCMP just started this year taking analysts (they realized 2 analysts strait from undergrad = 1 assoc. in cost). I know a kid who interviewed for them
Also know a Silver Lake Principle who was hired undergrad, but he was also a Summa at UPenn

Regarding top PE it's not easy. However, there are ways. Primarily it's network.

"If you want to succeed in this life, you need to understand that duty comes before rights and that responsibility precedes opportunity."

6/12/08

I joined Carlyle Distressed Fund in London from a master program without FT /BB summer work exp. I did the summer program and got the return offer. We have 4 interns this year and might hire 1 of them.

Private Equity Interview Course

6/12/08

You made a horrible decision and this will destroy the learning curve. You might as well quit now. /sarcasm

6/12/08

Good luck getting promoted to associate, don't think PE's promote any of their analysts w/o banking experience unless they absolutely kill it. Also, as for your day to day life, you'll be doing similar things to banking with a huge emphasis on DD and no client interactions (that's saved for associates). Hours are slightly better but I don't think you should be expecting anything less than 70-80. Nonetheless a Blackstone/Apollo on your resume will help you exit, but it's not the best if you want to stay in PE for long.

Best Response
6/12/08

Really can't tell if you're being sarcastic.

1) The analyst programs at MFs are structured to have all if not most of their analysts become associates.
2) You make a huge emphasis on DD sound like a bad thing, when reality anything close to it while you're in banking is probably the best and most interesting part of the job.
3) What client interactions are you talking about? LPs/investors? Not sure many associates have access to them either. If you're talking about the target/management team, yes you do interact with them as an analyst.
4) It's great if you want to stay in PE for long - you have more experience in the field and a better understanding of the job requirements than most of your peers. If you want to stay at the MF, you will also have had a head start in developing relationships and networking at the firm.

OP,

There are number of threads you can search - there are a couple of extremely great ones off the top of my head. Downside here is that you don't like it but will be able to recruit anywhere else (in and outside the financial world) if you wish.

Note: OP, not sure if this is a troll post based on 1) timing of post (June); and 2) candidates who land analyst gigs at MFs out of undergrad are usually diligent/smart enough to have done the research to know the answers to the three questions you listed.

6/12/08

No.. to respond to your points:

1) False. Why would they take someone that only knows how to do DD when they can take a banker that has a broader range of skills? Backed by many analysts I know in PE.
2) As a banker, my least favorite part is DD.
3) Either, analsyts are just there for the grunt work, associates handle clients and cold calling.
4) There's a reason why MFs like Apollo send their star interns to partner IBs like Evercore before taking them on full time.

6/12/08

Lol, I worked at an MF and have no idea what you're talking about.

1) Interesting, I didn't know this. Can you please name me a few PE programs that take on analysts but kick them out after two years and don't intend them to stay on as associates? Further, why do they take on any analysts at all then if they take your view?
2) Glad you like the pitch book churning/formatting activities the most.
3) False. Who are these associates cold calling? Who are these clients that you speak of?
4) First, we are talking about analysts here, not interns. Second, Apollo is the only MF (if not one of the very, very few MFs) who takes on interns but don't have an analyst program for them to come back to. It's laughable that you think this is a broader industry trend with all MFs.

6/12/08

I'm sure you do

6/12/08

So true

6/12/08

promotions are super team/firm-specific and you cannot generalize.. i work at a large cap PE fund and promotion from analyst to associate is doable... what is much harder is from associate to principal

6/12/08

1) Yes and no. You won't have as much deal exposure (especially end-to-end deal processes) as your banking counterparts. However, you'll be trained to think and judge investments from the start, which will give you a leg up by year 2 or 3 when new associate hires come in.

2) I'm not really sure, and anyone can feel free to jump in. You'll likely spend the majority of your day either assessing a potential deal or due diligence for an investment in process. This will mean a lot of reading, a lot of excel work, and maybe calls (for due diligence purposes). You won't be spend much time in powerpoint. It's likely in your first year that you'll be working with a more senior associate who will hopefully show you the ropes.

3) If at the end of the day, you want to end up on the buyside, I think you made a good choice. I'm sure you were debating if you should go to banking first, but you're starting with the industry that you're really interested in from day one, and there's value there.

I recommend reading people's bios, and reaching out to those who started out from the buyside first to understand what their thoughts were, and how they were either able to stay in the industry or transition out of it to something else.

--Meliora sequimur

6/12/08

Agree with this. I would say that you could be spending a decent amount of time in ppt if the firm you're at prefers using ppt (vs. word documents/memos) as its format for its investment committee/approval materials.

6/12/08

OP - if you want to be on the buy side and think about investments rather than just process junk as some middle man (I say this as a non-banking middle man in PE), then you're in fine shape. If BX and other megas don't take you, I am sure there are plenty of other PE funds/HFs that would gladly take you on in a few years. You might not be as process oriented as a typical banker, but you'll have thought like an investor and have worked with one of the best shops on the street (and hopefully have networked well within the firm with higher ups, who can help you out/develop you as well).

Be sure to get to know your team/teams, and folks sitting near you. If/when the time comes to leave they may be able to help you more with a move than any random headhunter.

Good Luck.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.

6/12/08

Wow, thanks a ton guys! This is a relief. And for the guy that thinks I'm trolling, I am definitely not trolling. This is a non-London non-NY office of a top 5 megafund. So, the recruiting process was ad-hoc and not in the standard recruitment season.

Anyways, I'm set for PE for life. So, keeping this in mind I think I made the right decision. Plus, I have an associate with whom I'll be working almost exclusively. This is a huge plus. Thanks again everybody!

6/12/08

As long as your fund offers a formal training program and mentorship opportunities you made the right decision. You will find over the course of your career that skillset requirements change and politics/industry trends will affect you in ways you can't anticipate at this time. No one is set for PE for life. The field is too competitive from an applicant perspective and there is too much capital chasing too few deals. I've now seen an entire cycle in the industry and things get volatile. Good luck to you and congrats.

6/12/08

You are definitely NOT set for life. Stuff can change. And FAST. Always be aware of that.

Good Luck.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.

6/12/08
  • PE out of undergrad in a legit deal role at a legit firm is probably the best job you can get out of undergrad in business
  • You are not even close to "set for PE for life." More likely than not you'll get chewed up and spit out of the industry before making VP. But you're off to a good start.
6/12/08

How you went from MS SA (with a 2.97 UG GPA, abeit 3.9 Grad gpa) to a full-time PE offer in a span of a couple months before you even started your MS SA is beyond me. But congrats regardless.

It would be helpful if you would be willing to spare a couple more details on the process so someone in the next cycle can be in your shoes.

6/12/08

Didn't hear about it but the change in hiring practice sounds interesting

6/12/08

Interesting to hear

6/12/08

Odd. I don't get the point to firms doing this, but hey if they think its best I cant argue.

6/12/08

bump

6/12/08

Probably some MO type of works. They don't have the time and resources to train you, and they can't hand you serious modeling works since you don't have any real modeling experience. What else do you expect? I suppose you may be asked to support fund raising, investor presentations, or generating reports for the clients.

6/12/08

it really depends on the shop - if its a sourcing model like summit, you will be doing a lot of cold calling just like the experienced hires. At a smaller shop, you will probably get more exposure to modeling and diligence, and at more established shops you can expect more support work.

6/12/08

Cold calling the potential firms you might invest in? Won't the firms come to us though?

6/12/08

I'd expect a mix of back-office P&L, plus cold calls. They will probably give you the chance to break out of that mold and start doing real analysis, provided you show ambition.

6/12/08

99 per cent of my time is spent on modelling and valuation work. If we have exclusivity on a deal then I'll spend time with Investment Directors and Partners talking to Management about projections.

I've never once been allowed to cold call a firm. If I come across a firm that might be a good Investment, then one of the Senior guys will get in touch with them, usually through the target's Advisors.

But, as some other Dudes pointed out, it all depends on your prior experience and the firm's strategy.

6/12/08

my experience with my wharton peers leads me to say there's no set rule - a lot of smart kids went to less well-known shops for the promise of more responsibility/larger pay earlier on - a lot of them also turned down offers from top buy-side shops because they wanted the traditional i-bank experience. incompetent people ended up everywhere, that's just the nature of life.

i'd say people these days are going wherever they can get a job

6/12/08

Yes, the kids who brag about their offers are douche bags. Perhaps some of them couldn't get that top BB banking job. Either way, just worry about yourself.

Those people may have just found a better fit at the boutique place. Or they might just be trying to save face. Why does it matter to you which of these it is?

6/12/08

either ignore them or stop hanging out with douchebags?

6/12/08

When it comes to B school, they are generally looking more towards quality than quantity (name, etc). Two people working the exact same role, the person at the bigger, more pretigious firm will probably look a little better, but in your case, I would really focus on making the most of the position. The more you can step up in your role, the more projects you can take on, the more passionately you can talk to your experiences, the more interesting (from you point of view) your time there was, the better it will look to b schools.

The key things you want to focus on will be getting a lot of quality experience (experience you can talk about and sell to the committee), step up as much as you can to show that you have gone above and beyond the general expectations, and make sure you can nail the rec letters (as in your superiors will write you some strong letters).

Focus on making the most of the opportunity, and don't even worry about the name. Best of luck to you.

IBanker
www.BankonBanking.com
[email protected]
Articles, News, Advice and More
Break Into Investment Banking

6/12/08

OP, one benefit of working in that type of environment is that you will have daily access to senior members of your team and will likely take on a substantial amount of responsibility. These two aspects will benefit you in the forms of strong rec letters and maturity/leadership examples. I work in a similar environment (larger fund size; a few $B+ headline deals) and I would say that what you may lack in brand name (Apollo, KKR, etc.) is more than made up for in the quality of your W/E and compellingness of your story. I would also ensure that you stay involved in the community/ECs so that you can draft essays that demonstrate that you are a well-rounded and not just a finance guy. For example, my group is very lenient regarding hours (its all deliverables/deal cycle based) so I have been able to volunteer as a youth athletic coach and mentor in my area (something that I have done for the past 14 years and I also played the sport in college, so I am able to show continuity/passion for an activity other than finance).
Good luck to you.

6/12/08

Thanks for the input guys, I'm glad that name brand isn't the deciding factor in b-school admissions.

6/12/08

Interested to know as well

6/12/08

bump

6/12/08

Tough to know without understanding what firm it is. I'm confused on the $40 to $300mm jump. Was the initial fund setup with only founders' capital?

6/12/08

It was set up with the founders capital. Current fund size is 40mm but they apparently are about to raise to 300mm and that will include a variety of institutional investors and private capital as well.

6/12/08

Could be a good opportunity. Make sure to vet the GPs, try to garner information about how successful the existing business has been and determine likelihood for achieving the fundraising target.

If the fund flopped, it depends on how good of experience you have. Assuming you understood modeling and gained some transaction experience, you could move to another PE fund, corp dev or over to MM IB.

6/12/08

Thanks, that makes sense. I have no modeling experience thus far, but supposedly will be getting some at the firm, although they are more growth equity focused within a very niche industry that is growing rapidly.

6/12/08

Thanks, that makes sense. I have no modeling experience thus far, but supposedly will be getting some at the firm, although they are more growth equity focused within a very niche industry that is growing rapidly.

6/12/08

it will be close to first year in ib at most banks

And so it goes

6/12/08
ucmaroon47:

it will be close to first year in ib at most banks

For what kind of firms? larger, $1bn+ firms? Smaller boutiques?

6/12/08
Bruce Wayne:
ucmaroon47:

it will be close to first year in ib at most banks

For what kind of firms? larger, $1bn+ firms? Smaller boutiques?

cant speak for megafunds, but 1bn+ will be fairly in line with that.

And so it goes

6/12/08

For megafunds, a lot more - 1st year PE analyst all-in comp is considerably more than 2nd year IBD analyst at a top BB, and probably about the same as a 3rd year analyst.

6/12/08
Othello:

For megafunds, a lot more - 1st year PE analyst all-in comp is considerably more than 2nd year IBD analyst at a top BB, and probably about the same as a 3rd year analyst.

Edit: for SOME megafunds.

6/12/08

80k base + 70k bonus for analyst at Bain Cap, KKR, TPG - not sure about Carlyle, BX or non bulge bracket PE. Don't tell me I'm wrong.

6/12/08

don't listen to these other guys, you will be paid in line with a first year ib analyst if not less. The hours are much better though and you will be working in pe

6/12/08
ky0ung:

don't listen to these other guys, you will be paid in line with a first year ib analyst if not less. The hours are much better though and you will be working in pe

This may be true for mid-market funds, but the megafunds I know that hire analysts out of undergrad definitely pay a premium vs IBD. And analyst hours at a place like BX are worse than at most BBs...

6/12/08
ky0ung:

don't listen to these other guys, you will be paid in line with a first year ib analyst if not less. The hours are much better though and you will be working in pe

this may be correct for mm pe.

At a place like KKR your comp will be higher in absolute terms, it may be lower than banking on an hourly basis.

Megafund hours will make banking seem like a fucking holiday fwiw.

6/12/08
ky0ung:

don't listen to these other guys, you will be paid in line with a first year ib analyst if not less. The hours are much better though and you will be working in pe

Agreed, we had 2 summer's last year that were extended offers, and according to my superiors, all-in pay will be below 1st year banking analyst. My general understanding from our firm and other firms is that direct-undergrad hires for PE typically won't make quite as much. This info is from 2 PE funds, both $15bn+ size.

6/12/08
Luis Winthorpe III:
ky0ung:

don't listen to these other guys, you will be paid in line with a first year ib analyst if not less. The hours are much better though and you will be working in pe

Agreed, we had 2 summer's last year that were extended offers, and according to my superiors, all-in pay will be below 1st year banking analyst. My general understanding from our firm and other firms is that direct-undergrad hires for PE typically won't make quite as much. This info is from 2 PE funds, both $15bn+ size.

this. although ramp up in following years if you prove to be beneficial will be quicker than ib

And so it goes

6/12/08

.

6/12/08

I was just talking with an associate at a $1b fund. His salary is 105K + 100% bonus potential and rights to co-invest with a line of credit from the firm.

Extrapolate as you want from that for their analyst salaries.

"If you want to succeed in this life, you need to understand that duty comes before rights and that responsibility precedes opportunity."

6/12/08

Hahaha. Here's a megafund offer I have seen with my own eyes. 95k base, 10k sign-on, 10k relocation, 100%+ bonus. Tell me again how that's on par or below a first year banking analyst... :)

6/12/08
Othello:

Hahaha. Here's a megafund offer I have seen with my own eyes. 95k base, 10k sign-on, 10k relocation, 100%+ bonus. Tell me again how that's on par or below a first year banking analyst... :)

Hopefully you took it...

6/12/08

While this is likely correct - that is the older guys run the show - in short, doing UG-->PE (esp. w/ a top shop like BX) is infinitely better than UG-->IBD-->PE in the long run. Yeah, you won't know crap starting out, and the associates will have +2 years (actually most won't have 2 full years, just under by the time they leave their programs) of modeling experience. But PE, is so much different than ibanking, in PE all the analysis and due-dilli that you'll be doing has real consequences behind any subsequent opinions delivered, in banking there's just straight a lot of useless BS that no one on the buyside gives two craps about, so really, they don't know shit either. Doing a two year stint straight out of UG in PE, you'll be 2x the modeling monster that they ever where. Sure your ppt skills wont be as impressive, but guess who gives a sh*t? No one, that matters a least.

When your two years are up and your looking to direct promote to associate, your banking peers will clawing, scratching and fighting to break into PE and you'll be the one screening their resumes. F*ck what your friends say and go straight to PE if you can. Even if you want to switch shops, you'll have a big advantage over kids even with the best banking experience.

Ace all your PE interview questions with the WSO Private Equity Prep Pack: http://www.wallstreetoasis.com/guide/private-equit...

6/12/08

That's the impression I get. Only downside I see to PE is that I won't have the crowd of young, straight-out-of college bankers around me to be "friends" with.

Lonely, lonely life as an analyst in PE. No?

6/12/08

I mean, from a logical standpoint, you are correct in saying that you will not immediately have camaraderie with plenty of other financial professionals your age. There are a lot of discussions on here that mention this as a potential downside, as you point out.

But something that puzzled me -- and perhaps this will answer your own question -- is why this matters so much? I mean, the only thing that's different is that it's HARDER to make these friends because they are not immediately available. But it's not impossible.

Countless individuals -- including almost certainly yourself, if you did PE out of UG -- get to where they are through networking and building relationships with guys they weren't exactly partying with every night after school or after work. Why can't it be the case that you just put in some extra effort into finding others your age, so that you can still have what you believe may be your dream job? It'll be roughly as difficult to make new friends as it will be to maintain old ones after the two year stint...at least, that's what I would imagine.

Others are definitely going to correct me if I'm way off the mark here. I just don't understand, though, why it's that important. It's a minor inconvenience, but it can be dealt with. Or so it seems.

6/12/08

crawl_b4-bawl:
That's the impression I get. Only downside I see to PE is that I won't have the crowd of young, straight-out-of college bankers around me to be "friends" with.

Lonely, lonely life as an analyst in PE. No?

Meh, yeah that could be a bit of bummer, but if you're a good guy (or girl) that is solid with your work product, the associates will roll you up into their social circle.

Really man, BX PE straight out of UG is a such a bad ass gig, you'll get over being a little be lonely at work and can just go hang with your real friends after work / on weekends instead. You'll live.

Ace all your PE interview questions with the WSO Private Equity Prep Pack: http://www.wallstreetoasis.com/guide/private-equit...

6/12/08

Agreed. Sacrifices are going to have to be made. Even recruiting requires sacrifices to social life, etc. I imagine the trend is not going to stop. Only question is, when do you put your foot down and say "I am not going to sacrifice other elements of my life anymore to [get into pe, get promoted to associate, get into hbs, make partner, close next Dell take private....]

This is really one of those times along this chain of sacrifices when I can curb back. Tough decision.

6/12/08

Personally, I think going from top banking or other group to PE associate vs going from PE analyst to PE associate doesn't make much of a difference. I had a similar choice (not BCP but another PE fund), but went with banking and everything turned out well.

Also, I don't know what BX groups you're looking at, but M&A/R&R have MUCH better cultures than PE. Although you do get to expense a lot more when you're working in PE...

6/12/08

AstonMartin:
Personally, I think going from top banking or other group to PE associate vs going from PE analyst to PE associate doesn't make much of a difference. I had a similar choice (not BCP but another PE fund), but went with banking and everything turned out well.

Also, I don't know what BX groups you're looking at, but M&A/R&R have MUCH better cultures than PE. Although you do get to expense a lot more when you're working in PE...

Those are the other groups. Loved M&A's culture like hell

6/12/08

A friend of mine is in a very similar position. He accepted an offer with GS PWM(not NY), but was recently extended an offer to join the Energy PE group of a BB firm in Houston. He asked for my advice, but I couldn't even begin to advise him....sorry.

6/12/08
anon2007:

My goal all along, however, has been to get into PE.

If that's the case, it sounds like you have found the express lane.

6/12/08

was about to say what the guy above me said. go for it and good luck.

6/12/08

The fact that it is top-tier makes a LOT of difference than if it was mid-market, etc.

6/12/08
ExGSBanker:

The fact that it is top-tier makes a LOT of difference than if it was mid-market, etc.

Are you saying that you would turn down an offer from Evolve Capital?

6/12/08

So noone would be worried about having to rescind on the banking offer? If this opportunity had come up three months ago when I was deciding between offers I think it would've been a no-brainer, but it's the fact that I'd be going back on a separate offer and probably pissing a lot of people off that really worries me. Thoughts on that aspect of the decision???

6/12/08

I have a similar problem. Graduating this year from a top Ivy, accepted an offer for a trading position, but now got an analyst position (suprisingly, wasn't expecting to get it at all!) at a PE firm (2nd tier LBO) that I think will be a better experience and fit for me. However, I am really thinking hard, is it advisable to reject an offer after you accepted it, and what are the implications? Is there any way you can turn down the offer without coming across as a tool?

6/12/08

I think the benefits of going straight into P.E. from undergrad far outweigh the costs of any ill will your move might generate.

I say go for it, or else you'll spend two excruciatingly painful years regretting the missed opportunity.

6/12/08

It's a tremendous opportunity, but you will burn bridges for sure. You'll be a renegade.

6/12/08

I think I am definitely going for it, regardless, but I wonder, I clearly am not working there for the rest of my life, do people get blacklisted in BB firms? If I come out of B-School and want to work in banking, how much of that could be a problem?
Finally about IBD, do people move from PE firms to mainstream IBD?I know people move the other way, but I would also want to get a different experience from a bigger shop in the future. Is it worth it to move from a PE shop to a mainstream IBD house?

6/12/08

Through contacts I had the opportunity to go to a hedge fund in NY after I finish my degree. I decided to go to a big bank instead. Why? Because I worked in an HF for a summer and it was great, but I'd prefer to go through the training that big firms offer, and also meet a lot of people my age in my analyst class. In case the market crashes (which people say it will), I'd feel safer having been trained fully and having a big name on my CV than being out on the street if the HF goes under.

It also depends what you want in your career though. I don't want to be in finance forever so I'm going for the broadest position instead of the narrowest.

6/12/08

I definitely wouldn't worry about turning down your I-bank offer, but I recommend being very careful in establishing what kind of job security and advancement prospects your position will have. There's often a danger in PE that you won't get on to a Principal/Partner track and will thus both miss out on carry and face a real risk of being made redundant in a down turn. This is partly why many people choose to enter PE/VC firms post-MBA or after spending some time in banking.

mba.tuck.dartmouth.edu/pages/clubs/peclub/pdfs/Private_Equity_Careers.pdf

Is a reasonably hlepful resource and expands on what I've been saying.

6/12/08

Thanks for the help, actually decided I will stick to the trading job, took lots of thought, and hope I wont regret!!

6/12/08

"And is Carnegie Mellon a target school for PE firms?"

the exact opposite

6/12/08

This is an extremely rare occurrence. But when it happens, it means the kid went to Harvard or Wharton.

6/12/08

Carnegie Mellon is basically a science school, but I've heard of PE firms hiring MIT kids (rarely, but I've heard about it once), so I figured Carnegie Mellon couldn't be too far off.

What do PE firms look for exactly in undergrad hires? Besides perfect grades?

6/12/08

PE straight out of UG is definitely rare and from my experience, the PE shops that will hire straight out of UG are fairly low quality and you would be better off having an IB analyst experience first.

6/12/08

There are several well known PE shops that actually do hire analysts out of school. If your end goal is to get an associate job in PE, then it is absolutely worth it and will make the recruitment process easier. Whether he does PE for 4 years or ibanking for 4 years, he's going to be killing himself.

And it is extremely difficult to get, even with good grades and good internships, especially since he's coming from a non-target school.

I think your brother (or you?) needs to do some more homework and figure out what he wants to do. Asking if it's worth it because it could pay slightly more than IB raises red flags to me. Whether he's paid $50k or $150K as a 1st yr PE analyst, if PE is what he really wants to do, then he should go for it regardless.

6/12/08
PEguy2011:

There are several well known PE shops that actually do hire analysts out of school. If your end goal is to get an associate job in PE, then it is absolutely worth it and will make the recruitment process easier. Whether he does PE for 4 years or ibanking for 4 years, he's going to be killing himself.

And it is extremely difficult to get, even with good grades and good internships, especially since he's coming from a non-target school.

I think your brother (or you?) needs to do some more homework and figure out what he wants to do. Asking if it's worth it because it could pay slightly more than IB raises red flags to me. Whether he's paid $50k or $150K as a 1st yr PE analyst, if PE is what he really wants to do, then he should go for it regardless.

Haha, this is definitely for my brother. I'm in law school and know fuck all about the intricacies of PE vs banking. But I'm looking out for him because I'm not sure he knows what he's doing. I personally think engineering is a safe bet for him, but he has gotten it into his head that PE will get him money, fame and chicks.

Since you're actually in PE (or at least I'm assuming from your name), can I just ask you some questions? What do they look for besides grades and internships - I'm guessing the elusive "fit" is key?

And how much more does a direct-from-undergrad PE associate make than an analyst at a bank? Say you compare a Morgan Stanley analyst with a new Blackstone associate. What kind of compensation differences are there?

6/12/08

This is going to seem like an unhelpful response, but it's the truth. Every generation (that's right, generation, not year, since it's extremely rare) there are a handful of people who grow up with a strong background in finance pre-college, either through family connections, obsession, whatever. In some cases these people graduate and get partner level positions (or close to it) right out of undergrad. A lot of times they didn't go to elite schools. I personally know a few people like this, and they all make millions of dollars running hedge funds by the time they are in the mid-20s or so. But they are extreme outliers, usually because of a lucky situation (if your dad is a hedge fund manager and you have been studying the markets with him since you were 10, that makes it a little easier).

The point is, unless you have something SERIOUS to offer, you don't get to cut to the front of the line without paying your dues in IB or somewhere else first. Majoring in econ and having high grades is so far down the list from serious that it doesn't count. You need to be able to show up and make money from day one. That is even harder to do in PE which has the relational / sourcing aspect that is absent from hedge funds and trading roles.

But yeah, basically, not going to happen.The point is that there is virtually nothing you can do to differentiate yourself in college enough to get a leg up on all the other smart, hard working people at top schools trying to do the same thing. And the system is institutionalized to go through the banking track -- all of the recruiting is set up that way, etc. Banking analysts are total commodities, that's why banks churn em and burn em -- no one has enough skill to be differentiated in any meaningful way.

Just to be clear, you MIGHT be able to get into an MM PE firm somewhere, but you're basically going to be doing banking work anyway (really low level bitch work), so you might as well just go into banking and get the better exit opps.

6/12/08

It's possible but don't count on it. I know a kid who went to a semi-target with a good but not perfect GPA and got 2 big-name PE offers out of undergrad (kid had a couple great internships and networked well). Also know kids who tried but didn't make it and ultimately ended up going the banking route.

If he does decide to go for it, he needs to proactively network and seek out job shadows, internships, etc with alums in the industry. Also needs to really get to know about investing and read everything he can get his hands on. As he's a freshman, he'll probably have to start small, but it's possible to build to a FT PE offer by graduation (but still very challenging).

6/12/08

@ Ravenous and wso: thanks, just saw your replies!

6/12/08

I'd agree it is extremely rare, but definitely not impossible as I've landed a spot at a MM PE firm right out of undergrad. There are a couple firms that hire right out of undergrad but as some of the others have mentioned you basically have to come from a top school OR be lucky enough to go to a school whose alumni work at the VP level or above at that firm (the catch is that usually most of these people will have gone to a target school, but sometimes a liberal arts or state school may be represented, I definitely wouldn't bet on it though). I can't speak for other firms but the one I've received an offer from, successful applicants have perfect or near-perfect grades, solid internships (banking or PE related), and are culturally a good fit.

6/12/08

The valedictorian (is it called that in college?) from my undergrad b-school (think Stern but not Wharton) went straight to a PE shop. I'm not sure what else he did, probably a lot, but he double majored while holding a 4.0 in those two competitive departments. I imagine he at least also had killer internships and started something impressive on campus.

6/12/08

It'd be more realistic to try for a post 2 year IB analyst stint, pre-MBA. Even that would be tough.

6/12/08

yea its pretty tough to go straight from undergrad to PE. They really want some experience under your belt first.

6/12/08

I have a few friends who are working in PE/VC straight out of undergrad. However, they are very sma