PE is overrated (compared to staying in banking)
I'm currently a SA at an EB and in the last few days, I talked to headhunters about entry-level roles (analyst 1) in MM PE and REPE. While the base is comparable (100-200 EUR difference a month), the bonus makes a significant difference. At my EB almost every analyst made a 100% Bonus, the majority of PE roles can't compare.
I also read that specifically with REPE (don't know that much about LMM/MM PE, but I think it's similar) the pay can be significantly lower in the pre-carry days.
So why do people choose a career in PE instead of banking, is it the better WLB (the REPE offer is 40-60h a week)? It seems like only the guys at upper MM (3i) and megafunds make more than banking (and work even more).
Or is my logic flawed because 2018/2019 was an anomaly, and the bonuses will go lower again?
Will carry make up for the lower pay in the first few years?
Furthermore, when will the ECM/DCM and S&T guys make less than m&a? Their leaving way earlier than me, I'm thinking of maybe going the ECM/DCM route just because many exit opps don't seem that great (I dare you to CMV).
Don’t have opinion here, just interested in what others have to say...
Wait so your basis of this analysis is 6 weeks of an internship at a bank and literally 0 days working in PE
Well... 9 weeks haha
But yeah and my talk with the headhunters.
But what I don't understand is why many MM bankers leave to lmm PE shops. Is the pay difference between an investment analyst (entry level), and investment assosciate (after Ib stint) that enormous?
Yes there is a large pay jump from analyst to associate but moreso than that banking absolutely sucks
I'm not an expert on the non-US fund pay structure but from what I've heard the economics of PE (for juniors at least) are a lot less attractive in places like Europe, Asia, Canada, etc. Hence why there could very well be a discrepancy (especially for US EBs in Europe which tend to mirror the US pay structure abroad).
In the US the pay comparison can really go either way depending on fund size. Mega funds will likely pay significantly more than banking while at a smaller fund you could actually be taking a pay cut.
I agree, I think that especially at mm/lmm funds (>10 people) the pay will be worse until you hit carry.
Stopped reading after "I'm currently a SA at an EB"
You're an intern comparing the pay of an EB analyst, widely known to be one of the most competitive and highest compensated entry-level finance jobs designed for feeding into MF/UMM PE, AM and HFs, to entry level LMM/MM/REPE positions...
Realize that the reason they pay so much is because they're literally buying your life for the next 2-3 years. The experience you get is among the best of the best, but its brutal so they need a carrot to dangle in order to keep bringing in new analysts. Since EBs usually run much leaner teams and are focused on advisory rather than underwriting (typically lack a BBs BS) they have vastly higher fee income per head than larger banks. This means they can afford to pay juniors more.
Carry is a whole thing to go into detail about and there are several posts on this forum that break down the numbers so I recommend you search for those and give them a read if you're that curious. Suffice to say that if you're at a fund that can consistently raise new capital, make good exits and you've got Principal/Partner level carry, you will be making more than most MDs in IB full stop. If you start trying to compare rainmakers like Ken Moelis or Frank Quattrone to an average performing fund's GPs then of course the former will be crushing it.
Judging from one of your comments higher up stating that what you're looking for is the highest paying job which isn't ridiculously competitive, you won't be going any of these routes anyway so the whole discussion seems silly. Any of these paths are extremely competitive to go far in and be successful. If you won't put in the work you won't get the pay, and anything that pays well is going to attract people willing to do the work. Focus on getting a return offer and less about how your pay vs effort matrix looks.
gtfo, looking at your post history you work at DC Advisory which isn't even close to being an EB
Also like everyone else mentioned you're comparing a "top EB" (in your case it isn't) to a LMM. Try comparing it to places like KKR/Apollo/Silver Lake and yeah comp in PE will blow banking out of the water by senior associate level.
Started working at a top EB EVR/PJT/CVP (yes they do pretty much pay 90-100% bonus and I would move to a top MM/MF PE no question when the opportunity arrises.
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