PE vs. IBD

AppMil's picture
Rank: Baboon | banana points 143

I was just wondering, for those of you who are in PE after Investment Banking:
What do you like better in PE than IBD (other than hours and pay)
Is compensation really that higher? Are the hours really less?
What skills did you learn in IBD that you could use in PE?
Do you regret your decision, or not? and why??

Thanks for helping out, I'm just trying to get things clear in my mind. I'm interning in two BBs in Investment Banking, and I'm starting to think PE might be cool since you're the decision making guy you know, you do the execution ..

Thanks in advance.

Comments (198)

Feb 2, 2015

I'm not your guy, buddy.

I'd like to know as well.

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Feb 2, 2015

I just transitioned from IB to PE.

Putting hours and comp aside, I personally think PE is more interesting. Are you the type to dig into the smallest of details (down to the serial # of a printing press during diligence) or would you rather see volumes of transactions? If the former, PE may be worth a try. If the latter, stay away from PE.

As for skills, you do learn to model just about anything under the sun in investment banking. Some MD, somewhere, will come up with the most absurd analysis and you will have to model it. At any rate, LBO and merger models are probably the main takeaway from banking from a pure mechanical perspective.

In terms of critical thinking, because you are pitching all the time, you tend to learn, for example, what type of companies should have higher EBITDA margins.

Feb 3, 2015

PE much more interesting, no question

I have worked in both, below are few reasons based on my experience

My take on IB
In IB, job is CLIENT SERVICES-related. While IB analyst programs do provide some great learning opportunities wrt finance, working in professional environment, etc., vast majority of time is spent on mundane tasks related to formatting and pitching ideas, while putting very very little thought/depth into work product. Basically, IB analyst work is always labor intensive and not often thought intensive. You will learn a lot, but would estimate that during a 2 year analyst program, >70% of what you learn occurs in first 6 months. In addition, IB has rigid hierarchy (e.g., teams of 5+ people, with anyone above VP level in "read-only mode"). Hierarchy can be useful in first few months when learning the job (e.g., great to have several people who you can go to when you have Qs), but after you figure out what you're doing, the inefficiency of this hierarchy is brutal / mind-numbing

My take on PE
In PE, while mundane tasks still exist, much smaller % of time is spent on these vs. in banking. Instead, in PE, nearly 100% of time is spent working on projects that are related to making money for LPs. Much more of your time is spent trying to understand companies / industries and doing deep fundamental research. There's some of non-investing work in PE, but this largely relates to managing people (e.g., in PE deal process, you will need to manage all of client service providers, including IBs, consultants, lawyers, etc.). Also, lots of time spent managing portfolio companies as well (e.g., attending board meetings, creating budgets, mgt compensation plans, etc.). Overall, work in PE is much more autonomous - e.g., you are paid to come up with your own views, people don't want / don't have time to check your work, and you need to speak up. Work is much more difficult and much more interesting, in my experience

Feb 4, 2015

Thank you guys for the input!

Feb 4, 2015

For a less sanguine view, read many of the posts here on why people hated PE: http://www.wallstreetoasis.com/forums/why-do-so-ma...

Feb 4, 2015

Thank you @"mrb87" .. some posts actually are similar to what I think, I mean:
- If comp is the reason: it gets higher also as a VP/ED/MD level too, and some BBs spoil their MDs big way
- Hours: they tend to be great from what I read for EDs/MDs, as a VP you start doing 9am-8pm which makes your life considerably better, and MD work is different, it's more about a management role, internally (with VPs associates etc.) and extrenally (clients)
Am I missing something here? what do you guys think ?

Feb 7, 2015
Feb 4, 2015
Maxx Faraday:

Thank you @mrb87 .. some posts actually are similar to what I think, I mean:

- If comp is the reason: it gets higher also as a VP/ED/MD level too, and some BBs spoil their MDs big way

- Hours: they tend to be great from what I read for EDs/MDs, as a VP you start doing 9am-8pm which makes your life considerably better, and MD work is different, it's more about a management role, internally (with VPs associates etc.) and extrenally (clients)

Am I missing something here? what do you guys think ?

I don't think you read the thread. People who left PE, and there are lots of them, generally hated the work.

Feb 4, 2015

is comp really better in middle market (where most IB analysts end up)? I mean compared to staying as an A3 or getting the associate promo?

Feb 4, 2015
SHORTmyCDO:

is comp really better in middle market (where most IB analysts end up)? I mean compared to staying as an A3 or getting the associate promo?

Also interested. Are the majority of the great numbers that are quoted coming from people at MFs?

"I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant."

Feb 7, 2015

the new "fizzled fruits" skittles suck...do not buy them...just sayin

Feb 7, 2015

remove the stage. There will be clowns no matter what

Feb 7, 2015

Is it just me or is anyone else tiring of all the one line, making absolutely no point and significantly irrelevant post that people are coming up with?

It seems like every single thread I read has a number of them in there. Granted some can be humorous from time-to-time but they are getting rather annoying.

At any rate, I don't have an answer for the OP's question but I would like to see any of the serious responses.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

Feb 7, 2015
cphbravo96:

Is it just me or is anyone else tiring of all the one line, making absolutely no point and significantly irrelevant post that people are coming up with?

It seems like every single thread I read has a number of them in there. Granted some can be humorous from time-to-time but they are getting rather annoying.

At any rate, I don't have an answer for the OP's question but I would like to see any of the serious responses.

Regards

The OP has been consistently posting stupid threads, thus the "one line, making absolutely no point and significantly irrelevant post that people are coming up with".
With answers like this maybe he will stop. It seems like the fact that many of his posts were closed is not enough.

Feb 7, 2015
EuropeanBob:
cphbravo96:

Is it just me or is anyone else tiring of all the one line, making absolutely no point and significantly irrelevant post that people are coming up with?

It seems like every single thread I read has a number of them in there. Granted some can be humorous from time-to-time but they are getting rather annoying.

At any rate, I don't have an answer for the OP's question but I would like to see any of the serious responses.

Regards

The OP has been consistently posting stupid threads, thus the "one line, making absolutely no point and significantly irrelevant post that people are coming up with".
With answers like this maybe he will stop. It seems like the fact that many of his posts were closed is not enough.

My apologies, I've been busy as of late, haven't seen the OP's other threads and was unaware of his behavior.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan

Feb 7, 2015

Lol it's funny how much people care about this guy. You're giving him exactly what he wants no doubt. If you want to make a difference just ignore his threats. Don't whinge like a little bitch.

Feb 7, 2015

Private Equity has zero prestige. Everyone knows that the only people that go to PE is retail bankers who can't handle the pressure of working from 9-5. Psh, hacks.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer
"Your grammar made me wish I'd been aborted." -happypantsmcgee

Feb 4, 2015

if you want a specific answer, better to ask a more specific question

what $ do you consider "great?"

Feb 4, 2015

I'm thinking of great as $180-200k all-in as a 1st year associate after 2-3 years as an IB analyst. Is this realistic at a MM fund? Or if it's one of those situations where it just depends, what is the typical range of comp for 1st year PE associates at MM funds?

Thanks for any insights.

"I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant."

Feb 4, 2015

Yes, if you define MM fund a PE firm investing out of ~$1-4Bn pool, then yes, those #s are definitely achievable/common for 1st year PE associates

I don't know anyone who works for a

Hope that helps

Feb 4, 2015

Very helpful, thanks!

"I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant."

Feb 7, 2015

How are you an MBA and unable to differentiate b/w the two?
~you're welcome

Feb 7, 2015

Are there any well known project specific PE fund out there? if here are, performace good?

Feb 7, 2015

Consider I-bankers real estate brokers. Consider PE guys real estate buyers (with the mortgage and all).

Feb 4, 2015

@"mrb87": I have actually read teh thread, was very intersting, and yeah you're right, they didn't like the buy-side environment, and some even say that pay isn't really that high when compared to IB, and as I said (which answers @"Generals2" s question) pay gets high "enough" to lead a great life after 10 years of Ib once you're a VP, and by "great" I mean making maybe 200k$ a year, bonus aside .. I kind of reached that number assuming that a 1st year analyst has 75k bonus aside, a 1st year associate 100k bonus aside, that would be a 25% increase every 3 years (at least in my opinion), so sounds legit if a VP reaches 200 .. I have no idea how senior bankers earn post-crisis ..

Feb 7, 2015
Feb 7, 2015

both

"The right to have children should be a marketable commodity, bought and traded by individuals but absolutely limited by the state."--Kenneth Boulding

Feb 7, 2015

man i wouldn't mind a personal relationship

Feb 7, 2015

+1 for you GotBushels, but only if we start a very personal relationship

"The right to have children should be a marketable commodity, bought and traded by individuals but absolutely limited by the state."--Kenneth Boulding

Feb 7, 2015

zhao zong- it's very hard to give advice on this question without knowing more about the two offers. Is it M&A at a top BB, an elite boutique or a random ass mm bank no one has heard of? What about the PE firm, obviously with 6 billion they sound pretty legit... but is it general or specialized, etc?

My gut reaction would be to take the PE job if the firm is solid and that's your ultimate goal. But obviously if the M&A is at a top bank w/ great M&A, that could change things hugely.

Feb 7, 2015

Do whatever the hell you want. I don't get people coming on here and asking others to make decisions for them. Figure out if you want to specialize in the sectors / products that the PE firm or IB work with and go from there.

People tend to think life is a race with other people. They don't realize that every moment they spend sprinting towards the finish line is a moment they lose permanently, and a moment closer to their death.

Feb 7, 2015

this is messed up... u gotta decide my man!

Feb 7, 2015
Feb 7, 2015

ibanking M&A. will open up doors.

Feb 7, 2015
bigmonkey31:

ibanking M&A. will open up doors.

Will it open doors to $6B AUM PE funds? haha...

Feb 7, 2015

Unless its Cerberus, this guy is B.S.

http://en.wikipedia.org/wiki/List_of_private_equit...
There aren't many 6bn PE firms that are HQ in NYC.

Feb 7, 2015
megafundguy:

Unless its Cerberus, this guy is B.S.

http://en.wikipedia.org/wiki/List_of_private_equit...
There aren't many 6bn PE firms that are HQ in NYC.

pls check individual PE website and you'll see how this info is wrong. you would expect KKR has only $31.1b?
But i can tell the PE I mentioned is indeed on that list, somewhere at the bottom

M&A

Feb 7, 2015
megafundguy:

Unless its Cerberus, this guy is B.S.

http://en.wikipedia.org/wiki/List_of_private_equit...
There aren't many 6bn PE firms that are HQ in NYC.

pls check individual PE website and you'll see how this info is wrong. you would expect KKR has only $31.1b?
But i can tell the PE I mentioned is indeed on that list, somewhere at the bottom

M&A

Feb 7, 2015
megafundguy:

Unless its Cerberus, this guy is B.S.

http://en.wikipedia.org/wiki/List_of_private_equit...
There aren't many 6bn PE firms that are HQ in NYC.

pls check individual PE website and you'll see how this info is wrong. you would expect KKR has only $31.1b?
But i can tell the PE I mentioned is indeed on that list, somewhere at the bottom

M&A

Feb 7, 2015
xfzhao:
megafundguy:

Unless its Cerberus, this guy is B.S.

http://en.wikipedia.org/wiki/List_of_private_equit...
There aren't many 6bn PE firms that are HQ in NYC.

pls check individual PE website and you'll see how this info is wrong. you would expect KKR has only $31.1b?
But i can tell the PE I mentioned is indeed on that list, somewhere at the bottom

The PEI list (which is the source of the linked data) is generally reliable/considered definitive but only includes LBO, mezz, and venture capital funds. It won't include hedge funds or non-PE asset management arms, which most groups on that list have. The list is also outdated (as of 2007). It's also worth noting that there are multiple ways to calculate PE AUM, depending on whether you include funds that have returned capital, whether you include funds that have been raised but not yet deployed, etc.

Anyway, as to your question, if you're interested in buyside work I'd go with the PE job. If it's a firm on the top-50 list, they'll probably have liquid strategies as well plus you'll (hopefully) be able to skip past some of the BS that comes with being a junior person in a huge company, especially in banking.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

Feb 7, 2015

this list is old, inaccurate and does not contain all pe firms within the given range (the 6bn for example)

"too good to be true"

See my WSO Blog

Feb 5, 2015

As someone who has done both MM PE ( ">IB at junior levels here are some things to point out:

*A large number of MM PEGs have relatively young partners and your chances of actually moving up past associate are slim
*There is so much dry powder in the PE world right now that actually getting deals done (thus getting true deal experience) is tough
*From my experience pay in MM PE ( ">IB at least at the junior levels
*In MM PE you are hand holding portco management teams and you will often act as their financial analyst for remedial projects or proofread their work daily
*MM PE really depends on the firm's partners. Do they care about actual valuation? Do they want you to grow and move up?

In conclusion, at least in MM PE, don't have stars in your eyes. It really depends on the firm, investment strategy, and upward mobility. PM me if you want more info, but this is my 2 cents.

Feb 5, 2015

Just would like to ask a few questions.

1. Are you referring to the fund size for ( 2. Did you move from IB to MM PE or the other way around?
3. If you had a choice between IB vs PE (>1B) out of undergrad, which one would you pick?

I know the above questions may sound obvious but I hope you can answer them. Thanks.

Feb 7, 2015

on the most simplistic level; bankers are the middle men between companies and investors where as private equity groups are the investors.

Feb 7, 2015

Think of bankers as real estate brokers. Think of PE as real estate buyers.

You take out a mortgage, buy a place, and then rent it out, using rent to pay down the mortgage. Then you hire a real estate broker to sell it again, hopefully at a profit.

Five ways to make money:

1) Your rent can be slightly higher than the mortgage payment, so you extract a small profit each month. This in PE is called a management fee.

2) As your mortgage gets paid down, you own more of the house. Your equity increases.

3) Legitimate businesses should grow, as real estate values tend to grow as well.

4) If you can improve the business, it's worth more. Sort of like fixing up your bathrooms and kitchens.

5) Mortgages, like debt, are deducted pre-tax. So you have a tax shield benefit.

Feb 7, 2015

^thanks. I was watching mad money (yes i know it can be quite an idiotic show) and it was talking about how the PE guys want to buy cheesecake factory b/c if it goes private there's more money to be made. so basically ibankers create the terms of the deals and the PE guys are the ones making/negotiating the deals.

Feb 7, 2015

Better money, smarter people, better hours everything in PE. The real difference however is principal v advisory. Banking is an advisory play, you have no principal involved you just try to get PE shops to do what you think is good for them with their money. You pitch to PE shops and strategics. You help everyone else do refinancings etc. In PE, it's your money, you get comped based on good performance of the fund (carry). You get pitched to by all the stupid ass bankers. At the end of the day its up to you on where you think the credit markets are for PE, but hard times in PE are hard times for bankers as well.

Long or short term you will make more in PE. Long term banking is being someones bitch and PE is making other people your bitch.

Think about it.

--There are stupid questions, so think first.

Feb 7, 2015

power money, unless ad_chirag is at a really good PE firm(KKR/Blackstone/TPG,etc.)...shouldn't he rather get into a good name Ibanking M&A house since PE is losing steam and the job security might be so so.

ps. chirag, i've heard people go from PE to banking. if u go to a really good mba school, u should have no problem in the fall to convince people u'd be a good banker.

Feb 7, 2015

First suggestion: be VERY careful about going into PE right now. It's blowing up, I tellz you what. If you think it's going to be as high-flying in the next couple years as it has been for the last several, you're in for a rude surprise. Not to say that there might not be belt-tightening at the banks as well, what with the credit market jitters and impending recession (a couple years out, fingers crossed but still once every decade, like clockwork) but there won't be quite the degree of pink-slipping.

Feb 7, 2015

Just for a little clarification, PE has lost momentum because liquidity has dried up in the secondary markets for high yield debt. Slowed PE translates into dampened LBO activity - moreover, sluggish debt markets translate into less M&A across the board.

These effects aren't limited to PE. To the extent that PE takes a hit, one would have to be very ignorant to believe that IB won't eventually share in this pain.

Feb 7, 2015

Thank you guys for your valuable opinions. I agree that pain will be shared by both.. perhaps more by PE.. referring to today's WSJ article which talks about how strategic buyers gain at this stage compared to PE..

About me: I am working for a small PE firm with 200M under mgmt.. b-school - top 20.. but not ivy!
current markets..

Well, i have always been a long term investor.. so dont choose to look much on short term.. however, this one we cannot ignore completely as it might have a huge impact.

Correct me if i am wrong, but i believe that above matter, but what matters more is how you fit well into either..

So, if we are looking at comparing side-by-side the characteristics to succeed in a particular career.. what characteristics wud they be? and how different for the PE and IB?

Thank you guys for prompt responses.
C.

Feb 7, 2015

or is PE going to take the brunt of the liquidity dry up?

I found the comment above that 'one would have to be very ignorant to believe that IB wont eventually share in this pain' interesting since it didn't elaborate much but I think is absolutely right...

Feb 7, 2015
Jason Borne:

I know this topic has been addressed already many many times on this forum, but let's start her up again....

Let's not...

.

Feb 7, 2015

Don't ruin the fun ;)

Feb 7, 2015
  1. No.
  2. Whenever you can.
  3. Everyone has their reasons for doing what they do.
  4. Politics are important, especially in smaller organizations.
  5. Depends on the deal.
  6. You develop some good skills and sometimes even get your voice heard. Many PE people take leadership positions in portfolio companies.
Feb 7, 2015

So first off, in the interest of full disclosure I will note that I worked in banking and consulting before but have not done anything full-time in PE. However, I've (ironically) helped friends get PE jobs and have seen what they do pretty thoroughly. I also interviewed for PE, though in the end I decided to move in a different direction.

Anyway, in response to your questions:

1) The lifestyle upgrade is not as great as most think. Yes, it's better and you generally work less but there are always busy periods. That said, you do get to do more "meaningful" work (less grunt work) in most cases.

2) Most would say after you've finished up in banking. Delaying/doing something else hurts your chances.

3) Are you referring to why people stay in banking? In some cases, they just couldn't get into PE or anything on the buy-side; in other cases, they actually like what they do and have been doing it too long to make switching a viable option.

4) We all answer to someone. But yes, in general PE is higher up on the pecking order because they don't have clients in the same way bankers do.

And politics definitely play a big role - keep in mind a lot of PE firms are small and thus very personality-driven. Partners have to convince everyone of the merits of an investment they want to pursue, so relationships are key.

5) As TabulaRasa said, depends on the deal. There's always a mundane part to DD, but if you're working in a more unusual situation (i.e. distressed deal) parts might be interesting.

6) Some PE guys move into industry, but I think moving up is more common than moving elsewhere.

You do learn some valuable things, but in terms of operational knowledge there's no substitute for experience. Keep in mind that if you are interested in learning how companies work, the best way to learn is to go work at one.

Feb 7, 2015

Just an aside: It's always funny to me to see kids say things like "I'm going to go into banking, then get a PE job, then boss bankers around." As if, as a 24 year old pre-MBA associate, you really have the ability to talk downward to a senior level banker. The same mentality goes for young bankers/PE professionals and their demeanor towards lawyers ("yeah, our counsel messed up the numbers so I was yelling at him all morning"). I'm sure you were, tough guy.

We're all business associates. We need the bankers just as much as they need us. Oh, and does anybody else hate the $100 dollar max gift policy? Everyone at my firm has embroidered Tumi breifcases, luggage, etc. given to them by the likes of UBS and Lehman from back in the day...

Feb 7, 2015
GameTheory:

Just an aside: It's always funny to me to see kids say things like "I'm going to go into banking, then get a PE job, then boss bankers around." As if, as a 24 year old pre-MBA associate, you really have the ability to talk downward to a senior level banker. The same mentality goes for young bankers/PE professionals and their demeanor towards lawyers ("yeah, our counsel messed up the numbers so I was yelling at him all morning"). I'm sure you were, tough guy.

We're all business associates. We need the bankers just as much as they need us. Oh, and does anybody else hate the $100 dollar max gift policy? Everyone at my firm has embroidered Tumi breifcases, luggage, etc. given to them by the likes of UBS and Lehman from back in the day...

Real talk. Anyone who gets a God complex from their job needs to take a step back and realize how dumb they are. Sitting on conference calls, running numbers all day, and writing memos is not something that should give you a sense of superiority.

Feb 7, 2015

I thought it was hard to move up the ranks in PE especially since senior people don't move elsewhere and just stick around there. Don't you need to move to another firm to move up?

Feb 7, 2015

I dont talk down to anyone (and I never will out of respect for others) but I have as a 25 year old associate given plenty of orders to senior bankers. The buyside is quite different than any type of services industry and I can see people (even junior guys) taking advantage of their role as the "client". At the end of the day all groups play an integral in the deal process and are valuable.

Internal ascension is really contingent upon firm culture.

I agree that people should not let their job define their character and any type of success is relative anyway.

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9 LBO Modeling Tests, 10+ hours of PE Cases and 2,447+ interview insights across 203 private equity funds. The WSO Private Equity Interview Prep Course has everything you'll ever need to break into the competitive PE industry. Learn more.

Feb 7, 2015

I mean it really depends on what you want to do between the two. You can always get back into PE down the line from IB though not sure how easy it is the other way around

Feb 7, 2015

I would personally go PE. It all depends on whether or not you like what you're going to be doing. Some people just use banking as a stepping stone for PE, so if that sounds like you go PE. If you legitimately enjoy banking and would like to work sell-side first, then bankings the bet. Although I'd imagine that the PE lifestyle is probably slightly better and the pay would be similar.

Feb 7, 2015

I'd go with the PE. You'll "save" two years and you can easily jump ship to another fund if they do not promote you.

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing.

See my Blog & AMA

Feb 7, 2015

Either choice will set you well for the future. Honestly, I would pick BB because their analyst program is more structured.

Feb 7, 2015

I would suggest to also take into consideration (i) (expected) dealflow and (ii) office location / setup for the decision, e.g. likelihood of closing 2-3 deals in 2 years as BB analyst vs. 0 deals in PE, as well as London / (regional) headquarter location vs. "satellite" office for either firm as these have strong influence on overall experience and exit opportunities.

Feb 7, 2015

Go PE, fewer seats and better experience in this situation. If they just raised 2-3 bn for their latest fund, it is barely MM and you will be doing lots of investment and valuation work for targets.

You will be doing lots of work either way, but you already have modeling experience, so in my opinion you don't need to do the risk averse thing here.

Feb 7, 2015

Have to go PE.

If you can secure a product group offer (M&A / LevFin) at bank, that would be the better option. Working in product group for couple years will give you access to better PE firms / buyside opps than what you're describing. It's actually easier to recruit for these opportunities from banking (rather than smaller PE firm), because there's such an established pipeline. That being said, the risk of failing to secure one of these opportunities from just an industry group probably sways the answer towards the existing PE firm. A large piece of this depends on your academic profile as well... If you have a top-tier academic profile, it will make it much easier for you to recruit out of banking.

Feb 7, 2015

If you want to do PE longer than 2 years, then the answer is easy: PE all the way. Sounds like you'll get great transaction experience (no sourcing) in your 2 years there. If you don't get promoted as an associate, you should be able to find a job at other PE firms without any issues (you'll be competing against 2 yr banking analysts).

Feb 7, 2015

Interested in this as well.

Would love to hear how IBs/other PEs view graduate PE analyst experience.

Feb 7, 2015

2nd year analyst shouldn't be an issue if you had good exp

Feb 7, 2015

Have you not gotten strong deal experience? I would think you would be in a better position to switch from MM PE to a MF than if you go back to IB. I'll caveat that I'm not at a MF, so I don't have direct insight into recruiting for those spots.

Because so many people on this forum are interested in going MF, I think people tend to over estimate the likelihood of getting an MF spot as an Associate out of IB. It's highly likely that you leave MM PE, go into banking, have a rough year or two, and then find yourself back in MM PE. Only now you've probably lost a few years.

I would go the route of contacting head hunters. I'm assuming since you went straight into PE out of undergrad, you have friends who are on the banking scene. Reach out to them and ask to be introduced to the head hunters that are contacting them about buyside opportunities. I can't see why a head hunter wouldn't be interested in talking to a kid with a couple years experience on the buyside already. Story could be different if you are at a really small fund that does not have a lot of brand recognition in the industry.

Feb 7, 2015

I'm thinking IB provides so many options and is a known entity. Granted I mean BB/EB. My firm is decently well known

Feb 7, 2015

Speaking from my years of experience here, I would definitely lateral into PE if given the opportunity. I had the chance to do so earlier but stayed in banking and now regret it. Banking is a very short term gig unless you have the ability and desire to make it to MD.

Feb 7, 2015

Hey JckBunce23, I'm here to break the silence...any of these links help you?:

  • From Private Equity Associate to VP in Private Equity Associate vs Investment Banking Associate Why go through the hassle of private equity recruiting opposed to ... a little above what you'll find in investment banking, something north of $100k. Private Equity ... is far, far more difficult than investment banking. In orde
  • Investment Banking to Private Equity- 6 Things You Should Know content from 2016, this one ranks #47 with 25 silver bananas. IBD PE PE Recruiting private equity banking ... 1. Why not just try to start with a PE firm? There are PE firms that hire juniors out of ... performers) out of undergrad need constant guidance and instruction. Out
  • Exit-Ops: Equity Research vs. Investment Banking- (A Definitive Guide, Part 2) On private equity, I gotta say that IB is a slam dunk here. I really don't know of any Equity ... more definitive for others. I'll try to knock out another ER vs. IB comparison in a week or two ... See part 1 here: Work/Life Balance: ER vs. IB- (A Definitive Guide, Part 1) As someone who has ...
  • Out of Undergrad: PE or Top IBD? on doing sell-side banking immediately vs. trying for the buy-side out of undergrad. My school ... PE?- Get paid less???- Hours differential =??? Please advise:) private equity IBD Goldman Sachs Banking ... was going for the glorified 2/2/2 out of undergraduate and trying to snag PE at a late
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If we're lucky, maybe I can guilt some users to help you out: @Superaguri27 @Sar07 @deas7

Fingers crossed that one of those helps you.

Feb 7, 2015

I don't think there is one right answer to your question. Someone with more experience could give you more color, but I interviewed with several of the firms you listed and other PE funds. I ended up taking a banking offer where I liked the people at an EB (think EVR/MoCo/Laz/CVP). I think the best way to approach it is to go for the best opportunity that presents itself to you during recruiting.

If you are thinking about BX and SL, I am assuming you are a fairly competitive student at Wharton.

You will find that people that are successful generally work hard to put themselves in the best position to get lucky when opportunities present themselves. I was looking at the Forbes 30U30 list and there are always a few spectacular cases of people who are just on another level. One of those people who is now a partner at a large hedge fund started at Silver Lake as an analyst out of school.

Also, not all of the firms you listed give full-time offers. Oaktree, for example, does not and the summer internship (located in LA) is only a summer internship regardless of performance. If you really want to do investing in the long-term think about what type of investing is interesting to you and how you can position yourself best to end up at that firm. You really can't go wrong with those jobs and I would advise you to figure out the return offer rate, do some research on LinkedIn and figure out what people do after those jobs and if those exit opps are what you are interested in and then make a decision of if you want to do PE or IB out of college.

Feb 7, 2015

Some possible reasons:
You want to be a decision maker rather an advisor
You want to see all aspects of investing
You want to get a holistic view of businesses rather than just a financial view

Don't mention lifestyle or comp.

Feb 7, 2015

are you kidding...

1)principal
2)have to create value in a company to realize profits
3)much more about learning about industry and company and their operations, working with management
4)dig much, much deeper

those are some good reasons (people will bring up arguments against these: PE is just financial engineering, etc)

Honestly, I can see how the why ibanking question might be difficult for some people, but the why PE question is so basic

Feb 7, 2015
napoleon:

are you kidding...

1)principal
2)have to create value in a company to realize profits
3)much more about learning about industry and company and their operations, working with management
4)dig much, much deeper

those are some good reasons (people will bring up arguments against these: PE is just financial engineering, etc)

Honestly, I can see how the why ibanking question might be difficult for some people, but the why PE question is so basic

so easy yet you don't know what you're talking about, stop misleading him.

Feb 7, 2015

Undergrad Advice,

Which PE firm are you talking to? I'm pretty sure Blackstone PE already filled their 3 FT undergrad spots.

One of my little brother's friends is going there. I thought they already gave out their offers.

Silver Lake, middle market?

Feb 7, 2015

Could also be the GS PE arm, but doubtful.

Feb 7, 2015

A shit hole college town? Can't think of where it would be except maybe Columbus, OH.

Feb 7, 2015
peinvestor2012:

A shit hole college town? Can't think of where it would be except maybe Columbus, OH.

Columbia, MO is in the cards, too.

Feb 7, 2015

Neither. Unimportant to the question though. And since when is Mizzou a semi target? Or OSU?

Feb 7, 2015

Ann Arbor..? Indiana U? Emory? Vandy? Interesting...OP reveal your school.

Feb 7, 2015
DoctorAndre:

Ann Arbor..? Indiana U? Emory? Vandy? Interesting...OP reveal your school.

AA, Bloomington and Nashville aren't shitholes.

Tulane? Emory? USC (campus only)?

Feb 7, 2015

Never, it would be pretty easy to extrapolate who i was if i gave you my school.

but can someone answer the question...

Feb 7, 2015

Do you think there will be any significant difference in the exposure and type of experience you'll get at each respective place? Also, are there compensation differences that could potentially factor in?

I think the decision also depends on your prior internships. What sorts of things do you already have on your resume at this point (PWM, another small PE, etc.)?

Also, is there any difference in terms of deal size/deal flow between the two firms? A place with more deal flow would a) make sure you get good exposure during the summer, and b) increase the likelihood of an interviewer being familiar with the firm during recruiting next year for you.

Feb 7, 2015

Give us more info about the two firms. How many transactions does the PE firm make a year? Do they have a specific industry focus? Are they a typical LBO shop, a longer-term acquisition group, a VC or growth equity-stage firm? Will you be cold calling bankers to get deal flow or working on analysis of potential targets?

What type of deal flow does the IB get? What type of transactions do they focus on? Also, industry or geography specific? Does that align with your preferences?

Feb 7, 2015

collegebanker:

probably slightly more exposure at the IB. i really have no idea about general experience as i dont know anyone who has interned at either. comp differences would be minimal at most, the IB is offering (possibly negotiable) $10 an hour and i have to cover living expenses with that so its a break even scenario. the PE is likely unpaid; they dont have a formal internship program. I have BB PWM on my resume as well as some assorted research and leadership stuff. like i said the IB is probably slightly more active.

peinvestor:

PE will make ~1 transaction a year (as in buying a company). very small regional shop, both of these places have 5 or so employees. No specific focus, long term acquisition oriented. No cold calling but will probably be doing some research and analysis work. the IB is also small, they don't list specific dealflow on their website but probably 5 a year, all

Feb 7, 2015

OP - TAKE THE PE OFFER

Save money on rent, and spend the summer with friends and family.

Feb 7, 2015
BTbanker:

OP - TAKE THE PE OFFER

Save money on rent, and spend the summer with friends and family.

This.

Feb 7, 2015

I would say PE.

For those wondering, he goes to the wonderful school of Notre Dame.

"I did it for me...I liked it...I was good at it. And I was really... I was alive."

Feb 7, 2015

a good guess about notre dame but incorrect again, although it was my 2nd choice school. south bend is an absolute hell hole though, i would be surprised if there was a single IB or PE shop there.

Feb 7, 2015

I would agree, PE offer is probably better, even if it is a small shop. There are quite a few like that in the Chicago area and Upper MW.

Feb 7, 2015

Must be NYU...New York is the biggest shit-hole of them all.

Feb 7, 2015

I'm going with UIUC. Not sure I'd call it a semi target for BB, but it probably is for Chicago MM IB.

Champaign is a dump. Only thing worse is West Lafayette. The rest of the B1G is solid, outside of Columbus.

Feb 7, 2015

oh for christs sake can we focus on the discussion about which internship to take, not my school...

Feb 7, 2015
ChrisHansen:

oh for christs sake can we focus on the discussion about which internship to take, not my school...

You got multiple answers saying PE.

Feb 7, 2015

I had a similar decision to make and made a thread about it. Got a lot of good insight from various WSO members:
http://www.wallstreetoasis.com/forums/choosing-bet...

Feb 7, 2015

Yes, but not many specifics. any particular reason why PE would look better on a resume even though i want to do IB?

Feb 7, 2015
ChrisHansen:

Yes, but not many specifics. any particular reason why PE would look better on a resume even though i want to do IB?

To be honest, both choices are going to have relatively the same impact. But, if you want to be at home where you save on rent and get to see family, friends, etc., then the PE shop makes more sense.

It sounds like the dealflow of the IB shop is probably sporadic and MM deal flow has been tight so far this year, compared to the past few. There are tons of PE funds looking for transactions and far fewer sellers right now. So, that could be a downside to the PE fund.

But, if you flip it around, the PE funds are getting more aggressive and looking at more deals, even those that may be out of their "wheelhouse" (larger or smaller than normal, different structure, different industry focus, higher customer concentration, lower growth, etc.).

The good thing about working for the PE shop in my view is also, if the guys are decent, you can get them to help teach you what they look for and focus on. Then, you can either choose to stick with the buy side or move back to the sell side for FT and leverage your understanding of buyer expectations to land a solid MM IB offer.

Feb 7, 2015

I'd personally pick the PE option if that's what you want to do long term. Sounds like you're thinking about family planning if you're older and, I assume, it's a serious relationship. If it's truly an upper-MM firm it will definitely be known by anyone in PE that would be involved in recruiting later down the road. If you want an opinion on the firm itself feel free to PM. The other factor I'd consider is how much I like the geography/industry.

This is one man's opinion; you'll get well-thought out arguments for both options. Congrats, this is a great problem to have.

Feb 7, 2015

I'm not very familiar with the ranking of MF/ upper MM / MM / lower MM / etc. But the PE firm has $3-5B in AUM at the moment. The biggest concern about the PE firm is that they have close to no dry powder. I am sure their LP GP can write a side-check for one-off investments but that's not the same as having a guaranteed amount of capital to put to use. In short, M&A activity will be lower. But at the same time, they'll probably be devoting a large amount of time towards divesting their investments (I believe their fund is nearing the end of it's 5/6 year mark). Will the divesting / management of current investments still be a good experience for when I want to make my next career jump to another PE shop?

And for the record, I am older and in a serious relationship. That's why the NYC lifestyle isn't as glamorous as it would have been several years ago.

@Hugh Myron I will send you a PM later this week to ask for a more private opinion on my two options.

Feb 7, 2015

Take the PE offer and feel free to PM me as well.
You can ALWAYS go back to banking.

Feb 7, 2015

But wouldn't the strong deal flow from the BB IBD gig offer more opportunities for my second job?

Feb 7, 2015

Is the PE firm raising a new fund or is the firm winding down? @h3dgehog

Feb 7, 2015

There is no word on a new fund at the moment. I do know that fundraising can take a long time. So even if they are planning a new fund, it wouldn't be fully raised until a year or so. Maybe they plan on kicking off a new fund with an acquisition this year? Who knows. @WSO1212

Feb 7, 2015
h3dgehog:

There is no word on a new fund at the moment. I do know that fundraising can take a long time. So even if they are planning a new fund, it wouldn't be fully raised until a year or so. Maybe they plan on kicking off a new fund with an acquisition this year? Who knows. @WSO1212

Obviously would need to know more, but that sounds risky then. If the firm just turns into a zombie fund your experience will be pretty limited to portfolio work / monitoring and administrative tasks, and helping with sell side processes. And attrition will be high, so talent will be leaving and learning opportunity will be limited as well. If you had clarity that they were raising a new fund with high probability of success, I'd say take the PE gig. But given the lack of clarity here, I'd say take the BB offer as it will give you more career flexibility in the long run.

Can you reach out to the other analysts at the PE fund to ask some questions regarding their experience and what they do day to day? This is a pretty standard request in my opinion and wouldn't raise a flag or anything, so I would suggest doing that if possible and get their feedback

Feb 7, 2015

I know there are no analysts at this PE shop. But I will ask the associate there about what his day-to-day has been like over the past few months.

That aside, would I still get a good experience at the PE shop if another larger Sponsor buys out the entire portfolio and keep the team to manage and help with add-on acquisitions? @WSO1212

Feb 7, 2015
h3dgehog:

There is no word on a new fund at the moment. I do know that fundraising can take a long time. So even if they are planning a new fund, it wouldn't be fully raised until a year or so. Maybe they plan on kicking off a new fund with an acquisition this year? Who knows. @WSO1212

I'm crossing into an area where I don't have first hand experience, so take the following with a grain of salt and hopefully others can chime in if they have. But I have been in finance for almost six years (2 IBD and 4 in PE), but I have never seen a scenario like this play out where a larger sponsor comes in and buys out a a fund and keeps the team together. I've known people who have been at funds who wind down and they either (i) use the tail of remaining time to find a new job; or (ii) they stay with the fund to the end of its life because they give big bonuses to stay and GPs / partners promise to help place them in another shop once windown is complete; or (iii) the junior partners / MDs spin out to start their own fund and bring a subset of the team with them. But these options will all be uncertain and stressful in the interim, and no guarantee any workout. Do you have a sense of how well known/ regarded this PE firm is?

Do you know why the PE shop is not focused on raising a new fund? Is it because returns have been bad? GPs retiring from the game? These are answers you should definitely get from someone senior before you join. They should have no problem giving you their 5 year roadmap the more I think about this situation. Not doing otherwise is just wrong to do to someone joining right out of school in a junior role. I wouldn't be shy about getting answers. Obviously be professional and cordial in your approach, but you owe it to yourself (and they owe you the answers) before taking the leap of faith. I know you may not feel comfortable asking these questions given you are just coming out of college, but I would urge you to. And how they respond will be telling data point as well.

On a personal level, what's your biggest concern on joining the BB? Hours? Not making it to buyside after? Location?

Feb 7, 2015

From both rumors on the street and some past conversations with the PE shop, it could very well be the case that another PE shop may scoop up a majority of the portfolio and keep the team on to manage them since the acquirer does not have the industry expertise and industry network to grow the portfolio from a strategic point. In esscense the team will be the "corporate development" team for the portfolio and help the acquirer grow their footprint in this particular indistry.

As for me being heaitant about the BB gig, it is mainly because i want to do PE long term so if I can get in now, why not? Especially since I enjoy the particular indistry that the firm operates within. A second reason would be work life balance. Obviously I would be willing to take the brutal hours of IB but if an opportunity to avoid it presents itself why not roght?

Feb 7, 2015

In my opinion, I would lean towards the PE role and work towards getting transferred to the main investment team from corporate development. Great read anyway and SB+

Feb 7, 2015

I would go BB. As you said, traditional/vetted program. If it ain't broken, why fix it?

Also, your point on the only things to do in the city being getting wasted/clubbing is wrong--every major city has more to do than just that...

Feb 7, 2015

You are absolutely right about the vetted part which is why it is hard to just sign with the PE firm at this point in time. As for the things to do in the city comment. Let me clarify by saying that life in the city is very much associated with the work life balance. When getting off at midnight or after, the only real thing to do is hit up bars.

I am having a call with the PE firm later this week - will post any additionally insight to make it easier to give me advice / suggestions.

Feb 7, 2015
h3dgehog:

You are absolutely right about the vetted part which is why it is hard to just sign with the PE firm at this point in time. As for the things to do in the city comment. Let me clarify by saying that life in the city is very much associated with the work life balance. When getting off at midnight or after, the only real thing to do is hit up bars.

I am having a call with the PE firm later this week - will post any additionally insight to make it easier to give me advice / suggestions.

To elaborate on my previous point, the BB offer will give you a little wider range of opportunities in the event you realize you don't want to do PE. You'll build a network (an analyst class), and you could move to the buy-side if you prepped properly (although not guaranteed, you have a high likelihood if you take the well-worn path). Also, in the event you realize you don't want to do finance anymore, a BB name on a resume goes a long way because it's recognized outside of finance. Also, @WSO1212 made an excellent point about joining a 'zombie fund' -- this would drastically change your experience.

With regards to your nightlife point, if you get out at midnight on a Wednesday and want to go to bars, power to you--I'd just go home and pass out. I personally preserve my partying for Thurs(rarely)-Sat, unless there's something for work or something like that. Very few cities even have places open past 1 AM except the major cities (NYC last call at bars is like 4 AM). What do you expect to do when you get off at work at midnight, go visit a museum or something?

Feb 7, 2015

Both brilliant offers since you graduated from a non-target last year (looked at your old posts) what have you been doing since then?

Feb 7, 2015

I worked part time and networked.

Also, I spoke to a VP there and it seems as though they have a committed check from one of the LPs to pursue more acquisitions. And they are planning to restructure one of their funds, which can also be a source of additionally capital.

After some fine tuning of the employment terms, I may sign with the PE firm.

Feb 7, 2015