Private Equity vs. Investment Banking out of Undergrad

Hi all, I have two summer 2021 internship offers currently on the table. One is with a PE shop in NYC, and the other is investment banking in NYC as well, and both firms have good names. I know a lot of people in the industry recommend investment banking first, but if PE is the end goal for a lot of people, it seems appealing to just go into it after undergrad. What factors I should think about when making a decision? Please let me know your thoughts!

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Comments (15)

  • Intern in IB-M&A
Aug 23, 2020 - 11:52am

this is a huge point. know a few people from my target who got really prestigious PE internships their junior summer, but the firm either just does not hire full time out of undergrad or they have super low conversion rates, and then you are relatively fucked for FT recruiting. Super tough to get into IB without an IB internship (even with a good PE internship), and all these kids ended up at mediocre MMPE or just went with non-finance roles, even though all had really competitive profiles and could've likely landed great IB jobs. 

  • Analyst 1 in IB - Gen
Aug 24, 2020 - 10:30am

Most people I have seen with those prestigious junior year PE internships end up at top IB groups for FT if they don't convert

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Aug 23, 2020 - 3:21am

There's exceptions to every rule, but 9/10 times you should take the PE job. You can always do banking after two years of PE, but not the other way around. Even if you have a GS M&A offer, I'd take a MM PE job bc it will set you up well for business school and you will be able to recruit to a megafund bc of your experience. Or you can go back to a MM fund or take the GS M&A offer post MBA.

  • Prospect in IB-M&A
Aug 23, 2020 - 9:36am

Personally would take GS IBD over MM PE every day of the week. If you get two years into your stint and decide you want to do something else, you have way more optionality with the GS brand on your resume. 

  • Prospect in IB-M&A
Aug 23, 2020 - 11:27am

GS M&A isn't a thing lol. GS goes by coverage, not product group.

OP, it depends on if you have the FT return possibility and if you're happy there for Analyst and potentially Associate years.

If no to either of the above, then you're better off sticking to GS coverage group and recruiting down the traditional path into MFPE or whatever you're really interested in. if you stick with a smaller boutiqe/MM PE fund, you may end up with a lower chance of laterling into MFPE than if you had gone the GS path.

  • Prospect in IB-M&A
Aug 26, 2020 - 7:38pm

Take this with a grain of salt just because I have no clue what IB or PE offers you are considering and also have no clue what your educational/finance background is like.

I think it should really come down to:

1. Whether that PE shop is where you want to be in the long-term (think 5+ years) or positions you well for recruiting for whatever role you want in the future

2. Where you'll be able to succeed and grow the most

Even if the PE shop is where you want to ultimately end up, you need to figure out whether the intern-to-full time conversion rate gives you a reasonable chance to end up there post-grad and you also want to know if the firm has a good analyst program that will train you to succeed and grow there rather than just throwing you into the deep end. Have you had a lot of exposure to finance and developed the technical skills to succeed in a more independent role? Or are you coming from a more liberal arts-y type of background? There's a good reason why many PE firms haven't started hiring people out of undergrad and part of it is that IB gives you early exposure to capital markets and a variety of deals to develop your interest in specific industries or investment mandates, and it also offers you the chance to build out your social / career network that will be much more useful when you're in more senior positions and take on a more sourcing-heavy role. 

Personally, I'd lean towards taking the PE offer anyways just to get that buy-side exposure and also, if you eventually decide to recruit out to IB for full-time, having that name on your resume definitely opens a lot more doors for full-time recruiting than another IB name. 

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