Q&A: 3rd Year PE Associate (entering MBA)

Hi All,

I have a fair amount of free time before starting my MBA in the fall. This community has been extremely helpful for me since the time I was recruiting for internships years back, so I wanted to use the time to give back to those looking to break into the industry, to the extent possible. I'm happy to speak with anyone who would find it helpful, specifically on the following topics:

  • Undergrads (only entering 2nd years and later please) looking to recruit for IB summer internships
  • Interns thinking about bank / group placement options
  • Full time analysts looking at buy-side opportunities (HF/PE)

As for my background, I was an intern and then full time analyst at GS/MS in NY, recruited for HF (though 95% of my peers went through the PE process), landed a few offers at different sized funds but ultimately decided to move into a private markets role outside of the US after realizing that the HF world probably wasn't the best fit for me (and that I wasn't a great public markets investor)

If this would be helpful please PM me. Or if you have more general questions that would be helpful for others, feel free to post them here and I'll be happy to answer.

Cheers

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Comments (11)

  • Prospect in 
Jun 24, 2020 - 12:43pm

-What made you realize you weren't a very good public markets investor?

-Why were you initially leaning HF over PE for buyside recruiting?

-Why was growth equity the fallback when you realized that HFs weren't the right route for you?

-Were you in a coverage or product group? How do you feel that that impacted your buyside recruiting experience?

-Did you plan to recruit buyside before you even began IB or was it something that emerged later on?

I feel like these might be some more general and broad, useful questions/answers to the majority of monkeys

Jun 24, 2020 - 3:16pm

Also interested in why you did not feel like you were a good public markets investor.

Array

Jun 24, 2020 - 4:00pm

Hopefully answered that in my other comment. Most of the funds I interviewed with were pretty active managers in the short term, and the roles felt more like equity research, projecting quarterly earnings vs. long term thesis driven. There are definitely a handful of long only, 'private equity approach to public markets' shops that I'm sure I could have done well in, but they are more few and far between and also tend to have the highest employee retention (and thus don't hire often).

Most Helpful
Jun 24, 2020 - 3:48pm
Prospect in :

-What made you realize you weren't a very good public markets investor?

-Why were you initially leaning HF over PE for buyside recruiting?

-Why was growth equity the fallback when you realized that HFs weren't the right route for you?

-Were you in a coverage or product group? How do you feel that that impacted your buyside recruiting experience?

-Did you plan to recruit buyside before you even began IB or was it something that emerged later on?

I feel like these might be some more general and broad, useful questions/answers to the majority of monkeys

  1. I was looking at a combination of long only / long short funds. Around the time I was recruiting, a number of the larger shops shut down and there was a sort of decline, which I think has continued in asset allocation towards HF, with fewer and fewer generating alpha over a long period of time. I spoke to a number of people in the industry and my perspective on those roles really changed quite a bit -- I interacted with a lot of people who had hopped around from fund to fund (at some great places) and it offered a lifestyle and frankly stability level that I didn't think I'd be comfortable with. I also received a good amount of advice from alumni that was pretty negative with regard to investing in equities and trying to make a career out of it, so I'm sure that impacted my thinking to an extent. In terms of realizing I wasn't the strongest public markets investor, I had maintained a paper portfolio for about 3 years, was able to see the calls I made over that time. I think to succeed in one of these roles you need to have extreme conviction in your thesis and price target and have the stomach to see the markets ebb and flow (sometimes significantly) in the short term. I had a few 'buys' on stocks that had some underlying linkage to oil (utilities, airline leasing, etc). In the fall of 2015 oil prices fell through the floor (as did the aforementioned industry stock prices) and I think that was probably the final sign for me.

  2. I was ultimately deciding between a few HF offers and the role I ended up pursuing, which was outside of the US. I was not at that time looking for the traditional PE experience, and I had been interested since I was in school in working abroad (studied international relations + history), so the role I took gave me the chance to do that.

  3. I guess I should clarify, I moved to a non-US role where very little buyout activity took place and almost all the deal activity is primary capital put into the businesses, not a sort of Palo Alto tech focused growth equity shop. So in that sense more similar to a conventional PE role but without much (and often without any) leverage.

  4. I was in a coverage group that did its M&A in house, so in that sense it was a fairly well rounded experience. At GS all the groups do in house M&A, and about half of the coverage groups at MS do as well. I looked at it as the best of both worlds, as we not only got a good understanding of an industry but also had the chance to work on different types of transactions, including financings. While the debt issuances aren't particularly exciting, I had the chance to pitch for and work on a few IPOs, which was quite interesting and fulfilling work.

  5. Not at all, and I don't think most of my peers did either. I think those coming from an undergrad finance / business background tend to be more aware of these paths compared to others, for better or for worse. My group didn't have anyone from Wharton, Ross, Stern or any of those programs, so we all came in a bit blind. The 2nd years in our group were extremely helpful as far as recruiting, including providing recruiting materials, making us aware of all the HHs and which HH covered each fund, interview prep, etc.

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  • Prospect in 
Jun 24, 2020 - 5:16pm

Thank you! I (and the other prospects/interns) all really appreciate your insight. Best of luck in your new role

  • Associate 1 in IB-M&A
Jun 24, 2020 - 1:34pm

How common was it for you and your peers to get buy side interviews through networking/connections?

Jun 24, 2020 - 3:16pm
Associate 1 in IB-M&A:

How common was it for you and your peers to get buy side interviews through networking/connections?

All of the interviews for larger funds ultimately took place through the recruiters, and it is difficult to bypass them altogether as they truly are the gate keepers for any process. That being said, having a connection at one of the funds can definitely be helpful -- it is just usually that they notify the recruiter to add you into the process.

Before deciding to recruit for HFs, I did a bit of PE networking through my school's alumni network, specifically with the larger Chicago based funds, as I was considering a move back to the Midwest to be closer to family. When one of those funds started its process, one of the MDs asked the recruiter to add me -- the recruiter then emailed me asking if I wanted to be included (even though I was at the time working with them on a few HF roles). So the networking definitely can be helpful.

All but 1 of the analysts in my class went to funds that had an analyst from my group already there (from either the year above or 2 years above), and I think that is quite common. Since my time, those same funds have generally hired 1 analyst from our group per year, so the trend continues.

When it comes to smaller sized funds, the processes are less formalized and so networking definitely can play a bigger role.

Jun 25, 2020 - 11:39am

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