Sophomore Year- Investment Banking Vs. Private Equity

I'm in a really fortunate position in that I can choose between interning at a lower middle market private equity firm or a middle market investment bank which has a little more of a name brand (they do $15-20 million range deals)

As a sophomore at a semi-target, which one would you guys recommend choosing? Next year, my goal is to apply and try to get an internship at a BB or elite boutique.

 

While PE experience before you graduate is fantastic, the simple fact is that being able to write "Investment Banking Summer Analyst" on your resume before heading into junior year recruiting is a massive advantage that will get you far.

You get to talk about your experience during info sessions on campus or in phone conversation / coffee chats you set up during the fall as you begin networking. You automatically avoid most hard technicals in interviews because the banker simply wants to start running through deals you were staffed on to see how much you actually know about the deal process. You'll also (after getting placed into a group) probably start off with a little bit of goodwill where people may assume you to be a bit more competent than other interns.

It'll also help you figure out earlier on whether or not you like this career path, which is the truly invaluable piece you may be overlooking. If banking isn't for you, it's so much better to find that out as a sophomore where you have two years of school and one summer internship left to figure out what your real interest is.

Good luck.

I am permanently behind on PMs, it's not personal.
 

I'm currently a sophomore at what you guys would view as a fringe target. Have the above offers in hand, and I'm looking for some input/suggestions in accordance with my aspirations. Looking ahead, I'd ideally like to make the jump to an upper-tier M&A shop for my junior summer and believe I may be interested in PE at some point down the line. Which of these opportunities will best position me in the short-term?

 

I think both will open doors for a transition into IB at GS/MS/EVR for junior summer. But with those firms you want to work at just keep in mind that your profile doesn't just scream typical "2 years IB + 2 years to PE." Some firms are fine with it, but I've heard for example GS isn't as friendly about their analysts recruiting for PE. Maybe somebody else can chime in on this.

 

Some of my friends who went through the recruiting process their junior year who did PE their sophomore summers had to convince the interviewers why they wanted to do IB when they did an internship in PE. This shouldn't be too much of a problem though.

In the end, you'll be in great shape for junior recruiting with either one.

 
Best Response

I’d probably take the pe internship. That’s pretty sizeable aum, so I’m guessing the guys at the fund will have great connections to banks and can put in a good word/help you set up calls. Unlike the regional bank, they’ll probably be supportive of you looking elsewhere for the following summer, and will help in whatever way they can.

Regional ib is really good too, and obviously the work is highly relevant. But I think the “having to explain why ib” is overrated as a concern - never was an issue for me. You should be able to cruise through bb/eb sa interviews after a pe stint at a reputable fund, especially if you can get a little bit of modeling experience (for initial bids, screening cims or even just practice).

 

Just to piggyback off this, I have IB on my resume, as well as an M&A advisory firm, and still consistently get asked "Why IB?" I think it is a boilerplate question all prospective interns should expect.

On a separate note, my background was search fund, M&A advisory, and LMM PE shop. When reaching out to investment banks, I was always asked "why not just go into PE?" I hopped on the phone with one particular alumni who told me to stop pursuing banking altogether (not an exaggeration, and one of my schools only BB alumni), and even when I justified why IB, he told me I was making the wrong decision. This is a unique situation, but I think it speaks to the importance of really having an excellent reason as to why you did PE a second time if your goal is BB IB.

I have as much FT experience as a 12 year old, so I'm not trying to push you in either direction, just share my own obstacles regarding networking and interviewing with 2 "PE" related internships.

 

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