Tier 1 PE vs. having a life
Was curious what your thoughts are on joining a top PE mega fund (e.g. Blackstone/KKR/TPG/Carlyle) vs. joining a less prestigious yet reputable place (e.g. Marlin, Vitruvian, Waterland) that allows you to still have a life.
I was initially set on joining BX, running after prestige, just like many others. However, going through IB and speaking to Associates who work at BX really changed my perspective.
Not keen on barely surviving again for another 2 years because of internal politics, crazy hours, and micromanagement before doing an MBA or exiting for good. Instead, I would rather work at a place that is more entrepreneurial and also respects people's lives outside of work. Yet, I feel as if I am in a minority with this mind-set.
Hence, was wondering what potential pros (apart from prestige and pay) could outweigh the cons I (subjectively!) identified above?
bump
I am at one of the MFs in their REPE teams and I see myself staying there for a few years (maybe up to principal level) to get the brand and experience, before leaving for a fund that allows for better WLB. I am willing to sacrifice a few years at the junior end but not for an extended period, particularly once I have kids. I know my opinion is probably an unpopular one on this forum but I am acutely aware that I am at my happiest being surrounded with my friends and family with enough disposable income to not have to think about if I can afford something. MFs are not the only place you can find this - there are even a few example threads on here from people in REPE at smaller shops doing amazing or at MM/UMM PE firms having a good WLB.
Just my thought process
What are your thoughts on comp (ignoring anything above Principal) when thinking about MF vs MM/UMM? Speaking to headhunters and looking at comp reports, once you cross $1-2bn+ fund size there appears not to be a gigantic gap? For sure there will be a difference but I got the impression it’s more ~100-200k on cash and 1-2m on Carry? Still significant but would imply a gap of 20-50% maybe, but not speaking about 2x+
I think at MFs you definitely get a premium on basic salary across all levels but as you point out, once you get to funds that cross $1-2bn+ then the all-in comp discrepancy isn't as meaningful and I think its principally because at MFs you have a lot more people taking some of the promote versus at the MM/UMM fund its split across a much smaller team. Secondly, one of the other real benefits I have seen is that MM/UMM funds can offer the option of co-investing at the GP level, and if you combine this with the (on average) better MOIC at the MM/UMM level then you can see a really significant boost to your comp here. Whilst this is still lagging the carry you *could possibly* get at the MF (then have to factor in if you can even get promoted etc), you're getting a much better WLB at the MM/UMM fund whilst still comfortably being in the top 1% of earners.
I'm afraid your assumption that you would have more of a life at a place like Vitruvian is very flawed, beside the fact that they are also just as hard to break into. It's not Tier 1 = sweatshop and other tiers = good life. You really need to DD the WLB thing during interviews.As to the other part of your question - it depends on your personality. There is a theoretical input/output chart of effort vs comp and you should aim to be somewhere on or above that efficient frontier, so to speak, but where exactly is up to your preferences. In my view, I would choose a better lifestyle any day so long as comp and fund reputation meet a certain threshold. I have what I would describe as a pretty good lifestyle for the industry and it makes a world of difference. I keep in good physical shape, can plan stuff/trips on weekends, see my friends and chicks. And I still earn ridiculous money for anybody not in this industry. Might I have a less "preftigious" name on my cv? No doubt. Do I give a shit? Not in the least - my life is much cooler and well rounded.
Hot take, I think the ideal path is principal/partner at a LMM/MM fund where you fit great with the culture and enjoy the work, can have a life, and still make great money. Even if you aren't an investment team partner, the top folks on the BD and IR side (and probably even operations/consulting teams for funds that have them) make very nice livings as well with better lifestyles. Idgaf about my professional "preftige," I own a nice house on over an acre in a beautiful suburb. I *need* time to be a human and take care of my health, enjoy my hobbies, spend time with my wife, and raise my first kid that's coming soon. We're all going into the same ground at the end of it all, but did you even really "live" if you missed some of life's simplest joys due to overworking?
From seeing this in my fund, this is the way
Heavily agree with this
You should consider secondary funds / co-invest gigs. That is another step down in terms of ‘prestige’ but one where you could feel more comfortable around WLB. You get deal experience but not having to deal with portfolio companies reduces work hours and improves lifestyle.
This is true. It's still very transactional and deal based, but once you do a deal its very "set it and forget it", on to the next one.
Your life isn't going to be noticeably better trying to "trade down" in name whatsoever at your level. This is just an unfortunate fact. If I had it to do all over again, and had perfect progression, I would go for the absolute best brand name I could land (BX probably being top choice), work my 2 years then re-evaluate. Carrying that brand name with you will always give you credibility over others. I would still end up in a LMM firm that has the flexibility to chase off market deals. The frenzy at the top seems anti-productive to not only happiness, but returns as well.
To clarify, are you saying after 2 years as an associate at a MF like BX, you would then go to the LMM fund or rather that you’d just eventually end up at a LMM fund? Would be interested in hearing your ideal path post the MF associate stint (e.g., b-school or no, what level you’d look to drop down in fund size, established fund v. new fund, etc.)
Personally, I'd just try to find an established fund that has a track record of promoting within and go from there. Skip bschool if I could.
Of the ‘tier 2’ names most of those will not be that much better than the MF’s in terms of lifestyle tbh. As some one else said, do you diligence on the fund and even specific groups within the fund. Personally if I went back in time I’d solve for places / teams that allow you to grow, get good reps, and without burning yourself out.
It's not about brand name, it's about the actual culture. There are certain heuristics that will help (general correlation between MF and hours) but when it comes to a specific opportunity in front of you, just evaluate culture through back channels. I know someone at a $10bn+ fund who works 60 hours a week and, even when he does work crazy hours on a live deal, says the culture is amazing. He's also not one of those psychos that actually loves this job, too, he's just a regular dude.
See if you can find that. Look you're going to be Rich no matter what fund you're at if you see it through a career for the next 40 years, even a dinky LMM firm. Find some place that can get you there.
Can you elaborate more on your last paragraph? Why do you think a person can become rich even at a LMM firm? Are you assuming the fund will be performing well and growing?
Just do the math on carry at a $100m fund. You don't need many people to deploy that level of capital, and lion share is going to the founders. There are plenty of folks in the LMM that do extremely well. And yes, for carry to pay out you need to perform well (your LP's aren't paying you economics to lose them money) and stay with the firm over the life time of the fund.
The nature of how much dd is involved on a private equity transaction necessitates a lot of hours. That being said, I think there are firms with good cultures and those with bad cultures. If the firm respects you going out for dinner, getting things done at your own pace (unless immediate deadline), then that’s something you may work a lot of hours for, but you’ll have a good balance. Generally speaking, I’ve found if I’m open and honest with higher ups about my plans or what I have going on, they’ll respect it and encourage me to enjoy those moments away from work
HAHAHA, bro Marlin is notorious for people having no life/ leaving due to how intense it is. Here’s a little secret:
just because a fund is larger or they do larger transactions doesn’t mean people work harder there or are smarter. People really need to learn that LMM-MM-Large Private deals isn’t a qualification of how good a fund is, it’s a competitive positioning decision. It blows my mind how this mentality is so common. Do you all also think VC investing is somehow for beginners while investing in public companies is for pros? No, it’s a decision made based on opportunity in the market. Sweat shops exist at every level of investing or facilitating transactions (IB).
I agree with this. A lot of the general characterizations on WSO of MFs are not all encompassing. People love to tell stories about MFs, but like most jobs, there are highs and lows and no one is consistently pulling 100+ hour weeks. I know plenty of UMM and LMM PE firms that work just as hard and have shittier cultures than MFs. Your miles will vary depending on the firm / group so I highly recommend people do their own diligence before making any judgments.
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