Why does everyone exit to PE if IB has higher EV of earnings?
Title
Trending Content
| +95 | MF PE Rankings | 47 | 1h | |
| +50 | LMM PE vs. MF PE? | 13 | 3d | |
| +49 | How hard to study for PE interviews? | 24 | 3d | |
| +29 | PE Modeling - Software - Bookings to ARR (First Time) | 9 | 12h | |
| +28 | Future of O&G PE? | 21 | 1d | |
| +28 | What are the early signs of an exceptional investor? | 6 | 2d | |
| +27 | Valuation of Operating Solar Project | 9 | 1d | |
| +20 | Breaking into PE from a Non-Target with Visa Hurdles - Need Advice | 5 | 1h | |
| +19 | VP Signing Bonuses | 24 | 1d | |
| +17 | How to account for management option pool with strike price in 3 statement model | 6 | 2d |
Career Resources
Service based vs. Investment/Ownership based. A partner in PE will net 2-3x an MD’s comp. Still very slim chances of making it to either
risk adjusted for both, IB makes more on average over a long term career -- mainly because it's easier to move up the ranks in IB than it is in PE
According to whom?
You're missing the glaringly obvious reason here chief, IB is absolutely fucking soul crushing, PE generally is less so and as everyone says more intellectually stimulating. Also my first year PE bonus doubled my old groups 3rd year associate bonuses this year. So take that for what its worth. Aside from that they are two very different jobs. So many more factors besides "NPV of expected comp over 30 years" lmao
that's true, was just moreso referring to the fact that people think PE pays way more when in reality it actually pays less than IB for the median person's career
This is just a bait post, especially after this year’s IB bonuses. There are so many posts about this and there’s really no reason for another.
If this isn’t a troll post, there are several reasons to go with PE. PE comp ceiling is substantially higher, the WLB is slightly better, the work is more intellectually stimulating, your colleagues are smarter and you have more optionality (PE back to IB is easy, IB to PE at the senior levels is uncommon). The upside is higher and the downside is basically the same because you can just go back to IB. Worst case, you make a little less money for a few years but gain a valuable skillset. True analytical thinking vs being a glorified real estate agent.
Going to catch some shit for this but it’s not even close.
Can confirm, I feel like the dumbest guy in the office everyday now. My VPs/Principals are so damn smart, makes me lol at my VP's in banking honestly.
yea but who really cares about that, most people just want to get paid
1 year of bonuses doesn't mean it's "not even close"
I have data on this and for the median person people in IB make more than people in PE
There’s a chance this year is going to be even worse than last year for IB fees (don’t quote me on this, I have no stats to back this up). I’m also not sure how old you are but for the past decade, PE has crushed IB in terms of comp. IB comp only exceeded PE comp the last few years because IB has been bleeding talent to PE for the past decade.
Not calling you a liar but I’m pushing 30 I just don’t see how you could have data showing that IB comp > PE comp unless you’re only looking at the last few years, which would not be a career’s worth of earnings.
My brother in christ, if you finish two years of banking and think ‘This isn’t bad, I could do another 10 years of this because my expected value of comp over my career is higher,’ you’re just build different, and good on ya (statistics on comp aside)
Once you do IB you will realize why people leave. Judging by the comments, not something you’ll have to worry about.
Lol get ratio’d prospect. If you’d like, I can mock interview you for your upcoming JPM HCM superdays.
PE earnings are significantly higher than IB over a lifetime, plus the lifestyle is better since you're the client rather than the client's punching bag. Carry is a lot of money.
ceiling is higher but for the median person, u will make more in IB than in PE for ur whole career
Don't think that is factual at all (and I went A2A in IB, not exactly out here defending my career path).
Again, carry is a huge portion of comp... you'd have to (as an MD) close a megadeal every year to keep up with that
I have hard data on this proving me right. DM me if you want the data
We get it bro you’re average af and want a safe way to make money because you’re not smart / talented enough to bet on yourself to succeed in PE. That’s fine - no need to make a thread about it, good luck with your median salary in your median life.
Can you please kindly take your hard data and shove it up your ass now? Nobody wants to see it
You would hope to literally hold me at gunpoint and threaten to shoot me to make me go back into banking (so I would hope it pays more)
The author of this thread clearly has strong feelings on this subject, but the facts are scarce.
I mean, I make $500k cash as a MM PE VP... banking is what, $500-700kish at the same level? Carry/coinvest should add another $2.5M at 2.0x, $5M at 3.0x... it it's a 2.0x every 10 years that's a total of $750k a year annualized, if it's 3.0x in 5 years that's $1.5M a year annualized... and we've consistently performed and raised new funds every 4-5 years for decades now. Factor in the tax benefits on that as well... even without assuming any further promotions / increases, that should net a lot more than IB, and I have basically zero risk of cyclical layoffs (obv still risk of personal performance)
what's your latest fund size?
Between $1-2Bn, so scale these numbers up for a larger fund, down for a smaller one.
As my title indicates, I don't know much.
But are any of the commenters on this thread based in UK? How much of what has been said here is true of Banking vs PE long-term NPV comp in London? I have a BB summer offer lined up this year and I am not very sure if aiming for private equity is the best in UK.
Does it remain true that the PE comp ceiling is far higher than IB in UK? Exactly how high are the chances of advancing for enough in the UK PE ladder to exceed the highest IB ceiling? Does it remain true that the median comp in UK IB is perhaps greater than the median UK PE?
UK PE large cap pays better than banking counterparts in cash (except 2020/21) and substantially better when factoring carry/leveraged co invest. Lifestyle is also better
Bump
Quia cumque voluptatem qui nihil iusto et. Ut est rerum libero voluptas consequuntur nulla deserunt. Doloremque molestiae enim excepturi quae. Maxime praesentium quam enim vel facere est aut sint.
Tempora dolores sequi nostrum sit. Voluptatem magnam iste similique. Tempore id et eos neque. Non nostrum enim ullam similique. Et accusamus eos velit fuga est.
Architecto pariatur porro quasi necessitatibus et. Cumque repudiandae in quae magni sed placeat labore.
Eum impedit fugit velit accusantium inventore voluptas veniam qui. Numquam quam voluptatum ab est. Iste suscipit optio iste corporis. Nihil temporibus quos quidem et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Error quo quae id fugiat. Deserunt enim repudiandae magnam eveniet. Reprehenderit ullam necessitatibus provident autem sed.
Impedit eveniet earum inventore dolores culpa eius. Dolor velit qui velit. Deleniti quia voluptatem ad et non.