If you work in investment banking, the chances are that you want to work on the 'buy-side.' And if you want to work on the buy-side, you probably want to work in private equity. The way private equity recruiters tell it, they're deluged with applicants: there are 300 applicants for every junior job.
Private equity jobs are seen as better paying, more 'rewarding', and less gruelling than jobs in investment banking. Firstly, if you're senior enough in private equity you get paid a salary, a bonus and carried interest - and carried interest can be enormous. Secondly, in private equity you're an investor rather than an adviser, which theoretically makes the job more interesting long term. And thirdly, if you work in private equity you shouldn't find yourself toiling all day and all night and all weekend.
But what if those preconceptions are wrong? What if private equity jobs aren't so wow after all?
Recruiters say some M&A juniors are certainly over-excited about the private equity industry. "In the same way that people had false expectations about banking careers five years ago, they now have false expectations about working in private equity," says Andy Pringle, director at recruitment firm Circle Square. "You get a lot of people who think private equity will offer a more glamorous lifestyle," he adds. "They think that they'll get to walk into boardrooms and make some real decisions about running firms.
"The reality is that the role of a junior in a private equity fund is mostly about analysing documents. You won't leave the office. You won't do much other than Excel and you won't be adding much value."
Speaking off the record, juniors already working in the private equity industry confirmed that the industry has a few downsides. "When you're working on a live deal, the volume of hours is just as bad as in banking," said one associate at a PE firm. "If anything, it's even more stressful because you're not just advising a client, you're working towards underwriting a business plan which may put hundreds of millions of dollars at risk."
"Some funds are very presentation focused and you will spend loads of time doing PowerPoint decks, which involve a lot of formatting," said another private equity analyst. You'll also work hard: "At the big funds all the senior guys are ex-bankers and often keep the culture," he said.
In theory, you'll have a better life at a smaller fund. However, even there you might find yourself working slightly longer than standard hours. "Smaller shops are more chill," says another private equity junior. "One of my friend working in a mid market firm clocks out at 6-7pm most of the days." At the big private equity funds, the money is the draw: "If you leave the likes of Goldman Sachs to join Blackstone as an analyst, your lifestyle is not going to improve. You will get a 20% pay-rise, not much else," says one PE professional.
Should you stick to IBD then? Not necessarily. Another recruiter who takes analysts from investment banks and places them in private equity funds and who spoke on condition of anonymity, said private equity isn't that bad - it's just not as good as people think it is. "The thing is that we get a lot of analyst twos and threes from investment banks who want to do ABB - Anything But Banking," he said. "It's pretty difficult to persuade them the alternative isn't much different."
If you work in private equity and have an opinion on the industry's appeal relative to banking, leave a comment in the box below.
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