PE to IB? Are buy-side skills sought after in IB?

[AugustusSeptimius1]

Hello, all,

Had a rather niche question as I know that the typical career path is to progress from IB into Private Equity. However, I've been able to secure two summer placements with 2 middle-market PE firms for this summer. Now, I'd previously intended to do an IB summer analysts internship during the summer of '24 (before entering my final year of uni) and then convert that into a full-time IB job following graduation in '25, eventually moving into PE after several years. However, the fact I've secured these PE positions has left me wondering if this summer experience could, in theory, allow me to get a summer PE internship next summer and thus start working in private equity right away after graduating (cutting out 1-3 years in IB) or if it could, instead, provide me with skills/experience that is potentially sought after in IB, potentially increasing my IB employment viability. Either outcome is ideal so curious to hear any thoughts.

 

[JustAnotherHuman1]

You can’t ride two horses at the same time. It is true that the usual career trajectory (for those who have such an aspiration and manage to make the jump, at least) goes from spending a couple of years on the sell-side to then moving on to the buy-side, so I think this decision depends on your risk aversion. A mid market PE (an elite might be different) is not necessarily better than an analyst position at a BB, but there is never a straight line to achieving your goals. I wouldn’t sweat it, and simply try to balance your career decision based on where you will learn the most, like the team and also have a decent name (again, see the Bank of Morgan Sachs Capital article), and also, well, the kind of opportunities you have on the table. Maybe you’ll never even get a graduate offer at a BB, then you have no choice but to go the mid market PE route. Either way, you’ll develop your financial modelling skills. I’d worry more about improving your networking skills, as that will ultimately have a greater impact on your success than whether you start out here or there (which is still important, but I think not that important in the grand scheme of things).

If this makes you feel any more confident, I’m pretty sure even some “lowly” Big 4 accountants make the jump sometimes. Sure it might not be as common, but it still happens. Goes to show it’s more about attitude than aptitude and etc.

 

[magellan1]

In my view, it is a bad idea to go into Private Equity straight after university.
Firstly, you will lack important skills and will likely underperform your peers. Smaller private equity firms usually provide little training and expect by default new joiners to have the required skills and knowledge while investment banks have much lower expectations for junior analysts. In the first months/year, IBs invest a lot of resources to train the newbies.
Secondly, it is much more common and easier to move from an investment banking role to a middle-market PE than vice-versa.
Thirdly, joining directly a mid-market PE firm might limit significantly your alternative options for employment in the future. What are you going to do if you lose your job at the mid-market PE firm? The skills in this job are very specific (e.g. LBO modeling, searching for companies to acquire, etc) and not transferable to many other jobs.
Fourthly, the compensation at mid-market PE firms is often lower than the compensation at tier-1 investment banks.
Finally, you might get bored and disappointed with the job quite soon. Take your time and go through the full journey (IB summer internship, analyst, associate, joining a PE firm, etc). Don't rush!

 

[JFH1]

You have clearly done your research, you have thought out your career strategy and you are putting in a lot of effort, all of which is commendable. If possible, I would suggest waiting until you have done your PE internships to decide on which course of action to take - you may love it or hate it, you may decide you have what it takes to enter PE directly or you may not (of course the same also applies to IB). I think that there is a lot to be said for keeping your options open, and of course having the flexibility to adapt if, for example, you don't get offered the job you hope for. If your plans are too rigid, you risk either being disappointed or potentially missing out on what could prove to be a great opportunity.