How I Went From Investment Banking to Private Equity to Make 6 Figures

  • A 27-year-old private equity worker in London left investment banking in 2021.
  • He said recruitment is strict and that he earns less but has more control over his time.
  • But he says that in both jobs, “w“Ork life balance” and “mental health” are just buzzwords.

This essay is based on an interview with a 27-year-old private equity practitioner in London. He has been asked to keep his name and employers anonymous for privacy reasons, but Insider has documents to confirm his identity, employment and salaries. The following has been edited for length and clarity.

After studying economics and finance at university and doing some banking internships, I took part in an analyst program at a boutique investment bank in London. I worked my way up and was promoted to Investment Banking Associate in 2020. At that point, I decided that banking wasn’t really something I wanted to do long-term.

So I looked at my exit options and realized that getting into private equity is a common progression for junior investment bankers. In 2021, after a rigorous recruitment process, I finally moved to the buy side. Now I’m a private equity partner in London. I made a little extra in investment banking but now I’m making £160,000 a year or about $185,000 on my salary and bonus.

Many junior bankers want to get into private equity, but it’s not easy

The successful change from investment banking, also referred to as the “sell side” in technical jargon, to the “buy side” in private equity was very competitive. From a recruiting perspective, getting into private equity is a very difficult process that most people will fail at. It takes a heavy toll on young bankers to take extra time to prepare their private equity proposals, which often involve many roundtables, Excel modeling tests and case studies.

There are many investment banking analysts in each cohort, but private equity job opportunities are limited. If you’re on the buy side, you can hire bankers to do the heavy lifting and focus on the more interesting and value-added work.

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The hours are still bad, but they’re a little better than in investment banking

In banking, for example, I worked from 10 am to 1 or 2 am and was expected to come into the office on weekends. In my private equity job, I usually start at 9:30 am, but I can go home around 10:00 pm, which is a big improvement. Also, I don’t often have to work weekends. I would say more than 60% of my weekends were free.

You also have better control over your time and more say in the process. For example, if a private equity rep wants to schedule a call at 11 p.m., the bankers have to take the call. But a banker would not be able to schedule a 11pm meeting with the private equity partner if the PE partner did not want it. It also reduces the number of calls per day in private equity. Meanwhile, as a banker, I was constantly on conference calls and didn’t have time to do much else.

However, the stress of working in private equity is probably higher than in banking because you’re actually managing people’s money and participating in investment decisions. You’re part of a small team managing millions or even billions of your investors’ money, so the cost of making mistakes is much higher.

At work I do two main things: review investment opportunities and monitor portfolio companies

In the first, I get information about companies from brokers like investment bankers or Big Four advisors, do research, make calls, review data, build a business model, and write investment memos. The second requires me to stay in touch with a company’s C-suite management team, understand the company’s trading performance, attend board meetings, and provide support to the portfolio company as needed (funding, operational improvement, hiring, mergers and acquisitions, etc.). .).

On a typical day, I get into the office at 9:30 am catching up on emails from portfolio companies and bankers. I often join a call with the CFO of a portfolio company to understand the financial performance over the past month. Then, when I have a moment, I have a quick coffee with colleagues.

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Sometimes I have to do an impromptu analysis from a partner. When the evening is over I order dinner from Deliveroo, eat at my desk and try to actually model and write memos, since it’s quieter in the office in the evenings because most seniors have left by 6pm I usually try to do things get up around 9 or 10pm and order a taxi home unless we are in a live transaction or have something very urgent.

The move from investment banking to private equity is truly a numbers game

A handful of top London based recruiters recruit staff for many of the US and European private equity firms such as Kea Consultants, Dartmouth Partners and Private Equity Recruitment. The first step is to get in touch with these recruiters. It’s typical for recruiters to also reach out to analysts they’re interested in. Once connected, have a five to 10 minute introductory interview so they can determine if you’re a decent person and if you actually have a chance of getting an offer somewhere.

Recruitment in London is not as structured as in the US and companies are more likely to hire as needed. That said, the firm I ended up with had an “on-cycle” schedule, meaning they start the process in January and February and issue offers around the investment banking bonus season in March or April, so successful ones Candidates who come from investment banking can resign immediately after receiving their bonus.

Then you send them your CV and have an initial interview with them. If they think you could make it, they put you on a short list of applicants and send you to the hiring companies.

It was really a numbers game for me. It’s basically copying and pasting your resume and cover letter. You apply for 50 positions and 10 are likely to give you a first interview. Then you get to five second rounds, trying to land two or three offers. Obviously, personalities matter because people tend to hire those who are similar to them. You need to get on well with the hiring manager and his team to have a real shot at an offer.

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The interview itself is difficult and time-consuming. There are six to eight rounds in total—including back-to-back interviews, case studies, and mock-up testing—that require you to build a leveraged buyout
Model from scratch or from an existing template – which take place over a few weeks. They don’t say the total pay upfront, but they give you a range, and it’s pretty standard. I didn’t know the exact number until I got the offer.

Money is never enough, but I think it’s okay. However, I took a small pay cut by jumping in exchange for a better long-term return.

“Work-life balance” and “mental health” are just buzzwords

Recently, the banking industry has increased salaries for junior bankers due to discussions about work-life balance. But basically it’s about silencing them.

Management talks about mental health in their meetings and town hall meetings, but at the end of the day are they really doing anything about it? Look at Goldman Sachs. What do you do for the work-life balance? Giving away fruit baskets for juniors with two extra bananas? Are they really doing anything to help them in the long run? I do not think so.

It’s even worse in banking because everyone is treated as a resource. The seniors have less respect for the juniors because they expect them to come and go. With private equity, on the other hand, the managers assume that you will remain loyal to the company, so they take the time to get to know you as a person.

But after all, they’re still financial people, so no one really cares how many dogs you have or what’s your sanity.

Do you work in investment banking or private equity and want to share your story? Email Lauryn Haas at [email protected]

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