How I Went From Investment Banking to Private Equity to Make 6 Figures
- A 27-year-old private-equity associate in London switched over from investment banking in 2021.
- He said that the recruiting was rigorous and that he makes less but has more control of his time.
- But he says that in both jobs, “work-life balance” and “mental health” are just slogans.
This as-told-to essay is based on a conversation with a 27-year-old private-equity associate in London. He’s asked to keep his name and employers anonymous for privacy reasons, but Insider verified his identity, employment, and salaries with documentation. The following has been edited for length and clarity.
After studying economics and finance at university and doing a couple of banking internships, I joined an analyst program at a boutique investment bank in London. I worked my way up and got 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 found that going into private equity is a common progression for junior investment bankers. In 2021, after a rigorous recruitment process, I eventually moved to the buy side. Now I’m a private-equity associate in London. I was making slightly more in investment banking, but now I make £160,000 a year, or around $185,000, from my salary and bonus.
Many junior bankers want to go into private equity, but it’s not easy
Successfully making the move from investment banking, also known in industry vernacular as the “sell side,” to the “buy side” in private equity, was very competitive. From a recruitment perspective, getting into private equity is a very tough process that most people will fail. It takes a toll on junior bankers to carve out extra time to prepare for their private-equity applications, which often include many rounds of interviews, Excel-modeling tests, and case studies.
There are a lot of investment-banking analysts in every cohort, but the openings in private equity are limited. When you’re on the buy side, you can hire bankers to do the heavy lifting and focus on the more interesting and value-adding work.
The work hours are still bad, but they’re slightly better than investment banking
For example, in banking, I worked from 10 a.m. to 1 or 2 a.m., and I was expected to come into the office on the weekends. In my private equity job, I generally start at 9:30 a.m., but I’m able to head home around 10 p.m., which is a big improvement. Plus, I don’t often have to work on the weekends. I would say more than 60% of my weekends have been free.
You also have better control of your time and more say in the process. For example, if a private-equity associate wants to schedule a call at 11 p.m., the bankers will have to get on the call. But a banker wouldn’t be able to schedule a call with the private-equity associate at 11 p.m. if the PE associate doesn’t want to. Plus, the number of calls that you have a day is reduced in private equity. Meanwhile, as a banker, I was always on conference calls and didn’t have time to do much else.
That said, the stress when you’re on the job is probably higher in private equity than in banking because you actually manage people’s money and help make investment decisions. You’re on a small team handling millions or even billions of your investors’ money, so the cost of making mistakes is a lot higher.
At work, I do 2 main things: diligencing investment opportunities and monitoring portfolio companies
For the first one, I get information about businesses from brokers such as investment bankers or Big Four advisors, conduct research, make calls, review data, build a deal model, and draft up investment memos. For the second one, I have to stay in touch with a company’s C-suite management team, understand the trading performance of the business, attend board meetings, and support the portfolio company wherever needed (financing, operational improvement, hiring, M&A, etc.).
On a typical day, I get into the office at 9:30 a.m., when I catch up on emails from portfolio companies and bankers. I often jump on a call with a portfolio company’s CFO to understand the financial performance of last month. Then when I have a moment, I grab a quick coffee with colleagues.
Sometimes I have to run some spontaneous analysis from a partner. When the evening rolls by, I order dinner from Deliveroo, eat at my desk, and try to actually do modeling and write memos, as it’s quieter in the office in the evening because most seniors have left by 6 p.m. I usually try to wrap things up at around 9 or 10 p.m. and order a cab home, unless we’re in a live transaction or have anything super urgent.
Moving from investment banking to private equity is really a numbers game
A handful of top recruiters in London handle the hiring for many of the American and European private-equity firms, such as Kea Consultants, Dartmouth Partners, and Private Equity Recruitment. Step one is to get in touch with those recruiters. It’s typical for recruiters to reach out to analysts they’re interested in as well. Once you’ve connected, you do an introductory call for five to 10 minutes so they can tell if you’re a decent person and if you actually have a chance of getting an offer somewhere.
In London, recruiting is not as structured as in the US, and firms tend to recruit as they need to. That said, the firm I ended up with did have an “on cycle” timeline, which means they start the process in January and February and give out offers around investment-banking bonus season in March or April so that successful candidates coming from investment banking can resign right after getting their bonus.
Then you’ll send them your CV and have an initial call with them. If they think you might make the cut, they’ll include you in a short list of applicants and send it to the hiring firms.
For me, it was really a numbers game. It’s basically copying and pasting your CV and cover letter. You apply to 50 places and 10 will probably give you an initial interview. Then you get to five second rounds and try to land two or three offers. Obviously personalities play a role because people tend to hire those who are similar to them. You have to get along well with the hiring manager and their team to have a real shot at getting an offer.
The interview process itself is difficult and time-consuming. Altogether there are six to eight rounds — including back-to-back interviews, case studies, and modeling tests where you have to build a leveraged-buyout
model from scratch or off an existing template — which take place over a few weeks. They don’t say the total compensation up front, but they give you a range, and it’s quite standardized. I didn’t know the exact number until I got the offer.
Money is never enough, but I guess it’s OK. That said, I took a small pay cut by jumping in exchange for a better return in the long run.
‘Work-life balance’ and ‘mental health’ are just slogans
Recently, banking has hiked up the salaries for junior bankers because of work-life-balance discussions. But it’s basically to shut them up.
Management talks about mental health in their meetings and town halls, but at the end of the day, are they really doing anything about it? Look at Goldman Sachs. What do they do for work-life balance? Giving fruit baskets for juniors with two extra bananas? Do they really do anything to help them in the long run? I don’t think so.
It’s worse in banking because everyone is treated as a resource. The senior people have less respect for the juniors because they expect them to come and go. Meanwhile, in private equity, the managing directors assume that you’ll stick with the firm, so they spend time with you and get to know you as a person.
But after all, they’re still finance people, so nobody really cares how many dogs you have and how your mental health is.
Do you work in investment banking or private equity and want to share your story? Email Lauryn Haas at email@example.com.