How I went from investment banking to private equity to earn 6 figures

  • The 27-year-old private equity lawyer in London moved from investment banking in 2021.
  • He said the recruitment was rigorous and that he earns less but has better control over his time.
  • But he says that in both works “w“ork-life balance” and “mental health” are just slogans.

This “as told” essay is based on a conversation with a 27-year-old private equity partner in London. He was asked to withhold his name and employers for privacy reasons, but Insider confirmed his identity, job and salary through documents. The following has been edited for length and clarity.

After studying economics and finance at university and several banking internships, I joined an analyst program at a boutique investment bank in London. In 2020, I worked my way up and was promoted to Investment Banking Associate. Then I decided that I don’t want to do banking long-term.

So I looked at my exit options and discovered that going into private equity is a common move for junior investment bankers. In 2021, after a thorough hiring process, I eventually moved to the procurement side. I am currently a private equity lawyer in London. I used to earn a bit more in investment banking, but now I make £160,000 a year, or about $185,000, from my salary and bonuses.

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

The successful transition from investment banking, also known in the industry as the “sell-side,” to the “buy-side” in private equity has been highly competitive. From a recruiting perspective, getting into private equity is a very difficult process that most people fail at. It is difficult for junior bankers to take the extra time to prepare for their direct investment applications, which often involve multiple interviews, Excel simulation tests and case studies.

There are many investment banking analysts in each cohort, but limited opportunities for direct investment. When you’re on the buy side, you can hire bankers to do the heavy lifting and focus on more interesting, value-adding work.

The hours are still bad, but they are slightly better than investment banks

For example, in banking, I worked from 10 am to 1-2 am, and I had to come to the office on weekends. My work in private investment usually starts at 9:30 in the morning, but I can get home around 10 in the evening, which is a big improvement. Besides, I don’t often have to work on weekends. I would say more than 60% of my weekends were free.

You can also manage your time better and talk more in the process. For example, if a private equity partner wants to schedule a call for 11 p.m., the bankers will have to accept the call. But a banker won’t be able to schedule a call with a private equity partner at 11 p.m. unless a lawyer wants to. Also, direct investing reduces the number of calls you have per day. 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’re actually managing people’s money and helping make investment decisions. You’re on a small team handling millions or even billions of your investors’ money, so the cost of mistakes is much higher.

At work, I do 2 main things: thorough analysis of investment opportunities and monitoring of portfolio companies

For the former, I get information about the business from brokers such as investment bankers or Big 4 advisors, do research, make phone calls, review data, create a deal model and draft investment memos. For the second, I have to liaise with the company’s executive team, understand the trading performance of the business, attend board meetings and support the portfolio company where needed (funding, operational improvement, hiring, M&A, etc.). .).

On a typical day, I arrive at the office at 9:30 a.m., when I catch up on emails from portfolio companies and bankers. I often call the CFO of a portfolio company to understand the financial results of the previous month. Then, when I have a moment, I have a quick coffee with my colleagues.

Sometimes I have to perform a spontaneous analysis on my partner. When the evening comes I order dinner from Deliveroo, eat at the table and try to do some modeling and memo writing, as the office is quieter in the evening because most of the elderly leave by 6pm, I usually try to pack everything. get up around 9 or 10pm and order a taxi home, unless we have a transaction or something extremely urgent.

Moving from investment banking to private equity is really a numbers game

Several top recruiters in London recruit for many US and European private equity firms such as Kea Consultants, Dartmouth Partners and Private Equity Recruitment. The first step is to contact recruiters. It is typical for recruiters to also reach out to analysts they are interested in. After connecting, you conduct an introductory call for five to ten minutes so that they can understand if you are a decent person and if you really have a chance to get an offer somewhere.

Recruitment in London is not as structured as in the US and firms tend to recruit as they need to. However, the firm I went to did have an “on-cycle” schedule, meaning they start the process in January and February and give out offers during the investment banking bonus season in March or April so that successful candidates, who came from the investment banking sector can leave immediately after receiving the award.

Then you send them your resume and have the first conversation with them. If they think you can get the job, they will shortlist you and send it to the hiring firms.

For me it was a real numbers game. It’s basically a copy and paste of your resume and cover letter. You apply for 50 places and 10 will probably get you an initial interview. Then you go to five second rounds and try to get two or three offers. Obviously, personalities play a role because people tend to hire those who are like them. You have to get along well with the hiring manager and their team to have a real chance of getting an offer.

The interview process itself is complex and lengthy. There are six to eight rounds in total, including back-to-back interviews, case studies and mock tests, where you have to create a leveraged buyout
model from scratch or based on an existing template—which take place over several weeks. They don’t talk about total compensation up front, but they give you a range, and it’s pretty standardized. I didn’t know the exact amount until I got the offer.

There’s never enough money, but I guess that’s okay. Still, I took a small pay cut in the jump in exchange for a better long-term return.

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

The banking sector recently raised the salaries of junior bankers amid discussions about work-life balance. But mostly it’s to shut them up.

The leadership talks about mental health at 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? Gift 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 worse in banking, because everyone is treated as a resource. Older people have less respect for younger people because they expect them to come and go. Meanwhile, in private equity, managing directors assume you will stay with the firm, so they spend time with you and get to know you as a person.

But at the end of the day, they’re still funding people, so no one really cares how many dogs you have or what your mental health is.

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

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