Path from LMM IB -> HF
Currently a recently promoted ASO1 at a LMM boutique in NYC. I can make the leap to MM PE relatively easily (have a good network from funds I've worked across and my firm has a solid rep in its industry coverage). My ultimate goal is HF / public investing, but my sense is that my background would probably force me into a suboptimal seat at a small fund with high downside risk.
Essentially, my recruiting outcomes for PE are likely to be good. My recruiting outcomes for HF is unknown. Would love any clarity on what kind of HF seats I might realistically be able to recruit for, and whether it's worth making the transition to a well regarded PE fund first and recruiting for better seats in 1-2 years.
Based on the most helpful WSO content, making the transition from a Lower Middle Market (LMM) Investment Banking (IB) role to a Hedge Fund (HF) can indeed be a nuanced path. Here are some insights and steps you might consider:
Leverage Your Network: Since you have a good network from funds you've worked with and your firm has a solid reputation, use these connections to learn more about opportunities in both PE and HF. Networking is key in finance, and having conversations with those in your network can provide clarity on what HF seats might be available to you.
Evaluate PE as a Stepping Stone: If you can secure a position at a well-regarded Middle Market (MM) Private Equity (PE) fund, it could strengthen your resume and investment analysis skills. This experience can be valuable when transitioning to a HF, especially if you aim for funds that value a strong PE background.
Consider the HF Directly: If your ultimate goal is to work in a HF, you might want to explore that path directly. While it's true that coming from a LMM IB might limit you to smaller funds initially, gaining direct HF experience could be more beneficial in the long run if public investing is your passion.
Assess Risk vs. Reward: Understand the risk profile of smaller funds versus larger, more established ones. Smaller funds might offer more hands-on experience and responsibility early on, but with potentially higher downside risk.
Skill Development: Continue to develop your public investing skills, such as financial modeling, valuation, and market analysis. These skills are crucial in HF roles and demonstrating them can improve your recruiting outcomes.
Recruiting Strategy: If you're unsure about the HF recruiting landscape, consider speaking with a recruiter who specializes in HFs. They can provide insights into the market and help you understand what kind of seats you might realistically recruit for.
In summary, whether to transition to PE first or go directly into HF recruiting depends on your long-term career goals, risk tolerance, and the opportunities available to you. It's worth considering both paths and seeking advice from mentors and recruiters in the field.
Sources: Long Term HF recruiting, PE Recruiting Failure, Q&A: I am a Hedge Fund recruiter, What is a Hedgefund?, Differentiating yourself for hedge fund recruiting (post-IB)
Bump
I mean, can you pitch? And what do you want? Any banker can get a biz dev interview at a big pod, it’s extremely easy to get a look, but then you need to pitch ideas and articulate your interest. So if you’re ready to make the jump and want to join the pod gang, no reason to wait. If you need time to get good, no rush.
The more prestige-focused SMs probably value the PE experience more, but I work at a pod not there so not a ton I can add
Interesting, I was under the assumption that it's much harder to get BD interviews at podshops than how you're characterizing it. Is there a reason most associates come from pretty pedigreed backgrounds (both IB/PE) vs. any bank?
Want a podshop seat, not really looking at SMs vs. a few where I have school alumni.
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