Is it worth it?
I’ve been with my firm for a little while now and am coming up on a VP promotion. I didn’t get in at ground zero but I got in pretty early and the fund has since performed well and is on its way to being respected in the space. There’s a lot of talented IPs in our group and it’s been made clear to me that I have a path upward.
But I just don’t know that the grind is worth it. We are sweaty-ish and it seems like it gets worse as you go. Like the hours are very manageable half the time (60-70 2 weeks a month) but we pull 80+ hour the other 2-3 weeks and half the time it’s on unimportant portco work. The people up to 5-8 years ahead of me (VPs and Principals) routinely work 60ish hours during the work week and then end up working a material portion of the weekend (min 10 hours). Beyond that though, we’re a bit low on comp for a MM fund and there’s a general tone set by my senior folks that you must be responsive at any time - including nights and weekends. I get that PE can be banking 2.0, but that’s a little ridiculous and especially when it’s not deal related.
I see a ramp at VP to call it $400k cash comp and maybe a point or two that maybe materializes into another $500k in 5 years so we’re talking all in maybe $500-600k (assuming subsequent Principal promote) with sufficient fund performance. That’s not chump change (although not exactly balling out here in NYC) but if I’m expected to work as much or more in my early-mid 30s, is that worth it? My alternative is to join a SM HF with a unique strategy where hours are better (and more importantly I have significant control over my schedule) and comp should be same or better with much higher upside. Of course, the flip side is inherently less job security but it’s been communicated that they don’t think like a pod shop and that includes hiring/job security.
So all that said PE bros, is it worth grinding another 8-10 years to make partner or should I roll the dice and go find out if I can hack it in public markets with higher day-to-day stress but more control over my schedule?
If you truly have a good comparable seat at a HF, I would take it and try it out. I don’t think it’s worth grinding out your 20s and 30s just to get to a Partner seat that still sucks from a work life balance standpoint if you already hate the hours. If the HF doesn’t work out, I’m sure you’ll be able to find your way back to PE even if it’s at a different firm. On a separate note, i don’t think anyone would disagree with you when people say the next couple of decades for PE won’t look nearly as attractive as the last two. There are just too many secular headwinds for people to blindly believe the DAW for a 2x MoM return. Fees are already going down and fundraising will continue to be tough so who knows if PE is actually as stable as it once was. It’s certainly sticky capital, but I don’t think it’s a given for every firm in the industry to raise successively bigger funds which is what is required to promote younger professionals. Imagine a world where you grind out the next 5-10 years for a nice cash comp, but carry is worth 50% less than what you thought for illustrative purposes. Would you still pursue PE? If so, continue on your path, if not, I think it’s worth pivoting. Everyone says once you get to the VP level, it’s Partner track but I would bet that less than 50% of VPs actually get to Partner when all is said and done.
I did PE. Now at HF. Almost zero chance I would be able to move back to PE unless at the junior level and even then tough. (This is for me personally): Comp prob similar to IBD, maybe marginally worse, at the same level but more variance, better lifestyle, worse culture, more stress.
Yes, it gets harder as the years go by, but not hard to create a story to come back after 1-2 years especially after a stint at a UMM / MF PE. The way I think about it the best seat in HF > best seat in PE > average seat in PE > average seat in HF. You just have much less variance in PE
Sounds like the seat you're in is not for the long-term given poor culture - do you enjoy the day to day work in PE? PE gigs with great culture + long-term trajectory are hard to find out there, but do exist (although easier outside of NYC imo). I would hesitant to jump to an HF purely for WLB / comp maximization unless you have a genuine interest in public markets and that style of diligence given the cons mentioned above.
Have you considered jumping to the LP side? Might be one of the best comp maximizing seats where you're working <60hrs / week with limited stress and variability in hours, but you have to stomach a material cut in pay comp trajectory.
What is the current size of your fund? That comp seems a bit low for a NYC VP.
Have you asked for transparency on upward trajectory? That clarity feels necessary. It's unclear if you've compared offer letters/trajectory conversations with your peers, but if you ask folks at other firms I'm guessing that you'll be surprised by how clear and transparent a lot of firms are about their promotion schedule/compensation trajectory/future plans (I didn't realize this until comparing with business school peers). I go on a bit of a diatribe below, but my overall point is that you should feel free to (diplomatically/tactfully) ask for something akin to a roadmap that helps ground expectations for the future in your current seat. Hopefully, your firm is new enough that a question like this won't be met with too much discomfort if you position it the right way. Either way, it's something you deserve to know, just as your firm deserves to have the opportunity to evaluate you before promoting you.
To answer your question, continuing to grind it out in your current situation (given what you've chosen to disclose) is absolutely not worth it. Not much to add on the specific HF opportunity you're considering (I never considered HF), though if you're thinking through a broader search I would suggest also exploring other PE roles/firms.
I've been at three different PE firms - different spots pre-/post-MBA, switch post-MBA - and can confidently say that, within reason, PE firms operate on a spectrum when it comes to how they treat people (which translates quite directly into desirability of long-term prospects at each firm, to your question). First firm was a MF with a decent culture and the typical MF drawbacks on W/L balance, overall "grind it out" mentality, and uncertainty of ascension given a crowded partnership. Second firm was a similarly-sized firm/MF that paid below street on cash/carry (I negotiated street cash comp), though offered a fairly compelling rationale for why that makes sense and why it's worth holding out for the upward trajectory; notably, the firm declined to provide a transparent roadmap for that upward trajectory, and the culture also sucked (should have made this more of a priority in hindsight, more below). Current firm is an up-and-coming shop with a great interpersonal culture (as in, nice people), at/slightly-above market pay for the fund size (with transparent communication around how that will progress based on fund size and promotion schedule), and embedded/ingrained firm-level expectations around W/L balance that are on the more demanding side though not unreasonable.
Ultimately, my advice is this: if you are partial to the work in PE, don't let the experience at your current firm dominate your expectations for firms/roles across the industry. A number of cynical/negative assumptions here (to make a point, if anything), but your current situation seems most analogous to my second firm: low pay, ambiguous incentives oriented around upward/future trajectory, unnecessarily bad/infuriating/burdensome culture, etc. From my experience, the best insight I can give you is that you can only take seriously what a firm is willing to put on the table, in writing. If your request for greater transparency along these lines (again, assuming it is diplomatic/tactful) is met with any kind of friction, the best case scenario is that your firm is new enough such that senior leadership hasn't fielded a question/request like that and they are open to discussing, while the worst case scenario is that you are being set up to be taken advantage of. Absent a promise to devote more thought to your question and a meeting in the coming weeks to discuss, I would view the situation skeptically.
Call me cynical/jaded, and keep in mind that I am the opposite of a "rage against the machine" type (in fact, I am often too accommodating), but given my experiences I feel confident in saying that - even in this industry - reasonably attractive situations (regardless of your personal needs) are easier to come by than you'd expect. Within reason, mid-level folks and associates at the bottom of the totem pole are entitled to basic expectations around trade-offs. Want me to make very large personal sacrifices? Great, just pay me well (pennies out of everyone else's pockets) and make sure my experience is high quality. Want me to accept pay that is lower than market, early in this firm's fundraising lifecycle? Sure thing, but I/others deserve to have a rough idea of the potential upside given what you're implicitly asking of us. In any situation, there's always a path to balancing the upsides and downsides; if your current situation doesn't fulfill that (sounds like that's the case), I would assume that the decision-makers made the conscious choice to structure things differently. Meaning, no, it's not worth it. Seek other opportunities.
This was super helpful, thanks. I asked for a more defined path and it was met with you’re on track for next year (next fund raise) and we really value your contributions and blah blah blah. Would not commit on comp (though said I would be in line to tap into fund economics) nor timeline beyond VP or any effort to minimize unnecessary work/timelines. I think it’s a safe assumption that this was relatively unexpected and a first or second type ask. Overall hit a few of the points but not quite what I wanted. There’s things I like and dislike about the job for sure - but let’s just say it’s close but doesn’t quite break positive. So all in, it makes it for a pretty easy choice.
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