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Investment Banking Exit Opportunities: Everything You Need To Know

Exit opportunity

There are words in the English language that spread like wildfire the moment they’re used. “Exit opportunities” is one of them. I don’t think I ever had a call with a student interested in our services without hearing “exit opps” at least twice. It’s almost a parody by now. 

Anyway. Aside from making me laugh, exit opportunities after investment banking are a real subject. It’s top of mind for many students interested in a career in finance. 

Since they want the best for their careers, it’s only normal if they think strategically about which doors will be open to them after a few years in investment banking (and which doors are the most beneficial to them). 

That’s why I wanted to write an article to share my view on the subject, even if you already have a zillion articles online talking about the same. 

In this article, you will learn:

  • What are the main career paths available to you after a few years in IB
  • Is life on the buy side really better?
  • Why thinking about exit opps may already be a red flag

Spoiler alert: My take is slightly different than what you may have seen elsewhere…

What are your "exit opportunities" after investment banking?

First, let’s talk about the typical paths that are open to you after investment banking. Note that any path is possible. If you want to, nothing prevents you from becoming a yoga teacher in the Nepalese mountains… But the career paths I’ll present below are the ones that tend to be the most popular and seamlessly accessible after a few years in investment banking.

1. Private Equity
private equity

What is it: PE firms buy companies, increase their value by optimizing their financial performance, and typically sell them a few years later to achieve a high ROI. PE firms typically use leverage to buy private or public companies, hence the term “Leveraged Buy Out” or “LBO” to designate operations involving significant amounts of debt. 

Private Equity is a very popular career exit for investment bankers. It’s typical to see GS investment bankers move to the “buy side” by accepting offers from reputed PE firms like Blackstone, TPG, or KKR. PE firms tend to recruit their talents almost exclusively from top-tier investment banks, because the skillsets you develop in IB and PE are very similar. Hence, transitioning to PE after 2-5 years in IB is a very logical step. 

  • Attractive compensation. PE tends to be even more lucrative than IB, especially when you reach senior roles. On average, you can expect to earn at least 20% more at an equivalent level of seniority. Further, due to the mechanism of carried interest, the compensation upside is nearly unlimited. Bear in mind, however, that it may take you a decade to reach levels of compensation that substantially differ from IB.
  • Exceptional calibre of people. In IB, you technically work with the “cream of the cream”. The top 2% of applicants who were smart and competent enough to get the job. In PE, you work with the “cream of the cream of the cream”. To get a job in PE, you’re competing with thousands of top-performing investment bankers who are just as hungry as you are. So when you do get in, every colleague of yours has been through a “double filtering” process: investment banking selection (ruthless), then PE selection (even more ruthless). As a result, the people you’ll be working with will typically be extremely smart, competent, and ambitious. 
  • Slightly better work-life balance (in some cases). Many candidates think PE offers a much better work-life balance than IB. This is not necessarily true. At PE “megafunds”, you can work just as hard if not harder than in IB, easily pulling 70–80+ hours a week depending on deal volume. That said, it is true that on average, hours are slightly less hardcore, but don’t expect a normal 9-5 either. 
  • Still very demanding lifestyle. As mentioned, hours in PE are not drastically better than in IB. They are slightly more manageable, but you will still work very hard and won’t have much free time, especially during live deals if you’re working at top-tier buyout firms. 
  • Exceptionally hard to get into. Top PE firms almost exclusively recruit from BB banks and elite boutiques. They take very little recruitment risk and tend to follow a “plug and play” approach to selecting their new hires. That means if you don’t have the traditional background they’re looking for (prestigious university + several years of IB experience at top-tier investment banks), it’ll be extremely hard to get in. Even if you have the right background (top uni + GS M&A experience), there is guarantee at all that you will ever land a PE role. Their recruiting processes are exceptionally competitive, and the caliber of candidates is on a whole new level. 
2. Hedge Funds

What is it: Hedge funds are investment funds managing money on behalf of institutional investors and very wealthy individuals. Their goal is to achieve active returns for their investors by employing a diverse range of investment strategies designed to outperform the market. 

Hedge funds are a common exit path for investment bankers and equity research analysts (people performing research on traded equities). The recruiting process at hedge funds is typically much less structured compared to that at IB. Each firm has its own way of recruiting and assessing candidates. 

Unlike IB interviews, which can be prepared in a consistent way, HF interviews are usually highly unpredictable. You can’t just prepare a list of interview questions, just like in IB. Here, you need to genuinely know what you’re talking about, and you need to demonstrate your market intelligence in real time, improvising on questions that you’ve never seen before. 

In other words, in IB, you can fake it (to a degree), but in HF, you can’t. You just have to be extremely competent, or you’re out. For that reason, the world of HFs is the closest thing to a meritocracy you can find. Top performers stay and thrive; bad performers don’t last; and pretenders are systematically rejected. 

  • Extremely competitive compensation. Pay can be even higher than Private Equity, depending on the fund. Since pay is directly linked to how you perform, the compensation upside is massive, even at relatively junior levels. Hedge funds typically have very compelling compensation structures that incentivize outperformance. The more money-generating ideas you deliver, the higher your pay. When you reach the position of PM (usually after at least 5-7 years of experience), you can potentially make millions per year, if the fund performs well. 


  • Flatter hierarchy. On the HF side, the hierarchy is very flat compared to IB and PE. You start as an Analyst, then Senior Analyst (some funds don’t even make that distinction), and if you’re very good at your job, you may become Portfolio Manager – the dream goal of many hedge fund analysts. This flatter structure offers more opportunities for career advancement. If you prove your worth, you can quickly become a well-respected analyst and even a PM, if you play your cards right.


  • Less office politics. A common complaint in IB is the constant office politics. Navigating office politics is critical to rising up the hierarchy in banking, but in HFs, there is a much greater emphasis on competence and merit. You can be the worst at office politics and still become a prominent analyst at a hedge fund if you perform well. For that reason, many super-smart, analytically gifted individuals who lack “political skills” (or who just hate politics) go work for hedge funds. Politics can still exist, but it’s much less pronounced compared to IB.


  • Constant intellectual stimulation. Whether you work in trading or investing, you will constantly make use of your analytical mind by analysing data, stocks, indexes, commodities, and many other things, depending on your team. Many hedge fund analysts are analytical machines; thinking critically is what they do best. Some of the smartest people I’ve ever met worked at hedge funds. 


  • Better work-life balance. With the exception of a few large, global hedge funds where hustle culture prevails, you can generally expect a better work-life balance on the hedge fund side. It’s not uncommon for people to leave their desk between 5 and 6, just like in a normal job. I used to work at a $12 billion hedge fund in London and most people were gone by 6.30pm. The only difference is that people tend to come very early to the office, usually around 7am. Note that work-life balance can greatly vary depending on the HF you’re at. But overall, it’s much better than PE or IB. 


  • Variable compensation. Your compensation is closely tied to how the fund is performing. If the fund is doing badly for several consecutive years (which can happen quite often), your pay could be much lower than what you would earn in PE or even in IB. There is a variable element of compensation that is not entirely in your control. You have to accept the volatility of your annual compensation, which can feel uncomfortable when you’re trying to settle down, buy a house, build a family, etc. 


  • Limited job security. Most hedge funds go bankrupt within 7 years (yes, that’s brutal). That means that if you join a hedge fund, the likelihood that it will be wiped out of the market is high. If you work for mega hedge funds like Point72 or Citadel, this risk is greatly reduced, as these firms are now large-scale financial institutions with highly diversified strategies. The other risk is being laid off due to sub-par performance. HFs are full of super-smart people who are just as driven as you are. If you perform badly, you won’t stay long. And finding another job in the hedge fund industry is anything but easy. 
  • Limited exit opportunities. After working for a hedge fund, it’s very difficult to move towards PE or VC, as you’ll lack deal experience. Potential exits in finance include traditional asset management firms. Outside of finance, I would argue that opportunities are limitless. It’s true that the world of HF is a very niche industry, but the analytical skills that you build there can be easily promoted to access a great variety of analytically-oriented jobs.
3. Venture Capital

What is it: Venture capital is the equivalent of private equity for early-stage companies. VC funds invest in startups and often provide founders with financial and strategic advice to grow the business. Just like PE, the primary goal of VC funds is to sell their stakes at an attractive ROI after a few years post-investment. 

In VC, there is also a great emphasis on deal experience, which means that previous M&A experience will be appreciated. A key difference with private equity is that VC investments are typically much higher risk as the startups they invest in have a high probability of failure (a new company is more likely to go bankrupt than a mature, established one). While VC firms are taking riskier “bets” by investing in early-stage startups, payoffs can be significantly greater than in PE, if things turn out well for these portfolio companies. 

Culture-wise, VC firms have a way more laid-back environment compared to the high-pressure vibes of PE and IB. People tend to dress more casually and behave with fewer personality restraints. 

  • Better lifestyle and work-life balance. Work-life balance is significantly better in VC compared to IB or PE. You can expect to work between 50-60 hours a week on average, depending on deal activity. That means that you will have more free time to pursue personal projects and enjoy the company of your loved ones. Many burned-out investment bankers have moved to VC to obtain a better, less stressful lifestyle while continuing to pursue their interest in finance. 


  • More laid-back, casual environment. Some people may not like that, but if you work in VC, you’ll typically be surrounded by very positive and supportive colleagues who take themselves less seriously than in IB or PE, where most people are visibly tensed, serious, and sometimes austere. It obviously varies by firm, but VC culture is in general much more friendly and welcoming. The dress code is more relaxed, people are often in a good mood, and the overall ambience is warm. This alone is a major positive aspect.


  • Exciting job. The job is genuinely interesting in many respects. You will search for investment deals, meet extremely smart and driven entrepreneurs with novel business ideas, conduct thorough market analysis, and contribute to the growth of exciting startups that may turn out to be tomorrow’s corporate giants. Just imagine the pride you would feel if you were among the few VC investors who accompanied Airbnb in its earliest stages… Not only would you be very rich, but you would also probably feel very good about having contributed to the growth of a global success story. 


  • Lower pay. Compensation is typically lower than IB and PE at junior levels. However, you can still earn a lot of money as you gain more experience, especially if you have the opportunity to earn some carried interest. Similar to Private Equity, the compensation upside in VC is pretty much unlimited. But it may take you a longer time to reach the highest tiers of compensation in VC. 


  • Limited exit opportunities within finance. After venture capital, your exit opps within finance will mostly be limited to other VC firms or some variations of PE funds (growth equity, mezzanine funds, etc.). That said, possibilities are endless outside of finance. 
4. Corporate Finance

What is it: Corporate finance is another common path for investment bankers. It’s a rather vague career term that encapsulates every role within a corporation involving financial operations, from fundraising to capital budgeting to cash flow management. Your goal is to make sure the company is growing, maintain a strong balance sheet, and create value for shareholders. 

A common move after investment banking is to do an MBA at a top grad school, before joining a company as a senior corporate finance professional. With experience and good relationship skills, you may even become a CFO and therefore a member of the executive management team. A CFO at a large-cap, publicly traded company can earn seven figures per year, including bonuses.

  • Better work-life balance. In corporate finance, you can expect to work less than in IB, most likely less than 60 hours per week. That said, if you reach senior roles, the workload and pressure can also be significant. 


  • Can be very rewarding professionally. If you reach senior positions in corporate finance, you may oversee the financial operations of a billion-dollar corporation with thousands of employees and millions of customers. This amount of responsibility can feel very rewarding. 


  • Plenty of exit options and good job security. Experience in corporate finance can open pretty much any door that is related to finance. The skills that you build there can serve you in many related professions (related to finance and strategy), offering good job security. 


  • Lower pay. Compensation is significantly lower than in IB, PE, or HF. It’s hard to provide a range as every firm has its own compensation policies, but you will for sure earn less in corporate finance compared to other paths mentioned before, especially for junior roles. That being said, you may still benefit from attractive compensation packages at more senior levels after a few years of IB experience. If you manage to become CFO, then your compensation can rival or even exceed that of IB or PE. Just be aware that the progression of your salary will typically be slower in CF. 
  • Bureaucracy and office politics. Some people like that, but in CF, you can expect a lot of office politics, depending on the firm. That means that your recognition within the firm and your career progression will not only depend on your degree of competence but also on the way you deal with people and navigate corporate politics. Large corporations also tend to be more or less bureaucratic, which can be irritating for people who favour no-BS effectiveness over slow administrative procedures.
5. Entrepreneurship

What is it: Launching your own business alone or with partners. I know that many of you get stars in your eyes when you hear the word “entrepreneurship”. But trust me, this path is not as glamorous as it seems. In fact, for most people, following this path is not a good option. They would be better off in PE, VC, CF, or elsewhere. That said, it comes with its rewards. 

  • Unlimited freedom. When you work for yourself, you can technically take vacations whenever you want, work from wherever you want (if you have a digital business), and organize your day however you please. To me, it’s one of the biggest benefits. The freedom of having the option to wake up at 10 if you wish, to book a spontaneous flight to Prague for 3 days in the middle of the week, and to live life on your own terms This lifestyle is possible, and the feeling of boundless freedom is priceless.


  • Unlimited compensation upside. There is no limit to how much money you can earn when you run a business. In IB and PE, your salary will increase fast, but you will never get an 800% compensation increase in one year. When you have a business, there is no limit. If you manage to generate $100k a month with your business and want to pay yourself $30k, no one will stop you from doing that as long as you pay your taxes. There is nothing stopping you from making millions per year in 2–3 years, although it is highly unlikely that it will happen. 


  • No boss. If you don’t like receiving orders from a boss, then having your own business is great. That said, it doesn’t mean that you don’t owe anything to anyone. In entrepreneurship, your “boss” is more or less your clients. If your clients want your services, you have to deliver. But the benefit of having no boss is that there is zero risk of being fired for not being on good terms with your superiors, since you have no superiors. 


  • Flexible work schedule. When you work for yourself, you manage your work as you please. You want to start working at 11am, and end your day at 3pm? You can. Probably not recommended for growth purposes, but in theory you can. You can work on weekends and take time off during the week. You have complete flexibility. You’re the master of your own time.  


  • Extremely enriching on a personal level. Building a business is a tough but wonderful adventure that will teach you countless lessons about resilience, responsibility, and problem solving. If you start solo, you will have to learn a lot of new skills that are important to growing a business, including sales, copywriting, prospecting, personal branding, and more. Successful entrepreneurs are usually ultra-generalists; they had to learn multiple crafts at once to make their business financially viable.


  • High likelihood of failure. Most businesses fail to make any money. It is possible to work one year, two years, five years, without giving yourself a decent salary. It’s easy to dream of luxury villas and black Bentleys when you see all these successful entrepreneurs on Instagram and YouTube. But in reality, most people who launch businesses don’t make any cash, or not enough to sustain themselves. Due to the survivorship bias, you don’t hear about the majority of entrepreneurs who fail, but you do hear a lot about those who succeed. A lot of very smart people with IB experience have attempted to launch businesses and failed, only to come back to the corporate world shortly after. If you’re interested in this path, don’t underestimate the difficulty of building a profitable business.


  • Very limited exit opps. When you run a business for more than 2 years, it becomes extremely difficult to get back to a normal job because very few recruiters will want you. By choosing entrepreneurship, you become pretty much unemployable in many competitive fields, including investment banking. There are still corporate doors open to you, but you will have to be very good at justifying your move to become an employee again. 


  • Work-life balance can be worse than in IB. It’s true that if you wanted to, you could work 2 days a week. But in practice, if you want your business to take off and generate consistent revenues, you will have to work very hard, perhaps even harder than in IB. Since it’s your business, it’s quite easy to become consumed by work to the detriment of your personal life. 
  • No financial security. When you’re an employee, you have a fixed salary and financial safety. When you work for yourself, there is no security. If the business doesn’t make money (or if you don’t have funding from external investors), you can’t pay yourself. Financial security is never granted; it is earned. Even if your business is successful, you may still experience huge fluctuations in salary during tough periods.
The danger of thinking "exit opportunities" and the Private Equity trap

In this final part, I would like to address the common danger of thinking about exit opportunities. 

Countless candidates share the exact same line of thinking:

  • They want to work in IB at a bulge-bracket bank for 2-3 years; 
  • They assume that IB is a necessary purgatory that will give them the experience and legitimacy to pursue highly lucrative buy-side roles;
  • They aspire to switch to “the Promised Land” of PE as soon as they can, to work for the Blackstones and KKRs of this world. Assumptions: better work-life balance, significantly better pay, unmatched social prestige.

If we look at this line of reasoning, it appears to make sense. The problem is: it is tragically flawed. Many students genuinely believe in this reasoning because they see it everywhere online and because their peers think the same. But in reality, it works very differently. 

First thing, PE is not as glamorous as you think it is. I noticed that many candidates have a highly idealised vision of PE that strongly differs from reality. The pay can indeed be significantly higher than IB when you reach the most senior echelons of the hierarchy (partners can make mid-single digits per year), but it won’t be that much higher in the initial years of your PE career

Second, work-life balance is not necessarily better. If you work at PE “megafunds” (KKR, BX, TPG, etc), you can expect to work just as hard as in IB, if not harder. Hours will tend to be less crazy in smaller PE funds, but don’t expect a normal 9-5 either. At any respectable PE firm, you can expect to work at least 70 hours a week, and the intensity of work can be even higher than in IB. 

Second, do not underestimate the competition for top PE firms. Even with several years of IB experience at BB, nothing guarantees that you will make a successful move to the buy-side. There are thousands of elite candidates with premier IB experience and pristine academic background who are in direct competition with you. 

Third, assuming you have no IB experience, you don’t even know if IB is for you or not, and you’re already thinking about exiting the industry? If your primary goal is to exit the IB industry as soon as you can to go to the buy side, what does it say about your motivation to work in IB? If we go one step further: how do you know if PE will be a suitable career path for you if you don’t even have a realistic taste of it? 

PE and IB are very similar in many regards (intensity of work, mindset of people, work-life balance, culture, etc). If you don’t like IB, there is a chance you won’t like PE either. So before thinking about “exit opps”, think about “learning opps”: get some quality IB experience, let yourself feel the job, and decide if you like it or not. 

Only then the question of “exit opps” should scratch your mind. 


A word about the author

Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.

He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.