Private Equity vs. Private Credit: INSIDE the Buy-Side

Private equity or private credit? Two of the biggest growth areas in finance over the last decade have differences in how they work, how they make money, and what the day-to-day actually looks like that are often misunderstood. In this episode of What's the Big Deal?, Debs sits down with Graham, who spent a decade at Ares Management, to break down what private equity and private credit are, how they differ, and what aspiring analysts and associates should consider when choosing between them. WTBD Newsletter: https://webmail.wallstreetprep.com/wh... Follow Us On Socials: LinkedIn:   / wall-street-prep   Instagram:   / wallstreetprep   Resources: https://linktr.ee/wallstreetprep TIMESTAMPS: 00:00 — Cold open: PE vs. private credit, what's the difference? 00:39 — Episode intro: setting up the explainer format 00:55 — The fundamental difference: equity vs. credit, public vs. private 01:40 — Motivation: upside potential vs. capital preservation 03:12 — Return profiles: PE at 15%+ IRR vs. credit at high single digits 04:30 — How private credit funds use leverage to amplify returns 05:31 — Do PE and credit arms ever finance each other's deals? 06:33 — How closely the two sides work together on transactions 07:46 — When PE and credit invest in the same company 09:17 — Diligence focus: market opportunity vs. downside protection 10:16 — Deal pace and volume: single-deal depth vs. portfolio flow 10:42 — Generalist vs. specialist: how Graham thought about it 11:33 — The technical skills you need on both sides 12:06 — Career paths and progression: how to break in today 13:33 — Graham on leaving Lehman Brothers 14:13 — Closing thoughts Topics covered: → What private equity and private credit actually mean → The fundamental difference in motivation: upside potential vs. capital preservation → Return profiles: 15%+ IRR targets in PE vs. high single digits to low double digits in credit → How private credit funds use fund-level leverage to amplify returns → Whether PE and credit arms within the same firm finance each other (they don't) → How closely the two sides work together on deals → Diligence focus: market opportunity vs. downside protection → Deal volume and pace: longer single-deal cycles in PE vs. higher flow in credit → Career paths: how to break in, work culture, and progression → Graham's reflection on leaving Lehman Brothers and finding "a better life" Whether you're choosing between PE and credit, considering a buy-side career, or just want to understand how these two sides of finance actually work, this is the episode for you.