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Why It Is Important To Recruit For Private Equity Before Your Associate Promotion

Private Equity

Private equity recruiting is very confusing, likely due to the fact that you need to process a lot of information in a short amount of time. You have to learn a lot in terms of volume and need to learn how to do work quickly which leaves fairly limited time and opportunities for introspection and self-evaluation. Because the private equity recruiting process happens so early, you’ll notice that a lot of your peers in banking will often be unprepared come time for on-cycle or off-cycle recruiting and will often miss the process altogether. When you are working hard on grueling pitch decks and deal work in banking, it is really easy to postpone your need to study for private equity interviews and the recruiting process. You are going to be tired, exhausted, and mentally have little in the tank. Believe me, I get it; I was in your shoes. However, if you are one of those folks who thinks that it is okay to leave recruiting until later on in your banking career, as in beyond the associate promotion, I want to offer you my advice to reconsider your approach. A seemingly short-term decision may have long-term effects in your career and being thoughtful in your approach to recruiting will pay dividends in your future career path. 


Simply put, the longer you leave private equity recruiting off for, the harder the process becomes. It is functionally similar to the results you get from procrastination. The workload doesn’t go anywhere and you just feel worse than you did before procrastinating. Additionally, if you are interested in a career in private equity and don’t really care much about banking, you are delaying the inevitable and just making it harder for yourself in the short-term. Think about it this way, during the on-cycle recruiting process, you are competing against many investment banking analysts who are generally just starting their first job out of university, and have minimal understanding of the financial landscape and what their job truly entails. This is the nature of on-cycle and to a lesser extent off-cycle recruiting your first year in banking – for those that are prepared enough, this is an advantage, as you may be able to punch above your weight simply by knowing more than your peers and appearing more polished; for those who are unprepared, this is going to make you seem pretty generic and will affect your chances of getting an offer. Moreover, once on-cycle is done, there are just fewer spots remaining at “well-known” shops. This is a fact. I understand a lot of firms are pulling back on on-cycle recruiting but this is generally not true of the majority of established, large-cap firms. If you leave recruiting for later, there are just going to be fewer of these opportunities left, since they will fill up during on-cycle. Considering how much some megafund shops are paying now, you would also be leaving serious money on the table due to a lack of unpreparedness. To the extent these seats are not filled up, during off-cycle, you will be competing against people who have had more experience to prepare for their interviews and had more time to prepare for recruiting. This means that the potential applicant pool is likely far more competitive for fewer spots – which means it’s going to be harder for you to place and even more difficult if you are already an associate. 


Beyond just the timing of recruiting, you need to understand how the business model of private equity works. Private equity roles are inherently more specialized and as you get more and more senior, you begin to develop a more targeted expertise. As such, if you go to recruit for private equity as a Vice President in investment banking, you are going to have a pretty tough time, since the pool of candidates they would be likely to hire is experienced private equity professionals, who may have at least had some associate experience in the industry. I would consider this the biggest risk. When you recruit after your associate promotion, you may be essentially competing against other experienced private equity hires – who likely be heavily favored based on their experience by headhunters and firms alike. After all, who wants to go through the arduous task of re-training a new hire? No one! Will everyone you are competing against be experienced? No – but again, you are just making the potential recruiting process harder for yourself.  


Another trend I have been noticing recently is that if you do not have direct experience with financial modeling through banking or other, aligned experience with private equity – firms will often start lateral hires behind. That is, you may be a senior associate in your previous job but you may start your private equity role as an experienced analyst or junior associate. If you come from a banking background, you will likely be immune from this given the overlap in skillset but if you come from another industry, this is a major drawback and something you need to consider heavily. Starting as an analyst / associate when you have 4-5 years of experience may not be the end of the world, but it will have a definite impact on your career progression and your lifetime earnings, so why even take that risk? This is all easily avoidable if you just double down and grind a bit extra during your first job, earlier on. 


Another reason that people brush off but is important is the relationship side of the equation. I understand that once you leave to the buy side you likely won’t have to deal with your exact team all the time, but finance is a small world. If analysts stay and become associates, the general view from your team is that you are interested in staying for the long-haul in your current position because if you wanted to leave, you would have left during the analyst stint like everyone else. It’s more of a bad look to leave at an odd time during your investment banking associate stint than it is to do the same during your analyst years. There is no reason to ruin relationships unnecessarily and give other folks a sour taste in their mouth about you, in the case you cross paths in the future. Who knows, this might impact a future deal – again, why take the risk? 


Finally, another trend I have noticed at higher levels of seniority is that the interview process becomes much more scrutinized than it would be if you are interviewing as an analyst. As you level up in banking, you are given more roles and responsibilities, further on in your career you are also going to have more experience. Sounds great right? In an ideal world, yes, but in the realm of interviewing, this just gives your interviewers more ammunition to hit you with, more areas where you can be potentially caught off guard, and less leniency from the interviewers because you have more experience. All these factors just add unnecessary complexity to an already unfavorable recruiting and transition environment.


The biggest reason of all, though, is that once you get a private equity offer early on, you can enjoy the rest of your analyst experience without having the perpetual anxiety and stress of private equity recruiting looming over you. You already know your next career step far ahead of time and can focus more on the job at hand or cruise control (a little bit) until the end of your stint. Peace of mind is valuable in this job and industry, so make sure you maximize it. At the end of the day, why would you a) make things harder for yourself in the long-term and b) minimize your chances of an offer if you had the choice to avoid both scenarios with a little extra grunt work in the beginning?


Look, it’s not impossible to secure a private equity gig when you are an associate or a vice president in banking, it’s just less probable. I know when you are young there is this immense pressure of FOMO and wanting to enjoy a “normal” life compared to your peers, but if you want an intellectually stimulating and high-paying job, it requires sacrifice both in recruiting and in the job.

Make it easier for yourself and recruit early on.


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