US private equity prowls for young bankers fresh out of college
Buyout firms tapping junior bankers earlier — advancing the annual recruiting cycle
Wall Street’s newbies — investment banking analysts straight out of college who just hit the desk — have barely started one job when another starts beckoning.
Junior analysts a few weeks on the job can now expect a flurry of emails from headhunters for some of the most prestigious private equity firms in the world.
The jobs they’re being recruited for can pay more than $200,000 (Dh734,600) a year and won’t start until 2019.
The battle to hire the best of them is fiercer, and more urgent, than ever.
Buyout firms are tapping junior bankers earlier — advancing the annual recruiting cycle, the industry’s biggest window of hiring, for the fifth consecutive year after an agreement to hold back fell apart.
The shift comes as a war for talent heats up in private equity, where firms are raising record amounts of capital from investors starved for yield while competing for talent against rivals and Silicon Valley technology firms.
To lock down the brightest candidates, mega-funds such as KKR & Co, Warburg Pincus and Carlyle Group LP fill up their classes as early as the first day of interviews.
Coffee, cocktail invitations
Headhunters start by firing off invitations for coffees and cocktails to junior bankers just months out of college. By December, their resumes are stacked on the desks of private equity firms such as Apollo Global Management LLC, Bain Capital, Blackstone Group LP, TPG and Golden Gate Capital.
During the most recent cycle, formal interviews started in January, said Julian Johnson, the executive vice-president of Sponsors for Educational Opportunity. SEO helps underrepresented candidates break into the industry.
That was the earliest recruiting start ever — about two weeks sooner than the previous year, and a full three months sooner than in 2013, when the major private equity firms stopped cooperating on timing after some broke out to recruit early.
“Someone always gets nervous” and starts recruiting first, said Josh Grauer, a partner at Dynamics Search Partners. Other firms then have to jump in immediately, their managing directors often forced to cancel business meetings last-minute to interview candidates.
“Every January, we hold our breath and hope it will start later,” said Susan Levine, the head of private equity recruiting in North America at Bain Capital.
The majority of the megafunds fill up their spots within 96 hours, said SEO’s Johnson.
Hours to decide
The jammed schedule means candidates have to decide on offers within hours.
A junior banker at Morgan Stanley said she got her first offer at 6pm on the first day of recruiting, but it expired at midnight. She gave it up to continue her interviews with other firms, including one that started at 10pm. She asked not to be identified because the process is private.
“I feel for the candidates because the process is so frenetic it can sometimes be difficult for them to make thoughtful decisions,” Levine said. With private equity shops poaching bankers earlier and earlier, the relationship with banks is becoming more strained, said Patrick Curtis, the founder of Wall Street Oasis, a job advice forum for the finance community. It’s sometimes difficult for analysts to care about their job after securing an offer, he said.
At Goldman Sachs Group Inc, junior bankers have to be secretive about job-hunting because it could lead to their dismissal, people with knowledge of the matter said. A Goldman Sachs representative declined to comment on whether there’s a policy banning first-year bankers from accepting offers.
To attract candidates, some boutique banks have gone so far as to brand themselves as a two-year training ground for lucrative private equity jobs.