Defer PE Recruiting Until Second-Year?
It's no secret that on-cycle PE recruiting has shifted to be dramatically early (the cycle kicked off late-October most recently if I'm not mistaken), and this trend is likely to continue for the near future. As a result of the unexpectedly early start date for recruiting this past year, a lot of first-year analysts have opted to wait until their second-year. In this backdrop of more analysts choosing to recruit as second-years, it seems that first-year analysts will be greatly disadvantaged in future recruiting cycles, given that first-year and second-year analysts compete for the same spots for the associate role at PE shops and first-years lack deal experience and technical expertise on a relative basis.
As an incoming first-year IB analyst (at a large independent advisory firm), I wanted to ask the WSO community what its thoughts were on if and how the earlier PE recruiting process is affecting the choice to recruit as a first-year versus as a second-year.
Personally, I am wondering whether it would be worth it to wait until my second year to recruit for PE. I graduated in December and, given my interest in investing, was thinking about preparing for first-year on-cycle recruiting until I start work--I plan on starting work a few months early than the official start date. However, if there is a paradigm shift to analysts recruiting as second-years vs. first-years, I certainly do not wish to be at the wrong end of that trend.
Since you have time and know you want to do PE, I would go ahead and prepare assuming that you want to recruit on-cycle. Despite more 2nd years being a part of the recruiting process than before, there is still a (unjust) preference towards first years and a thought that 2nd years didn't get anything their first time around (usually not true).
The bar will be lower for you as a 1st year and the options will be more than for a 2nd year. As long as you prepare as per the guides, you'll be fine through the process. The main benefit is that you'll be able to go through both banking years relatively stress-free. Just make sure you're ready, only get to interview once per firm and you don't want to get on the bad side of HHs
Thank you for the response. If other people can speak to the bias towards first-year analysts among PE firms, that would be greatly appreciated. The reason that I'm asking for further clarification is that I know several data-points of second-year analysts placing extremely well
Definitely can recruit well if you have a good relationship with the recruiters. You'll just always get the question why you didn't recruit your first year and need to know all your stuff cold to prove you're not "leftovers"
I think that the real decision is are you willing to do a 3rd year in banking if you recruit on-cycle as a 2nd year. 2nd years in my group have had great success recruiting, getting interviews at plenty of reputable names, so I don't see much harm in waiting until you're a year in (or even doing off-cycle opportunities in the latter half of your 1st year).
Thank you for your insight.
I'm expecting a lot of deals in the space that I'll be working in over the next 2-3 years, so I don't mind staying on as a third-year. However, unless the marginal benefit of staying on as a third-year (in terms of better exits) is significant, I would rather transition to the buy-side ASAP. For example, I would be willing to stay on as a third-year if it meant joining a UMM/MF vs. a vanilla MM PE firm.
Also, any anecdotal data points of how first-year analysts did in on-cycle recruiting this past year would be greatly appreciated!
Honestly as far as I know 1st year analysts that I know all had very meh go-arounds this recruiting cycle. I think funds recognize that with on-cycle recruiting being only a few months in you can’t really distinguish who’s the best candidate, so many funds have been cherrypicking the top candidates on paper (your GS/Harvard guys) and leaving a few spots open for off-cycle to pick up guys who actually have good deal experience.
Anecdotal of course, but I skipped year 1 recruiting all together, did basically no recruiting year 2. Did it all year 3 and didn't find it to be that challenging. 100% certain I would not be at my position today if I had interviewed for it as a first year. Luck definitely played a part, but I felt having a story that really made sense was super helpful. If you look through some of my old threads you'll find some more color on my recruiting process.
Thanks for that. Is there a reason why you skipped recruiting in year 1 and barely did it in year 2? Were you simply not ready, or did you just not have an interest in investing until year 3? I looked through your past posts, but I don't think you've ever explained it.
Combination of factors, really. 1) I realized fairly early on I wasn't that interested in "vanilla" PE and didn't want to blindly commit to something w/o really figuring out what I wanted 2) My girlfriend was applying to medical schools and I wanted to wait to see where she would end up - year 2 she got waitlisted at a couple places and didn't actually get in anywhere so I called off recruiting 3) I had optionality to stay on w/ my group past my analyst stint so job security was never an issue, and I never was the type of person who had my life planned out to do the traditional 2+2 then business school.
I guess there was always a part of me that recognized that because of my non-target, pure liberal arts background, I had a lot of ground to catch up. That combined with me being at a MM and not BB made it so I knew I wasn't the most attractive candidate on paper alone, even though I had stellar reviews and got top bucket bonuses every year. A third year definitely made me a much stronger candidate.
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