Deteriorating Associate Quality?
Ignore title - VP2 at a MM IB.
Over the past 18 months, I've noticed a trend of bottom bucket analysts getting offers from very reputable MM (and sometimes UMM) PE shops, when previously those spots would only go to the top performers. I don't think my group's "prestige" has materially increased over the past couple years, so not entirely sure what's driving the change.
Question for PE VP+s, have you guys noticed a deterioration in quality in your associate pipeline and new hires? Wondering if this is actually flowing downstream or we just suck at evaluating talent / performance.
I have anecdotally heard people complain about this at other funds - we have not had any noticeable drop off in quality in the past ~3 associate classes, though could be that we are recruiting offcycle / all of our candidates have at least 1 year of actual banking experience when we interview them vs. the arms race to recruit earlier and earlier. Are your analysts getting offers early and then coasting?
Not from my understanding - I've done a bunch of reference calls for analysts and they're almost always 1+ year in at the point they're getting offers. The coasting typically happens the last few months before leaving. The highest performers who leave still sprint to the finish.
Anecdotally, I have also noticed an increase of backdoor reference calls from some of my counterparts at the VP / Principal level if I've got a relationship with them. I don't neceassarily agree with this practice, but it's something to be mindful of for all the analysts gunning for PE exits...
Over the past few years, there has been a deterioration of the economics of a PE career. Wonder if those phenomena are related
Every PE interview process is the same. Same technicals, case studies, etc. Anyone who practices a little bit with some BS deal on their resume can spin through interviews. Also at my bank we had practically every PE firms case study and interview questions saved in an internal folder...
IB performance is completely uncorrelated with PE associate performance. In fact, analysts who prioritize PE interview prep at the expense of IB performance often place better than the analysts who fully commit to IB and don’t have time to prep for interviews.
There are many bottom bucket IB analysts who become excellent PE associates.
Agree, the smartest people in my group are usually the ones who are prioritizing exits and don’t give a fuck about their current job. The dumbest people are the ones who stay, and they get top bucket because they don’t have to prep for interviews and their focus is 100% on the current job. Doesn’t help that our bank consistently pays below street and drives out all the people who know what they’re worth.
Congrats on UBS!
This is it. To be top bucket at my bank, all you really had to do was grind harder than everyone else. At my current fund, i'd say grinding gets you 60-70% of the way there. The ability to think critically fills the gap which honestly was hardly ever tested back in my banking days.
OP here - Understand your point, but that hasn't been my experience in the past. I recognize my group could be more of an outlier vs BBs /EBs. In the past, the top guys / gals would get good exits if they wanted but the bottom buckets typically went to very small LMM shops. Not so much the case anymore.
That’s because recruiting happens earlier. These guys might have been top performers in past years but now they’re incentivized to focus on recruiting immediately upon joining instead of learning the job of IB and once they secure an offer they stop caring.
Associate quality has definitely declined. But the first comment above is spot on. It’s psrtislly a generation thing. But also the value prop of PE has declined so a 22 year old is prob less willing today to destroy his entire life and well being for the promise of millions of non existent carry dollars, relative to ppl 10-15 years ago. Given you can now do tiktok YouTube or AI. Also some of the smartest people who previously self selected into PE are probably now starting their own AI company etc. it’s a different era and motivation level for sure
Precisely, it ain’t that complicated. People just won’t grind as much if the money on offer isn’t as good. Still a fantastic career but let’s be honest, it won’t be nearly as lucrative as it was for the previous generations. Always try to subtly remind this to the boomers around me.
Associates have definitely declined, but not all their fault. The associates now went to college during COVID and may have had their first roles be in remote or hybrid settings. That makes it tough to learn how we all did - huddled in a MD's office and talking in between comments on mute, being pulled into a call just because you were close in proximity, etc. Their has also been an increased importance on WLB for that generation, so they just don't seem to work as hard as past classes.
wonder if there is an equilibrium effect where easier to get promoted if you can still keep on par with the quality of associates previously.
What are some of the different skillsets in IB vs. PE where a top bucket in IB might not succeed in PE? From my understanding, the associate role in PE still mostly execution and putting in the hours and being on call.
It's cause the comp is not as good as it used to be.
I just saw a post on LinkedIn of someone recruiting for an IB Associate/Analyst at Cantor Fitzgerald for Biotech sector with a requirement to have a PhD in Biosciences and the salary of $110-150k (I'm assuming 110 for An, 150 for Asso) in NYC. I know people working back office jobs and making $250k+ with low stress, low hours, and job stability. So the value proposition of IB is not really there anymore. And from this forum I get the idea that PE folks are making less than IB folks nowadays. So, there's no incentive for people to sacrifice their time and health in IB/PE anymore.
Because comp hasn’t caught up with inflation. It’s that simple really
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