Filtering out “check the box” associates
I notice us hiring more and more people who just checked some boxes 3.7+, top school, group etc. We do not participate in on cycle so it’s not that. These kids come in but have low desire to do the job and just mail in ok work or have low desire to really learn the business. They produce their pages and go home. How do you filter those kids out in interviews vs top the candidates who are going to try and think and improve on the job?
Everyone has access to the same interview prep so they all come off “polished” but you quickly see in 4/5 months a big difference between the check the box candidates and those who find PE interesting
I’m a PE prospect myself so take this with a grain of salt, but maybe more qualitative heavy interviews would actually determine who’s following the space actively vs. those who have grinded through peak frameworks? My on cycle process was a joke in the sense that it was basic behaviorals, a few loose questions about an interesting company / space - but felt largely learnable like in IB. Then there was the modeling test and presentation, which is still a monkey see monkey do skill in the grand scheme of things.
VC interviews tend to be heavily skewed towards market analysis, idea generation, and sourcing skills (mock call with a CEO) that could be adapted to test genuine interest at LBO shops. If you’re hiring team is purely prestige whores though then that’s what you’re gonna get - applicants that check the boxes and see your firm as just that: another box to check.
Ditto, this is what happens when you only recruit based off prestige and not passion.
I'm in the HF world but have noticed the same, I think it boils down to what you are hiring for. One team I was on hired juniors specifically with the intention of finding people who could one day be a PM. Another team hired just to find a cog in the machine and execute the junior tasks they would be given. Nothing wrong with either set of needs but don't expect to find those with genuine interest when you are searching for a cog.
Though these examples would be a bit different for PE associates, when I was hired on the cog searching team I was asked pretty basic questions about stocks I had covered in the past and then given an assigned company to research and pitch. The future PM searching team gave me those things plus asked tons of questions about "What do you trade in your PA?", "who are some investors you follow and admire?", "what are some investing books you've read?", and also took me out to a few lunches where we had fluent conversations about the stock market. Bottom line: finding someone who really cares takes more time, effort, and probing, but they will easily stand out if you do those things.
Ignore flare - associate in IB. Maybe a hot take here, but this is not really just applicable to PE, but most finance industries. I think there a TONS of people in IB and PE who don’t actually give a shit about the job and are there purely for the money and exit ops, and to me that is okay. It’s funny, because firms want the absolute best talent that is smart, hardworking, analytical, and let’s be honest, borderline submissive, yet they treat most of these kids like dogwater. Juniors get absolutely grinded here and pay is basically the minimum these firms can offer in order for analysts/associates to consider staying. So I really have no problem if people just do their jobs and go home. It’s crazy how fucked the culture is in IB and PE lol. If you literally just do your job (even if it’s done well) it’s considered underperforming because you are not going above and beyond. Stay chillin boys
Wonder if this guys firm even pays market
You’re the exact candidate OP is trying to filter
People don't like this comment but it's true. OP is trying to figure out how to identify associates in the recruiting process that actually give a shit and have potential at moving up the ranks directly. Just like in banking there's a big difference between top-bucket analysts and mediocre ones, despite having similar credentials. This commenter in IB is clearly fine with the latter, but that's the pool we're trying to sort out during the recruiting process.
Throwing another $50k at people isn't going to suddenly change the candidate pool.
Not sure why the above response got downvoted. You have to be willing to offer something above market to get above market employees. Not sure why people would think you would get better than a "will do" associate if you are hoping to put them through a grinder for at market pay with no real upside. There was a thread on here a few weeks ago asking about PE firms to avoid and if you find it, the funny thing is practically every respectable PE firm was on that list. This is not the 20th century anymore where you can treat people like dog crap and expect them to grind for you. Especially when the upside is terrible compared to the 20th century in PE.
This. There is no free lunch. You get what you pay for (in comp, culture, upward trajectory you offer to these candidates). Vanilla cake firms get vanilla cake employees. Nothing surprising about this.
"Silent quitting"
*quiet quitting
Hi, I find PE very interesting and I check those boxes. You guys hiring?
being very honest - i think IB/PE hires everyone based off on brand name/networks/referrals etc.
Maybe try and expand your interviewing pool a bit?
i got dinged over several people who came from more brand name banks and colleges multiple times and didn't even get an interview for most competitive places
.
I don't know, this post annoyed me for some reason. There's some obvious truth here that there's tons of bias towards the "boxes" that candidates check with bank prestige, GPA, undergrad, modeling skills, etc. But at a certain point you have to ask yourself why / how the system and recruiters have evolved to think that way. It's because they're maximizing on-the-job competency, not long-term potential. Most VPs have the same mindset when they hire, too, because they need to know the work will get executed properly.
The fact of the matter is, you don't need curiosity or passion to be a good associate. You need to be intelligent, hard-working (willing to be abused), well-spoken, and technical. The models, IC memos, and random slides/analyses don't write themselves, and this is 90%+ of an Associate's job. It's a baseline expectation that someone has to be good at these things, and checking the boxes is a great way to find kids who will do what they're told decently and will crank out work. Will it be the best, most thoughtful shit? Obviously not, but it'll be fast, generally correct and to the specifications asked for.
People don't tend to tolerate failure in the above, so they over-index on making sure they get someone competent (in classic risk-averse fashion). It's so much less acceptable to have an Associate who struggles technically and can't churn work product but who "thinks like an investor." So you couple this with the fact that the kids that you DO hire are getting burned alive during live deal sprints, and it's pretty easy to see why Associates start mailing it in -- if someone's working 80-90 hrs per week cranking on deals, it is exceedingly hard to spend another 5-10 being "intellectually curious." And then when they get a break, it's pretty normal to enjoy the weekend and earlier hours so they don't flame out.
Anyway, this was a long way of saying that it's the system itself creating this phenomena, and PE firms will continue to hire capable candidates rather than the best candidates because that's what's perceived as necessary to be good at the job. You want people to think more critically, be more thesis-driven and thoughtful? Don't pile on 80 hrs of highly iterative work that needs to be near-perfect and then expect them to "go above and beyond." If you do want someone who does it all, then you need to make the job sufficiently attractive for them relative to other opportunities. Do you give them lots of exposure (without throwing them under the bus)? Is there a culture of mentorship and learning, vs. "getting shit done?" Do you pay them more than alternatives?
Pay and prestige used to go a long way to differentiate PE from banking, tech, etc., but the gap has almost entirely closed, and PE firms need to adapt. Don't know what the right answer is, but people are getting smarter on what the reality of working in PE is, and they are realizing that it's hardly worth dedicating one's life to.
Exactly this. At my prior fund I was dinged by my MD for not "using my network to bring in deals" as an Assoc 1, when I was spending considerable time doing literal data entry for one of my portco's because the same MD refused to approve additional spending for them to add headcount. Not only does it require a significant mental switch flip to go from this kind of menial work to strategic thinking and business development, there's usually very little incentive to do so (i.e., the MD's are often expecting associates to think at their level despite being paid 5x more than them and with significantly more equity, experience, and incentive).
I think what are you saying is a generic corporate fallacy: you are paid a fraction of value generated, and in order to get a promotion, you kinda need to advance to the next level already before the pay you, sometimes for years. That means anyone working for others, with a few exceptions maybe, are definitely losing a lot of cash because of this ubiquitous system.
I love this reply, and it's much more eloquent than I could have phrased it.
To the extent that OP might be talking about people who have "ownership" over their work instead of merely doing a mediocre job and hoping a senior catches it, that's important to screen for and you can ask about candidates' individual responsibilities / weird nonstandard side things they may have done in deals that they were proud about (harder to do when on-cycle occurs at the banking training level) to get a sense of that. Or even just what kinds of things they've overcome in life, how they think of strengths / weaknesses (in a non-BS way), what they're generally proud of, etc. "Character" may sound like too lofty a value to make a difference in finance recruiting, but it honestly does make a difference when there's an ASO who just hammers stuff out and cuts corners versus one who pays a little bit more ATD and thinks a little bit more deeply than the next guy, which can actually benefit the team.
BUT, and I mean huge BUT--the current PE cultural environemnt is toxic AF and doesn't actually reward good character! PE tends to pitch itself as some kind of deeply more intellectual exercise relative to banking ("it's your own money, so you actually care how the business is doing, not just making a pitchbook!"). But the way the industry, especially at some of the more prestigious places, treats its juniors is basically as bankers with better modeling and datapacking skills. There's less BS work than banking, true, but not necessarily more fulfilling / deep-thought work. A lot of these firms are *deeply* hierarchical, with substantive deal conversations only occurring between principals and MDs / partners / operating advisors. When that's the case, I disagree with the other commenters who ask "make sure they love the industry and stonks" or whatever.
Me personally, I could not give a fuck about where the S&P 500 will be in three months or what the outlook is for tech services (not my PE vertical) in the medium term. But I find the intellectual challenge of making "unknown unknown" risks in deal-making more ascertainable and quantifiable (as much as possible) to be pretty interesting. I think that makes me a better potential associate than someone who's inhaling Matt Levine and tracking stocks all the time without the intellectual component. BUT the way the industry is set up, I think both approaches generally end up being the same because Poindexter Bro and I have to end up spinning our wheels on the same rote work anyway.
After a 80+ hour work week, if poindexter bro is staying late in the office to run some analysis which doesn't add material value, it shows a significant lack of understanding on their behalf (there's probably a better way to word this). What will be far more valuable to them (physically and mentally) and the deal team is them getting a few hours extra sleep rather than going "above and beyond" with some analysis we didn't ask for. Associates who go "above and beyond" end up tired, and tired associates make silly mistakes. It's far more important they do what's asked of them and then try live their lives with the limited free time they have left, rather than doing what's asked of them + 20% more and burning out. Sleep + down time is far more impactful than some random analysis nobody requested.
I don’t think I’m a check box associate, and I’d say the best interview processes I was in that also taught me the most were ones that gave me a CIM, CDD and FDD and a whole weekend to put together a prelim IC paper. Really allowed me to think about the investment and during the debrief they challenged me on certain aspects. If your interview process is just a 45 minute modelling test followed by some behaviourals you can bs your way through I suspect you won’t get the best candidates.
Do you 1) offer carry to associates (whether legitimate, phantom, or some other form of incentive based comp) 2) have a realistic path from associate to VP? If no, then that is your issue. It’s crazy to me that senior PE people are very aware that incentives drive behavior, but still expect associates to do more than the bare minimum when there is no tangible upside for doing so
Can go ahead and say the answer is no. Agree completely on incentives -- incentives apparently only drive port co behavior, not at a PE fund.
Half of this argument sounds like someone who thought that they were the greatest, most forward thinking PE associate of all time. I'm sure they had a VP who routinely thought they were lazy, not strategic, etc. Only difference is that VP didn't go to WSO to whine about it.
In all honestly, and all due respect, it says a lot about your firm and your hiring process.
Also, slightly off-topic, what is your background? Surely not in a similar vein to those you are trashing?
I have a genuine interest. It's a bit cringe but I'll tell you more about my profile & you can try to spot some pattern.
Where I really stand out - I can talk intelligently about any single investment style and/or POV. I know a ton of random stuff (and all the firms and the legendary financiers/investors) about all aspects of finance. My knowledge isn't just from news or WSO but also from niche newsletters / books.
Because I have genuine interest in investing, I also read stock pitches for fun online. I always have public market stock pitches (L/S) because I check the market & news every day. I just try to accumulate as much knowledge as possible and I try to implement it. It doesn't mean I'm not truly interested in PE - it just means that I genuinely like researching/investing/learning!
Proactiveness shows on my CV through big leaps - random uni, somewhat relevant work experience, big leap for masters, big leap in career change (PE Intern). Proactiveness can also be shown through extracurriculars - I have tons of investment-related stuff.
Judging by myself and my friends, the reality is that very few people are genuinely interested in this for the right reasons and if they are, they might be a bit quirky. You are trying to find someone who loves this so much that they'd sacrifice their personal life heavily for it. So don't be surprised if the person who ticks your boxes leans a bit toward nerdy (but ofc make sure you can have a beer with him/her).
Finally, try to really understand what motives them. Google and brainstorm on what the best way to do this are. It's usually money, status, family expectations and/or peer pressure. Those from humble backgrounds are likely to work a bit harder imo but could be a bias.
Exquisitely correct.
You're impressively self-aware.
thanks, glad someone found it interesting/useful
Stop hiring kids based on their pedigree and ability to "check boxes"
JAMMBO alert - IMO this post is more indicative of OP's fund than their candidates
... JAMMBO...?
Just.. Another.. Middle... Market... Buyout...?
Yep
More like check the box candidates and hardo check the box candidates
VPs really be like we don’t have associates that go above and beyond while also jamming associates with 90+ hours per week of grunt work and paying at like a 20% to IB. Sorry if at 2am I want to sleep and not think strategically about our deal
PREACH
Lot of hate! Just wanted some interviewing advice.
We have 10bn+ latest fund size, A1 comp is 360k (middle bucket) and we don’t require business school for promotion. We demand people work hard in return. Don’t think it’s crazy.
You haven’t found the associates you want and when you ask, they all tell you the expectations are unreasonable, as a participant in a market business (buying and selling companies), perhaps you should apply that some concept to the market for talent and consider that it has moved up, just like bidding 4x EBITDA won’t win you any auctions for any non-trash companies these days
They gave you advice, it's just not what you wanted to hear. It was good advice though.
$360k is not that much in todays job market, just saying. You can make as much or more in many other jobs that don’t expect you to put in 80 hrs a week
Making 130k working 40 hours a week doing corporate banking in Alabama lol is your PE fund broke or just cheap?
Within gen z, it will be difficult to find someone who is smart and interested in PE type work. The work is plainly not that interesting (or rewarding), and the more intelligent you are the sooner you realize this. The jig is up for finding good junior PE talent, imo.
You’re a VP for a PE firm
bro, not putting a man on the moon
Can you let us know your shop so we can avoid it ?
After reading all the replies here, I think I’m going to avoid PE and stay at MBB. I don’t particularly enjoy being treated like dogshit and I don’t think the extra pay is worth the abuse. This was enlightening.
A lot of MM PE shops don't even give you a meaningfully higher comp than consulting (consulting comp from my friends in consulting, and I'm in IB). It is no unusual for someone in IB to cut pay to go to MM PE.
I led hiring for prior PE firm, a MF. It really comes down to your interview process. You can’t expect that every associate will be technical, hard working, polished, pedigreed, and have investor mindset. Ideally, candidates you hire have four of those traits. The associates that have all five are promoted to VP. So if you think your associates are too check-the-box, I’d ask if your firm is willing to sacrifice one of the other qualities to prioritize the passion/interest in PE? One can argue that passion/interest is much more fundamental and hard to teach versus polish, for example, but many interview processes prioritize the latter, not the former.
Fwiw, it’s pretty easy to evaluate if someone is passionate about investing. Were they in an investment club at school? When you give them a business case study, are they enthusiastic and ask questions after? If you’re not giving them a business case study (different from a model test), that’s a process failure on your end.
>Fwiw, it's pretty easy to evaluate if someone is passionate about investing. Were they in an investment club at school?
Lmfao c'mon man that's not a great piece of advice.
@OP - People here are giving bad advice. You can game case studies just as much as you can game a model test - the only thing you can't escape from as an interviewee is an honest-to-god, genuine conversation. Don't frame it as a case study, give to them in the conversation just as much as they give to you, ask actually deep and insightful questions and encourage the same back.
I know people that work at MBB, top PE, top APM, etc. - all that hypothetically had to go through some sort of case study the tried to judge for creative thinking etc, and these people are total morons - zero creativity or outside of the box thinking whatsoever. If I want to know how insightful and intelligent someone is I don't give them a test, judge their group, their GPA, etc - I have a genuine conversation about whatever intellectual topic for 30 minutes and I can walk away pretty confident with my judgement. You can layer on tests/GPA filter etc. outside of that, but at a certain level you have to trust your own instinct through your own methods to really truly see if they're an intelligent and insightful human being.
Cannot agree more. Despite people saying LO will be a dead game soon, the most genuine conversation I had was a few years ago with a LO manager (T. Rowe, Wellington) when I was still in school. It was really about what books did you read, what stocks you follow, what do you think is interesting, etc. versus can you walk me through a DCF / LBO, or whatever not-so-easy but boilerplate, check-the-box thing you get at many PEs, HFs, etc.
JFC, I want to work under you. That mindset is elite.
Give a 2-3 day case study with a max two-page word memo output, no appendices and a working excel model for a public co.
The people who bring in thoughtful outside research are the ones you want to advance. Model doesn't need to be perfect but check-the-box. You can figure out in an hour debrief session on their "passion".
Do they ask you as the interviewer questions outside of the case? (Did your firm look at this company, what did you think about it, why didn't you invest, what do you like about this industry)?
Yeah sure, give the kids working 70+ hour weeks a 2-3-day case study, unpaid, just for them to maybe get an offer. Sorry but this one doesn't fly unless the person you're trying to hire is unemployed or a student
The two day case study is market standard for hedge fund interviews at the junior level and some off-cycle or senior associate / VP interview processes. Generally tends to be over the weekend. Most places don't give any direction which is where the pain comes in where it becomes bad filter mechanisms.
My old fund gave a page cap and a form model output, but I know other funds where people submit 20+ page write ups.
My fund called the people they know at my group / firm and asked how I was to work with. I think that is the only way
Every firm does that. Unless you're a moron your references aren't going to be like "Hey this kid absolutely sucks and has been phoning it in".
Are you at a place that attracts highly sought after talent?
If so, have to seek out the killer instinct, by feel.
If not, you’re better off hiring the kid from an off the run school/banking program that will view getting this job as a huge upgrade and will show up with fire in his belly wanting to capitalize on the oppty vs. rando Wharton-GS kid who feels like he’s deigned to sully his resume with your firm.
I think what you’re looking for is a certain value system more than anything else. When I was in IB/PE, the times that I overdelivered were when I knew that I could put forth something really impressive that would knock the socks off my teammates (as much as you can knock someone’s socks off with an excel file). I love to automate things (forever seeking efficiency) and have spent a lot of personal time throughout my career automating spreadsheets or analyses because I really enjoyed the reaction when I shared them with my colleagues. As I got more senior and my responsibilities changed, I would take a lot of pride in teaching the junior staff about PE and explaining complex concepts. Anyone who has been to one of my prior firm’s LP meetings knows that I like to ditch the podium / microphone / notes and present my portfolio companies without notes (admittedly in part because LPs always fall asleep during annual meetings, they are so boring).
None of the above can be deciphered through a line on my resume. If you want to find someone who truly cares, you need to dig into their value system and find someone who places huge weight on their reputation and hates disappointing others. Then, once you hire this person, you have to treat them respectfully and actually acknowledge when they do good work — create a positive feedback loop so that they feel their efforts are rewarded. If they don’t genuinely like or respect their team, they aren’t going to care what their teammates think of them.
pivate equity is poggers
Make sure you're paying above market if you're asking this question. Market pay gets market results.
Below market pay, well, good luck.
If you want candidates above and beyond others make sure your firm offers above and beyond the other firms
Edit: say that you pay $360k for Ass1. There is your answer.
Think APAE would have a good response here
Dealing with a bunch of burnt out bankers who think they made it to the holy land and achieved a seat at the table by being graced with buyside employment.
You gotta interview and tell them you want hungry people and that you guys have some serious investing to do. Sound like a hardo in interviews. You’ll lose the ones you don’t want and you’ll get the ones you desire all fired up
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