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.
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
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.
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.
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.
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
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.
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 ?
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.