How will market crash affect on-cycle?
Especially curious to hear from people involved in current process, or who were involved during 2020.
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Based on the most helpful WSO content, market crashes can significantly impact the on-cycle recruiting process in several ways:
Increased Stress and Uncertainty: During market downturns, the stress and unpredictability of on-cycle recruiting can amplify. As noted in discussions about the 2023 on-cycle process, candidates already face immense pressure, and a market crash could exacerbate this by creating additional economic and job market uncertainties.
Lower Candidate Quality and Preparation: In challenging market conditions, firms may observe a decline in the quality of candidates. For instance, in 2023, model test pass rates were at all-time lows, and candidates were reportedly weaker compared to prior years. A market crash could further strain candidates' preparation and performance.
Reduced Hiring and Class Sizes: Funds may reduce hiring or delay decisions due to economic instability. In 2023, funds were already filling a lower percentage of their class with on-cycle candidates, and a market crash could lead to even more conservative hiring practices.
Shift in Candidate Mindset: A market crash might prompt candidates to reevaluate their career choices. As highlighted in recent threads, some analysts are questioning the value of the process, with fewer participants going "all in" on on-cycle recruiting.
Lessons from 2020: During the COVID-19 market crash, the global economy faced significant disruptions, which impacted recruiting timelines and processes. Candidates and firms had to adapt to virtual interviews and shifting priorities, which could serve as a reference for how a future crash might unfold.
If you're currently involved in the process, staying prepared, flexible, and informed about macroeconomic trends will be crucial.
Sources: 2023 On-cycle is a disaster, A Decade Into IB: Teetering on the Edge of Cataclysm?, How long will the Covid-19 affect the markets? How should everyday investors react?, Coronavirus scare and the impacts to the global economy,
Negatively. Hope that helps!
Thanks! Appreciate the thoughtful response.
Guys - PE is done. Think about how many levered companies are out there that sources cheap stuff from China to sell to the US. Those companies just had a 100% increase in COGS.
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