On Cycle Recruiting 1st vs 2nd Year MBB
I've noticed it seems like a lot more MBB analysts are waiting for their Year 2 to recruit for PE and then leaving after their 3rd year. Is there a strong reason (experience, compensation, promotion, b-school) why these consultants wait an extra year compared to IB recruiting? Would it still be smart to recruit as a first year MBB analyst or will that be looked down upon? Just not sure why it seems most MBB analysts take 3 years before switching nowadays vs. IB who all do 2 years?
I recommend waiting. You will be more successful on the job, and more likely to yield a better recommendation letter or convert to VP, by doing so.
Your peers from IB will have better technical skills, but what you lack there, you will make up for it with a greater sense of working autonomously, driving processes, asking strong questions, and contributing in meaningful ways. Ultimately, this drives more long term value in your career, and so showing this early on in your Associate tenure will more than compensate for your lack of modeling skills as you hit the desk.
What would you recommend for an IB analyst trying to develop some of these skills? It seems like everyone's praising consulting over banking these days, even for PE.
The poster above does a good job of outlining the benefits of waiting to recruit, however I don't think most 1st years at MBB are that thoughtful about it (I know I wasn't). I think the main driver is just most first years at MBB are unsure if they want to do PE. Most kids who end up at MBB explicitly chose NOT to do banking, which means they're less likely to 'know what they want to do with their life' in general and certainly less likely to be 100% in on PE. With recruiting so early, literally a few weeks after hitting the desk in a normal year, most MBB first years will sit out recruiting and use the extra year to see if they're really interested in PE. Given MBB doesn't kick you out after your 2nd year there's no pressure to recruit first year.
Agree with all the above but would add a few thoughts:
Your 3rd year at MBB can be quite rewarding: higher comp + profit share, direct-reports (which you won't get in PE until SA / VP), ~more say in your staffings.
PE interview assessments are likely to be the exact same regardless of age / experience: The questions will be the same/similar for 1st year bankers and 2nd year consultants. During on-cycle, interviewers will be seeing too many candidates in a day to differentiate someone who should be 'held to a higher bar' because they're 1 year older. Further, they're simply looking for the best people from the total pool and won't care about your added year regardless. Added experience from cases/diligences/modelling can only help you unless you're very well prepared to begin with.
Where will you land in terms of performance at your firm?: Often over-looked and under-emphasized on this site. You should do whatever you can to assess whether you will be top 25%+ or 'average' on your first performance review at your firm. This is the single most important filter for PE headhunters, and a huge criteria for getting interviews vs. not. If you're top 25%+, you'll get lots of interviews, if you're average it will be much harder. If you think you might fall in the 'average' range I highly suggest recruiting in your 1st year of MBB in order to front-run your firms review process (e.g., if on-cycle starts before you get a rating, they'll defer to your GPA and the fact that you made it to MBB in the first place). Or alternatively if you get an 'average' rating before on-cycle kicks off, you should wait until next year and do everything in your power (e.g., fake it 'till you make it) to bump that up.
Obviously, would place more weight on whether or not PE is something you truly want to do before diving into these processes. You will never get a second chance if you blow it with a headhunter or any of their clients (HH's ghost you, blacklist you, and you'll never interview with the same firm twice), so if you're going in it needs to be 110%+.
SB'd. The point about ratings is spot on. For 2nd years that recruited at my MBB, there was 100% correlation between those that were rated in the top 25% at the firm and those those got interviews at H&F and Berkshire specifically. That is, everyone that was rated top 25% got interviews, nobody that was rated "average" did (based on a sample of ~20). Ratings matter.
How would the headhunters even know how you are ranked? They can't reach out to your firm and ask I thought...
HH's ask for your ratings and sometimes ask for proof via a printed performance review
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