A Guide on How to Navigate On-Cycle PE Recruiting

I thought I could finally give back to the community and assemble some advice for those thinking about going through the gauntlet of on-cycle PE recruiting. This is an amalgamation of comments I've made, discussions I've privately had with other members of this board, and some new thoughts. Hopefully, this is helpful and insightful and helps at least one person get an offer or make go/no-go decision on whether to participate in this shit show of a process.

Preliminary Thoughts

PE recruiting (both on-cycle and off-cycle) makes IB recruiting look about as difficult as getting a greeter job a Walmart when you're geriatric.

Focus 100% on what you can control, and don't worry about what you can no longer control. In other words, don't spend time focusing on your GPA, what undergrad you went to, previous test scores, bank/group, etc. as all of those are now set in stone. They do play a factor in the process as I mentioned in the thread but there's nothing you can do to change those now.

If you are a first or second-year analyst thinking about going through on-cycle this year, the time to start preparing is now given how early the process is and the competitive dynamics. But you need to be 100% committed to the process and know for sure this is what you want to do.

The Headhunter Process

Step 1 of PE recruiting is being ready to crush your HH meetings. This involves having a well thought out and well-articulated story as to who you are, how you got where you are, and specifically what it is you want to do next, and why. It definitely helps to tell the HHs exactly what type of fund/strategy, in which geography, and what sector (or generalist if that's your thing) you want to be in and why. The more concrete you are, the more they will be willing to help you. The more articulate about the differences in fund strategies (and the more articulate you can be about describing WHY you want to work at a particular fund given their strategy), the better. HHs will ask you point-blank what funds you are most interested in. There is a great opportunity to illustrate and prove to them that you've done your homework on various funds, understand their nuances, and that KKR operates differently from Warburg (just an example), and get them to view you favorably.

It also helps to know who each HH's clients are and name specific funds you are interested in that they cover and be able to speak to why you'd be a good fit for said fund. The less wishy-washy you are on what you want the better. The HHs are very risk-averse as they want to get paid. Ask the analyst class ahead of you for HH coverage sheets. It's helpful to get those ahead of your first HH meetings (they tend to give them out at the end of the meeting but as I alluded to you really want to be one step ahead here).

HHs force rank candidates for each fund individually; while the ranking is similar, each fund receives a unique list with differentiation in rank often being whether you'd be a good fit/understand the fund's strategy) (the score/ranking consists of a host of factors; this is one). All that said this is a fast process and it's really only enough to get you the interview at these funds. Funds will also ask HHs directly, "How likely is Candidate X to accept our offer?" and you give the HHs more confidence to say "well Candidate X was very vocal about strongly preferring your fund strategy vs. Fund Ys, so I think he'd accept." This last point is more applicable to off-cycle given the speed of on-cycle, but it still applies.

Rank and triage which funds are your top choices and why. This will come into play during the actual weekend, as you'll come to see why in a later section below.

Remember above all else that HHs are NOT your friends. They work for the PE funds, not for you.

Modeling Exam & General Interview Preparation

Make sure you can absolutely nail modeling tests in less than the required time. This simply means you need to be getting reps. Your group/previous analyst class should hopefully have a bunch of old case studies/modeling exams you can use and practice. This is somewhat why bank/group can be correlated with exits, as this pool of resources and knowledge can build up over time within a given group. You should be working on them for 6+ hours at least on your protected Saturdays and studying late at night after you finish your work for the first few months. Ask yourself if that is what you want to spend that time doing because that is what it takes to increase your odds of getting a job. When it's time to take the exam, you should be at the point where you can do these models with your eyes closed and on zero rest. It should absolutely be 100% mindless mechanical excel work, and hopefully, it should be ingrained in muscle memory. Needless to say, you should be doing these completely error-free within two weeks of the process kicking off.

The people who are most successful in this process are the ones who put in the time and effort to be most prepared in order to skew the odds ever so slightly more in their favor. The modeling exams/case studies are a box to tick, but a very important one, especially given how fast and competitive the process is. It is 100% true that people get cut over seemingly minute differences in the quality of their model. If you finish with an extra 5 minutes and can spend that time both checking and formatting the model, that can go a long way to getting you to the next round. This also goes to what I have commented before about self-selection being a factor, as candidates who are more on the "hardo" side are likely to have somewhat pushed themselves/selected themselves into better groups, spent more time prepping for PE recruiting, etc. Of course, there are people who put minimal effort into preparing for on-cycle recruiting and will somehow get an offer from Thoma Bravo or something but don't think about them, worry about yourself, and again focus on what you can control.

Make sure your resume is polished and that you can speak in-depth to every single word on there. Make sure you have refreshed and polished your behaviorals from when you went through IB recruiting. Spend time practicing these out loud. Do some mock interviews with other analysts who intend to participate on the process and give each other objective feedback on each other's answers.

Tips on Developing the "Investor Mindset"

This part has been covered numerous times on this board by members who are significantly better and more experienced investors than me, but I'll lightly touch on it here for completeness.

Gently start to ask your senior bankers the "why" of the deal, from the buyer's perspective. Do try to think of it on your own, but it is helpful to get some insight with someone who is a bit more seasoned. When you do this be sure to practice situational awareness: don't do this as they're giving you comments in their office. Instead, ask them to grab a coffee and catch up, say you want to get to know them more and that you're working on XYZ deal for them, and then broach the subject. This has the added benefit of helping you develop a better rapport with seniors as well.

Second, and I know this is challenging in IB, but it helps to have skin in the game. You obviously can't actively invest and trade due to compliance restrictions, but you can run a paper mock portfolio on ThinkorSwim or Investopedia. Set one up, try to do some research on individual names/themes/ideas and build a portfolio and actively manage it.

Most importantly, read read read read read. Read everything possible. But, and this is absolutely critical, read actively and critically. Read all the classic investing books (there are plenty of lists on this site already so I won't repeat them). Read the WSJ/FT/Barron's daily. Read sell-side research on companies in the industries you're most interested in daily. As you're reading, ask yourself why this matters, what is the sell-side missing, how could this piece of seemingly unrelated news possibly impact the companies I cover/am invested in/my clients? Figure out what the most important KPIs are for the company and industry. How are they trending for the company vs. peers, how are they expected to trend over the next 1, 2, 5, 10 years vs, peers and why? What is the story? Is there a catalyst that could accelerate/decelerate the growth in these metrics for this company? Ask yourself to form an objective opinion on whether or not a given asset is mispriced or not. Valuation should be one of the final steps after you've gathered enough information on the industry and asset itself. Is it currently mispriced? Is there a reason it's trading at a 2.0x premium/discount multiple to peers? Is there a catalyst for multiple expansion/contraction in the near or medium-term? What are the risks to your thesis? Why could you be wrong? What happens if you are wrong?

Also, your ideas need to be actionable, and if you're pitching a stock/LBO candidate, it needs to be actionable for the specific fund you are interviewing at and it needs to align with their mandate and investment philosophy.

I know there's a lot here, but the goal should be to develop a systematic screening and investment process, and that takes a lot of time and learning by doing. It's something nobody ever truly masters and investing mastery is by definition an ineffable goal, but one everyone on the buy-side actively works toward.

Discussing Your (Minimal to Non-Existent) Deal Experience

Given how early the process is, everyone on the other side of the table knows how little real work you've done and how little knowledge you've accumulated. However, you still need to be extra crisp on what little deal experience (and pitch experience) you have. So the onus is on you to spin it to sound like you did more than you have, while at the same time walking the fine line of not going overboard in that direction. You need to know the major details of your deals (size, multiples, valuation, key diligence findings, etc.) and you need to be able to speak to whether this is a good deal for the buyer and why or why not. Note I said for the buyer, not for your client. So if you are on a sell-side, you should be explaining your deal from the buyer's perspective as they are the ones in the investing role. Take a formulaic approach to your answers about your deals. It's also helpful to explain upfront why you think this is a good/bad deal without being prompted (see the previous point on how to develop the investor mindset). All that said, please try to be concise. No more than 2 minutes when walking through your deals; better to keep it high level while hitting the major points and let the interviewer ask you follow up questions.

Pre-Process Breakfasts & Events

There will be breakfasts, dinners, networking sessions etc. before the process actually kicks off. But given how abruptly the process kicks off now and how early it is, these are becoming substantially less important in the overall process. Last two years, a number of these events ended up being cancelled because the process ended up launching before they even took place. That said I'd be remiss if I didn't meniton them in this thread. However, don't get upset if you don't get invited to a certain fund's event even if that is a fund you want to work at. I've personally witnessed people who weren't invited to these types of events for a certain fund end up getting an offer at that same fund. That said if you go, it's really simple: don't make a fool of yourself. Be courteous to everyone you meet and play the game.

The 72-Hour Living Nightmare

So the weekend is finally here. The process has historically kicked off with a particular SF-based PE fund jumping on a plane to Teterboro and kicking off the process. Every other fund and HH scramble to send out interviews once they catch wind of this. Sometimes those of us at other funds will hear rumblings this it's about to kick off, but even then it's like 5 days in advance max and we struggle to get ourselves in order, line up case studies, etc. It's definitely worse as a candidate, but it certainly isn't fun for the funds either.

The next few days will be an absolute abomination, and you will be interviewing on close to zero sleep and likely pissing off all your deal teams in hopes of securing your next job 20 months in advance. You very well be interviewing with a particular fund until 2am, then they expect you to come back at 7am to continue, all the while you are passing up interview offers with other funds.

You have to decide which funds you want to interview at amongst the choices you are given. Sometimes it even may be worth it to leave a fund in the middle of your interview process to head to a different fund you may have a better shot at. The funds will literally hold you hostage - you can spend 12 hours at a fund, get to the final round, then get cut and have no offer, while also having skipped out on a handful of interviews at other funds. I've commented on this before, but it helps to be aware of how funds make day-of decisions. I.e., KKR is notoriously prestige and "strength on paper" driven. So for example, if you are interviewing at KKR but have a mediocre background on paper (i.e., semi target undergrad, mid-level bank, not a 1600 SAT) and have another interview coming up at a different fund, it is likely in your best interest to leave KKR and head to that other fund. It's all about increasing your odds of getting an offer.

The interviews themself will run the complete gamut. You need to be prepared for anything and everything. Complex and nuanced technical topics, your story, deal experience, every single word on your resume, etc. You will be meeting with everyone from associates up to partner (although partner interviews are typically reserved for later rounds).

If you make it past the final round and are given an offer, you need to take it. These offers typically explode on the spot. If you leave the room, the offer is gone. No time to think it over, no time to shop it. This is why you need to know ahead of time what your top choices are in order and why. You need to be committed and willing to sign before you ever step foot in the room.

It is really impossible to overstate how competitive and fast this process is, and how much luck plays a factor. This is why it's not super wise (in my opinion) to draw broad conclusions about certain exit ops of a particular group/bank; that's not to say there is a zero correlation between the strength of bank/group and (this board's perceived) strength of exit, but the correlation is definitely not even close to 1, and I think it has more to do with preparedness, prior self-selection, and of course the aforementioned luck factor.

On-Cycle Aftermath

So the weekend is over and you have an offer - or maybe you don't. For those of you who received an offer, congratulations - you've secured your next gig. For those of you who didn't receive an offer, congratulations - you have more time to decide if this is really what you want to do and to potentially land somewhere that could be a better fit for you.

Remember how much luck plays a factor here. On-cycle PE recruiting is the finance hunger games. It is totally fine to recruit on-cycle and not get any offers. Do not beat yourself up over it if it doesn't work out, as it may end up being for the best. At the end of the day, it is just a job, and there will be plenty of high-quality PE funds recruiting later. You are also so early in your IB stint when on-cycle happens that you likely won't even know whether deal-driven work is for you or not. That's one reason why these funds go so early: to lock kids in before they become jaded in banking and decide to try something lower stress. Go read the horror stories in the recent threads on Apollo. While Apollo is definitely toward the top of the "most brutal PE sweatshops" list, it is certainly not playing in a league of one. There are plenty of people who burn out from Ares, KKR, Warburg, etc. early on after having already had a rough go in IB for two years. I have personally seen it happen to friends & former colleagues. A lot of my friends at MFs work harder now than they ever did in banking; the stakes are much higher and the pressure is more serious. I'm not saying this to dissuade anyone from doing MF PE, but more to make people aware of what they're signing up for so they can go into the process with eyes open slightly wider.

Good luck everyone!

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Comments (53)

Jun 13, 2020 - 11:17am

Most of the SF firms come to NYC from my experience. I'm not entirely sure how it works for SF-based analysts from a logistics perspective; I'm a lifelong east-coaster and didn't have any close friends on the west coast. Hopefully another commenter can provide some insight here, but I'm sure this has been asked and answered at least once elsewhere on the forum. Apologies that I can't really be of more help here!

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  • Analyst 1 in IB-M&A
Jun 12, 2020 - 1:38pm

Thank you for the very informative post! Have you been seeing less and less first year analysts recruit on cycle due to the lack of prep and deal experience? Almost all of our first year analysts in my group sat out on cycle last year because we all didn't feel prepared... Literally the only way you can be prepped to go for first year on cycle is if you study for PE during your senior year of college hahaha

Jun 13, 2020 - 11:22am

Yes, out of the classes I've seen recruit after mine, fewer and fewer decided to go on-cycle due to feeling unprepared and/or uncertain that it was what they wanted to do. However, now more and more banks are moving to a two year direct A2A promote cycle, so that really doesn't give you the option to delay PE recruiting as much. If you wait a year to do on cycle, you'd be a year or so into your associate role in banking and then would leave to go to PE. When you commit to the associate role as an A2A, the banks are anticipating you will be staying longer term. You'd also end up with some sort of bonus clawback in almost all scenarios if you were to leave this early into your associate role in banking. So these increasingly common 2 year A2A promote cycles are a big catch 22 and throw a wrench into the entire on-cycle process now.

  • Analyst 1 in IB - Gen
Oct 17, 2020 - 4:26pm

Just to clarify: if an analyst did off-cycle PE recruiting at the start of their 2nd year in banking, the job offer would still be for in two years? Does it not happen often that you recruit for a PE job that starts in just one year? 

Jun 12, 2020 - 3:05pm

Thanks! Can you elaborate on how KKR is very different to Warburg? And any other insights on the culture/style of all the funds you researched would be much appreciated!

Jun 13, 2020 - 11:28am

I'm fairly hesitant to do that for a number of reasons. One being that providing a fulsome answer would likely require a post that rivals the length of the OP lol. What I'd encourage you to do is be resourceful to get a better sense of this yourself. Some of these have been covered previously on this site. Also, go to all of the major fund's team pages and utilize Linkedin, and see whether you notice any patterns and commonalities of the associates and their backgrounds. You'll see that the average background of a KKR associate is fairly different from the average background of a Warburg associate (to continue with my previous example). As far as their investment strategies, go read their websites. Often there are "investment criteria" sections that can be surprisingly informative. Compare and contrast between the various funds; you do have to do a bit of "reading in between the lines" here to get a better sense of this, but if you also go look at current investments and realized investments, read the overview of those, dig deeper and read the press releases on the transactions, you should start to get a fuller picture. To create an even more extreme example, think about the differences between an Oaktree and a Silver Lake as a starting point.

  • Analyst 2 in IB - Ind
Nov 17, 2020 - 11:38am

Since OP didnt summarize it I'll throw in my 2c. But know that my reply is meant to be short and not all-encompassing. Warburg is basically an upper middle-market PE firm that does a high volume of platform and add-on deals. They use little leverage. The two most sought after groups are IBS (the "LBO" group) and TMT (the "VC / Late Stage" group). This may become dated if they reorganize their groups again as they did a year ago or so for some of the other groups. The TMT role is very sourcing-heavy and the IBS role is the classic generalist PE role. They do bigger deals as well but they've done a number of platforms. The firm overall is very lean and solely does PE.

KKR PE is a bigger beast and also houses various industry groups and product groups (MM LBO vs Tech or HC Growth). They tend to invest all across the board, however, they generally write bigger checks as compared to Warburg. It's hard to speak to it further because each of the groups / industries is a bit different and I don't know too many people there. A better comp for Warburg is like an MDP / CD&R type of place though Warburg is viewed by some as more presitigious.

  • Intern in IB - Ind
Jun 12, 2020 - 9:11pm

How does growth equity recruiting work? Similar?

  • Analyst 2 in IB-M&A
Jun 12, 2020 - 10:34pm

Related to your comment about not stressing about undergrad school and performance: for someone that's recruiting as a second or third year and going after MM/LMM but has a shitty GPA and test scores do you think it's worthwhile to retake the SAT or maybe even take the GMAT to try and mitigate poor performance in school? I mean a 3.1 GPA and ~1,200 SAT and then even a MAcc with a 3.2 but still in a solid group at a great bank.

Jun 13, 2020 - 11:34am

In your instance, I think you'll be fighting an uphill battle even for LMM/MM funds off-cycle. Please do not take this the wrong way, but even for those type of funds your profile is >2 standard deviation outlier. Convincing HHs to pass you on and rank you favorably in their force-ranked lists will be difficult. Then you have to convince the fund you're a better performer now than history suggests,and that they should take you over someone with an even slightly better track record. I'm not saying it is impossible, but I don't want you to underestimate the degree of competition, nor do I want you to get discouraged by the proces itself (which I've seen happen many many times). I would 100% encourage you to take the GMAT and score >730 at the minimum (750+ here would really help you in my opinion). You may also want to consider bschool to rebuild your brand entirely.

  • Analyst 2 in IB-M&A
Jun 13, 2020 - 12:06pm

Do you think the GMAT would make up for the poor academic history? Much if at all, and more than retaking the SAT?

Your comment in business school is interesting, as it's a bit of a catch-22, it seems like. To get into PE post-MBA, I'll probably need PE experience pre-MBA, but your comment suggests I'll need to rebrand through business school to get into PE to begin with. Unless I misread?

Thanks for responding by the way!

  • Analyst 2 in IB-M&A
Jun 13, 2020 - 12:19pm

And sorry my question about whether the GMAT would really help in your view for those smaller funds is unclear. If we're talking a 1% "premium" on my existing profile then I don't know that the time investment is worth it in my mind (especially since I'm not sure I even want PE long term). But if you think it can swing the pendulum in my favor significantly then it becomes something worth exploring. I took the GMAT cold once and got like a 600 back in undergrad so imagine I've got a long road ahead of me on top of working analyst hours.

Also understanding this is probably a best man's guess and varies fund to fund.

Most Helpful
Jun 14, 2020 - 11:25am

Do I think taking the GMAT would make up for poor academic history? Make up for it, no, but add a datapoint to your profile that signals you're a hard worker and have changed over time/since college whatever, yes. In your case it is 100% not worth retaking the SAT vs. taking the GMAT at this stage in your career. There are higher returns to the GMAT, especially if you end up considering bschool, wich leads me to your second question. I also wouldn't go so far as to heavily swing odds in your favor, but it would likely open up at least one opportunity that would have otherwise been shut to you.

Need of pre-MBA PE experience for post-MBA PE. Maybe, maybe not. Depends on the fund. Even if you manage to get into H/S I think it would be nearly impossible for you to end up at a MF-type shop. LMM from one of those schools without pre-MBA PE experience is more doable, but still tough given the low number of seats. This is also true for those with pre-MBA PE experience. It gets more and more competitive.

On the third point, in your instance for your next pre-MBA job I certainly believe that you need to expand your options beyond traditional PE to give yourself an edge. Everything you listed above would be fine, and you should also consider expanding corp dev/strategy roles. This would give you a decent story for bschool, as well as a slightly different skillset, and could potentially set you up nicely for bschool buyside recruiting given your story.

All this said I am not an MBA admissions consultant and suggest you reach out to one for a consultation to sort out your gameplan.

Jun 13, 2020 - 5:10pm

Any ideas on how COVID will impact the whole thing? Virtual modeling tests?

Jun 14, 2020 - 11:27am

Extremely TBD. Still too early to know. I'm curious myself. I've heard just about every option you can imagine thrown around. What I can say is it is unlikely a decision will be made until like 3 days before the process kicks off, and NOBODY on either side will really have any warning. There is also the likelihood some funds will do it virtually, others in person, etc. It is way too tough to give a concrete answer here yet.

  • Analyst 3+ in IB - Ind
Jun 14, 2020 - 1:22am

I didn't get a return offer from my BB and went to another BB (Still solid); will this be used against me on cycle?

Jun 14, 2020 - 11:30am

Don't bring it up unless directly asked why you are at bank X when you interned at bank Y. Even then, I don't think you necessarily need to be so direct as to say you didn't receive a return offer. I'm assuming based on your post you "traded down" in bank tier. HHs and interviewers may just connect the dots anyway. I wouldn't sweat it. If directly asked if you didn't receive a return offer, say yes, craft a reasonable answer as to why (say fit related or something along those lines) and don't say anything to ding yourself.

Jun 15, 2020 - 11:02am

No, we have not.

The general consensus seems to be that these candidates should, at least in theory, be on-par with IB analysts. However the PE analyst experience is way less homogenous than the IB analyst experience, so there are question marks about how much hands on training/experience you receive in those two years vs. IB peers. However I don't think it's a tangible disadvantage by any means.

Jun 14, 2020 - 3:35pm

Thank you for the great post. Had a couple questions:
1. In resumes for on-cycle recruiting, do you put your work experience before your education even though you have only really completed one month of work? Also what do you put under your current job if you've only finished training?
2. Do you think there's a possibility PE on-cycle recruiting still kicks off in August when people are still working virtually or will the meetings with HHs and firms wait until people start going back to offices in September? Ik no one can really know what will happen but curious to hear your thoughts.

Jun 15, 2020 - 11:06am
  1. Yes, work experience now comes first. If you summered in IB and hopefully at the same bank, list what projects you worked on as an intern. As I mentioned in the OP in the discussing deal experience section, your job is to spin what little you have into sounding like you did a bit more without going too far overboard to the point people are doubting you. Your goal here is to (i) convince me you did your homework on the projects and deals you do have, as I recognize that your experience thus far is limited and subject to luck of the draw in early staffings, and (ii) demonstrate that you can articulate the key functions of your current job and how that relates to the one you're currently interviewing for.

  2. I answered this above in response to another commenter. Nobody has any clue on format or timing yet.

Jun 14, 2020 - 6:44pm

As a European at a US MF (in London), I have to say that this is just ridiculous and it speaks volumes about the crazy finance culture in New York.

I know that people interview early, but these things about leaving a superday to go to another place on the same day? Or leaving before you know the outcome because you don't look as good on paper? This is just absurd and breeds a very unhealthy and juvenile work ethic.

(Having said that, this is surely a very helpful thread for whoever is going through this crap)

  • 3
Jun 16, 2020 - 4:12am

I hate the fact that all of these firms start recruiting so early. Not everyone has a set path, and it doesnt leave much room for "exploration" because the train moves quick and before you know it, you're left with 0 opportunities even though you may be qualified.

  • Analyst 1 in IB - Gen
Jun 19, 2020 - 1:50pm

Any specific books/material about business models, industries, or analyzing companies you would recommend?

Jul 21, 2020 - 6:10pm

Are there any updates on recruiting this year? Know you mentioned it was uncertain, but wanted to see if there were at least updates to timeline or maybe HH emails have already gone out to do kickoffs. Thanks!

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