GS Analysts Fired For PE Recruiting

rossi99's picture
Rank: Chimp | 10

As we all know a first year analyst has to make a decision around this time of the year: a) take part in PE/HF recruiting for a job that would start after his/her two year commitment, or b) be a good monkey and stay out of the recruiting process because his/her firm prohibits it / it is a conflict of interest.

At this time, GS JM's think the correct answer is A, while higher-ups, who believe there is a firm policy in place that says no analyst shall take part in recruiting until six months from the time they've finished the two year program, are going with B. So now this is happening:

Goldman has been firing IBD first year analysts with buyside offers for next year. Senior people are calling up funds to ask if any analysts have received offers from them. A bunch have been cut so far.

A bunch, we're told, is in the ballpark of four, which seems like enough to put the fear of god into people.

What are people's thoughts on how this will effect the traditional PE recruiting process? Could this push recruiting back for all banks? Also, any thoughts about whether this will hurt GS IB recruiting?

Source:
Goldman Sachs Does Not Look Kindly Upon First Year Analysts Who Plan In Advance

Comments (103)

May 23, 2012

I heard that some funds had already adjusted their recruiting schedule because of this new policy.

May 23, 2012

The comments on that are great

May 23, 2012
Anacott_CEO:

The comments on that are great

This.

May 23, 2012

It will probably not affect recruiting as much as one might think after reading this. People will just go along and make up excuses and still interview. Its more a matter of PEs not calling MDs etc for references.

May 23, 2012

Bizarre. I think this will backfire. There's a somewhat longstanding, unwritten truce that private equity funds will go in and raid the good analysts a year early, but more or less honor the two-year analyst programs and essentially commit to hiring on a year-long lead time (which is a pain for the funds).

If the banks are going to go around firing these analysts, then the funds will just start hiring for immediate start.

May 23, 2012

Bad move by GS, great for the analysts.

I'd love to draw unemployment for a year with a PE offer in my back pocket.

May 23, 2012

Why would GS even care? If an analyst is going to complete his 2 year contract whats the difference if they have a job offer after, go back to business school or become unemployed?

May 23, 2012
Bobb:

Why would GS even care? If an analyst is going to complete his 2 year contract whats the difference if they have a job offer after, go back to business school or become unemployed?

If an analyst gets the job offer too early then he/she may lose some incentive to go that extra mile (especially when bonuses aren't so huge anymore as I have heard).

May 23, 2012

i dont know if it's exactly good for the analyst. you will have a year gap of doing nothing (assuming the pe firm wont come back and fuck you over) and you will forget on a lot stuff. Usually the second year is a lot easier anyways

May 23, 2012
Ricqles:

i dont know if it's exactly good for the analyst. you will have a year gap of doing nothing (assuming the pe firm wont come back and fuck you over) and you will forget on a lot stuff. Usually the second year is a lot easier anyways

Ok, maybe not great for the analyst. But certainly not the end of the world.

May 23, 2012

lol, anyone notice UFOInsider's comment?

May 23, 2012
manbearpig:

lol, anyone notice UFOInsider's comment?

:D

My understanding is that GS wants to retain more talent, but I'm not sure this is the best way to do it. The other thing is this: who is going to buy their junk if they don't have any contacts on the buyside?

Funniest
May 23, 2012

actually, best comment I saw:

"What about 1st year operations analysts? Seriously, should I be worried????"

    • 2
May 23, 2012

In response to those saying how great it would be to collect unemployment for a year with a PE offer in your back pocket, most of those PE offers state that the offer is contingent on finishing your two year investment banking stint.

May 23, 2012
Slingin'CrackRock:

In response to those saying how great it would be to collect unemployment for a year with a PE offer in your back pocket, most of those PE offers state that the offer is contingent on finishing your two year investment banking stint.

I would find it hard to believe that a PE firm would rescind an offer if their HR department was the reason for the firing. If so, I retract my comment.

May 23, 2012

does anyone know what groups these people were in?

May 23, 2012

completely understandable. I'd be pissed if my analysts decided to bounce on me half way through their 2 year stint.

May 23, 2012
couchy:

completely understandable. I'd be pissed if my analysts decided to bounce on me half way through their 2 year stint.

But they don't leave until their contract is up

May 23, 2012

Horrible, horrible move by Goldman. As an analyst choosing between Goldman and BB Bank #2, I'm much less inclined to go with Goldman if I know my ultimate goal is the buy-side and I'm going to get fired for trying to recruit after my 1st year. Plus, you're essentially firing your most competent employees halfway through their contracts, leaving you with only the losers (unfair for me to say, but I just said it). Sounds like you're 2nd year analyst class is about to get a whole lot shittier. These kids are still working for a bonus, it's not like they're totally unmotivated to work. Plus they're competitive go-getters as it is, I wouldn't worry too much about the conflict of interests. It's been working fine for years now, why start a panic?

May 23, 2012

This seems poorly thought out by Goldman. Heaven forbid these kids that are busting their ass 100+ hours for your bottomline try to avoid unemployment when their contracts are up. If you want the best analysts to be able to accept an associate promotion encourage managers to identify top talent early and invest their time in them.

May 23, 2012
theBEEGEES:

This seems poorly thought out by Goldman. Heaven forbid these kids that are busting their ass 100+ hours for your bottomline try to avoid unemployment when their contracts are up. If you want the best analysts to be able to accept an associate promotion encourage managers to identify top talent early and invest their time in them.

Nobody wants to be an Associate. Not even the Associates.

May 23, 2012

Isn't the unemployment max $450/week? That's like 20k a year...

May 23, 2012
Kools:

Isn't the unemployment max $450/week? That's like 20k a year...

Yeah, you're right. I think it's actually less ($405). Never-mind, this sucks for the Analysts.

May 23, 2012

On the flip side, this may not matter in the longer term. Word is some megas are dissatisfied with the talent coming out of IBD these days (deal flow and LBO experience just isn't there) and are therefore planning to start recruiting directly from undergrad. In a few years the whole IBD stint may become a thing of the past.

May 23, 2012
labanker:

On the flip side, this may not matter in the longer term. Word is some megas are dissatisfied with the talent coming out of IBD these days (deal flow and LBO experience just isn't there) and are therefore planning to start recruiting directly from undergrad. In a few years the whole IBD stint may become a thing of the past.

Or you know why not waiting until 3 or 4 years (+ maybe an MBA) before taking people from IBD like in Europe? What a joke...

In my opinion it's very important to get a sell side / advisory experience before going to the buy side. Doesn't make any sense to recruit 22 years old with 1 aborted mandate...

May 23, 2012

i like this post because i've been trying to understand what analyst do after their two year stint. b-school is fine, but what if you wanted to keep working. This answers that question.

Just curious what other opportunities are out there for analyst that dont want to go straight to b-school?

May 23, 2012
MrBroadway:

Just curious what other opportunities are out there for analyst that dont want to go straight to b-school?

F500 fin, bartender, corp dev, writer, start up, financial journalist, consultant, basket weaving, scuba instructor, OWS protester, politician, think tank, etc.

May 23, 2012
illiniPride:
MrBroadway:

Just curious what other opportunities are out there for analyst that dont want to go straight to b-school?

F500 fin, bartender, corp dev, writer, start up, financial journalist, consultant, basket weaving, scuba instructor, OWS protester, politician, think tank, etc.

Also known as the Search Bar.

Nice insight from above on megas being disappointed with IBD talent.

    • 1
May 23, 2012

search bar got it.

May 23, 2012

I have never been so glad not to be at Goldman...

This is pretty terrible; I hope the PE firms in question let those kids keep their offers.

Banks give out two year contracts, then get pissed for you looking elsewhere? I cannot fathom what the intention here is. I really doubt this makes anybody want to work for GS long term.

labanker:

On the flip side, this may not matter in the longer term. Word is some megas are dissatisfied with the talent coming out of IBD these days (deal flow and LBO experience just isn't there) and are therefore planning to start recruiting directly from undergrad. In a few years the whole IBD stint may become a thing of the past.

This...actually makes a lot of sense. I hope they do. I have always thought of analyst programs as borderline dysfunctional...when your interns choose you for exit opportunities, something is not quite right. The larger funds are easily the size of boutique banks now, so why not? They lack deal experience, but their is more than enough bitch work to go around.

May 23, 2012
West Coast rainmaker:

I have never been so glad not to be at Goldman...

This is pretty terrible; I hope the PE firms in question let those kids keep their offers.

Banks give out two year contracts, then get pissed for you looking elsewhere? I cannot fathom what the intention here is. I really doubt this makes anybody want to work for GS long term.

labanker:

On the flip side, this may not matter in the longer term. Word is some megas are dissatisfied with the talent coming out of IBD these days (deal flow and LBO experience just isn't there) and are therefore planning to start recruiting directly from undergrad. In a few years the whole IBD stint may become a thing of the past.

This...actually makes a lot of sense. I hope they do. I have always thought of analyst programs as borderline dysfunctional...when your interns choose you for exit opportunities, something is not quite right. The larger funds are easily the size of boutique banks now, so why not? They lack deal experience, but their is more than enough bitch work to go around.

This is actually horrible. Paulson started out on the buysid and realized he was at such a disadvantage without working on the sell side first he decided to join bear stearns instead. It is crucial for people interested in pe to work as an agent first, especially for mega funds where they put together complicated financing packages.

And even if you get trained really well starting on the buyside, you're still at disadvantage because you don't have any banker buddies as contacts down the line.

May 23, 2012
couchy:

This is actually horrible. Paulson started out on the buysid and realized he was at such a disadvantage without working on the sell side first he decided to join bear stearns instead. It is crucial for people interested in pe to work as an agent first, especially for mega funds where they put together complicated financing packages.

And even if you get trained really well starting on the buyside, you're still at disadvantage because you don't have any banker buddies as contacts down the line.

I agree with your argument. In Paulson's case, and that of most undergraduates, it would be a bad idea to start on the buyside. Its like jumping ahead in school: you are instantly less experienced, less capable (comparatively speaking), and lack any social network.

But, if all the megafunds switch to college hires, then nobody is at a disadvantage. Your banker friends are replaced by PE friends. Your sellside deal experience would be replaced by buyside experience. PE shops would be less lean, but hiring a dozen college kids will not move the needle at any megafund.

I don't think any megafund would expect college kids to be able to structure a LBO deal. You would still need an associate class with ~2 years experience, now in charge of supervising and training the analysts. But the PE shops would train and provide experience in house, versus getting analysts from IB.

May 23, 2012
rossi99:

Could this push recruiting back for all banks? Also, any thoughts about whether this will hurt GS IB recruiting?

Another Holocaust would not affect GS IB recruiting bro.

    • 1
May 23, 2012
Connor:
rossi99:

Could this push recruiting back for all banks? Also, any thoughts about whether this will hurt GS IB recruiting?

Another Holocaust would not affect GS IB recruiting bro.

The student protests at your campus did...

May 23, 2012
UFOinsider:
Connor:
rossi99:

Could this push recruiting back for all banks? Also, any thoughts about whether this will hurt GS IB recruiting?

Another Holocaust would not affect GS IB recruiting bro.

The student protests at your campus did...

I mean in general, there will never be a shortage of analysts for GS.

May 23, 2012

Well this is making Blackstone, Morgan Stanley and Moelis that much more attractive.

May 23, 2012

most funds know this by now. So even if the GS kids get hired, they will say they dont know him. no biggie just dont get caught

May 23, 2012
Ricqles:

most funds know this by now. So even if the GS kids get hired, they will say they dont know him. no biggie just dont get caught

i wonder which funds were dumb enough to out these analysts? or did they do this on purpose for whatever reason...

May 23, 2012

Insane. There's definitely going to be a shift in the way recruiting works for the big shops and it's only a matter of time.

BossMode

May 24, 2012

i dont get it. why would the mega funds suddenly go down a tier and hire college kids?? they are there to make money, not to tutor. There's a reason why only a few hire right out of college.

banking exp is invaluable for pe guys. they don't want to teach you how to run a deal when they could just do it themselve

May 24, 2012

Could it be an effort between the funds and GS to push recruiting back again? It would increase incentive for analysts at BBs to work hard for recruiting later, and the funds would have more time to determine headcount.

May 24, 2012

Is it normal for banks to be so opposed to PE recruiting? I was told at Blackstone the MD's help you get buyside jobs (reaching out to contacts at PE firms, etc.)

May 24, 2012

I think this is very firm specific, meaning that GS for example obvisouly discourages it, but MS for example is actually "advertising" their analysts buyside placement on their OCR presentations.

May 24, 2012

Things:

1) You can start out on the buy-side just fine, no disadvantage. (for exceptions, see #2, 3)
2) John Paulson - and one cannot argue the validity of the following statement - is fucking retarded.
3) Due to Mr. Paulson's retardation, he had to retreat hat-in-hand to the sell-side to "learn" first.
4) Wanted to echo that megas are in fact "diversifying" away from IBD-heavy recruiting
5) Blackstone will not only reach out to buy-side firms for you, they'll get you around the interview process

May 24, 2012
BlackHat:

Things:
5) Blackstone will not only reach out to buy-side firms for you, they'll get you around the interview process

How So?

Also- if the Megas are somewhat focusing away from IBD recruiting, where are they turning?

May 24, 2012
Count Drachma:
BlackHat:

Things:
5) Blackstone will not only reach out to buy-side firms for you, they'll get you around the interview process

How So?

Also- if the Megas are somewhat focusing away from IBD recruiting, where are they turning?

ER and AM. People with sector expertise.

And BX has been and hopefully still is known for not only being okay with analysts going to the buyside, but actively supporting it. BX wants you to come back and work PE for them anyway. I'm not saying they'll literally get you around interviews (though they do) but they have enough buyside influence to be able to place their top talent when and where they please as far as PE is concerned. HF is another story.

May 24, 2012

Yeah, heard BX killed it this year, especially on the hedge fund side (Baupost, SAC, Och Ziff...)

May 24, 2012

This move by GS kind of screws up the analysts MBA plans if you look at the timeline.
Previously, the analysts could go:
IBD => PE => MBA => PE or VC

Now the analysts will have to choose:
IBD => MBA => IBD
or
PE => MBA => PE / VC

May 24, 2012

Someone correct me if i'm wrong, but I'm pretty sure analysts are EXPECTED to be interviewing with PE firms their first year

May 24, 2012
ello:

Someone correct me if i'm wrong, but I'm pretty sure analysts are EXPECTED to be interviewing with PE firms their first year

Well, it looks like GS is changing that policy.

May 24, 2012

bump - don't mean to hijack but was curious as to what the PE recruiting process is like, vis-a-vis openness/secrecy with current IB employer?

May 24, 2012

I heard a rumor about this. Your reasoning is spot on.

May 24, 2012

Yeah it's true. I haven't heard of firings actually happening but have a friend in GS who said the company told them anyone interviewing their first year could jeopardize their position. He was class of 2008 so it already started then.

Array

May 24, 2012

I'd be curious to know more details.......

May 24, 2012

I've heard that GS, along with PWP, doesn't let in PE headhunters. So it seems like the firm is actively trying to keep their analysts from jumping ship to top PE firms.

May 24, 2012

It's confirmed that GS is firing its analysts. I guess if you're dead set on PE you shouldn't go to GS. Because, by the time your two years are up all the spots at the top PE shops will already be taken by analysts from other firms.

May 24, 2012

im curious as to how they find out that people are interviewing? do they keep an ear out on the street/have former GS employees at PE firms keeping them updated on the resumes they are getting in or something like that?

May 24, 2012

It's confirmed that GS is firing its analysts. I guess if you're dead set on PE you shouldn't go to GS.

holy crap...definitely not signing with GS then

im curious as to how they find out that people are interviewing?

I'm pretty sure headhunters getting references from your MD's/VP's is a critical part of the process

May 24, 2012

Wow...that is really disturbing. I can't think of a worse way to screw analysts over.

bump - don't mean to hijack but was curious as to what the PE recruiting process is like, vis-a-vis openness/secrecy with current IB employer?

My understanding is that headhunters reach out to you around jan/feb in your first year (i.e. like 6 months into the job), you get an offer in may/june after a long interview process. You start a year later (the NEXT summer)

So basically, if GS doesn't let you interview the first year, you won't have any PE exits by the time your contract expires

May 24, 2012
foiegras:

Wow...that is really disturbing. I can't think of a worse way to screw analysts over.

bump - don't mean to hijack but was curious as to what the PE recruiting process is like, vis-a-vis openness/secrecy with current IB employer?

My understanding is that headhunters reach out to you around jan/feb in your first year (i.e. like 6 months into the job), you get an offer in may/june after a long interview process. You start a year later (the NEXT summer)

So basically, if GS doesn't let you interview the first year, you won't have any PE exits by the time your contract expires

Headhunters first hit you up in November and December. Dynamics got the ball rolling in mid-November this past year.

May 24, 2012

Quite simply - this is not true.

May 24, 2012
cdnbanker:

Quite simply - this is not true.

You wanna bet money on that?

May 24, 2012
cdnbanker:

Quite simply - this is not true.

CDN is right, this isn't true

May 24, 2012

I mean, four months ago I heard a panel of GS bankers from MD down to first-year analyst all speak of how although the firm would love to retain its talent since they devote so much energy to seeking the best, they realize that some (read: many) people will want to leave and to keep people happy while they're there, they help them with recruiting.

May 24, 2012

Yah GS has always had the written policy that you are not allowed to interview for PE until 6 months till the end of your 2 years. This is in no way new - they do this to keep people from skipping multiple work days to interview and to stop people from focusing on their exit.

Doesn't mean that you are not allowed to interview or that your MD won't help you, you just can't go around talking about your PE interviews and skipping work days. You do it on your own time, I mean this isn't new at the firm and people are still going to PE with ease. If an analyst was fired, and I doubt this, they were most likely crossing the lines with how blatant it was that they weren't interested in finishing up their two years.

The firm definitely would rather promote up analysts so they don't like them leaving but they don't stop them either. So I'm calling BS.

May 24, 2012
KB24TD21:

you just can't go around talking about your PE interviews and skipping work days. You do it on your own time

Wasn't aware that you had any.

May 24, 2012

Here's the deal with GS as far as I've heard (note, I do not work at GS and my info is second-hand, so it may not be 100% accurate):

  1. They strongly discourage first years from interviewing, but the kids interview regardless. From what I've heard, you're not going to get fired for this, but you will likely get fucked on your bonus if they do find out.
  2. Signing an offer before your bonus=fireable offense. The way analysts get around this is they verbally accept an offer, but don't actually sign anything until after their year-end bonus (this is 1.5 years in... GS analysts get their first bonus at 6 months and then their second at 18). You simply keep your mouth shut about having received/accepted an offer and go about your daily tasks as you normally would. PE firms understand this, particularly because many of the PE employees came from GS themselves.

Someone with better info please correct me if I'm wrong. Again, not 100% confident with the above.

May 24, 2012
DontMakeMeShortYou:

Here's the deal with GS as far as I've heard (note, I do not work at GS and my info is second-hand, so it may not be 100% accurate):

  1. They strongly discourage first years from interviewing, but the kids interview regardless. From what I've heard, you're not going to get fired for this, but you will likely get fucked on your bonus if they do find out.
  2. Signing an offer before your bonus=fireable offense. The way analysts get around this is they verbally accept an offer, but don't actually sign anything until after their year-end bonus (this is 1.5 years in... GS analysts get their first bonus at 6 months and then their second at 18). You simply keep your mouth shut about having received/accepted an offer and go about your daily tasks as you normally would. PE firms understand this, particularly because many of the PE employees came from GS themselves.

Someone with better info please correct me if I'm wrong. Again, not 100% confident with the above.

i'm pretty sure GS analysts get their bonuses at the end of 12 months (i.e., in the summer), just like every other BB analyst on the street

May 24, 2012

I have heard this about Goldman also.

Listen up everyone, the culture in IBD is changing regarding exit ops. Now that investment banking and finance in general are no longer the envy of civilization, banks in general are having a much harder time at MBA recruiting. Because undergrads are young and dumb, analyst monkey recruiting has not suffered as much and the talent keeps flowing in. Naturally, banks are acting to protect this talent by promoting them. Many more 3rd year / direct promote offers are being given out and this is now seen as the "default path" in an increasing number of groups. Senior bankers are much more touchy about giving out references and sticking their necks out to help kids get exit ops. This is happening right now and I expect it to get worse every year. Of course your mileage my vary but buddies across the street have confirmed this.

May 24, 2012
macro:

I have heard this about Goldman also.

Listen up everyone, the culture in IBD is changing regarding exit ops. Now that investment banking and finance in general are no longer the envy of civilization, banks in general are having a much harder time at MBA recruiting. Because undergrads are young and dumb, analyst monkey recruiting has not suffered as much and the talent keeps flowing in. Naturally, banks are acting to protect this talent by promoting them. Many more 3rd year / direct promote offers are being given out and this is now seen as the "default path" in an increasing number of groups. Senior bankers are much more touchy about giving out references and sticking their necks out to help kids get exit ops. This is happening right now and I expect it to get worse every year. Of course your mileage my vary but buddies across the street have confirmed this.

I've heard this about The Firm here and there, but no one should avoid Goldman because of a little tighter policy on external recruitment. What you lose in stricter policy you gain on GS' name.

If you're in TMT, you're probably going to be able to go to Silverlake if you want.

The "trend" varies by group/bank, though. MS/CS/JPM/UBS Sponsors will push for you because it's good business. MoCo really sells placement capability in interviews.

May 24, 2012

This is a rumor. No factual evidence. The person didn't perform well it's not because of recruiting.

May 24, 2012

Yes that's the policy. But it's a don't ask, don't tell type of thing. Everyone recruits and accepts/signs.
A few analysts at GS abused the "I'm joining the firm but can't formally accept now" at some PE firms to reneg when a better offer came along; so believe a number of PE firms require them to sign but bviously no one will tell GS you did.

May 24, 2012

Regardless what the reality v formal rules are, the bottom line is that this situation sounds opaque to the point where it's risky to interview for PE in the first year.

May 24, 2012

I'm still curious what kids will go there knowing that they can't plan for exit....unless GS is promoting analysts on a systemic basis now. Anyone?

May 24, 2012
UFOinsider:

I'm still curious what kids will go there knowing that they can't plan for exit....unless GS is promoting analysts on a systemic basis now. Anyone?

You have to remember this is not a new thing. This policy is at least 5 years old and they haven't struggled thus far in getting candidates or in moving people into the PE side. And they do promote after 2 years, in fact in a weird dynamic the policy exists and groups interview analysts for associate positions at the same time that the analysts are interviewing for PE positions. So even they are interviewing before their policy deadline

May 24, 2012

Yeah, MS analysts got a (somewhat uninspiring) stub this year - that said, haven't heard the same about GS. Also, while I haven't personally heard of any specific cases of analysts getting fired, I do know that there is a big push there to promote from within, to the point where A2A offers are being given after 2 years (instead of 3).

Best Response
May 24, 2012

i've heard the tooth fairy trades money for my teeth

May 24, 2012
Barry Allen:

i've heard the tooth fairy trades money for my teeth

+1
just because it's random as hell. I'm giving away bananas today

May 24, 2012

just keep it under the radar, that is should not be a problem. and dont tell people you are interviewing for PE positions, these news make the round pretty fast.

May 24, 2012

I've heard the same thing about Perella Weinberg as well as GS

May 24, 2012

You have to remember this is not a new thing. This policy is at least 5 years old and they haven't struggled thus far in getting candidates or in moving people into the PE side.

How do you interview with PE in secret? Don't headhunters ask for references from MD's?

May 24, 2012

.

May 24, 2012

This was an interesting read. I had no idea IBD worked like this. ST for life.

.

May 24, 2012
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