How to prepare for after IB analyst program
As the private equity on-cycle recruitment is starting earlier every year, it seems as though most banking analysts have very little experience on the desk before they need to ultimately decide if they should recruit for PE.
For incoming analysts and SA 2020, how should we go about making that decision of whether to pursue the "typical" PE recruiting process or explore other options, namely, staying at the same investment bank for further career development. This seems particularly difficult given most of us will have had little actual banking experience by the time this decision must be made.
Would appreciate any insight from current analysts or associates, those who have chosen to go through or not go through with PE recruitment, as well as any senior-level IB/PE opinions. Thanks!
also interested in this
This is slightly scummy, but if you're at all interested in PE, prep for and do the on-cycle process and then assess in 18 months if you actually want to leave (you almost certainly will). Not a good look if you renege, but you’ll probably have had more than your fill after 2 years of IB, the fund can easily find someone equally capable in short notice, and you’ll only have burned your relationship with one HH out of 10+. Plus, if you’ve had a good enough experience that you’re considering staying, your bank will almost certainly take you back in heartbeat if you depart and regret it.
Barriers to entry go WAY up during off-cycle (tons more interviews, case studies, and modeling tests over the course of weeks or months, with no clear timeline or deadline unless you have other offers to leverage — and even that might not move the needle), whereas during on-cycle, you can nab a job at a top, top fund with just 1) a polished story, 2) rehearsed technicals and 'deal prep', and 3) familiarity with 'one hour' or even templated LBO models.
Do all funds give out the full 2 hour LBO modeling tests? Or is it usually just the UMM/MF shops?
For on-cycle it really depends. Usually they don’t have time for anything longer than an hour, unless it’s a elite fund that doesn’t fear you leaving mid-interviews.
For off-cycle, basically any PE firm worth its salt will give you one or both of a model + case study (3-5 hours total depending on length and complexity, usually a pretty even split down the middle on timing, maybe a slight shade more toward model) or just a more complex model (2-4 hours), since they have weeks or months to put you through your paces.
Incoming Analyst here. Also curious about how to go about sharing deal experiences if it is essentially only 3-4 weeks on the desk before going through on-cycle recruiting ( if I am not mistaken). Any advice would be greatly appreciated.
Bottom line is we are all well aware candidates don't know their ass from a hole in the ground when it comes to discussing deals. That said, it's more about your ability to (I) convince me you put in the effort to prep for the interview by studying the little experience you do have, and (II) spin what experience you do have into sounding like it's more than sending PIBs to production. On the other hand, your earliest staffings are likely impacted by your performance as an SA (i.e. better staffings go to those who have a perception of being stronger coming in); this is obviously not always true I'm generalizing. So your performance in your internship becomes even more important. Given internships are abbreviated and/or virtual this year, even this may go out the window when the SA 2020 class recruits for the buyside.
Overall though the focus is shifting back in favor of candidates who are paper rockstars for PE recruiting given the few professional datapoints funds have to go off of. So bank, group, GPA, undergrad institution, and yes SAT scores are more important than ever (and not just as a screening mechanism - I've personally heard from friends at other funds that a decision was made because one candidate was slightly better on paper when two candidates were otherwise indistinguishable). This is the harsh reality.
Do you have any thoughts on how the next cycle of PE recruiting is going to look?
Great post — anyone thinking about on-cycle 2020 should take note.
From what I’ve seen at least, the “harsh reality” you describe is somewhat overdue. IB and PE recruiting have veered sharply towards “who’s rehearsed?” instead of “who’ll be most capable ~6 months in?” There’s some overlap, of course, but ultimately, the Stanford kid with a 3.9 in CS probably has a gear that the “semi-target” kid with a 3.5 and a BBA won’t ever be able to touch, and it’s silly to give offer preference to the latter simply because he knows what a DTL is, or spent Christmas break learning how to do a ‘paper LBO.’
(Queue the MS from kids who fall into the second category)
Do you see PE recruiting getting pushed back this cycle? I'm currently recruiting off-cycle, but curious how on-cycle will look as I'm sure it will affect my recruiting process.
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