Non-Competes for IB Analysts
Hey monkeys,
For those of you who were hired as IB Analysts/Associates (recently or in the past), was a non-compete clause made part of the standard (or sample) employment agreement that you received? If so, what was the stipulated period of enforcement? How do these affect PE/buy-side recruiting (can you leave)? And truth be told, how much does this impede job prospects and exit-opps in general at such a junior level? Do they really enforce them for analysts?
Also, can these be negotiated down/away?
Thanks,
PinnacleMan
Generally not in force at junior level - starts at associate (1mth) - VP (3-6mths)
Sorry, but to be clear - you're saying they DO definitely exist as a standard part of an EA, but ARE NOT generally enforced? Or are you saying they're usually not in junior level contracts (analyst)? Any sense/potential in trying to have it removed/reduced or not?
Thanks a lot for your answer! Much appreciated.
Sry, to be clear - do not generally exist at junior level
Thank you!
+1SB
There is generally NO non-compete in a junior banker's employment agreement. At more senior levels, standard practice is to have a "garden leave" requirement. So when a senior banker leaves for another bank, the bank he is leaving requires him to wait a certain number of days before he starts (it's often a month for VPs, two for Directors, three for MDs, or something like that). The former employer continues to pay salary during the garden leave...so it's basically just a paid vacation. Analysts and associates can generally leave at-will.
Buy-side funds would not normally be characterized as competition. After all, the business is entirely different. To an investment bank, a private equity fund is a client or potential client, not a competitor. What can be a very mild restraint to exit is the signing bonus, which most banks require analysts to repay (sometimes on a pro rated basis) if they resign within a year. That period has often expired by the time analysts recruit for buy side funds. Funds that take analysts before that period will sometimes buy out the obligation.
Thanks a ton! Makes a lot of sense. Was recently examining a sample EA for a friend and there appears to be a non-compete/non-solicitation clause, with a 2 year period! Need to re-read it though so I know EXACTLY what it is referring to/implying. Perhaps it is different because it is a boutique. A little disconcerting for sure given that he is at such a junior level (analyst) and the period is so long.
+1SB
Thanks PM!
you might be compensated for lost bonus when moving between BBs
after all these days its not much ;)
Sunt commodi quia iure delectus. Ratione vero aut magnam rem quas et.
Vero repellendus ab illo aut eos voluptatem excepturi. Expedita aliquam odio ullam architecto ut id. Quia magnam et ipsam. Aut consequatur enim iure quo suscipit praesentium. Vel provident ut aliquid accusantium qui atque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...