Private Equity battles Investment Banks... And i'm okay with it.
Times published an article talking about how PE are after IB analysts in their early stages. Don't get me wrong, I am all for it - it just feels like all the info on private equity interviews in the article was a bit obvious except one thing that sort of surprised me.
PE firms call you up for an interview an hour before it? Okay now that's ridiculous: “You may be called into an interview two days in advance, a day in advance or an hour in advance. And you have to be there.”
Maybe IBs need to double their analyst numbers so half can go and half stay? Win/Win for both ;)
http://www.nytimes.com/2014/07/06/business/wall-street-banks-and-privat…
The NY Times pretty much puts out a similar article every year, so nothing really new. For instance:
2013: "A Rush to Recruit Young Analysts, Only Months on the Job" http://dealbook.nytimes.com/2013/05/23/a-rush-to-recruit-young-analysts… 2011: "A Grab for Wall Street’s Rising Stars Before They’ve Risen" http://dealbook.nytimes.com/2011/03/09/a-grab-for-wall-streets-rising-s…
Haha word. I guess people gotta read something, right
Right on the spot what Mr. Sheyner says.
how an investment bank MD sees it: http://epicureandealmaker.blogspot.ae/2014/07/you-go-first.html
According to a related NYT Dealbook article, Bain Capital received 200 resumes, interviewed 75 people, and hired two investment bankers for next year's class. TWO. Even if you are in GS TMT/MS M&A/BX M&A, those are crazy odds...and the rest probably don't stand any chance. Serious reality check to people going into banking hoping to land a MF some day
This is true, but keep in mind Bain Cap hires mostly consultants. Next year's class is 4 consultants, 2 bankers, and 4 analysts who were already there.
Obviously super competitive everywhere, but Bain is different from a banking recruiting standpoint
OK so even if the the typical MF hires 6 bankers, those are still crazy odds for anyone not in one of the 5 top groups. On the other hand a 2000 kids go into the Street every year hoping to one day work at a MF. Would they do so if the best they could do was work in MM PE?
So true. Matter of fact, PE firms are starting to do their own recruiting, slowly, but surely. Especially hiring kids right outta college
http://dealbook.nytimes.com/2014/07/07/one-way-to-solve-private-equitys…
PE's deal flow is too slow to provide the kind of M&A deal experience that IBD provides. If PE shops are hiring kids right out of college, that means those PE shops probably no longer need those kids to do heavy lifting M&A works, which in turn may mean they are outsourcing heavy lifting M&A works to the banks and these new kids may focus on investment screening, portfolio company monitoring, and due diligence types of functions. Then we may begin to see the widening divergence of the PE and IBD skillsets.
Good point.
A reasonable number of PE firms consistently post ad's for jobs via internal job portal for my (target) in the UK.
Description goes something like this... X-X is seeking a candidate with at least one, preferably two, prior internships in top tier investment banks. Applicant should have gained X-X skills and have had some relevant deal exposure in addition to an excellent academic track (translation, consistent 1:1... I think this is a 4.0 in the US).
So they are still asking for a lil' bit of IB experieince even at undergrad/MSc level..... I guess if you have passed Goldman, then JP (perhaps even a little PE internship on the side) internship screening processes they are just taking the opportunity to cherry pick at an earlier stage, and as you suggest, develop the skill set they now need with the top applicants without waiting for 2 years.
Additionally, and totally unrelated to above discussion, there has been a real climb in the number of EM regional focused PE adverts being posted where the description is as above but the 'relevant deal exposure' turns into 'relevant regional transaction experience and intimate knowledge of local business environment'.
There is certainly some truth to this but I have 5+ years of anecdotal evidence that suggests otherwise. How many models do you really think that you need to build before you become proficient in excel and financial modelling? I would argue that by doing fewer deals and spending more time on each model while concurrently participating in other aspects of the investment process provides a more valuable learning experience and skillset than doing 2 years as a model / powerpoint monkey. Most bankers pitch a deal or assist with one aspect of the overall deal process whereas the PE analyst may be required to build the lbo model and then build a full blown operating model that is used moving forward by the portfolio company and/or the PE shop. A lot of this is also done from scratch rather than from a template but that obviously varies by shop. This does assume that the PE shop has some base level training program or mentorship program and none of this diminishes the value of a 2 year IB training program, which I do think provides a great foundation. I do think the standard hiring process of 2 years in IB > PE will remain intact but I also see value in hiring an undergrad from a target that has 1 or 2 banking summer internships. I could have that kid sign up for a modelling course and then have him operate as part of a 3-6 month mentorship program and mold him how I want and develop him into a great analyst before sending him off to b-school or promoting from within.
With the widening skillset divergence, PE in the future no longer has to lure young analysts from IBD. What do think that will do to the PE compensation at junior rank?
Apollo called me out of the blue once and conducted the interview within 2 hrs of that call...
Can only speak from my own experience but an interviewer for a pretty decent PE shop told me that they no longer plan on hiring bankers in the future, only recruit out of college, and promote from within. could've been BS though to make the position seem better
I just had a conversation with a buddy of mine at Blackstone who claims that all of it is nonsense and they are planning to do what they have always done - recruit those who received the training at IBs - because the actual recrutiment that IBs do cost A TON of money and the training does as well plus once they go thru they can see who was good and what not. Hopefully thats just Blackstone and Steve Scwarzman's philosophy.
At this point, the job market is so saturated I don't see why PE can't attract excellent talent at a precipitous discount out of undergrad and just make analysts with 2-4 years of Bank experience come in as Associates without needing an MBA (Sacrilege?).
I had coffee with MD at my boutique firm and he told me PE firms are no longer interested in bankers because they realized that bankers are good at doing deals but suck at the most important part i.e. value creation. Hence they are trying to develop their own analysts or people from consulting/Big 4 background. So I should start at PE if I wanna be there someday (as if getting in was walk in the park lol)
However, I believe the same thing doesn't apply to top tier funds.
lol.
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