Private Equity Hostage Situation
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Member @sman540 shares his journey from a small boutique bank to a reputable bulge bracket investment bank. How he struck out the first time with on-cycle private equity recruiting while at the boutique and how he recovered the second time around. Learn about how intense the on-cycle private equity recruiting process is and why it's similar to a hostage situation
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Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis. Your host and chief monkey, and this is the Wall Street Oasis podcast. Join me! As I talked to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. Member sman540 shares his journey from a small boutique bank to a reputable bulge bracket investment bank, how he struck out the first time with on cycle private equity recruiting while at the boutique and how we recovered the second time around while the bulge bracket. Learn how intense the on cycle private equity recruiting process is and why it's similar to a hostage situation. Enjoy. You know my S man, five, 40, thanks so much for joining the Wall Street Voices podcast.
Sman540: [00:01:03] Yeah, thanks so much for having me, Patrick.
Patrick (CEO of WSO): [00:01:04] Cool. So it'd be great if you could give a quick summary of your background.
Sman540: [00:01:09] Oh, sure, if so, I'm born and bred from New York. Both my parents are physicians, so growing up I always had an interest in health care but didn't really know what I wanted to do professionally and then ended up going to a target school for undergrad. And pretty much everyone was funnelled into either consulting or banking. And I was studying health care policy at the time, so I thought I'd try to combine the health care that I grew up with, with just this banking push that everyone else was doing and turned out. I actually ended up really liking it, really having an interest in finance. So I did an internship in a markets group at a bulge bracket. My sophomore year leverage that to break into front office role with an investment banking with a boutique, a health care boutique. My junior year for my internship, I accepted that role full time and then, after six months on the job, received a lateral opportunity to switch to a bonus bracket still in investment banking but within a different vertical, and have been doing that for the last eight months now.
Patrick (CEO of WSO): [00:02:10] Great and real quick. So you specifically going back to kind of undergrad when you were when you made that decision of like, OK, finance does interest me what that was? You said sophomore year?
Sman540: [00:02:22] Yeah, yeah. It was to be exact. It was my first semester of sophomore year. I had joined an on campus business club and just it was a stock focused investment club. I joined the finance team and we made pitches to sign client to the investment committee. Every other week and just really enjoyed the process, got me interested in valuation and kind of took off from there.
Patrick (CEO of WSO): [00:02:45] Got it. So let's talk a little bit about like specifically the recruiting aspect of, you know, you kind of knew early on enough like sophomore year. It's not if you had if you had to come to that realization, junior year might have been a lot harder, right? So tell me a little bit about just when you knew that's what you wanted to do. What did you do? Kind of what were the steps you took?
Sman540: [00:03:04] Pretty much the first thing I think this is one of the benefits of having a target school and especially being an on campus club and involvement is I just reached out to the older kids in the club that I knew had done finance internships and had successfully recruited. And I just said, you know, where do I start? What's the first step? And you know, people start recommending you buy the guidebooks and, you know, Wall Street, oasis, of course. And people recommend you start basically doing exactly what you're doing with them, but with people who are actually alumni and professionals who either in your club or when you're major. And so LinkedIn was pretty new at the time and was just starting to become really popular. So I made a LinkedIn and just started cold emailing alumni from my specific business club since it had been around for a long time. And not just my business club at my particular school, but also at other schools in the country because it was a national business club. And I just found a commonality, said you’re in my business club or you're from my school or from my major. Let's talk. And then through those coffee chats, someone recommended me to a markets, specifically a market research program at a bulge bracket. And now it probably would even be too late. As a sophomore at the time, it was around November of sophomore year. And the interviews were starting in January. Now it's moved so early, I probably would have had to be doing this in the summer of my freshman year, because now the interviews are starting right when you get back on campus, your sophomore year.
Patrick (CEO of WSO): [00:04:31] so tell me something so like that's for the sophomore summer or that's for junior summer.
Sman540: [00:04:36] That's for sophomore summer.
Patrick (CEO of WSO): [00:04:38] So, so it's happening about. Well, OK, it's happening about what would that be nine months before the start date of the internship. So not as crazy as private equity recruiting, but
Sman540: [00:04:52] Not nearly as crazy as before,
Patrick (CEO of WSO): [00:04:54] But still. Ok, so you're you have enough time here, so you're like doing it on camp, like you said back then was only a few years ago, but back then you basically were prepping your sophomore right at the beginning of sophomore year. You're doing a lot of that networking because the interviews were kind of November, December, January of your sophomore year. Now it's almost like right when you get back on campus, you need to be doing almost freshman end of freshman summer. You need to almost be doing this networking and getting ready. And you know, this is now October 2019. So people who are just back on campus now, if you're looking for a sophomore summer internship, get on it because it's definitely
Sman540: [00:05:33] The clock is ticking. He's definitely still boutiques that are recruiting. I know some of the bulge brackets have closed or are just starting to close, but definitely a lot of boutiques go actively recruiting right now.
Patrick (CEO of WSO): [00:05:42] Talk to me a little bit about like this sophomore internship buzz and craze at least five years ago. I know sophomore internships were very much like, Oh, you don't really need it, it's just almost impossible to get. It seems like that has, from speaking to a few people like the pendulum has swung to or it's almost now like for the most competitive candidates like the sophomore internship is is critical. Tell me a little bit about that.
Sman540: [00:06:06] Yeah. So I think the biggest problem is that now, because for junior summer recruiting is over a year in advance. Recruiting happens about 15 months in advance to 12 months in advance. So kids are doing interviews for their junior year internship before even starting their sophomore year internship. So because of that, in order to get the internship are in order to get the interview. To begin with, you have to have something on the resume to be able to talk about.
Patrick (CEO of WSO): [00:06:31] And so even though you haven't started the sophomore summer internship, you put that on your resume to help you land June your summer internship interviews. Exactly. This is insane. This is insane. What do you put it? What do you put on the resume? You have nothing. You have no experience. You just say a future intern.
Sman540: [00:06:47] You just put
Patrick (CEO of WSO): [00:06:49] You put future incoming sophomore, summer intern, you know, in this division, this boutique investment bank or whatever. And then that helps you land the bulge bracket summer analyst interviews. Got it.
Sman540: [00:07:00] Exactly. Ok. And a few people also do you know we'll do a corp dev internship their sophomore year and sort of say, I'm really into the old story was I'm interested in Corp Dev. But once I did it, I wanted more valuation work. Now the story is, well, you know, I wanted to get some client side and some industry exposure before I go into a particular vertical or, you know, I'm interested in product banking and I wanted to get industry exposure before trying for my internship, you know, something like that.
Patrick (CEO of WSO): [00:07:26] Unpack that a little. I think that's really interesting. Can you unpack that a little bit more in terms of how the stories have evolved in terms of what this the story you tell recruiters, can you?
Sman540: [00:07:34] Yeah, I mean, it's just it's become a challenge because you can't really speak to experience anymore, right? And you know, it used to be for me, at least, especially I did my sophomore internship just because it was something I was interested in and I liked. Following the markets. I saw market data market research be great. But what you know, and then I did the internship. There were things I like. There are things I didn't like, and I said, Maybe I can find some. It's a better fit and that that was true, but that was also an easy story to tell. Now it's sort of you have to tell them why you didn't apply to their sophomore internship in investment banking in July after your freshman year. And so you have to basically say, I mean, you know, everyone has a different approach. But what I tell the kids, especially from my business school or from my business club, they reached out to me, you know, I tell them just, you don't need to make any excuses. Just say, have a reason for why you're doing your particular internship this summer. So if you've got a corp dev gig, say, I really think that it's going to give me industry exposure and I really love this industry. But it's something that I wanted to do to get the client side so that I could be a better banker in my junior summer and your step ahead of the kids. We've only done banking.
Patrick (CEO of WSO): [00:08:41] To be clear, this is advice for people who didn't who missed the boat on like the bulge bracket, sophomore applications or something. So that so that you sound like, oh no, like I I knew I really wanted this corp dev or this other, you know, industry vertical experience. And that's why I had an exact blah blah blah. Just to make it a legitimate excuse when in reality, when reality may have been like, you didn't even know you want to do banking, right? But that's not like it.
Sman540: [00:09:06] In reality, you know, no 19 year old should be planning their career five years in advance. Right? But they have to now.
Patrick (CEO of WSO): [00:09:12] Right? Ok, fair enough. So. So tell me, OK, this back to your story. So you're you kind of you're doing this boutique internship, your sophomore summer, but you have that kind of lined up on your resume now to try and land the junior summer interviews one of those kind of start hitting for you. Is it? I assume it's on campus recruiting. Tell me a little bit about the resume drop and the conversions, first rounds and stuff like that.
Sman540: [00:09:35] So it's so it's really it's all moved to higher view at the Big Bang. So it used to be on campus interviews for all the target schools, now they just send you basically a link to a video platform, it's not even a Skype interview, it's just you talk into a blank screen and it's then reviewed by an algorithm and to screen out certain patterns that I'm not aware of. And then it's then reviewed by the on campus recruiting team who will watch all of these videos of these kids answering five behavioral questions into staring at a camera. And then you'll pick the kids for the Super Day from that. So what that really has meant is it 100 percent has turned into networking, and it's all about networking with people when typically the firms will come on campus. If you're a target school in around February or March of your of what is your sophomore year, but for junior, your summer. So we're talking, you know, six months in advance and internships start. They'll come, they'll do networking sessions, you'll get cards, you'll get emails. Reach out to those people right away. Schedule calls. Start contacting them. Maintain a dialogue. And then as soon as the applications will open typically depends on the firm. Some of them open right away. Some of them open in March of sophomore year. Again, for junior ActionScript, some open July 1st is when pretty much all the bulge brackets open this year, so
Patrick (CEO of WSO): [00:11:01] It's almost a full year about
Sman540: [00:11:02] A year before.
Patrick (CEO of WSO): [00:11:04] Yeah. Got it. Ok.
Sman540: [00:11:06] Um, and then basically because it is this high review system, you don't really get a chance to have a first shot at the interview. And they screen, you know, they'll screen hundreds of candidates per school for what ends up being 20 to 30 Super Day invites.
Patrick (CEO of WSO): [00:11:23] How did you prep for looking into a camera and talking into a camera and not feeling super weird about it?
Sman540: [00:11:28] I mean, I was the higher view thing actually started literally the year after I recruited. Ok, so I didn't have to do it. But you know, most people that I've talked to and asked about it or, you know, people have reached out and ask me for help, and I sort of put them in touch with friends who are younger. And they basically said that they literally just recorded themselves over and over and over again on their computer, answering simple questions. They knew where they were going to get like why investment banking, you know, why'd you choose your major in college? Just tell me about yourself in general. And then, you know, you basically just watch video of yourself and you notice weird things that you're doing with your texts. You're not looking at the camera properly and so on.
Patrick (CEO of WSO): [00:12:06] Yeah, you get you get the weird text, you get the weird, you know, the ums and the, you know, the filler words. You start catching those. Yeah, and then try to try to clean it up and polish it a little bit better. Got it. Also probably trying not to sound like a robot after you practice one hundred times.
Sman540: [00:12:22] Exactly. You sound like a human is pretty hard these days.
Patrick (CEO of WSO): [00:12:26] Yeah. So OK. So you didn't have to go through that, but you were. It was fairly accelerated in terms of your process. Tell me a little bit about. So you started. They came on a campus. Was it around March? You said March, April?
Sman540: [00:12:39] It was. Well, so again, those are timelines for today. They came on to campus just as students were getting back. So August. Org. Oh, I'm sorry for the Virginia for the initial networking sessions, for me, it was also yeah. March, March, April for the network. So like right at the end of sophomore year
Patrick (CEO of WSO): [00:12:56] And so did stuff start opening up, like for junior summer then and you already had. You hadn't done your you hadn't done your sophomore internship yet, but you had it on your resume? Correct. And what did you put? Were there any bullets under that?
Sman540: [00:13:07] Under that? I just put a one line description of what my role would be, you know, working in markets. So on. And then I put my title was just incoming SA analyst. And that was it. That was and then the dates that I'd be working and the firm and that was it.
Patrick (CEO of WSO): [00:13:21] And that's pretty standard nowadays. They were. They expect you to. Yeah, OK, cool. So they come on campus, you know, the game, you're going to go to these networking sessions for all the brackets, all the other elite boutiques, you're collecting cards and you immediately start emailing people to try and get on the phone.
Sman540: [00:13:37] Yeah, basically, that same night, as soon as you leave, you just start writing your emails and you send them either that night or you draft in that night and them first thing the next morning. And you know, you basically just say, really enjoyed speaking with you? Let me know if you can find some time to get on the phone and then, you know, the hit rate's pretty low for that. Like, you know, you might meet 10 people at the event. You know, all of them and only one will talk to you. But the key is just every person who talks to you just say at the end, is there anyone you recommend I speak with? Mm hmm. And especially if you're at a bulge bracket, the most important thing is talking to the staffer because at least at our firm here, the staffer is in charge of all recruiting and it's their full time job. So they basically they, you know, their banker like first your VP or so, and then they get basically a year of instead of being a banker, they just do recruiting and staffing analysts on projects.
Patrick (CEO of WSO): [00:14:30] Ok. So kind of like a very different role.
Sman540: [00:14:33] Whoever gets stuck with that? Exactly. It's basically a treat. I mean, it's a vacation for the first year.
Patrick (CEO of WSO): [00:14:39] Right. So they basically are you're trying to get them on the phone. So you're hoping that one of these analysts or associates or someone was at the information session will give you that contact. Exactly. And then even if they ignore you, your names out there, you've shown that you've networked, you sure that you've at least reached out and maybe they recognize you. And so are they the who's the one who's actually looking at these videos that are coming in? How many videos? I mean, I assume now that it's a video platform, they're basically probably it's like maybe a thousand people sending videos.
Sman540: [00:15:09] I mean, it's yeah, it's I mean, it's pretty, pretty crazy. So for here. So I'm actually on the campus recruiting team for the school that I went to. Right. And so since it's a target school, it's basically a collection of bankers who are at the firm who went to your school, who volunteer to be on the recruiting team, right? And so it's the same people who go to these networking sessions, right? Which is.
Patrick (CEO of WSO): [00:15:33] But are you are you guys the one actually looking at the like the videos
Sman540: [00:15:36] Or you guys ones like, yeah, yeah, no. Yeah, I mean, we'll literally and it's analysts all the way up to me will be watching the videos.
Patrick (CEO of WSO): [00:15:44] And how long do you guys spend on each video? Do you guys do you guys choose like one specific question to focus on each of you or something like that and you rank it and then it?
Sman540: [00:15:53] Yeah, it's much more you watch so many. I mean, I personally have watched call it, you know, and this this was my first year with the firm, and I watched probably 15 to 20 higher reviews from kids from high school. And they basically just said, was there anyone like not even ranked them? Just was there anyone who stood out, you know, and in a positive way? Was there anyone who made an impact on you or, you know, write down a list of names of people who made an impression and then it's kind of a black box from there, I don't know. And the deciding
Patrick (CEO of WSO): [00:16:25] Or and the fifth and the 15 to 20 that you watch, are you watching just one of their responses you were watching? They're full like five question.
Sman540: [00:16:32] Yeah, each question, they time it and they only give you either a minute and a half or two minutes per question. So it's ten, you know, it's ten minutes, basically five to ten minutes per person.
Patrick (CEO of WSO): [00:16:43] That's actually a lot.
Sman540: [00:16:44] And it's actually a lot. Yeah, OK. Yeah, and you do it over the course of, um, over the course of about two weeks, or at least I did because they sent, you know, the applications open July 1st, it's rolling. We basically started watching high reviews right away and then by like July 15, they said, OK, here's the kids we've selected for the Super Day.
Patrick (CEO of WSO): [00:17:04] Got it. Ok. And so do you feel like any of the kids you said stood out ended up making it to the Super Day?
Sman540: [00:17:10] A few of them, yeah, actually. Two did and one got the offer, which is which was pretty, pretty exciting, pretty cool to be in that process. And were you? And he also was a kid who had reached out to me before even submitting his application. You know, he had met me at the networking session, reached out all the standard stuff.
Patrick (CEO of WSO): [00:17:26] And did you had he basically where you when you were viewing people? I assume they were just all from your school?
Sman540: [00:17:34] Exactly. Yeah, it was. I don't know how the non-target process works, but for us, at least, we only look at kids from our school.
Patrick (CEO of WSO): [00:17:40] My guess is there's probably just a bucket of all the non-targeted get thrown into one massive bucket and some, some poor soul has to go through that large bucket.
Sman540: [00:17:48] I could see that being the case. Ok.
Patrick (CEO of WSO): [00:17:50] Ok, fair enough, OK. So let's get back to your the process and the timeline. So you're basically on campus. It's sophomore year. The sessions happen. You start doing resume. It's not really even, I guess, in your case, it was like resume drops or who's allowed to do interviews. Anybody allowed or you have to be invited.
Sman540: [00:18:09] Um, you have to be invited. Some people don't even get the higher
Patrick (CEO of WSO): [00:18:12] View, so you get you get you basically drop a resume, in other words.
Sman540: [00:18:15] Exactly, exactly.
Patrick (CEO of WSO): [00:18:16] Yeah. So it's like getting a first round interview. You do the recording. Hopefully you've practiced at this point so that you don't sound like a robot and you don't get nervous on camera, right? You submit those and then tell me about the turnaround time. How long do you hear before you see me in a
Sman540: [00:18:29] Super Day or not? So yeah, it can be, you know, they they do a number of waves of super days because they don't there'll be some super souvenirs that they'll only give out. They'll pretty much always give out an offer. But some people just look at that one offer some, they'll give out like six or seven. You know, it's it's not like they have a number of slots that they have to take each Super Day. Yeah, it's just, you know, it's a yes or no on a per applicant basis. So because of that, you know, I think for our school, we end up having three super days in total. And so, you know, for some of the kids they found out from submitting their higher view, the earliest they could have found out is two weeks. The latest is a month and a half, or even two months to two
Patrick (CEO of WSO): [00:19:08] To two to eight weeks. Let's say in terms of when they would be notified of that, they made it to a Super Day. That's really good information. Tell me about specifically when you said there's three super dates for your school, so there were super days. Is this for your group specifically or is this as firm wide or and is sorry, go ahead.
Sman540: [00:19:28] Oh no, I was going to say it's firmwide.
Patrick (CEO of WSO): [00:19:30] Yeah, it's firm. It's a firm wide Super Day, three of them. And then specifically, so it's not just your school and it's not just your group. It's basically just for the pool of analysts, right?
Sman540: [00:19:41] And it's typically they'll have a group of schools or a collection of schools go at the same time. So they'll have, you know, if you went to an Ivy League, the Ivy Leagues will go at the same time if you're at a target and the target ness will all go together. You know, you, you, you start to notice patterns, especially when you're interviewing and you ask all the kids where they went to school and they went to the same, very similar schools. So Exactly. It'll be so it'll be three super days. And it's not just going to be kids from your school, it'll be a collection of schools.
Patrick (CEO of WSO): [00:20:13] Is it fair to say you go from like traditional targets to semi targets to non targets in terms of the Super Day?
Sman540: [00:20:19] Yeah, yeah. I think I think that's pretty. It's pretty fair.
Patrick (CEO of WSO): [00:20:23] Do you feel like there's more offers being given in the last two buckets versus the first bucket now that a lot of the like more competitive now that there's less interest in investment banking at the maybe at the target schools than traditionally? Do you feel like you guys are leaning more downstream?
Sman540: [00:20:38] I've only ever I've only ever seen a target school process because I don't really interact. I only am on my school's recruiting team, right? So it's kind of a tunnel vision view. Yeah, I can say in terms of, you know, kids who are interested in it. There definitely is. There's definitely a concern at the bank level of kids, you know, taking kids from target schools because in terms of exit off, they don't have better opportunities once they start. And, you know, I don't know if they've run the math on it, but there's definitely an opinion that a kid from a target from, you know, a top target school is more likely to leave than a kid from a, you know, general state school.
Patrick (CEO of WSO): [00:21:19] Right. So the attrition being such a big issue now for the banks, they almost prefer a potential, a state school kid who's really smart and going to be a great analyst that has a higher likelihood of staying versus it's a kid from an Ivy League that has a better chance to jump. So you think that school, let's call it pedigree or prestige, still plays a big factor in private equity recruiting
Sman540: [00:21:47] For private equity one hundred percent only. Not on a firm level, but because the Headhunters act as screeners got it and the headhunters basically determine who gets interviews and who doesn't. Yeah, so and you know, the headhunters hunters, they're just playing a numbers game. They get a fee. If you get the job, they don't, if you don't. So they are very, very biased towards the top target schools.
Patrick (CEO of WSO): [00:22:10] Got it. Ok, fair enough. Tell me a little bit about so let's go back to your I keep interrupting because I'm curious about the specifics, but let's go back a little bit to your specific process. So you dropped your resume. You got some higher views, but you didn't go to a bulge bracket. So tell me about what was the thought process of going back to the boutique you were working at for your it was your sophomore summer, right? Tell me about.
Sman540: [00:22:36] So my sophomore summer is actually at a bulge bracket. But no, it was OK. I got it. Junior Summer was the boutique in investment banking.
Patrick (CEO of WSO): [00:22:45] That's right. Ok, so tell me so your junior summer was there. You obviously got a return offer at the boutique. And so tell me about did you try to leverage that offer to a land, a land, an analyst spot at a middle market, elite boutique bulge bracket bank? Or what was your thought process when you got that offer? Or was it exploding like you just didn't have the chance?
Sman540: [00:23:09] Yet so they gave me two weeks to accept, and it was very conditional, very clearly stated. If I don't respond by Friday. Yeah. You know, August, whatever, I lose the offer. And so I did place some calls. I reached out to friends. I reached out to, you know, some of the alumni network in the process just saying, you know, did your group not take any kids, you know, do you have any slots open? And I just wasn't able to gauge. I mean, two weeks is not enough time to gain traction really in the full time process. So I figured I'd much rather have a job than do recruiting again. And I did enjoy the internship. I like the people, so I said, you know, it's still banking. I'm happy and it. Let me take this, take that right.
Patrick (CEO of WSO): [00:23:50] So its front office is still banking. It's at a good boutique that has a good presence in their industry. So you're like, you know, I'm just going to get some good deal experience and be there. So tell me when you came and started working, you know, it's interesting because they put that they put that really tight time frame on you for that exploding offer of two weeks almost to force your hand. Yet was it worth it? You know, I wonder was, is it worth it for them to do that? Because then you look at kind of what happened to you and you still ended up jumping, what, very, very soon after seven months into the job? And that's that probably ended up costing them? Yeah, more than.
Sman540: [00:24:23] I mean, they had to replace me, train the new person, and it's hard to find good on the run for a job, you know, six months in.
Patrick (CEO of WSO): [00:24:32] Right. So tell me a little bit about that. Like, did you feel when you started with them? Was it immediately like you started talking to people networking now that you were, you know, now that you were had the banking job on your resume, now that you kind of were, you know, you had that going, you could you could do it without the time restriction or that that exploding offer. Tell me how that lateral, you know, lateral recruiting process worked. Was it people reaching out to you or were you active?
Sman540: [00:24:57] Yeah. So it was. So what? My route might be a little different than some of the people who lateral. But basically I had done the on cycle private equity recruiting process as a first year at this small boutique and just wasn't able to get any traction with the Headhunters. And even from a target school in investment banking at a respected boutique, you know, it's at least, you know, maybe putting the blame somewhere else. But to me, it felt like I just wasn't taken seriously or getting traction because I wasn't at, you know, a top firm. And so to me, that had caused a little bit of frustration. But I was I was very focused on private equity recruiting. And then just one of my friends told me that a couple of second years in his group had left early and had left six months earlier than they expected because their job said, Hey, we want you to start early, and they had openings and they were hiring three laterals. And he just said, Are you interested? And part of it was the frustration, and part of it was just not gaining traction on recruiting. I said, absolutely, here's my resume. And it was, you know, I think our group here at both racket was very, you know, in need of analysts at the time and especially was having trouble finding people in December, especially with right before the holiday season. So I interviewed with them two days later, I had a Super Day and then I received my offer that Monday. So over the course of five days went from not even thinking about it to having an offer and starting in a month.
Patrick (CEO of WSO): [00:26:27] So OK, so that makes a lot of sense to me, you know, tell me before, you know, talk to me about that frustration with the private equity on cycle recruiting process. Tell me, like, how many recruiters did you meet with? Were there specific recruiters? Did you feel? Did you get any interviews or just they were for smaller middle market shops only? Like, tell me a little bit about that.
Sman540: [00:26:45] Yeah, so I pretty much met with all of the recruiters. You know, I had done a lot of prep. I knew what I was getting myself into. And, you know, I appropriately treated them like interviews, and I felt like the meetings with the recruiters went well. But only a couple of the non major recruiters, you know, the KPIs, the ankles were not sending me any opportunities. I was able to get two or three interviews at small and middle market opportunities, and I was able to get a lot of opportunities in Chicago, which to me, just being from New York City, I had no interest in in leaving the Northeast. Um, but you know, I was only looking at New York, Boston. And so because of that, I, you know, I was thinking, Do I want to uproot my life and apply to some of these jobs in Chicago that are expressing interest? You know, and also in terms of the opportunities, it wasn't even like I was not getting interviews. I wasn't even getting the emails to ask if I was interested in these interviews or, you know, potential interviews that my friends are both brackets for getting. And I wasn't getting the invitations to dinner events or drinks events that all my friends in both brackets were getting right. And so to me, I just I just started saying, OK, there's clearly, you know, a bias here. Let me. You know, let me keep shooting my shot and see how it goes.
Patrick (CEO of WSO): [00:28:07] And then so did you. Did you get any? So did you do any interviews in that first year?
Sman540: [00:28:13] I did. I had about I had two interviews. I was able I got three, you know, like cocktail events essentially and got two on cycle interviews at very small middle market, industry focused funds.
Patrick (CEO of WSO): [00:28:26] And how did those turn out? You didn't quite get the offers or you were close?
Sman540: [00:28:30] Yeah, yeah. Both of those, I didn't quite get the offers and that definitely you know where I work had no impact on that. That was purely on performance competitiveness of the candidates. Yeah. But you know, it was more so, you know, in my opinion, especially after the first one, I felt like I did exponentially better in the second interview. And I felt like if I got a third interview, you know, it's like after each interview, I made it to the next round. The first one, I met with two people and got the ax. The next one, I made it to the modeling exam and then got the ax. And you know, I felt like it's now that I've seen it. Now that I've done it, if I get a third one, I can lock down the offer and then just wasn't getting any interest or wasn't getting that third interview.
Patrick (CEO of WSO): [00:29:13] You know, I've interviewed a few people that kind of gone through the first, the recruiting, the on cycle recruiting process and private equity in their first year banking. And a lot of them have started saying, you know, they wish they had delayed. Did you have any of that regret like you wish you had more prep? Like, I know our private equity interview course, a lot of people do that and then they're like, Oh man, I should have done this a long time ago before I had my shots, you know what I mean? It sounds like you got to reset a little bit because you went, you did lateral. But talk to me a little bit about the prep you did kind of leading up into the interview.
Sman540: [00:29:40] Yeah. So I did purchase the Wall Street guide for private equity recruiting. And I will also say, you know, not to toot your horn, but in my opinion, it's by far the best guide for private equity. Appreciate that. Appreciate and the both in terms of the modeling exams. And I think, most importantly, just the technical questions on it. Every single interview that I asked 90 percent of the technical I could point to the guy and say he took it from here, or it was, you know, an extrapolation of here. And so I had read that over my summer before start while I was in training, you know, the training is pretty much a joke. It's two months of basically vacation before you start banking, right? And so I took those two months to basically read through the guide. You know, talk to some of my friends who were in the industry do practice modeling exams. But I, I think genuinely to some extent, you can't.
Patrick (CEO of WSO): [00:30:33] It's hard to replicate it. Yeah, you need the marks. You need them. You need a realistic mock interview.
Sman540: [00:30:37] Yeah, exactly. So we try to learn it.
Patrick (CEO of WSO): [00:30:41] We try to encourage people to do like at least one mock interview with their actual private equity professional for like dude, you don't know until you're actually in there in the hot seat. Like it's very different than reading a guide and then like practicing in your head or even practicing in front of a camera versus live, but. And the thing is, the thing with private equity is it's like everyone's incredible. Everyone's impressive. So it's really about how you come across and how, how genuine, how passionate, you know, how likable you are, really. So it's interesting to me that, yeah, it's just interesting to me that more people don't do that, at least with maybe they do with friends, but they should be doing it a lot in terms of just drilling with
Sman540: [00:31:20] That one hundred percent. If I had done, you know, three or four mock interviews with a professional, I would have gotten the first offer.
Patrick (CEO of WSO): [00:31:28] Yeah, I don't. I don't. That's what I don't get. It's like, you know, you spend what is a couple of hundred bucks you like? Have you have like real live feedback, but it's OK. Whatever point is like, it's one of those things where I think you need to go through it to realize like. Oh, man, I could have been so much better, you don't you don't realize how much better you can get until you kind of fall on your face for the first few times. Exactly. But OK, so that's good. So you were getting better, but you're still frustrated because the cycle passed and it was on cycle. You didn't you didn't get any offers. But at the same time, do you feel like you burned any bridges having talked to recruiters and them knowing you? Or do you feel like once you lateral to the bulge bracket, you had a new rebrand and you could, you were seen in a different light?
Sman540: [00:32:13] You definitely burn bridges if you don't rebrand, OK? And I think part of the appeal of the ladder into the bulge bracket was that it would give me an opportunity because essentially the recruiters get feedback from the people that you interview with. And if they say the kid's not ready, they're not going to send you more opportunities. Got it. So, you know, exactly. You said I needed the rebrand to meet with them again as a second year, having done interviews, having prepped and, you know, being polished for me to come back and say, I'm stronger. This is my new story. You know, get me in front of a fund and I'll kill it.
Patrick (CEO of WSO): [00:32:47] Got it. Ok, so you're at a specific group? I won't say at the bulge bracket, did that have any impact in terms of the type of opportunities you were seeing?
Sman540: [00:32:56] Definitely. Definitely. I think especially once I did, you know, on cycle, the second time I realized that firm is incredibly important, but especially now that the cycle has gotten so early. Even more important is what group you are. So I was I was only getting a small handful of generalist offers. You know, the M&A kids were getting every, you know, offer basically every interview under the Sun.
Patrick (CEO of WSO): [00:33:23] So if you had to rank the groups, what's the best groups to be in for private equity recruiting? I think I know the answer, but go ahead. And what would you say is the best
Sman540: [00:33:30] One hundred percent? Top three is M&A financial sponsors and left in that order? Got it. Ok. And then tech is a close fourth.
Patrick (CEO of WSO): [00:33:39] What about like a restructuring group for like distressed funds or something like that or credit funds?
Sman540: [00:33:45] Yeah. I mean, I think I wasn't, you know, I didn't really look at any of those opportunities. So I'm not sure, but I'm biased.
Patrick (CEO of WSO): [00:33:51] I'm biased because I was in restructuring.
Sman540: [00:33:54] Okay?
Patrick (CEO of WSO): [00:33:56] But anyways, go ahead. So you OK. So you get the rebrand, you're getting some opportunities, not as many as them and kids, but you know you're still getting some looks. Your story is really down pat now. You're you kind of had that full year under your belt of banking. I assume you have some deal experience at this point.
Sman540: [00:34:14] I did I did I had I had closed the transaction before I left or my transaction had announced before I left my first firm. And then I I had a second transaction announced in about May with my current firm.
Patrick (CEO of WSO): [00:34:28] Awesome. And so you had some good stuff to talk to. Did you tell me how you prepped specifically for those? I assume a lot of the interviews focused on the specific deals you worked on.
Sman540: [00:34:39] Yeah, yeah. A first round interview with every firm is basically just a five minute, you know, conversation of Walk Me Through Your resume and a few technicals and the 25 minutes of walking to your deals.
Patrick (CEO of WSO): [00:34:51] And so how do you? Any tips specifically on how I mean, we have we just released something new on the on the on the course where we actually have private equity professionals walking through deals they did in banking? Yeah, we actually have audio now, like almost like a podcast form where people can listen to how they talked about their deals in the recruiting setting. But I'd love to hear, is there any tips you have in terms of people prepping for like that, that transaction or that deal walk through? Like, what should they know?
Sman540: [00:35:16] Yeah, I mean, you know, the very first question of sort of the first or second question of the Wall Street oasis, this guy that has all the technicals it tells you basically exactly what everyone's going to be interested in your deals, which is, you know, first and foremost, just what was the size, what was the multiple it went for? You know, p e the book value, if the firm, if applicable and. You know that's sort of the rundown, the next one is the investment thesis. Why, why? Why does the deal make sense, which then always turns into would you invest in the deal? Right? So on and so forth, basically just three bullets about, you know, why the deal was happening and then in addition to that, just have three merits and considerations. So, you know, why a company would buy another company is different than why the company is a good company, and it's important to know that those are two different things. And if you answer why they bought it as just why the company was good, you're answering that question wrong? Right? And so, you know, just merits and considerations of the target company in the in the deal. And then, you know, items, the diligence and just further points of diligence. And I literally for prepping it. I opened up our diligence tracker and I just looked at some of the high priority diligence items that we actually listed for the process and why. And thought just took a couple of seconds to say, why was this high priority versus low priority? Why was this so important? And you know, some of the things like, how do they? I, you know, like what the CEO succession plan was high priority for us because, you know, the deal was a private equity backed deal, so they really cared. The management was going to stay or, you know, if it's in particular, it's like, is the company going to hit their numbers? What's their revenue retention look like? Basically, you just look at what the high priority items are and you think, why is this important? And then when they then ask you, what would you diligence further about the deal? You then just list off the three things from your diligence tracker, right?
Patrick (CEO of WSO): [00:37:12] In terms of the highest priority items and why exactly why you think they're important? So, OK, so that's great. So really, drilling down on your deals, knowing them inside and out is obviously critical to being successful. So you felt like. So tell me about the process. So how many now that you're at this bulge bracket, you're getting a few more looks. You're a little bit more polished. Now you have deals you can really sink your teeth into in terms of the interview and show that you know your stuff. Were you doing a lot of the modeling on these deals, so you're able to kind of talk to that?
Sman540: [00:37:42] Yeah, so I on the deal that I did here, I actually did not do the modeling. But you very quickly learn how to pretend you did the modelling, which is you.
Patrick (CEO of WSO): [00:37:51] How do you pretend?
Sman540: [00:37:53] Yeah, OK, got it.
Patrick (CEO of WSO): [00:37:55] Got it. So even if you didn't do the model, you can at least be familiar enough with the model where you can say, like, Yeah, I was in the model. But, you know, do you have to actually say, Yeah, I built it? Or do you say, yeah, I'm very familiar with the numbers and all the model in the deal. How do you frame?
Sman540: [00:38:09] I think especially if you're at a bulge bracket that has a particularly strong M&A team, they're going to they're going to call your bluff if you say that you ran the model, right? But I think you can very realistically say, you know, we we diligence some of the assumptions in the model and some of the growth targets that we're very company specific or we're industry specific, and we work closely with the internal team at the company to come up with these assumptions because, you know, and it's it's true, it's such if you go deep in a process, the M&A guys are kind of just plugging and chugging and modeling. It's the coverage group that's actually the one updating the numbers and actually giving the assumptions to drive the model. So I think if you're honest with that, you definitely get credit for it, but you also have to be ready to defend if they start asking you, Well, where did y five percent, you know, what growth did you use? Why, where
Patrick (CEO of WSO): [00:38:59] And how much industry knowledge do you feel like you needed? Like how much? How deep did you have to go?
Sman540: [00:39:05] It definitely depends on if it's with a fund that's industry focused fund or not. With the generalist funds. One hundred percent, it's not that deep. It's pretty high level. Yeah, if it's with a fund in your sector, especially, and this is something that happened to me. Unfortunately, if they worked on the deal that you're talking about and they were a potential buyer in it, you know,
Patrick (CEO of WSO): [00:39:27] It's like worst nightmare.
Sman540: [00:39:29] Yeah, exactly. And I mean it, you know, it happened to me where essentially, you know, the guy wipe the floor with me because he knew deeply high level. You know what the comps were trading at, what precedent transaction specifically he had looked at, you know, things like that. And that's actually one thing I didn't mention that I should have is in addition to knowing your deal, it's just as important to know, you know, and similar to what it went for, what precedent transactions went for, you know, what multiples were used there and what the comps are currently trading at. Because you know that for me, especially in this interview, that was the first thing he went to. He was like, Well, you know, did you look at an unnamed the deal that I was not familiar with, you know, in this transaction at all. And I had said, OK, well, why didn't you look at that? You know that XYZ? So, you know, it's for an industry focused fund. I would say pretty. You need to have a pretty strong industry knowledge to know the trends.
Patrick (CEO of WSO): [00:40:25] No, no. The transactions in that space. Yeah, no. Actually, that's that said, no, the cops are trading the public comps. Exactly. Got it. Ok, fair enough. And so tell me about like just the overall stats. So another in other words, like you kind of reached out to all the recruiters. Did you get where they willing to talk to you again, number one, because you had the rebrand? And number two, how many of those conversations led to first round interviews or coffee or, you know, cocktail hours and all that stuff?
Sman540: [00:40:52] Yeah, so, you know, some of the recruiters actually had reached out to me and some of them, some of them keep track or will send you kind of bi monthly, just email blasts to everyone that they've met with, saying What's your current status? Do you have an offer now? And so some had reached out to me saying, Hey, you know, just want to check on your status? And I then dropped, Oh hey, I'm actually a fully track at x y z would love to meet or and some I just reached out to independently. One hundred percent were receptive. Everyone was, you know, more than willing to meet with me again. And then in terms of where that went down the line, I ended up getting, whereas before I had had, you know, three cocktail events throughout the whole cycle process and two interviews before the process even started, I had six, you know, cocktail drinks, breakfast events, essentially networking events with the firms. And then as soon as the process kicked off, that turned into four on cycle interviews.
Patrick (CEO of WSO): [00:41:49] Tell me about the timing of that. When did that happen? I know that just happened, right? Like a month ago.
Sman540: [00:41:53] Yeah, yeah. So it's the essentially the end of August, you know, they'd call it August 20th or so. The coffee chat start happening. They went on for about two to three weeks, and I think it was September 12th.
Patrick (CEO of WSO): [00:42:08] More people still in training like their first year, the people who had just started at the desk, they were some of them still in training or they had just finished.
Sman540: [00:42:15] Um, I probably at some roofs they had at our group, they literally had started the coffee shop started the week after the kids started at the desk. Yeah. So their second week on the job, they're having these coffee shops with ferns and then less than a month into the job, they're having first round interviews.
Patrick (CEO of WSO): [00:42:32] Yeah, for a job that's almost two years away. Exactly, exactly. So just to give you more perspective, this is people who are starting the typical on cycle private equity recruiting process starts two years in advance. So in other words, people in September of 2019 were interviewing for jobs that wouldn't start till what, June or July of two thousand twenty one. Yeah. Ok. So just to give people a little perspective of how crazy it is. So, OK, so you're interviewing that six or so or cocktail hour turns into four on cycle interviews are those. Do those immediately go to in person or like final rounds or how many rounds are there? And let's talk about that.
Sman540: [00:43:16] Yeah. So it's different for every fun, but basically the way it was at all, the ones I went to was they just bring you in in the morning and they have you interview with people until they give you an offer or send you home.
Patrick (CEO of WSO): [00:43:28] Got it. Ok, and then tell me, tell me about the you know, where these middle market, upper middle market funds, mega funds were, they tell me about that pressure with the, you know, doing the interviews all day. They either send you home or you immediately going to another fund right after that? Or how does it work? Yeah, yeah.
Sman540: [00:43:46] I mean one, I got sent home and then I got told to leave. And then less than an hour later, I was meeting with the next one and I had been at the first one from 8:00 a.m. until 3:00 p.m. And then I was at the next one by three 30.
Patrick (CEO of WSO): [00:44:02] And then you're at the next phone by three 30. Are they both like up on market funds? What would you call
Sman540: [00:44:06] What we were? Yeah, the smallest that I met with was a around billion. It was like a $900 million phone. And the largest I met with was a, you know, I'll call it, 10 billion plus fund. Got it. So it was, you know, it was it was definitely a range. And you know, there's also definitely a strategy. You know, I was kind of lucky with the timing of mine. They were more spaced out. But the way that some people have it is you're literally at a fund and you get a call with an invite to a megaphone and you're at around mid-March Mid-Market Fund, you have to make the decision. Do I leave right now and go to this megaphone or do I take my chances? Things are going well so far and try to get the offer here and sacrifice me that interview with the megaphone. So it's it's a lot of, you know, game theory going on.
Patrick (CEO of WSO): [00:44:51] And so what do you think? How how would you how would you advise people who are going through this incredibly stressful process? It's happening over a weekend typically, right? It's like two days, two or three days.
Sman540: [00:45:03] Yeah, it started on Thursday night and it ran until basically Tuesday of the next week.
Patrick (CEO of WSO): [00:45:09] And tell me, what time are they people? They have people coming in at like eight a.m. And how late are people interviewing till?
Sman540: [00:45:15] So typically, you'll be there for five to six hours before you get an offer. Mm hmm. And some people, you know, they're doing these nonstop. I had a friend who was at a megaphone. He came at the fourth and it's not like they had slots. They just whenever they send a candidate home, they call in the next one. So he got a call at around 4:30 for a megaphone and he was there at 5:00. He got the offer at 2:00 in the morning. So I mean, he was, you know, he was there for about, you know, doing some quick mental math on nine hours.
Patrick (CEO of WSO): [00:45:49] So he was there at 2:00. So they kept interviewing him and people were there interviewing him till 2:00 in the morning.
Sman540: [00:45:56] So it's not nonstop. It's typically they'll have, you know, they'll have you interview with someone, they'll put you in a room and then they'll discuss everyone that they met with and then they'll send you home or they'll have you meet with another person. So it's a lot of waiting, too. It's a lot of just kind of sitting in a room for at some points an hour, you could be sitting in a room for two hours and have someone come in and sent you home. Or you could be there for two hours. And then after literally just you met with one person, you're there for two hours. Someone brings you into the next interview. And so it's just very stop and go and very random and stressful.
Patrick (CEO of WSO): [00:46:25] And then you may get a call in the middle while you're waiting like, Hey, come to this megaphone. Exactly. And you've got to make that decision. So tell me about. Did you have any of those decisions you had to make in the in the moment?
Sman540: [00:46:35] I was very lucky that I did not. I had the way that my words was. I had to on the Friday, the day after it started, and then my other two were on Sunday. So I had, you know, one a day of rest in between, which was huge and both were, you know, 1:00 in the morning, one at night. I think honestly, everyone that I've talked to says I got crazy lucky, and that's very rare.
Patrick (CEO of WSO): [00:46:56] So tell me, tell me about like, did you land any offers in the first that first day?
Sman540: [00:47:01] On the first ad and not the first day, the first one, I you know, it was my very first interview in a year and I was a little rusty, but and again definitely should have done a, you know, practice with a professional. Yeah, and it didn't. It did not go as well. The second one, I made it to the final round and then the third one made it to the final round again. The fourth one got the offer that night at about midnight.
Patrick (CEO of WSO): [00:47:28] Wow. So you were like under the gun. You basically just got it. You basically just got. Yeah. Well, that's awesome.
Sman540: [00:47:34] Yeah. And they also, when they give you the offer, some of it depends on the firm, but they told me I had two hours to decide. And so I had between midnight and two a.m. to make this decision on the spot.
Patrick (CEO of WSO): [00:47:46] What if you what if you fell asleep? Just kidding.
Sman540: [00:47:48] I mean, there's adrenaline. I was still there I was. You were at the office. It was. I was there from 3:30. I was there for 3:30 to midnight and then at midnight had my last. I actually was just sitting around waiting for about an hour. And then they came in and said, hey, you got the offer, you're going to take it. You've two hours
Patrick (CEO of WSO): [00:48:06] And you just said yes, right there on the
Sman540: [00:48:07] Spot. I said, I said, you know, show me where to sign. Yeah.
Patrick (CEO of WSO): [00:48:11] Awesome. Wow, man. Exciting and crazy. I wish we could do like. I wish we could do a behind the scenes of that that would be so intense. Like to see that the whole game theory going down and tell me a little bit about some of your friends and tell me about some of them, any stories around where they did jump to try and go to that megaphone interview and ended up burning out and not getting any offers.
Sman540: [00:48:37] Yeah, I mean, I fortunately,
Patrick (CEO of WSO): [00:48:39] Like any words of warning,
Sman540: [00:48:41] Anyone who did it all ended up with offers but did OK. I had one friend who was at a respectable, you know, one to five billion phone and was waiting around basically to hear back if he got the offer or not got the call from, you know, top, top fund like one of the big five got. The call said, you know what, I'm going to take my chance left. What from what potentially could have been an offer if he had stayed for another hour or so? And then, you know, did that for a couple of hours and landed it, which was an incredibly, you know, I got to move on a million years, but
Patrick (CEO of WSO): [00:49:18] It was a gutsy move.
Sman540: [00:49:20] Yeah, it was to say the least. It was a gutsy move. But he he personally just had felt that his interviews hadn't gone that well at the first one. He was kind of surprised he had made it as far as he did. Got it and he had, you know, met with, you know, the top five fund had met with them, knew a bunch of kids from school and from his particular group that were there and just felt, you know, chances were good. He was going to take it.
Patrick (CEO of WSO): [00:49:44] So he felt like at this, even though he got pulled into this first fund, that was, I say, one to five billion dollar fund because the interviews didn't go really, really well. But he felt like maybe he was being kept around almost as backup. And you got to be thinking like our other offers going out right now and exploding in two hours. And is he just being held there? Yeah. Interesting. Really interesting. The game theory behind all that. Yeah, I mean, I would think if I'm being held, held, held, it's almost like you're being held hostage.
Sman540: [00:50:13] Yeah, no. I mean, well, because it's really there, like you sit here while this kids offer explodes.
Patrick (CEO of WSO): [00:50:18] I think I think I know the type. I think I'm going to call this the private equity hostage situation. I think I'm going to.
Sman540: [00:50:24] I like that. Yeah.
Patrick (CEO of WSO): [00:50:26] Um, the game theory of the of the entire I mean, we really talk about the game theory of the firms trying to get the top candidates. Tell me a little bit about. Have you heard any rumblings? I know you have it started in private equity, but from the people and doing through going through the interview that they're frustrated with the process in terms of how early it's going.
Sman540: [00:50:44] Yeah, the people in the people on the other side hate it. I mean, you know, they are, you know, just as frustrated as us, especially, you know, a lot of them feel like they're seeing good candidates who have a lot of potential that if they'd interviewed in three months later, probably would have gotten the job. And a lot of them to just also, you know, it's just very hard to ask someone interview questions. These kids don't have any deals. They only have an internship to go off of. So, you know, for them, they're like, it kind of feels like we're shooting fish in a barrel. And what some firms have done to counter that is expressing some of the big firms they'll have, you know, instead of having like a drinks event or something like that, they'll have coffee shots and they'll instead of one or two coffee shots, they'll have like five to 10 coffee chats per candidate. Got it. And if they really like a candidate, they'll basically meet with them, you know, over and over again over the course of the three weeks before the process starts. And then once the process starts to basically give them like to interview, you know, they give a modeling even if they have to give the job, basically. But yeah, no one hundred percent, both at the firm that I'll be going to and people across the board. There's it seems like no one's happy with how it's going right now.
Patrick (CEO of WSO): [00:51:56] Hmm. Any advice for people you know, you kind of you came in at an interesting thing because you had that first year under your belt, you kind of had a first bite of the apple, even though you only had a couple of interviews, it kind of opened your eyes prior to the process. And then, you know, once you got the rebrand to the bulge bracket, you. We're almost more prepped, but even then, like you said, you had four interviews in the first three. You didn't get the offer. So being as competitive, you are being kept from a target school, being a smart kid, having prepped. You still didn't get the offer until that final one, which is surprising to me. You know, I think it just speaks to how competitive it is and how crazy it is. Tell me about do you feel like any of the megaphones or middle market events are going later or holding seats open
Sman540: [00:52:37] And recruiting later? I mean, there's definitely some of the top funds, even only they did on cycle, but they only interviewed second year in the on cycle process. Interesting. Ok.
Patrick (CEO of WSO): [00:52:47] And you know, which ones do you watch? Do you know which funds those are?
Sman540: [00:52:51] Yes. So Silver Lake shows to do that. I don't know. I don't know any of the other funds in particular, but Silver Lake made that decision.
Patrick (CEO of WSO): [00:52:58] Got it. So they said, look, we'll just take our chances with the second year.
Sman540: [00:53:01] Yeah. And I've heard Searchlight did the same, but that I don't know. You're not sure. Can't confirm.
Patrick (CEO of WSO): [00:53:07] Ok. Very cool. Anything else? So, yeah, we didn't get too much into like your day to day life. I'd been banking. I assume it's very much what we've heard before, but anything you want to share about that or the group you're in in terms of like the work life balance, is it going well? Are the deals you're working on interesting?
Sman540: [00:53:26] Yeah. I mean, I definitely think just the overall, you know, the banks have very clearly made an effort to try to keep analysts and it shows.
Patrick (CEO of WSO): [00:53:35] Are you actually getting weekends like I know, different bulge brackets have different policies like I can't remember exactly. I don't want to say what policy your bank has because it may give it away, but can you right? Is is whatever policy they're doing, whether it's like, I know one is like Fridays or the ones like weekend, like every fourth weekend, I know another one has like pencils down. Like Friday to Saturday. There's a whole bunch of them out there. I can't. But is that actually being enforced?
Sman540: [00:53:59] One hundred percent? You know, it definitely depends on your firm and your group. You know, at my last job, we had a policy that was blatantly ignored. Um, and you know, it was like we would make jokes about almost would be like, Oh, like, you know, that's like a, you know, protected Friday or Saturday. But I love it.
Patrick (CEO of WSO): [00:54:20] But I think the boutiques have a harder time with it, right? Don't they? Do you would you agree with that like the boutiques, boutiques or smaller firms like, they don't have the they don't have the extra bench to, like be able to absorb?
Sman540: [00:54:32] Exactly. Exactly. I mean, you know, my analyst class size tripled between firms and I mean, you know, at the senior level, the seniors, you know, there's like only about 50 percent more seniors. So it's like you've got basically double the workforce per person to work on this stuff. And so part of that is they then give you more work. And you know, part of it is also just bigger. Deals require more people, but one hundred percent, it's hard. Boutiques are harder to staff and harder to make these policies for, right?
Patrick (CEO of WSO): [00:55:07] Do you think what do you think in terms of the trends going forward? Do you think it's going to continue? Do you think banks are going to become even more? I mean, I think retention is still a big problem. You see private equity poaching all the quote top talent from the banks would. What do you think are the bank's next move? Do you have any thoughts in terms of where it's heading?
Sman540: [00:55:22] I mean, I think honestly, I mean, I think banks are going to keep trying to keep people and going to keep making it better. I mean, you know, we have chats with our group head all the time and, you know, like different people from the bank, be it HR or bankers reaching out, you know, just having forums, basically even having some senior banker or like analysts and associate forums, just saying like, please, like what can we do to keep you just anything? You know? You want more money for your seamless dinners? Do you want more? Do you want Sunday off to like what? What can we do? You know, do you want to get promoted a year earlier? What can we do to keep you right? And so, you know, I think it's going to keep going. But to be honest, I just think,
Patrick (CEO of WSO): [00:56:01] Where does that, where does that balance out? But what would it take, what would it take to keep people on the sell side? I mean, there's got to be at some point there's got to be something that banks can do. A lot of people say no, because the type of work in private equity, maybe they're just more interested in that. But talk to me about that. Is there something the banks can do?
Sman540: [00:56:21] I mean, I personally think the I mean, I'm of the belief that at the end of the day, there's very little they can do. You know, the type of work is just not as appealing and eat, no matter how much you do towards the hours, they're always going to be hard. But I do think the biggest thing that's been successful here that for me at least and obviously this comes from someone who's leaving. But for me, I've seen work is just bringing analysts to meetings and making analysts feel like they're part of the team in the process. And you know, there's very much still, even after all these initiatives that they have, there's still a mentality that analysts are just kind of replaceable deal monkeys, you know, cog in the wheel, basically the car. Yeah, exactly. We're basically just woefully under slept robots that can crank through Excel and PowerPoint on. And so I think that really the best thing that the banks can do is just like bring them to meetings, say thank you. As ridiculous as that sounds like just having you know your boss come by and say, thanks for the hard work on the pitch, you know, goes a long way. Yeah. And you know, unless they start doing that and analysts become a bigger part of the process, I think if we keep saying, you know, it's kind of behind the scenes excel monkeys, I think it's going to no matter what, no matter how many protected weekends you get, it's going to stay the same. Yeah.
Patrick (CEO of WSO): [00:57:46] Personally, I think that until they continue to drop the hours even more, more protected weekends, more kind of these policies, but also not just that. I think the early promotions so the analysts associate it was a big is actually a big deal. I think that actually might really get people to stick around because if they see a path with no MBA, if they see a path where they actually like to sell and they like the idea of doing transactions, you may you may actually hold on to a few people each year that you wouldn't have otherwise.
Sman540: [00:58:17] And I will say to you on in in terms of reinforcing that there, you know, I have many friends who are taking pay cuts to go to private equity and who are, you know, missing out on a promotion, basically and going from what would be a second year associate at a bank to a first year associate at a PE fund where at the peace on associates, at the bottom level versus bank. He's got analysts before you and you're a more senior associate. So one hundred percent, I think the early promotions maybe not yet, but can make a difference.
Patrick (CEO of WSO): [00:58:52] So tell me about where on pay a little bit. Tell me a little bit about pay at the boutique and then you can give a little slight ranges if you want to give exact. But then and then tell me about what you've been seeing at your group
Sman540: [00:59:01] Or in your bank. Definitely. You know, pay at the boutique was better way better. You know, it's you. You sort of take a prestige haircut when you go to a bulge bracket.
Patrick (CEO of WSO): [00:59:12] So tell me, like based on one hundred or something or base 90 or
Sman540: [00:59:15] I mean, well, the salary is the same pretty much everywhere. Yeah, with the exception, with the exception of, you know, maybe if you're at the top two, you know, investment banks give, you know, who gives 75 and incentive you who notoriously just all in gives kids 300 K as an analyst, right? But with that exception, it's, you know, base salary pretty much across the board is 85 to 90. Mm hmm. For analysts and then bonus at a bulge bracket can be up to call it 80 percent for the top top analyst, whereas at the boutique Gaza before it got up to one hundred and twenty percent
Patrick (CEO of WSO): [00:59:51] For the top performing. So you're talking, let's say, 90 base and like one hundred to one hundred and ten bonus
Sman540: [00:59:58] For professionals about 200 all
Patrick (CEO of WSO): [01:00:00] In. Yeah, yeah, which is crazy for your first year out of school. Not bad. Yeah. So yeah, a lot of people that a lot of people don't think that or don't understand that sometimes the boutiques pay more because they understand they need to attract the talent. So OK. And then private equity, do you have an idea of what you're going to be getting or what the ranges are that you're seeing from other people?
Sman540: [01:00:22] I think, you know, for most of the people that I've talked to, obviously it depends on fund size. If you're at a fund that's in the, you know, five billion plus range, it seems like 250 to three hundred is what all in is what you can expect. And then the middle markets can range like crazy. I mean, I have some friends who are getting all in 180, which is, you know, a pay, you know, like there are some 30 or analysts that make more than that, right? And so.
Patrick (CEO of WSO): [01:00:50] Um, it sounds like my first year in private equity.
Sman540: [01:00:54] Yeah, yeah, yeah, I mean, but there's also some people that, you know, very small middle market fund that as a first year associate, you can start getting Kerry. So I mean, you know, and those do still exist and those are like, you know, the five hundred million to below funds. But you know, if you're getting Kerry in a well-performing fund, you can pass three hundred pretty easily in, you know, in terms of all in.
Patrick (CEO of WSO): [01:01:19] Yeah, fair enough. Ok. So in terms of yourself? So this is an on cycle process. So you still have a couple of years at your bullet bracket, correct?
Sman540: [01:01:26] Yeah, yeah. Yeah, I've still got two
Patrick (CEO of WSO): [01:01:28] More years left. So how do you plan to survive knowing that you have a private equity offer? How are you going to motivate yourself?
Sman540: [01:01:34] I mean, you know, to me, I actually think, you know, I'm just in general, very hard working person and someone who actually very much enjoys finance and enjoys what I do. Obviously, I don't enjoy, you know, formatting boxes and PowerPoint. But I think, you know, to me, like there was almost once I got the job. My biggest concern was, what do I do with all my free time now because I basically had spent every second, I wasn't sleeping or working. I was just prepping for interviews.
Patrick (CEO of WSO): [01:02:05] Yeah, all your free time because you're only working 70 hours a week or whatever.
Sman540: [01:02:10] You know, there's one hundred and sixty eight hours a week, and every investment banker knows that. No. Yeah. So it's, you know, if you've got 80 hours, I mean, that's still a solid 88 left. But um yeah. And I think I think the other the other big thing is, you know, there is, especially with the earlier promotions coming in out, I do still have to earn a promotion to associate if I'm going to stay for the full two years. So there's still a lot of pressure to continue to be a top performer and stay, you know, stay on the game.
Patrick (CEO of WSO): [01:02:40] Got it. So what would happen if you didn't win your PE offer would get rescinded?
Sman540: [01:02:45] You know, honestly, some it depends, depends on the fund, depends on the person. Some people that, oh,
Patrick (CEO of WSO): [01:02:50] That would be amazing if it didn't get to you and he just started a year early.
Patrick (CEO of WSO): [01:02:53] Yeah, or it'd be awesome if you didn't get the promo and you could take a year off or six months off before starting.
Sman540: [01:03:00] Another person I know actually talked to the PR firm and then worked for a start up for a year and worked for one of his college buddies, was starting a small company in San Fran, and he wanted to work for it. You know, it's something that you have to talk to your fund with and you have to make sure they're OK with it. I don't know if they're going to sign off on a year of vacation.
Patrick (CEO of WSO): [01:03:16] Yeah, probably not. Yeah, I don't think you need a year, but six months would be nice for three months, at least before starting.
Sman540: [01:03:22] Yeah, yeah, exactly. But I think from the few people that I've talked to, the majority have just started a year early.
Patrick (CEO of WSO): [01:03:30] Got it. Fair enough. And so before we wrap up any, any kind of words of wisdom, you would give in your younger self.
Sman540: [01:03:37] On this, I mean, it's, you know, it's ridiculous because I started my first semester sophomore year, but start earlier. You know, like basically if you especially if when I was 18 and saying, Oh, like, let me just you, I just finished high school, let me just relax for the summer. I think just the biggest thing you can do is just start thinking about what it is that you want to do. And I think the biggest step towards that is just talk to people who are in the industry and always, always, always talk to people who have done it before for everything. I mean, you know, when I get a picture book at work, the first thing I, you know, request, the first thing I say is, can I see a precedent? And same thing like, you know, if you're attached a decision or you want to become involved with something, you should always say, Well, what if people done before and talking to those people and learning from them is one? It's great for networking. You know, if I had, I had a high school senior reached out to me because he went to my high school and he found me on LinkedIn and I was incredibly impressed. You know, and I mean, you know, I said, keep in touch. And if he emails me next year when recruiting starts, I'll forward them to HR in a heartbeat. And but then even more so just, you know, you, I made a bunch of mistakes and obviously I would sit myself down and walk myself through those mistakes. But even more importantly, I'd say, you know, if I only get this one conversation with you instead of wasting it talking to me, just make sure to talk to as many people and find out their mistakes and what they would do differently, for sure.
Patrick (CEO of WSO): [01:05:03] Well, man, really appreciate you taking the time. It's been really insightful and went longer than usual, but it was. I think it was. It was. Hopefully the listeners enjoyed it.
Sman540: [01:05:11] Yeah, yeah, definitely. I mean, you know, I it's definitely something I enjoyed talking about. I'm glad that process is behind me. But you know, I also just want to thank you both for your time and also just, you know, all the resources that it provides. You know, it really was my main resource for recruiting and Owen. Oh, a lot of my success to the resources on the website.
Patrick (CEO of WSO): [01:05:34] Appreciate it, man. Thank you so much. And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis dot com. And till next time.
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