NYT article from last month on the "Mad Scramble" of PE recruiting

For the young MT board hotshots looking to try to break into PE, this is what it looks like at the top: " A Mad Scramble for Young Bankers."

quote:

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This summer, dozens of junior bankers in their early to mid-20s will start jobs in private equity after spending their first two years out of college working at investment banks. Private-equity firms use billions of dollars of cash and plenty of debt to buy entire companies. They are seen by many young strivers as the next rung on an elite career ladder, promising higher status and more pay — around $300,000 a year, including salary and bonus, roughly double what a second-year banker might earn at Goldman.

But for junior bankers, who are known as analysts, securing such a job means stepping into the middle of a Wall Street struggle that has intensified since the financial crisis.

The whirlwind process of interviews, which this year started in February, far earlier than many in private equity had expected, requires analysts to sneak around and often miss work. It bears little resemblance to the orderly on-campus career fairs they attended in college.

“It is not a normal search process — that, certifiably, everyone would agree with,” said Adam Zoia, the chief executive of Glocap Search, one of the recruiting companies involved.

Kira Yugay, 29, who worked at the Greenbriar Equity Group, a private-equity firm, after three years at Citigroup, said: “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.”

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quote:

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Mr. Sheyner, 31, who graduated in May from Harvard Business School, has turned this tricky situation into a business opportunity. He recently completed an exhaustive guide to the private-equity recruiting process, including sample interview questions and financial modeling tests. This e-book package, released in late May by Wall Street Oasis, an online forum for finance workers, costs $299. Hundreds of copies have already been sold.

Wall Street has tried before to bring some order to private-equity recruiting. The six major private-equity firms, after years of interviewing candidates far in advance, decided two years ago to wait.

The companies — Apollo, Bain, K.K.R., the Blackstone Group, TPG and the Carlyle Group — all chose to wait until January 2013 to recruit the workers who would start that summer, according to two people with direct knowledge of the situation, who would discuss private business matters only on condition of anonymity.

But the détente soon fell apart. Smaller private-equity firms had done their recruiting on the earlier schedule. The giants grew concerned that they might be missing out on the most desirable candidates.

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I think it's a weird time for PE and hedge funds, as I think I've alluded to other times. On the one hand, there are low interest rates and tons of money sloshing around, so there is a proliferation of firms because it's so easy to raise capital. On the other hand, the number of good deals to chase after seems to be dwindling, and returns aren't what they used to be. So when I read stuff like this...

quote:

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The private-equity firms, meanwhile, have grown stronger, benefiting from low interest rates and a buoyant stock market. They have raised huge new funds and expanded into new businesses, requiring additional workers.

To recruit young talent today, the private-equity firms make offers as long as 18 months before a job begins.

This timing is repellent to many bank executives, and not only because their workers are being poached.

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It kinda makes me think that some form of a shakeout might be coming to the PE industry.

On a tangential note, just a couple of months ago I saw an article, " Traders Are Walking Zombies on Wall Street," which might have just been exaggerating the temporary effects of lower volatility on FICC trading profits... but still, we are living in an interesting financial environment right now.