PE firms' eagerness to recruit junior bankers is blowing up in their faces. Here's why they need to change.
Almost Friday! Dan DeFrancesco in a still-snowless NYC.
On tap, we've got stories on more bad bonuses for bankers (don't kill the messenger), aggressive growth plans for a firm tied to an iconic American family, and why the end might be near for all of us.
But first, PE firms have to chill.
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1. Premature recruiting.
The early bird does not always get the worm, it turns out.
In the ongoing battle to recruit top talent, some private-equity firms' decisions to court first-year analysts just a few weeks into their new gig has backfired. As Insider's Emmalyse Brownstein reports, some PE firms are scrambling to fill positions that, in years past, would have been locked up for months.
Some context on PE recruiting: Firms recruit, interview, and make offers to junior bankers well ahead of their actual start dates. The process has continued to creep up, with most firms locking up their future class of associates nearly two years ahead of their actual start date. (For a complete rundown of the process, along with some tips, click here.)
This year marked the earliest start to recruiting, with some of the top firms interviewing candidates in August and issuing offers before Labor Day.
But, as Emmalyse's reporting has uncovered, that eagerness to fill positions hasn't paid off. Some junior bankers didn't feel comfortable interviewing for a new role when they had barely settled into their current ones. As a result, many top PE firms are conducting another wave of recruiting.
I've shared my disdain with the recruitment cycle for young investment bankers, and private equity is just as bad, if not worse.
Recruiting someone for a job nearly two years before their start date makes zero sense. Now factor in these candidates' ages — typically in their early 20s, a time when people go through a lot of personal growth — and you start to realize how silly this whole process is.
My first three years out of college I went from coaching lacrosse in Europe (be more of a bro, you literally can't), to writing about sports for a daily newspaper, to covering trading tech. While I realize I wouldn't be a PE recruiters first (or last) pick to fill a position, the point remains that young people change their minds a lot. So why are we trying to box them in?
The fact PE firms need to go back to the well to fill open seats should be a wake-up call. But, in reality, it won't change anything. Perhaps next year they'll cool it, but it'll be short lived. Then, before you know it, one firm will jump the gun, and we'll be right back to where we started.
Click here to read more about how PE firms' early recruitment of junior bankers backfired.
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Curated by Dan DeFrancesco in New York. Feedback or tips? Email ddefrancesco@insider.com, tweet @dandefrancesco, or connect on LinkedIn. Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.