The lion’s share of the recruiting process for pre-MBA private equity associates truly begins in the first year of standard investment banking and consulting analyst programs. This may surprise some people, but the recruiting cycle is very structured, even though it can start at a moment’s notice (depending upon when the leading firms in the space begin their process). Prospective private equity candidates must be ready for the process early in their investment banking analyst programs in order to be successful in landing a private equity job. That said, recruiting for some other PE jobs will take place year-round. Thus if you happen to miss the main recruiting process for PE jobs, you’re a leg down, but not out. You may still be able to find available opportunities. This chapter will detail this timeline more thoroughly.
The pre-MBA recruiting process for PE positions is truly unique. After banking, exiting to a position as a private equity associate is very prestigious, and PE firms want to make sure that they don’t miss the most qualified applicants. You’ll need to be prepared for the process to start at any time. Once one of the leading PE firms begins its search for the incoming associate class for its firm, the rest of the firms will generally start recruiting directly afterward. For the majority of the firms, the entire recruiting process will be finished within several months once the leading firms start recruiting.
This “leader and followers” pre-MBA recruiting process is primarily driven by the “megafunds” (KKR, TPG, Blackstone, etc.). When they decide to start the recruiting process, most of the other large PE firms, with associate classes ranging from 8-15 professionals per year, will then launch their processes right away. The middle market/smaller PE firms will typically follow shortly after that.
Note that venture capital firms and smaller private equity firms will typically recruit outside of this standard recruiting cycle, and thus the notes above about the process tend not to apply to them. That said, overall most hiring for next year’s summer start dates will be completed by July or August—nearly a full year in advance!
The competition for these jobs is very tough. You’re going to be up against a large pool of talented, driven investment bankers, and will be working against a tight timeline. Therefore it’s very important that you plan out your process well ahead of time.
Even before the official private equity process begins, the initial step for pre-MBA recruits is to meet with headhunters. They are essentially the “gatekeepers” for the interviews with most firms. Headhunters will contact a pre-MBA candidate in the first year of his/her analyst program (up to three months in advance of the start of the recruiting season).
For post-MBA candidates, note that the recruiting process is a bit different. These candidates can rely a bit more heavily on their graduate schools’ career centers, since most PE firms will go directly to MBA program candidates to begin recruiting them. In this respect, post-MBA recruiting is more predictable and standard, as it conforms to the overall MBA student recruiting timeline.
The typical recruiting cycles for pre-MBA and post-MBA associate positions are illustrated in the photo attached.
For pre-MBA candidates, after the headhunter interview the candidates go on to meet with the private equity firms directly. The overall process is a lot faster and more intense than investment banking. Candidates in this process truly need to be prepared for anything and everything. The recruiting process can be over very rapidly! A specific firm’s interview process can range from days to weeks, depending on the market conditions, how many firms are recruiting at the same time, and how quickly the firm in question finds prospective associates it wants to hire and who want to work for them.
Some investment banking analysts recruiting for PE firm jobs have encountered first-round interviews called “super-days,” where they meet with 8-10 people in one day and receive full-time offers at the end of the day. If this occurs, the PE firm will expect the candidate to accept (or reject) the offer within a few days! In other cases, the process is a bit slower, with several rounds of interviews spread out over a couple of weeks.
The traditional components of a private equity recruiting process include the standard behavioral and technical interviews conducted by junior PE associates—this part of the process is similar to investment banking recruiting. Where the process differs is in two primary places: the testing for investing acumen, and the testing for superior and LBO-specific technical ability.
Testing for investing acumen can come in the form of a broad 20-minute, consulting-like case study, or a detailed 3-5 hour investing exercise wherein the candidate has to research a company, go through the company’s filings, and write an investment memo on the sample target company. Unlike in a hedge fund recruiting process, PE associate candidates will very rarely be asked to pitch an investment idea. Instead, they may be asked what characteristics they would look for in a good LBO candidate.
LBO-specific technical ability screenings can come in the form of a financial modeling test, such as a paper LBO (in which the candidate must do LBO math in his/her head or on a piece of paper), or in a several-hour modeling test wherein the candidate has access to a computer and Microsoft Excel. Different firms like to administer this portion of the interview process differently, so for example, some will have modeling tests at the beginning of their process, while others may have it as the last stage of the process.
Therefore, you need to be prepared for every possibility if you hope to maximize your chance of landing a private equity associate position successfully. That said, don’t be afraid. The following sections and chapters in this guide will help you navigate the recruiting cycle and also help to prepare you for the modeling tests.