If you’re an incoming junior banker who wants to work in private equity, you may think Jamie Dimon has done you a favour. Ever since JPMorgan’s CEO said he won’t accept first year analysts who arrive at the bank equipped with offers to join private equity firms, PE firms in the US have been renouncing their practice of locking-in future junior recruits ahead of time. But recruiters say the practice hasn’t gone away.
“I’m hearing that private equity firms will still be hiring this summer,” says Anthony Keizner at New York-based search firm Odyssey Search Partners. “It’s still a very competitive market for talent and they aren’t going to sit on their hands.”
If Keizner is right, banks’ incoming first year analysts could get the private equity call at any moment now. In recent years, big private equity firms like Apollo, Carlyle and KKR engaged in an overnight recruitment frenzy as they attempted to pick off top juniors joining banks before they even arrived. After a single night of relentless interviews and LBO case studies, successful candidates turned up to work at their junior banking jobs with offers to join private equity firms 18 months later on.
It’s this that Dimon has been objecting to. In response to Dimon’s complaints, Apollo, General Atlantic and TPG have all recently said they’ll halt the practice of early recruiting.
There are plenty of other private equity firms out there, though. And Keizner says other firms are champing at the bit. Once one firm breaks out and begins interviewing banks’ incoming juniors, the rest will follow. This time last year, the recruitment frenzy broke out around now while many incoming analysts were on vacation before starting their banking jobs, says Keizner. Speaking to Business Insider, one participant described how he was out of town and flew into New York City for interviews at 2.30am and 7am. Keizner says this process could begin at any moment.
Nonetheless, there will be some changes to private equity recruitment this year. Keizner says all private equity firms have been looking at how they recruit. “There’s already been a fragmentation of hiring methods,” says Keizner. “Firms were already diversifying and hiring later in the cycle or training their own analysts.”
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If the overnight hiring frenzy becomes less significant, then US private equity hiring will start to look more like London private equity hiring. Across the Atlantic, the process has always been more sedate.
“The brutal one-night hiring exercise is a US phenomenon,” says Rupert Bell, chief executive of private equity recruitment firm, PER. “In the UK, junior bankers don’t sign private equity contracts for 18 months’ time. Instead, they tend to start interviewing for private equity jobs a year or 18 months into their banking careers and to move after their received their bonuses.”
Even so, junior bankers in the US who don’t participate in early hiring this year may find themselves at a disadvantage. Speaking off the record, another headhunter advises that incoming JPMorgan juniors should therefore probably still participate in the coming frenzy is they possibly can. “If you’re joining JPMorgan and you want to interview for a private equity job, you have a strong incentive not to mention it to JPMorgan,” he says, observing that this may be fair enough given that JPMorgan only imposed its zero-tolerance policy after they’d accepted its offers.
“A lot of these people only wanted to work in investment banking so that they could get to the buy-side,” he says. “To be told that they can’t accept private equity offers just as they’re joining is therefore harsh and career limiting. The rules of the game were changed mid-match.”
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