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Private Equity 101: Insider’s Guide to On-Cycle Recruiting

The first installment of Private Equity 101 will provide you with an insider’s take on the crazy world of on-cycle recruiting.

Analyst working at computer monitors at hedge fund

Every summer, first year analysts arrive at their new, cool, enviable job in Investment Banking in a major city. They have their few weeks of carefree training, learning a new city, and meeting new friends. Meanwhile, private equity firms and their headhunters are working tirelessly behind the scenes identifying these new top candidates to recruit to become the next wave of associates.


Just as training ends and bankers get comfortable in their new role, the wave of on-cycle recruiting emails are sent and it's off to the races. For those who want to one day become investors, on-cycle recruiting is the pinnacle moment in their careers. On-cycle recruiting is crazy and stressful, but it is designed that way for the benefit of the funds and headhunters. In order to navigate this crazy time, I will provide you with an overview of what to expect and remember as this process is unfolding. At the end, you may even be lucky enough to have made it to the “Buyside”!


 

Make a Plan

Step one in the on-cycle recruiting process is to make a plan and know what you want to get out of it. On-cycle recruiting kicks off abruptly every year and this year is no different. Without a plan, candidates get lost in the shuffle and can end up disappointed.


First thing to decide is the type of fund you want to work at. Private equity, growth equity, venture capital, and even some hedge funds recruit on-cycle. Also think about if you want to target a specific sector fund (tech, industrial, consumer, etc.). Making a list of the top 10 funds you would want to interview with will help you narrow your focus earlier, prepare for the interviews, and show headhunters you are serious. Once on-cycle kicks off, headhunters send flurries of interview requests and it is ok, and often smart, to turn down requests from funds you are not interested in.


Next, prepare and study - a lot. There will be so many well-prepared candidates out there and on-cycle happens so quickly you do not have time to prepare responses once it kicks off. More on preparation in future posts. For now, make sure to prepare your deal experience, study interview prep guides (there are great free and paid resources like Wallstreetoasis or StreetofWalls), and do practice interviews with colleagues and friends.


The Headhunters

Headhunters hold the keys to the castle. Unless you have a strong personal connection to a hiring firm, you have to go through them. The top headhunter firms for on-cycle recruiting include CPI, Ratio, Amity Search Partners, Dynamics Search Partners, SG Partners, Oxbridge, and many more. If these firms reach out to you, you should at least have a conversation to get your name on their radar.


The best way to approach headhunters is to understand what they are looking for. Headhunters are trying to provide their clients with the best portfolio of candidates they possibly can. To build this portfolio, they have to focus on a few key candidate qualities: 1) ability to communicate deal experience in a confident manner, 2) can articulate how you have worked in a team setting, and 3) humility (yes, I said humility). If you can exhibit these three qualities, the headhunter will ensure you will do well enough at the interviews to make them look good and get along with just about any firm culture. Additionally, headhunters want to enjoy working with you - if a candidate is hard to work with or dismissive, they will just move on to the next candidate (there are a lot out there).


As scary as headhunters may seem, they are just there to filter prospective candidates and make their commission checks. Understanding the headhunter’s incentives will help you make it through to the interview stage once on-cycle kicks off.


The Day (and Week) Of On-Cycle

No matter how much preparation you do going into the on-cycle process, kickoff day will be one of the most stressful days of your career. Depending on the year, emails will go out late at night over the weekend or earlier in the morning on Monday, requesting an interview at XYZ fund. Multiple headhunters will be sending you multiple emails each to meet different funds at the same time. This is where that list of targeted funds comes in handy. Feel free to take interviews with whatever funds reach out, but also do not be afraid to turn down interviews for better opportunities.


When you start interviewing, the funds will try to keep you on-site as long as they are still interested. In today’s recruiting game, once a candidate has a positive interview, they are shuttled off to the next interviewer until they are given an offer or get asked to leave. If funds are keeping you around, that is usually a good sign. Most funds will have you talk to a handful of investment professionals, do a case study, and meet a partner, sometimes all in the same day. It is the toughest Superday you will ever do.


While being shuttled to new interviewers is a good sign, be mindful of two things when interviewing onsite. 1) If you had a couple bad interviews and the fund is still keeping you around, feel free to leave to go on to the next fund. They are likely not serious about you and are just keeping you there as a backup. You cannot afford to be a backup when spots fill up quickly. 2) You may receive an email from your top choice fund after bouncing around a couple different funds or even days after on-cycle begins. If you get that email, again, feel free to leave and go interview at your top choice. Remember you are technically supposed to be working on your full-time banking job while recruiting, so you can always use that as an excuse to leave.


I will talk more about the interviewers, case studies, paper LBOs, etc. in future posts (plus there are tons of educational resources online). But if you make it to the end and get a coveted offer, you may be asked to take it or turn it down on the spot. Again, this is where that list and preparation is important. Know going into final interviews if you would take the job if offered. It will make the experience and decision much easier to say yes or no to.


Finally, remember that even if you do not get a job through on-cycle recruiting, there is still hope. Especially post-COVID, more funds are starting to only fill half their associate classes with on-cycle recruits. Some are even opting to skip on-cycle given how crazy and earlier it has become. There will always be funds in all industries looking for strong candidates. Plus, you might actually make a better career choice if you are not forced to make a decision about where you are going to start your investing career 4 hours after the first meeting.


On-cycle (and regular) recruiting is crazy, and will always be. If you have any questions, comment below or submit a question to our Contact page. I would be happy to provide advice having gone through on-cycle myself.


1 Comment


Guest
Sep 24, 2023

Great post. Having gone through on-cycle myself, this resonates with me. My fund in particular has filled 50% of its class on-cycle the last couple years

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