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Private Equity Recruiting 101: What You As The Firm Need To Do

private equity recruiting involves presenting case studies to interviewers

Recruiting for private equity is notoriously competitive. This field attracts leading talent, and top firms will snag the top 1% of that talent.

If you’re a smaller firm or new to private equity recruiting, you must understand the recruiting process used across the board.

Here we’ll outline the private equity recruiting process and what you can do to get in the game of attracting great talent. This article discusses different components of recruiting, questions you’ll want to ask during the interview, and the benefits of hiring a recruitment firm to source your talent.

The Three Paths Used In Private Equity Recruiting

Private equity is a competitive field that hires talent from specific areas. To attract the best and most qualified talent for your firm, these are the three paths to consider.

Path 1: Undergraduate Analyst

Some students set on a career in private equity accept junior-level roles in private equity with the hopes of breaking into the field. 

Private Equity Analysts are becoming increasingly common at mega-funds and otherwise larger funds in more developed markets. They’re also more common in some markets outside the US, such as Brazil.

These analysts have experience with:

  • Conducting research for firms
  • Ratio analysis
  • Providing interpretations of private companies
    • Using due diligence and financial modeling to evaluate the benefits of investing in certain companies
  • Raising money from private companies
  • Managing a fund or portfolio

These junior analysts have practice applying the fundamental skills needed to succeed in private equity.

Path 2: Investment Banking Analyst

This is the most common way to recruit private equity talent. 

If you’re a smaller firm, you’re more likely to attract talent from middle-market and boutique banks, as Investment Banking Analysts working at elite banks often get recruited by target private equity firms.

Path 3: Transitioning From Another Private Equity Firm

Private equity recruiting sometimes involves finding talent from other firms. 

This is the least likely way to attract talent, especially if you’re at a newer or smaller firm, but it’s worth considering if the right candidate comes across your radar.

It’s doubtful you’ll recruit anyone outside these three pathways, even if you’re a smaller or newer firm. These are the pathways that contribute the best, most equipped talent.

On-Cycle Recruiting 

The on-cycle recruitment process applies to analysts at elite banks and occurs within a few months of their start date in the analyst role. Offers from private equity firms are given for 1.5 to 2 years out.

The on-cycle recruiting process is where the top few private equity firms snag their talent. If you’re a smaller firm, your best bet is off-cycle recruiting.

Off-Cycle Recruiting

Off-cycle recruiting applies to smaller firms and those outside New York.

While on-cycle recruiting can wrap up in a matter of days, off-cycle recruiting takes months. As a smaller or newer firm, you’ll take your time evaluating different candidates and their ability to fit into your firm.

Rather than extending offers with start dates in a couple of years, off-cycle recruiting means extending offers with more immediate start dates, typically in the next few weeks.

Resumes

Your first point of contact with most candidates during the private equity recruiting process will be their resumes. The following qualities make up the resumes of candidates being recruited into top firms, so this serves as a guideline for you to apply to your talent pool.

  1. Work experience. A private equity candidate’s resume should predominantly be work experience, with their current role being at least 50% of the resume. Overall, you want to look for resumes with 80% of the space dedicated to work experience. 
  2. One page with three sections. Resumes should never exceed one page, and any candidate needs to condense their experience into that short a frame. For private equity, the three sections should be:
    1. Work Experience (top)
    2. Education (middle)
    3. Additional Information (bottom)
  3. Formatting. Margins should be 0.75 inches with font size 10-12. This is standard for quality resumes, and a candidate with sloppy margins or font sizes indicates someone who lacks attention to detail.

Interviews For Private Equity

In the private equity recruiting process, interviews are a chance for you to get to know candidates. They help determine whose expertise and personality meshes best with your firm.

Sample Questions

Here are some topics you can ask candidates about:

  1. Why private equity (or why not investment banking / venture capital / corporate development)?
  2. Technical questions pertaining to merger models, LBO models, accounting, and more.
  3. Deals or clients they’ve worked with in previous roles.
  4. Knowledge about your specific firm.
  5. Industry and market questions, although these are less common.
  6. Case studies

Questions Candidates Might Ask You

Smart candidates ask smart questions. Be on the lookout for insightful questions that go beyond what a candidate could research on your website.

These intelligent questions include:

  1. How does your fundraising amount compare to your fundraising target?
  2. How have your past funds performed?
  3. How many LPs makeup one fund?
  4. How do you decide on staffing?
  5. Tell me about your firm’s culture.

Using A Firm For Private Equity Recruiting

Almost all leading private equity companies use recruiting firms. Recruiting firms harness their industry experience to pair you with the best candidates for your company.

Employee turnover can cost anywhere from tens of thousands of dollars upwards to 1.5 – 2 times an employee’s annual salary. To minimize these costs, hire a recruiting firm that finds the best talent for your team.

Jennings Executive specializes in executive recruiting for a few select industries, including private equity. Learn more about us today!

Conclusion

Private equity recruiting is a competitive process that attracts top talent. 

Knowing where candidates come from, what to look for in their resumes, and what questions to ask during interviews can help you hire the best people for your firm.

Related: Private Equity vs. Venture Capital: Here’s What You Need To Know

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