The private-equity arms race for junior talent is seeing a temporary ceasefire this year, with top recruiting firms pressing pause on courting first-year investment banking analysts for 2022 roles.
Five recruiters told Business Insider that the disruption of the coronavirus pandemic is responsible for upending the timeline, which has moved earlier and earlier in recent years as private-equity firms tried to one-up each other for the best young talent.
Private-equity firms have long recruited from investment banks to fill associate roles, with the thinking they'll get two years experience of deal analysis before making a move to the buy side.
But over time, PE shops got more competitive in hiring the best and brightest from the banks and accelerated their time table in extending offers to analysts. Eventually, candidates in their early 20s agreed to jobs that didn't start for a whole two years out.
"It's absurd," one recruiter familiar with the situation said. "You started a job and then a month into it, you're being asked by a recruiter, 'What do you want to do next?' when they've just started their first job out of college."
Now, with some banking analysts experiencing delayed start dates and mostly working from home, private-equity execs have concluded that it hasn't made sense to recruit talent that hasn't fully onboarded with their employers.
"There has sort of been a truce from the private-equity firms and the search firms that recruit associates, on-cycle, into the private-equity firms," said Adam Kahn, a recruiter with Odyssey Search Partners.
"There has just been kind of an agreement that this year is just different and it's not in anyone's best interest to get this started right now," he said. "The process will likely kick off in early 2021 versus fall of 2020."
The quiet period has come after the recruiting coordinators of large private-equity firms have exchanged notes on their plans, according to two people with direct knowledge of the matter.
One source who declined to speak publicly to preserve relationships, called the communications an informal round table, while another described it more like market chatter.
"They all come to an understanding," this person said. Multiple recruiters said that the understanding is unwritten, so it's not binding — and could be threatened should any specific firm decide to flout the agreement and start contacting candidates.
Private-equity firms such as The Blackstone Group, Ares, The Carlyle Group, TPG, Bain Capital and KKR, all either declined to comment or did not respond to a request for comment about their hiring plans.
Private-equity firms are still recruiting to fill associate roles with 2021 start dates
But even though they won't likely start recruiting for 2022 positions until next year, PE shops are still hiring out of investment banks for 2021 roles, interviewing candidates who have at least a year of experience, recruiters said.
This, in part, stems from the fact that private-equity firms, which started recruiting investment banking analysts as early as mid-September last year, were unable to fill all of their openings for 2021 associate classes, one recruiter said.
Last year, many investment banking analysts weren't ready to interview for 2021 jobs at private-equity firms, this person said.
Nevertheless, private-equity recruiters told Business Insider that the current halt on recruiting, which could persist till well into 2021, was welcome news.
This year, "we can't even meet these people in person," one said, referring to entry-level IB analysts. "These people are not even in the office; they're not getting proper training."
Another said that the conversation between recruiters to slow down or delay PE recruiting timetables has been bubbling for some time, but never came to fruition without a concrete reason to push it off. The coronavirus provided a justified opportunity to change that.
"This is a conversation every year," this person said, "but this is a catalyst to actually make it happen."
Read more: THE GATEKEEPERS: 12 headhunting firms to know if you want to land a hedge fund or private-equity job
Have any tips about hiring trends at financial services firms? Contact Reed Alexander via email at rhodkin@bjinnox.com, encrypted messaging app Signal (561-247-5758), or direct message on Twitter @reedalexander. Contact Casey Sullivan via email at csullivan@bjinnox.com, encrypted messaging app Signal (646-376-6017), or direct message on Twitter, @caseyreports.
