Why You Can’t Get an Investment Banking or Private Equity Job via Recruiters – And What to Do About It
While most of the interviews on this site have been with job seekers or with current investment bankers, today we’re going to change things up and speak with an investment banking and private equity recruiter who works at a well-known recruiting firm.
You’re about to learn some little-known, highly valuable, and controversial information about the finance recruiting industry.
Keep reading to find out how to impress recruiters and interviewers and land PE and investment banking offers.
Where Did It All Begin?
Q: Can you tell us about your firm and what types of candidates you focus on?
A: Sure. We started off specializing in placing ex-military candidates, and since then we’ve expanded into almost 20 other industries, including accounting and finance.
Within investment banking and private equity, we focus on $200K – $1M total compensation per year positions. This corresponds to entry-level positions up through the mid-level – we do a few Partner and MD-level searches occasionally, but they’re not our core focus.
We work with a wide range of banks, but on the buy-side we concentrate on funds below $1B AUM and usually funds in the $50 – $500MM AUM range.
Q: How’d you get started doing this? I know sometimes investment banking analysts make the move over to the recruiting side – were you coming from that background?
A: No, I started off doing recruiting for general “Analyst” positions across all industries.
That was ok, but I found that I liked private equity and investment banking recruiting more because the fees were better and placement took more time – so you could focus more on a few key clients rather than spreading yourself thin.
While some investment banking analysts want to make the move into recruiting, they often fail to realize that technical skills matter very little for recruiting – it’s a sales job, not an analytical job.
You need to be a quick thinker and good on the phone – knowing the in’s and out’s of models and how an M&A deal works is ok, but you only need to know these topics at a very high level.
Q: You mentioned that you don’t do many Partner-level searches – but wouldn’t you earn far higher fees by placing these types of candidates rather than lower-level people?
A: While the fees are higher, there are a couple problems with Partner-level searches:
- Usually it takes 6-8 months to place a single candidate.
- All searches at that level are highly confidential, so making introductions and maneuvering the process has an added layer of complexity.
Overall, we’ve found that sub-$1MM range candidates are the best to work with because the chances of placing them are higher and because it’s not quite as extended a process.
How to Boost Your Interviewing Skills by 200% in 15 Minutes
Q: When you first emailed me, you mentioned 3 qualities that every successful investment banking or private equity candidate needs to show when they’re interviewing – what are they?
A: You need to demonstrate 3 specific skills when you interview:
- How you made money for your firm in the past.
- How you saved them money.
- How you improved a process.
The #1 mistake that you can make is focusing too much on your technical prowess and not enough on how much money you will make for a bank or PE firm.
Talking about models in interviews is fine, but you always need to tie them back to business results.
I get people who come in and start rambling about deferred tax liabilities and their hyper-advanced LBO models, and they miss something very important: most VPs and MDs don’t even remember how to build a model or use Excel.
What they do understand is making money or saving money, so you need to re-frame everything you’ve done in that context.
Q: Right, that makes sense – but a lot of people may not have “business results” to point to. Let’s say you’re working on a deal that never goes anywhere – how would you talk about how much money you made or how much money you saved your client?
Here’s an example: let’s say you’re creating a list of potential acquisitions for your client and you’re making recommendations on which ones they should pursue.
Even if this deal doesn’t advance to the final stages, you could easily talk about how much money you saved them if you can point to any acquisitions that you crossed off the list:
“I had to research potential acquisitions for our client – we got it down to a list of 10, and then I recommended taking 4 of the companies off the list because they weren’t a fit with the client’s product line. Any one of those would have cost them over $100 million, so I helped them to avoid a potentially bad acquisition and saved money in the process.”
If you worked on a merger that never went anywhere, you could talk about your model and key findings within that got your client a higher price if they were selling, or a lower price if they were buying.
Or you could always tie your work to the client coming back to you for more engagements in the future:
“The client was impressed with our work and especially the recommendation to avoid those acquisitions, so they decided to come back to us for 2 more engagements – I did the work that led to those, with a total fee potential of $10 million.”
Q: Right, that makes a lot of sense. Firms want people who can make them money or save them money – but is this true even of non-Partner-track positions?
If someone is just going to work there for 2-3 years and then go to business school does it really matter?
People come to me all the time and say, “So, where will I be in 10 years if I go to this firm? Can you give me an exact blueprint of my future career?”
Sure, here’s your blueprint: you make a lot of money for your firm and you move up. You don’t, and you’re out.
It’s really that simple: no matter what they say about you, if they see in you the potential to make them a lot of money in the future, you move up.
Q: Ok, I see – so there’s less of a “path” than most people think. What other key mistakes do candidates make when recruiting for finance jobs?
A: I could probably write a book about key mistakes, but here are just a few more:
- Not proving that you can evaluate and run a deal by yourself.
- Focusing too much on features and not enough on benefits.
- Relying on pedigree rather than results.
For #1, private equity firms might look at hundreds of deals each month, but might only invest in 2-3 per year max. Principals don’t have time to sift through all the information and evaluate every single detail – they need someone who can step up and do everything on their own.
Even at the entry-level in private equity, you’ll be coordinating with lawyers, bankers, the debt financing team, the company’s executives, and more – and you need to be comfortable doing all the work for everyone else and driving the process.
On #2, this is just a classic sales mistake: too many people go in there and say, “Well, I have a 4.0 GPA from Harvard and I worked at Goldman Sachs.”
Guess what? Those are features, not benefits.
How will you make me money? How much money have you made or saved for other people in the past?
Whenever I meet a candidate for the first time, I make him/her write down 10 things that are great about himself/herself.
Even if it/s “I’m great at baking cookies, so you can enjoy great food if you hire me” that’s better than nothing – the point is to always present benefits rather than features.
#3 is related, but I see a lot of people from Ivy League schools and bulge bracket banks expecting the world just because they have well-known names on their resumes.
It doesn’t work like that: you need to deliver results if you want to advance.
Often, candidates from less privileged backgrounds perform better because they’re twice as motivated.
Q: I also get lots of questions from people with Liberal Arts backgrounds who want to do banking or PE – how should they position themselves?
A: Actually, if you have a liberal arts background that can often be a big advantage because you’re probably much better at talking and BSing than math/science/finance nerds.
You want to position yourself as someone who can tell a good story around the numbers rather than just cranking out models all day long.
When they ask about your weaknesses, don’t say your analytical skills even if you’re tempted to mention that – pick something more qualitative and show how you’ve improved over time.
How to Work Effectively with Recruiters
Q: Thanks – those tips should be really helpful to anyone preparing for interviews right now.
What do recruiters actually do? Is it just a matter of screening resumes and making introductions?
A: We do some filtering of candidates, but it’s more than just looking through resumes and deciding which ones we want to pass along.
To give you some numbers on how the process works, here’s what I did over the past year:
- Received 7,000 resumes or inquiries.
- Got interviews for 42 candidates.
- Successfully placed 10 candidates.
These numbers improve a lot when the economy is better.
A lot of what I do on a daily basis is helping clients find very specific candidates – they no longer just come to us and say, “We need an investment banking analyst.”
These days it’s more like, “We want an investment banking analyst from Barclays Energy Group who worked on the Exxon Mobil deal, grew up in the UK, spent time in the Middle East, and can also play golf with under an 85 handicap.”
A lot of my time is spent looking for these types of people, and also with preparing our candidates for interviews and helping them to sell themselves more effectively.
It’s a huge myth that recruiters only forward resumes to firms.
Recruiters are also your best source if you want to do a secretive job search and keep everything on the DL – if you just go directly to an MD, he won’t care about your privacy. He’ll just call your current MD and ask how good you are.
Q: I get a lot of questions from readers without investment banking or private equity experience wondering if they should contact recruiters to help with the job search process. Is there any point in doing this?
A: Short answer: no. Over the past 2 years I haven’t placed a single candidate who wasn’t a 9/10 match for the job.
In 2005-2006 you could come out of a 2nd tier university, do marketing at a Fortune 500 company for 2 years, then “get interested” in investment banking and move in – but these days that doesn’t happen.
It’s not that you’re unqualified – but we just have so many people who do have finance experience lining up for jobs that it’s almost impossible unless you’re the Chairman’s son or you can bring a very unique skill set to the table.
Q: OK, so what should people without the required experience do? How do you get noticed if you’re not a perfect match for the job?
A: Become your own recruiter. Make a list of firms you want to go after, go to LinkedIn, look up people at those places, contact them, call them, visit in-person and start introducing yourself like that.
Then once you get to know a bunch of people at a specific firm, you can come back to me and say, “Hey, I’ve made some inroads on my own and know these 10-15 people – now that I’ve done that, what can you do for me?”
That puts you in a much better position to interview there, and we can help you a lot more if you’ve already done some of the work yourself.
Also, look up jobs on Indeed.com – other sites are OK, but I’ve found that Indeed is the best for finance. Just search for “banking analyst,” don’t narrow down the region, and see what you can find there.
Some of these listings are for “ghost jobs” – they’re not actively recruiting at the moment, but they’re collecting resumes and will contact you when they’re ready.
A lot of bankers apply and expect to hear back the second they submit their resumes, but it doesn’t work like that – expect to wait up to 3 days for any “live” jobs.
About the Market
Q: You’ve mentioned how much more specific clients have become with their requests. What else has changed in recent years?
A: These days, a lot of regional boutiques and lesser-known firms suddenly have the attitude that they can pick up analysts at top bulge bracket / boutique banks simply because the market is bad.
They come to us and say, “So, can you pull out the top analyst at Goldman or Moelis and send him to us right away, for half the pay?”
But it doesn’t work like that – even in a terrible market, top performers are unlikely to leave unless they have a really, really good reason to do so.
Some candidates have decided to go and speak with these types of firms anyway, but very few actually make the move from a top bank or group to something lesser-known.
Q: Do you think the market will improve in 2010?
A: Yes. In 2008 I placed 0 candidates into PE, and in 2009 I placed nearly 10 – so clearly things have been improving.
I think 2010 will be much stronger than 2009, and that both hiring and fund-raising activity will pick up. We didn’t see much of a change in Q1 and Q2 of 2009, but it definitely accelerated in Q3 and Q4.
Q: When will we return to 2005-2006 hiring and bonus levels?
A: We might see that by 2012-2013. This year will definitely be better than last year, but I don’t see a bull market emerging for another few years.
Q: Awesome, thanks for your time – learned a lot!
A: No problem. And let me know if you know of anyone who shoots under 85 and is a killer chef so I can refer them to my clients…
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