Private Equity Recruitment

An Overview of the Private Equity Recruitment Process, Including On-Cycle vs Off-Cycle Recruiting and Interview Preparation Advice.

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How Does Private Equity Recruitment Work?

Private Equity recruitment is the process by which Private Equity Firms attract, shortlist, select and appoint suitable candidates for roles within their organisation. 

The brutal reality is that PE is a highly sought after field, and firms tend to hire from a very narrow pool of candidates with exactly the right career background. 

This article explores what kind of professionals Private Equity firms tend to hire, as well as how the PE recruitment process works, so you can maximize your chances of success.

What’s The Best Career Background For Private Equity Recruitment?

The brutal truth is that most PE firms hire from a very narrow talent pool.  Overwhelmingly, the recruit:

  • Investment Banking Analysts at bulge-bracket and elite-boutique banks, as well as a few In-Between-a-Banks.
  • Undergraduates for junior-level roles, such as Private Equity Analysts (common in some markets, such as Brazil and Portugal, and increasingly common at mega-funds and upper-middle-market funds in developed markets).
  • Professionals who already work in PE at different firms.
  • And smaller firms also hire IB Analysts at middle-market and boutique banks.

It is possible to get in if you’re not in one of these categories, but it is not probable.  See our article on How To Get Into Private Equity for more detail about the options.

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On-Cycle and Off-Cycle Recruitment Processes

Private Equity Firms use both on-cycle and off-cycle recruitment processes to source new employees; they differ in timing, steps, interviews, and hiring criteria.

The On-Cycle Recruitment Process

The on-cycle recruitment process refers to a system where the top PE firms headhunt recently-hired Investment Banking Analysts at bulge-bracket and elite-boutique banks in New York within a few months of their start date in their banking role.

  • It starts and finishes very quickly, with the mega-funds interviewing everyone and handing out offers in a single weekend, and middle-market firms finishing after that.
  • Headhunters have a ridiculous amount of power in this process, and if they don’t like you, you’re screwed.
  • If you finish the on-cycle process and win a job offer, the position will start in 1.5 – 2.0 years. So, you may interview in December of 20X1, keep working in investment banking, and then begin a PE role in July or August of 20X3.

Crazy? Probably. Check out this On-Cycle Recruitment Case Study to get a sense of how the on-cycle recruitment process plays out in real life. 

The Off-Cycle Recruitment Process

The off-cycle recruitment process applies to every other type of Private Equity recruitment:

  • roles outside of New York
  • roles in other countries
  • roles at smaller firms
  • roles available to anyone not working at an investment bank

In the off-cycle process, you will usually start working immediately after winning the offer, which makes a lot more sense than waiting for 1.5 – 2.0 years.

Other characteristics of the off-cycle process include:

  • Off-cycle processes tend to take more time – months rather than weeks or days – and interviewers evaluate your “fit” and critical thinking abilities in more depth.
  • Case studies and financial modeling tests in on-cycle processes tend to be time-pressured ones where you have to get the answer as quickly as possible, while the ones in off-cycle processes require more thought and a real investment thesis.
  • In some places, the typical process is in between these extremes. For example, many headhunters in London begin contacting candidates a bit later than in NY, and they present both “start immediately” and “interview in advance” opportunities.

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Private Equity Recruitment Resources

Private Equity is a highly-competitive and sought-after field. PE firms tend to be relatively small, tight-knit and full of extremely smart and highly motivated people.  

Prior to preparing for the PE recruitment process, it’s worth learning more about what a Career In Private Equity is like. 

Once you understand what you’re getting into, the next step is to prepare thoroughly for interviews.  As a minimum, you should:

Chances to get hired by a Private Equity firm don’t come along every day: ensuring solid knowledge of these fundamentals will ensure you’re in the strongest possible position to land a job in the industry.