Morning Coffee: 21-year-olds applying to private equity’s most desired job urged to be “nice”. Jefferies' CEO says good times are back

The young people who get an undergraduate internship at Blackstone might consider that they’ve pretty much won the lottery.  There are very few of them – the “summer analyst” class is no more than 150, but that includes people from MBAs and law school.  The private equity firm's 0.3% acceptance rate is lower than Citadel’s 0.5%, and they get paid somewhere in the region of $20,000 for ten weeks of work.

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But of course, the real prize for winning that lottery is the opportunity to enter another lottery – to be one of the chosen few who get an offer to join Blackstone full-time, entering the world of private equity at one of the biggest and most prestigious firms, without having to go through the rigmarole of joining a bulge bracket investment bank and then immediately starting the “on cycle” recruitment process to move into private equity further down the line.  If you can swing the-internship-to-job-offer combination, you could be on the fast track to the top – Blackstone’s current COO, Jonathan Gray, himself joined straight out of university in 1992.

So, how to do that? Presumably, Blackstone interns will already be aware of basic advice like never wearing a crop top, going through Rich Handler’s checklist and never mentioning the name of a certain French finance professor.  They need to think about how they are going to stand out from an equally exceptional crowd.

Jonathan Gray dispensed three top tips, in his speech to the 2024 summer analyst class.  One of them is pretty obvious – come in early and triple check everything.  According to Gray, this demonstrates that you’re hard-working and care about your job. And it also probably acts as a simple filter – if the company has to winnow down the whole analyst class of 150 to a small number of offers, then somebody who turns in a presentation with the wrong logo, inconsistent fonts or a spreadsheet error has just given them an easy excuse to make a cut.

Another of the tips is somewhat harder to interpret – summer analysts are told to “act like an entrepreneur”.  How do entrepreneurs act?  Particularly since the obvious answer “they don’t try to get jobs at existing trillion dollar asset management companies” can’t be the right one.  It seems to have something to do with “taking risks”. Good luck.

But the final piece of advice is that “Sometimes people forget that treating other people nicely can be a bit of a secret weapon”.  The private equity industry has something of a reputation for sharp elbows and brusque behaviour, but that doesn’t mean that they want to see similar qualities modelled in their interns.  Blackstone’s own founder, Steve Schwarzman, invented the “Airport Test” for recruiters, which is simply to imagine that a flight has been cancelled and you’re stuck in an airport with the candidate for six hours – does your heart sink?  Sometimes, the highest achieving youngsters are the ones most in need of a gentle reminder that although it's nice to be important, it’s important to be nice.

Separately, the market proverb holds that “they don’t ring a bell when the market turns”. But if they did have such an alarm, you’d guess that the CEO of Jefferies would be one of the people who occasionally got a chance to sound it.  On his social media accounts, Rich Handler has declared that “The IPO Window is OPEN”.  He says that “there is meaningful demand for companies that are priced appropriately and have strong management, durable business models and solid long-term prospects”.

Not only that, but unlike the great deals boom of 2021, this time it’s “a more sustainable, realistic and durable market cycle”.  Nevertheless, Jefferies is recommending to clients that they act quickly because “Accessing this market takes time and a lot of work, and we have many clients who are actively engaged in this process today”. (Also, although this isn’t mentioned, you never know when an open window will suddenly slam shut).

This sounds like good news for bankers.  Although to an extent, anything of this kind has to be seen as a marketing document, and successful capital markets bankers tend to be optimists by temperament, it’s a high conviction call from a company that’s been pretty successful at timing the cycle over the years, and which has been putting its money where its mouth is in terms of hiring.  Bonus expectations for 2024 might need to be revised upward.

Meanwhile …

One sign of a real player is that they have a unique compensation scheme that has to be disclosed in the company accounts.  Although Larry Fink is the public face of BlackRock, his co-founder and President, Rob Kapito, has been along for the whole ride.  And along the way, he’s picked up an unusual and pretty sweet-looking “points” system that will pay a proportion of the company’s private markets profits into his retirement fund. (FT)

More evidence that the good times are coming back – the top law firms (which are always immediately upstream of the banking industry in terms of deal flow) have started to boost pay for their partners again. (Financial News)

And potentially even more – Sumit Mukherjee is a former co-head of Americas equity capital markets origination at Bank of America, and he’s now going to JP Morgan in a newly created “head of market intelligence” role. (Bloomberg)

Apparently the London hedge fund principals are fleeing the prospect of higher taxes, and going to “Milan or Dubai”.  Both cities are charming places to live if you’re very rich, just in somewhat different ways. (Business Insider)

An ROI calculator for anyone considering doing an MBA, which lets you account for fees, loans, internships and foregone income.  Interestingly, even the worst business schools in the sample still come out with a positive number. (Bloomberg)

Congratulations to Bolton’s own Daanish Hussein, whose hometown newspaper is very proud of him every time he gets a new investment banking job. (The Bolton News)

Unlike the conferences of investment banks, central banks are subject to freedom of information requests, so we know that holding a meeting of the ECB governing council in Ireland, with VIP travel and a private museum tour, costs €350,000. (Gript.ie)

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