Junior bankers are getting fussy about the private equity funds they'll join
It used to be the case that junior bankers were so desperate to work in private equity that the big funds could compel them to interview through the night. With private equity recruitment season around the corner, similar scenes may still occur at the biggest funds this year, but others are struggling to get bankers to interview even in daylight.
"Candidates are suddenly being very fussy," says one senior private equity headhunter in London, speaking on condition of anonymity. "They know that the worst place to be right now is at a fund that can't raise money, and so they're looking very carefully at whether a fund has had a successful fundraising in the past year."
The caution follows a prediction from Christian Sinding, CEO of Swiss-based Partners Group, a private capital firm, that today's 11,000 private equity firms will be reduced to just 100 over the next decade. The industry is maturing, says Sinding: there will be consolidation; there will also be disappearances, especially in the middle.
Candidates' wariness could come as a shock to funds that have been used to opening the door and finding a steady stream of eager candidates there. "It used to be the case that we'd advertise jobs and people would just apply," says the headhunter. "But the smarter bankers are only interested in places that have raised funds, and they know exactly who hasn't."
Funds like British-based BC Partners fell short of targets in '21 and '22, but it's not just regional funds that are feeling the squeeze. Carlyle is also in the process of cutting costs, and senior people have left Cinven in the past year.
With smaller private equity funds bearing the brunt of candidates' uncertainty, headhunters say the bigger funds are becoming more difficult to get into than ever. "Everyone is only interested in working for the global players now," says one. "There's a crowding effect."
Another headhunter, with an equivalent urge to remain anonymous, said this is a mistake. "If you're early in your career, working for a smaller private equity fund can give you more visibility and exposure to deals and portfolio firms."
As time goes on, however, he acknowledges that joining a smaller firm with fundraising problems is a bad idea, not least because the partners are unlikely to ever make enough money to leave, so promotions will be restricted.
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