by Brian DeChesare Comment (1)

On-Cycle Private Equity Recruiting: Will PE Firms Start Recruiting 10-Year-Old Children Soon?

On-Cycle Private Equity Recruiting

When firms kicked off the on-cycle private equity recruiting process in June this year, before IB Analysts had even started their training, some people were shocked.

But those covering the industry for 20+ years were not surprised.

It continued the insanity that the “on-cycle process” has become.

A long time ago, in a galaxy far, far away, this process used to start ~1 year in advance of PE jobs.

That gave IB Analysts about a year to gain deal experience, learn financial modeling, and make sure they wanted to do the job.

But that timeline crept up over time, slowing down only in “crisis periods,” such as in 2009 (financial crisis aftermath) and 2020 – 2021 (COVID).

With no immediate crisis in sight, PE firms have returned to their old practice of accelerating the kickoff date each year.

We’re now at the stage where you interview for your next job before your first job even starts.

As usual, I’ll start with the short version before delving into the details:

The TL;DR Version of On-Cycle Private Recruiting

On-Cycle Private Equity Recruiting Definition: In the on-cycle recruiting process, larger PE firms in the U.S. interview and hire candidates ~1.5 – 2.0+ years in advance of their start dates via intense interviews and case studies over a few days; after the initial kickoff, firms continue to interview candidates in cycles over the next few months.

This process contrasts with off-cycle recruiting, where firms start at later, varied dates, complete more extended, careful interviews, and hire for immediate start dates.

  • On-cycle recruiting is primarily an issue for U.S.-based candidates in New York aiming for PE roles at mega-funds and upper-middle-market funds. It barely exists outside the U.S. (ref: London private equity recruiting), and smaller funds are mostly off-cycle.
  • There are multiple cycles, so the “on-cycle” name is a bit of a misnomer. Yes, there is one specific kickoff date, but after this first wave, there are subsequent waves over the next few months, and many firms return in January – February of the next year to recruit more candidates if they didn’t fill all their spots.
  • Large growth equity firms and hedge funds also use on-cycle recruiting, but they tend to start a bit later, and off-cycle recruiting is more common in these industries. Something like ~80% of hedge funds simply recruit candidates as needed.
  • False scarcity and exclusivity are the intended goals of on-cycle recruiting. PE firms want to lock in candidates before they burn out from banking and have second thoughts. Also, even more cynically, they do not necessarily care about finding the “best” people since they know most Associates will not stay long-term. They just want the most motivated/hardcore candidates.
  • If you want to participate, you must start preparing after you win a return offer from your investment banking internship because PE firms could move up the timeline even earlier. Alternatively, you could preserve your sanity by skipping the initial process (see below).
  • “Preparation” means completing many LBO modeling tests and private equity case studies of different types, including paper LBOs, and reviewing technical questions. You’ll have to use your internship experience to discuss “your deals,” and you still need good answers for the standard fit/behavioral questions.
  • You can start later and still win a PE job, but you’re less likely to win an offer at one of the “top” firms by AUM and deal size. As the start dates keep moving up, fewer spots are filled right away, so more roles are available – just not at the biggest firms.
  • If you do not care about working at the biggest or most “prestigious” firms, I recommend skipping the initial process and taking more time to figure out what you want and where you’ll be competitive. You could still participate in later cycles or skip them and just do off-cycle recruiting at smaller firms when you have more experience.

OK, now to the details:

On-Cycle Private Equity Recruiting, Part 1: The Basic Process

Traditionally, the on-cycle process starts with headhunters (recruiters).

They get the names and emails of all IB Analysts and start contacting the ones they perceive to be in the “top” groups, such as GS TMT.

They’ll email incoming/current Analysts and ask them to fill out data sheets with information such as their university, grades, group, and other experience.

You meet with these headhunters, present yourself, and explain the firms/strategies you’re interested in.

They may also ask you interview questions, and they “rank” candidates and decide who will be referred to which firms.

Headhunters are not your friends. They are paid gatekeepers who earn ~30% of your salary for each successful placement, so their incentive is to place as many candidates as possible.

A few weeks after these meetings begin, there are “pre-process” events with PE firms, such as breakfasts, coffee chats, and networking sessions.

However, many of these events have been cut or condensed with the ever-earlier start dates, so you may not have to worry about them.

Even if they happen, you cannot do much to improve your chances because of how candidate selection works (see the next section).

After these potential events, a specific firm will kick off the process.

When this kickoff begins, expect to be contacted by headhunters right and left and go through many interview processes in a ~72-hour period.

You could easily show up at a firm at 7 PM, go through interviews and case studies until 1 AM, and then be asked to return at 7 AM for more.

If this process starts before your full-time job, you might have to cancel your plans and fly in to complete it.

Because firms start interviewing simultaneously, you must choose which interviews to accept based on your strengths and weaknesses.

For example, if you don’t have the best “names” on your resume, you probably don’t want to focus on a firm like KKR, which is notoriously prestige-driven.

If you go through the initial ~72-hour process and get an offer, it normally explodes on the spot, so you must accept it.

On the other hand, if you’re recruiting in a later cycle (weeks or months after the kickoff), offers do not typically explode on the spot – so you may be able to use it to create competitive tension and get other firms to move more quickly.

Spoiler alert: Many people do not get offers in this initial kickoff period, so they interview in the later cycles and for off-cycle roles.

Missing the kickoff or failing to get an offer in this period matters only if you are 100% set on working at a mega-fund.

If you do not care about this or want to be evaluated based on your real work experience, it’s better to focus on later cycles.

On-Cycle Private Equity Recruiting, Part 2: Candidate Selection

So, if you want to enter this clown show, how do you get an invite?

The short answer is that it’s based almost entirely on your university, bank name/group, GPA, and other criteria you have no way to change.

It does not matter if you can analyze deals or build models better than anyone in your group – if you attend Podunk University, you will get fewer invites than the Analysts who went to Harvard or Oxford.

Also, you were traditionally disadvantaged if you worked in a specialized group, such as FIG or oil & gas, because headhunters assumed you could not work on generalist deals.

A specialized group is still a disadvantage, but it might be less of an issue if you recruit before your job starts (but this is just speculation – I’m not quite sure).

All you can do to improve your odds of being selected are:

  1. Reach out to headhunters yourself, ideally via referrals from friends. For example, if your friend has better credentials and has received more emails from recruiters, ask them for a few referrals. This won’t always work, but there’s no downside in trying.
  2. Always maintain an updated LinkedIn profile, including the bank name and group you’ll be working in and your personal email address – since you may not even have a bank-associated email by the time recruiting begins!

If you do not get invites and do not have friends/acquaintances who can give you referrals, all you can do is send cold emails to recruiters.

Many headhunter/client lists are floating around online, and if you contact enough recruiters, you will probably get some responses.

But your odds are never great with cold emails, so don’t expect a high response rate.

On-Cycle Private Equity Recruiting, Part 3: Headhunter Meetings

Remember Rule #1: Headhunters are not your friends. They are there to screen, filter, and rank candidates and place as many as possible.

You should treat these meetings as job interviews and be prepared for:

Do not go into these meetings and say that you’re interested in both private equity and growth equity or that you’re interested in “large buyouts.”

You want to say that your area of interest is something like:

  • Firms that do healthcare services buyouts for between $500 million and $1 billion and focus on platform/roll-up strategies.
  • Growth equity firms that invest in direct-to-consumer companies in the health and wellness space for between $50 and $100 million.
  • Firms focusing on carve-outs of high-growth tech-enabled businesses within mature industrial companies for between $100 and $200 million.

If you cannot say something this specific, you will not rank very high on the headhunters’ list.

They will assume that you are less likely to accept offers, meaning they don’t get paid, meaning they do not care about you.

On-Cycle Private Equity Recruiting, Part 4: “Pre-Interview” Events and Networking (???)

This part is less relevant now due to the early and ever-accelerating start dates.

In past years, however, many private equity firms held breakfast or pre-breakfast events, coffee chats, and cocktail events where candidates met full-time professionals.

It might have been roughly a 10:3 ratio between candidates and PE professionals, with ~50 candidates at each event and 20 – 30 selected for first-round interviews afterward.

These events existed mostly to weed out people who were socially awkward or had clear issues.

Also, some of these candidates would not receive invites in the first place; headhunters referred them to make it seem like they had done more work.

If you used common sense and interacted like a normal human, your chances were the same before and after the events.

On-Cycle Private Equity Recruiting, Part 5: Resume and Interview Preparation

We have articles on private equity resumes, private equity interviews, and PE case studies, so I’ll focus on a few extra tips and updates here.

With your resume, I still recommend putting Work Experience above Education, even if you haven’t started working yet.

List the role as an “Upcoming” job and put your internship experience and deals from your internships below that.

Besides the normal technical prep, you must practice completing as many LBO modeling tests as possible.

Ideally, you’ll practice with 5 – 10 examples over 2-3 weeks, using a mix of templated tests and “start from a blank sheet” tests across different industries and complexity levels.

Open-ended case studies are highly unlikely in the on-cycle process, so focus on the simpler time-pressured tests.

For your deal discussions, you should follow the instructions and examples in the article on deal sheets. Aim for 2 solid discussions rather than 5+ mediocre ones.

You should also prepare an “investor’s view” of each deal and say whether you would have invested or bought the company.

One Final Note: If you are not prepared for everything above, I do not recommend accepting interview invites.

You could get lucky and win an offer, but the downside risk is higher than any potential upside, as you may not get invited back if the firm does more recruiting in the future.

On-Cycle Private Equity Recruiting, Part 6: Interview Process Logistics

The biggest issues in the interview process will be:

  1. Logistics – You must prepare for little to no sleep for multiple days as you run to different interviews and get called back for additional rounds.
  2. Expectations/Randomness – Even if you make it very far into interviews at one firm, you still have a good chance of being rejected because the process is arbitrary.
  3. Prioritization – This randomness explains why you must prioritize and pick the firms that best match your “on paper” background. You will not be able to interview at 10 firms within 3 days, so you must pick the top 2 – 3.

The good news is that the questions and case studies are not necessarily that difficult because they know you have almost no experience.

Also, if you participate in one of the later cycles, there will be fewer issues around logistics and priorities because there won’t be as many overlapping processes.

What Happens After Winning an Offer

If you win and accept an offer, you will probably not hear much until closer to your start date.

The PE firm may invite you to certain events or holiday parties, but that’s about it.

The biggest issue in this period is that you may decide against IB, PE, and other finance roles for personal or career reasons.

PE firms expect some attrition, but you will hurt your prospects in the industry if you renege on an offer (to put it politely).

That said, if you realize you’ll hate the offer you just won, it’s better to get out early and find something else before you start.

What to Do If You Don’t Get an Offer

If you don’t get an offer in the on-cycle process, your main options are:

  1. Network for Other PE Roles – Aim for smaller firms doing off-cycle recruiting.
  2. Consider Other Industries – Pretty much everything else, from hedge funds to venture capital to corporate development and corporate finance roles, recruits more slowly.
  3. Stay in Banking – There’s no shame in staying in banking, as the pay and advancement opportunities are still quite good.

Some Analysts also get the idea of staying in banking, going for the Analyst to Associate (A2A) promotion, and trying again in the next year’s on-cycle PE recruiting process.

Unfortunately, the typical promotion timeline of ~2 years screws this up because you’ll have to leave as an Associate and give up some of your accrued bonus.

You could do it, but the faster promotion + recruiting cycles disadvantage you.

Finally, I also recommend against doing an MBA if your main goal is getting into PE.

Winning a post-MBA PE role without pre-MBA PE experience is extremely difficult, and if you’re already in banking, an MBA won’t improve your chances much.

Final Thoughts on On-Cycle Private Equity Recruiting

Everyone likes to focus on the “kickoff date” for PE recruiting, but it means less than it used to due to the very early start date and multiple recruiting cycles.

If you have your heart set on working at one of the private equity mega-funds, yes, you need to be on top of this process and start preparing in your final year of university.

But if you don’t care, it’s arguably better to skip the first ~72 hours of craziness and wait for later cycles or the off-cycle process.

PE firms may start recruiting even earlier, but I don’t think they’ll move down to 10-year-old kids quite yet.

If they do, though, make sure you’re at a target elementary school, and you should get at least a few interview invites.

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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  1. Hi, Brian!
    I have an ECM offer in largest IB in my country and two in-house M&A and corporate development offers in two biggest companies in my country. I wanna try ECM because of IPO-boom but i’m afraid of exit opps. What do you think: what’s the best option in my situation? Today I have an experience in ER and small PE firm.

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