Why you should consider off-cycle PE Recruiting

Many young investment banking analysts struggle with the existential question of what the next step in their career should be. For many analysts, the first few weeks or months on the job revolve around finding the next gig, particularly if you’re looking to break into private equity. It can be tempting to pursue on-cycle PE recruiting, but the rush and craziness surrounding it sometimes blinds folks to what they actually are looking for in a PE role and can lead them to pick firms or groups they may not really enjoy working at. In my experience, doing off-cycle PE recruiting helped me better determine what type of firm I wanted to work at, what investing strategy interested me the most, and allowed me to get to know the team members on a deeper level. Let’s break down why off-cycle PE recruiting might be a good fit for you.

First off, what is on-cycle PE recruiting?

On-cycle PE recruiting refers to a few days to a week long process where a majority of major private equity firms recruit first-year investment banking analysts to their PE associate classes, with the intended start date 2 years out from recruiting. The cycle is disorganized, and interviews at firms tend to overlap and go well into the night (read: early morning). While the timing of the week has changed through the last few years due to Covid, we’ve mostly normalized back to the week occurring at the beginning of a first year’s tenure (i.e September, a month after you have finished training). The goal of firms that manage recruiting through on-cycle is to find top-tier candidates early and fill much of their associate classes by the time the week is over.

How does off-cycle PE recruiting differ?

Off-cycle PE recruiting is much less hectic and, in my opinion, more rewarding for several reasons:

• You can take your time searching for firms. I worked with several headhunters to determine which firms I wanted to go after. In total, my off-cycle recruiting process took about 2 months. While it can be tough scheduling interviews (many are still via Zoom) and carving out time for prep and model tests, I found that it was much more rewarding to grind for 2 months and use that time to find firms with attractive investment strategies, interesting portfolio companies, and potential for growth. As I narrowed my search, I spent more time on interview prep, modeling, and offer selection, which is where Officehours coaching really came in handy!

• You can actually get to know the firm’s culture. Unless you’ve spent hours and hours networking with PE associates before starting your job in IB, you probably don’t have a sense of what PE associates do on a daily basis and what they like or dislike about the fund they work for. During on-cycle, I met almost every director and partner on the team and felt that I got a really great sense for the culture before I even got the offer.

• You have more leverage. With more time, you can juggle different offers and potentially put pressure on the ones you want more. Furthermore, when it comes to negotiating your compensation package, you have much more leverage than folks going through on-cycle who will likely have to accept comp that is standard with the rest of their class.

Who can pursue off-cycle PE recruiting?

The great thing about off-cycle recruiting is that virtually anyone at the analyst, and even early associate, level can do it. Firms that participate in off-cycle recruiting are usually not bound to a specific timeline, nor do they feel the same pressure as on-cycle firms to fill associate classes quickly. They also don’t tend to have as stringent of age or experience requirements.

Off-cycle is also a great way for candidates from less prestigious or non-IB backgrounds (i.e. consulting) to break into PE. Many of the on-cycle firms target the large BBs and if they fill their associate classes, there aren’t enough roles left for those at boutiques, smaller BBs, or other professionals like consultants. Since off-cycle is now growing in popularity, those firms become available to people who may not have had a chance otherwise to get into PE.

Tips for off-cycle PE recruiting?

• Network! Once you start your job in banking, try networking through LinkedIn, school alumni, or any other channels you can to get to know PE professionals working at a variety of different funds. Even if you’re not sure you want to do private equity, the best way to be sure is to make connections with and learn from people who actually work in it. Additionally, accept those LinkedIn requests from headhunters and take them up on their offers for an introductory call, even if you’re not looking to recruit immediately. They are a great contact to have when you do want to ask them to introduce you to a fund you like.

• Take time to prep before you jump in. One of the things I wish I did a bit better during my off-cycle recruiting process was interview prepping before I started scheduling interviews through headhunters. While I covered the basics, I wasn’t prepared for how fast the process can move once you’re in the swing of off-cycle recruiting. Typically, you will have 1-2 phone screen calls, a model test, meetings the team in the office, interviews with partners and / or a Superday. This sequence can vary by firm, and since these firms aren’t held to strict schedules like with on-cycle firms, they could like you from your phone screen and want you to come in for a model test very quickly after. Keep prepping even when you think an interview might not have gone well or if you are uncertain of the firm’s timeline to keep your interview skills fresh.

• Get real about your priorities. One of the things I had to dig deep on was my priorities in terms of the life I envisioned for myself. Did I want to go for a big name fund? Did I want to work on a team that was close to each other outside of work or not? Did I want to stay in NYC or move somewhere new? I thought about what I really wanted independently, as well as asked my family and friends what they thought might be the best move for me. Doing this internal work not only helped me craft my answers to the “why our firm” question, but more importantly, it helped me make an informed decision when it came down to accepting an offer.