The private equity industry is racing to fill 2024 associate roles 🤓

• Private equity firms like Carlyle, Bain Capital, Thomas H. Lee, have been recruiting 2024 associates. source: Samantha Lee/Insider

• Last year's on-cycle recruiting kicked off earlier than ever, and many junior bankers weren't ready.

• As a result, some of the biggest firms still have open seats for their 2024 associate class.

• See the 8 firms that have been recently recruiting, according to insiders.

Private equity's aggressive recruiting tactics appear to be backfiring — forcing some big name firms back to the spigot to fill their 2024 associate classes, an anomaly for this time of year, according to insiders.

In an effort to win the war for talent that was raging last year, private equity firms pushed their recruiting efforts earlier than in ever— to late summer. In the past years, recruiting started in fall or even winter. But many candidates had only been on their new investment banking analyst jobs for all of one week when the recruiters came knocking, and therefore some weren't ready to figure out what kind of job they wanted in two years' time.

"We had been on the desk for literally one week," said a first-year analyst who participated in recruiting in late August and early September. "People just weren't prepped because, I mean, you're supposed to learn the stuff on the job. People didn't have experiences to talk about."

Now, some of the biggest name funds are still pushing to fill empty slots in their 2024 associate class with another round of recruiting — an anomaly at this time of year, recruiters and other industry sources said. Insiders say the amount of outreach suggests some firms may be paying the price for swooping in too early in 2022. It's a mistake the industry won't likely repeat anytime soon, they say.

"This is overflow from September," said Asif Rahman, co-founder of finance career coaching company OfficeHours. "Usually this never happens. We're in January, all these big funds are doing Super Days. Usually they're done already," he said, referring to intensive rounds of interviews that can last an entire day.

To be sure, not all private equity firms kicked off on-cycle recruiting in August. Some opted to give newbie analysts more time, according to Insiders. Firms involved in early interviews last year, according to Insider's previous reporting and people involved in the process, include: KRR, Apollo, Bain Capital, Thoma Bravo, Apax Partners, Hellman & Friedman, New Mountain Capital, Silver Point Capital, TPG, Blackstone, and the Carlyle Group.

Of those, firms that recently had or still have open seats, according to recruiting emails obtained by Insider and people involved in the process, are: Carlyle Group, Bain Capital, Hellman & Friedman, and Apax Partners. Other firms that have been involved in recent recruiting include Brookfield Capital Partners, Francisco Partners, GTCR, and Thomas H. Lee Partners (THL), according to emails and people involved in the process.

The firms listed either declined to comment or did not respond to Insider's correspondence, except for THL, which said:

"We believe we have a responsibility to identify and mentor the next generation of investment professionals," a THL spokesperson told Insider. "Our Associates bring a diversity of backgrounds and perspectives that helps prepare us for the firm's next decade – and the decade after that. It's why we take recruiting so seriously and devote a great deal of care to finding people who share our values."

Interviewing at midnight

The relationship between newbie investment bankers and private equity giants is one of the few symbiotic relationships in the finance world. Private equity firms target junior bankers to fill their associate ranks nearly two years in advance — knowing that by then they will be adequately trained for the job and ready for a more tolerable workload and bigger paycheck.

There's an entire process dedicated to this pipeline known as "on-cycle" recruitment. It usually involves an intense week-long period (although sometimes shorter or longer) where private equity firms rush in to snag the top talent. The competition is so fierce that firms have been known to place candidates in a room that they can't leave without their offers blowing up (because giving them time to think about it opens the door to rival offers). It's often a frenzy for the juniors, who can end up staying past midnight to do interviews and secretly sneaking out of the office to meet with potential future employers.

The usual chaos has been exacerbated this year because on-cycle recruiting for the 2024 associate class began earlier than ever, kicking off in late August, as Insider previously reported. And now industry insiders say they are seeing more open spots at big name firms than is usual for this time of year, and therefore more recruiting efforts by headhunters on their behalf.

"It was kind of so unproductive this year that there's been a second bite added," said Anthony Keizner, a managing partner at recruiting firm Odyssey Search Partners.

The bottom line shows the month and year analysts started their roles, and the yellow line indicated when on-cycle recruiting began that season.-OfficeHours

To be clear, recruiting has always continued on in the weeks and months after on-cycle — but usually through a scattered, more random effort referred to as "off-cycle." And off-cycle recruiting typically involved mid- to smaller-sized firms since the big names tended to nab up top talent during on-cycle, according to Rahman.

For megafunds, associate spots are typically long gone by now, he added.

Keizner likens the phenomenon to a hybrid species — a new combination of on-cycle and off-cycle recruiting.

"It's not a big unified push like the classic on-cycle, but there are definitely efforts PE firms are making to recruit first-year bankers now to fill those remaining spots," said Keizner. "And that's different this year than it's been before."

The second wave is sure to prove just as stressful and chaotic for the junior analysts who participate — many of whom put their necks on the line for a shot at breaking free of the "sell-side" to work for the more prestigious "buy-side."

Most banks, especially big bulge brackets, aren't supportive of the recruiting and see it as a culling of their own future stars. For the analysts who want to participate, it can mean missing work for coffee chats and interviews, which can be sticky. If you get caught at certain banks, said Rahman, you might get severely reprimanded or even shown the door.

"Analysts can get kind of crafty about it," he said. Some get their junior coworkers to cover for them, but sometimes other tactics are necessary. "Another thing you see is a lot of people start to have doctor's appointments or dentist appointments."

It's also a costly endeavor for the firms, especially if they're having to draw out recruiting efforts to fill spaces they expected to fill earlier.

"It's a big effort, it's a big logistical thing," Keizner said about the recruitment and interview process for the firms. "If you only hire a couple of people who are just out of college and aren't that good, it's a waste of time."

According to Rahman, the all-nighter interviews include the firm's vice presidents, directors, managing directors, and even partners.

"You need the buy-in of the entire firm," he said. "Hiring the next generation of talent is super critical to succession planning and the ongoing success of the firm. So everyone kind of cancels what they're doing and they focus on recruiting — it's a really big deal in private equity."

Rahman, Keizner, and the analyst (who asked not to be identified for fear of reprisal) agreed that this year could serve as a lesson for private equity firms, and result in a change to their recruiting tactics in the future.

"I think a lot of them aren't going to be seeing quality talent when it's somebody's first week on the desk," the analyst said. "I think there's generally going to be a push back."

"Come September 2023, when they're talking about the associate class of 2025, I think it'll be hard to get the senior people to commit to interview these bankers because they have less deal experience, and even more so in what's sure to be a slow year ahead," said Keizner. "There may be more pressure to wait a little longer again before starting."