Much akin to the original punch line to the joke, Why did the chicken cross the road?, the answer to the question, Why did the Ivy League graduate work for two years as an analyst in investment banking? is an obvious one: To get a job in private equity.
To that end, for many years, recruiting young bankers into the wide world of private equity after their two-year bulge-bracket analyst programs was a cordial and sensical process, with most PE firms like KKR and Blackstone playing fair. They began their hiring processes only after analysts had at least 16 months of investment banking experience (for jobs that wouldn't begin until one year later). However, in recent years, PE firms, growing more ferocious in their competitiveness for the best candidates, have been moving up the date they begin the process.
"'Five years ago, it happened in September, then July, then May, then April. This year, it's March,' said a senior partner at a large private equity firm who spoke [to the Times] on the condition of anonymity because he was not authorized to comment on the hiring process." (Note: firms are hiring now for jobs that begin in the fall of 2012.)
The exec adds, "Every year we talk to the other private equity firms and actually pretend we have a vested interest in being reasonable about this. And every year, some jerk kicks off the process a month early."
This year the jerk is Bain Capital. "In early March, word spread that Bain Capital, the $65 billion private equity firm, was holding interviews and making offers to top candidates. Bain's competitors -- some of which moved early in previous years -- were forced to scramble. They quickly rearranged schedules and, in some cases, canceled planned recruiting events in order to make their offers as soon as this week."
This is how the aforementioned PE exec feels about this: "The kids we're talking to got out of college last summer, spent six months in training, entered the job in January, and have done exactly nothing since then. So we're asking them about their transaction experience, and they're talking about what fraternity they were in ... It's a land grab. And it's a land grab for completely undeveloped property."
And so, if you're one of these pieces of land and are looking to interview with a top PE shop soon, you best brush up on your interviewing skills. One way to that is by checking out the Vault Guide to Private Equity and Hedge Fund Interviews, which includes hundreds of practice interview questions (quantitative along with qualitative), including semi-tricky Qs like these (the guide includes the answers):
Who else are you interviewing with/where are you in the process with other firms?
Do you plan to go back to business school? Why or why not?
Have you had a performance review? What did it say?
What's the most recent book you read?
What's the square root of 7,000,000 (approximately)?
A lily in a pond doubles every minute. After an hour, the lily fills the entire pond. When is it one-eighth full?
If there were no such business as private equity (or hedge funds), what would you do?
(Vault Guide to Private Equity and Hedge Fund Interviews)