With each passing year, it gets more and more challenging for private equity firms to land the top talent that’s so integral to their success. 

The competition for first-rate candidates has grown incredibly fierce over time. Unlike other industries, PE firms are expected to hire from only a couple of places (right out of school, the investment banking field, competitors) - needless to say, there’s just not enough fresh blood to go around. 

Left competing vigorously over a tiny pool of candidates, these firms must either navigate a private equity recruiting process that’s obviously been broken for quite some time or strike out on their own.

Good thing executive search firms like MSH exist to help venture capital and private equity funds attract and hire the top-tier talent that they so desperately need. This article will explain exactly how this type of partnership works and why it’s so advantageous to PE firms and hedge funds. 

The Industry Is Shifting

Private equity has been on a tear for over a decade now, even posting its best-ever year on record in 2021. But all this came to a screeching halt in 2022 after the Fed began raising interest rates in response to the persistent, ever-increasing inflation that plagued the country. 

At this point, the industry experienced a precipitous drop in PE fundraising and deals - stirring up feelings of uncertainty that will surely cast a prominent shadow over private equity for quite some time.

While executive recruiters aren’t anticipating mass layoffs or a hiring freeze in PE, they are expecting hiring to slow down over the next few years. In fact, a recent survey administered by J.Thelander Consulting indicated that 32% of PE firms don’t plan to hire at all in 2023, an increase from 21% in 2022. 

Despite this sobering statistic, it’s wise to remember that the industry is sitting on substantial amounts of capital - we’re talking $1.2 trillion globally, according to Pitchbook’s Q2 2022 Global Private Markets Fundraising Report. 

All that dry powder combined with consistent management fee income and portfolio companies that continue to expand should help private equity stay on course - perhaps not hiring at the same clip as before, but still hiring, and definitely avoiding layoffs. In addition, compensation is anticipated to remain competitive and high.

Navigating The Unique Hurdles of PE Talent Acquisition

As we mentioned above, hiring in the private equity industry is downright confusing, cutthroat, and challenging for candidates and firms alike. Let’s dive into some of the unique difficulties a private equity firm like yours might encounter as it tries to acquire top talent.

The Rigid Candidate Criteria

Job hunting usually goes like this: 1) search for a job online, 2) send in a resume, and 3) hope for an interview callback. The applicant can have a background in anything and potentially still have a shot at their dream job.

Not when it comes to getting hired by a hedge fund or private equity firm. In this case, the candidate must meet extremely specific expectations. Namely, they should still be in school, work for a competitor, or be coming from an elite investment bank. Any other candidates - no matter how amazing they are - likely won’t stand a chance without the help of a headhunter or a recruitment firm like MSH that specializes in PE. 

Hiring in private equity isn’t very open-minded, which narrows the pool of choices dramatically and leads to frantic competition between firms.

The Frenzied Recruiting Timeline

Another challenge in PE recruiting involves its unusually feverish and fraught timeline. Unlike other industries, in private equity, one large firm typically kicks off a recruiting frenzy once it starts interviewing to fill its slots. The process that ensues is fast and intense. Known as on-cycle recruiting, this is considered the primary way a candidate can score one of these coveted jobs.

One major downside to this aggressive and accelerated method is that the timeline keeps getting pushed earlier and earlier. As a result, students are literally getting hired two years before they’ll even start working! Pretty ridiculous, right?

Fortunately, working with an executive search firm like MSH can help PE firms land fully vetted “off-cycle” candidates (those who are just as qualified, if not more so, yet choose not to participate in the craziness of on-cycle recruiting or are coming from different backgrounds).

The Intense Interview Process

There are only so many top-tier PE candidates out there, so firms go out of their minds trying to identify and lock them down as quickly as possible. 

Hence, interviews can get pretty insane - we’re talking multiple rounds, modeling tests, case study requirements, and more. 

It goes without saying that it’s a lot for the candidates. But what about the private equity firms and hedge funds themselves? Naturally, it isn’t easy for them to pull all this off either given all the time, effort, and labor this type of intensive interviewing typically requires.

Plus, PE firms in many cases are expected to extend offers on the spot if a candidate makes it through their interview gauntlet. Talk about lots of stress and off-the-cuff key decision-making.

Your New Private Equity Recruiting Strategy

Hiring in the private equity industry clearly isn’t for the faint of heart. Believe it or not, though, it really doesn’t have to be so hard. Partnering with a reputable recruitment firm like MSH that knows its way around the industry can make all the difference in the world.

Let’s discuss how this type of partnership usually works. 

1. Brainstorm with the Team

To start, it’s important to meet with the recruitment team to create an accurate job profile and establish key performance objectives for the role in question. It’s critical that everyone’s on the same page from the very beginning to achieve success.

2. Determine the Right Fit

Once qualified candidates start rolling in, the team at MSH will evaluate their fit. In other words, how well does their experience align with the predetermined performance objectives? Moreover, will the candidate fit into your company culture and stick around for the long term? Being able to differentiate between a great candidate and a great hire is key.   

3. Attract the Best Talent

So much of a company’s hiring success comes down to its ability to attract high-quality candidates - and this is even more challenging in the PE industry given its unique on-cyle timelines and candidate restrictions. Let a PE recruitment firm like MSH do that for you, leveraging its extensive network, market research, proprietary AI software, and specialized knowledge to source, identify, and connect with top talent.

4. Encourage Diversity

Don’t allow your firm to get stuck in a rut. Actively eliminate hiring biases so your employees can benefit from a variety of perspectives and experiences. MSH ensures that it only passes along and highlights the best candidates possible by tapping numerous sources, in addition to presenting finalists without names to prevent biases.  

5. Train HR on the Process

Don’t forget to educate your hiring managers and HR team about this new recruitment process and how to conduct interviews effectively so you can consistently secure high-level candidates. The right recruitment firm will help your fund do this, making things way easier in the future.

6. Extend an Offer Quickly

While it isn’t necessary to extend immediate offers like many PE firms do during periods of on-cycle recruiting, it does pay to move fast. Once you’ve found a candidate with the necessary skills, background, and qualities, lock them down! Talent acquisition firms like MSH will push this part of the process along, even going so far as to clarify your company’s 90-day expectations with the new hire.

Our Mission Is To Help Your Firm Secure The Talent To Scale Your Portfolio’s Growth

It’s never easy in any industry to find and hire top talent. But add in all the complexities specific to private equity (unreasonable on-cycle timelines, highly restrictive hiring criteria, investors’ shifting priorities, and insanely fierce competition, to name just a few), and it can seem nearly impossible.

That's why our team is standing by, and eager to help. We've got deep ties in PE space and our team knows exactly how to navigate the entire process so your firm can quickly and easily hire candidates who will propel it forward.

Contact us today to lock down winners who will contribute significantly to your bottom line.