This article is part of my series on how to get into private equity
Private equity headhunters (also called outsourced “recruiter” or “executive search firm”) are true gatekeepers of roles in the industry.
To land a job at a top private equity firm is no easy feat, and impressing private equity headhunters is one of the first steps required in the process.
It will take many hours of preparation and planning before you are ready to meet with headhunters.
In this article, I’ll be discussing what private equity headhunters are, what roles they play, and how to prepare if you’re scheduled to meet one.
What Are Private Equity Headhunters?
Most private equity firms and hedge funds are too small to have their own internal recruiting teams. Many middle market private equity firms have less than 30 employees, and nearly all of these employees are entirely focused on investing.
This means that many aspects of the recruitment function needs to be outsourced, which is where headhunting firms come into the picture. These firms recruit investment professionals for private equity firms, hedge funds, venture capital firms, as well as other alternative asset managers.
These search firms help organize candidate information and screen potential employees to weed out bad candidates. They also perform various other human resources functions.
The recruiters from these firms often deal with the first screen of candidates and can, unfortunately, destroy your chances of getting a job in private equity if they don’t think you will make a good fit.
The initial screening criteria they use is mostly based on what firm (usually investment banks) you work at, the university you went to, and your GPA.
However, after that screen, they will also assess you in an in-person or Zoom interview.
While dealing with these headhunters is not exactly fun, it is one of the only ways for you to get into the private equity industry.
What Role Do Headhunting Firms Play In Private Equity Recruiting?
Now that you know the basics of what a headhunter firm does, we can go into a little more detail in this section about the role they play. I’ll cover both the on-cycle and off-cycle processes.
On-cycle executive search firm recruitment process
- The firm starts the recruitment process by sending introduction emails to prospective candidates. These candidates are usually sourced from bulge bracket investment banks and top boutique investment banks, and are only due to start working in private equity in a year or two if they are selected.
- The executive search firm will then collect data sheets and resumes from the candidates. Some of these data sheets are quick and easy to fill out, but others may require you to create a list of your preferred private equity employers.
- The recruiter will then schedule initial meetings with candidates who meet their initial criteria. These are the first batch of interviews, so they mainly ask questions relating to deal experience and behavior. These interviews are designed to weed out candidates who aren’t prepared and those who aren’t sure what they want from the process.
- Group networking events are sometimes organized prior to interviews. These are usually casual breakfast or drinks events where recruiters can socialize with candidates. Sometimes these events can be virtual, or the private equity firm may even organize an event itself.
- Candidates who have impressed the recruiters from all these steps will then be invited to interview with the client private equity firm, once they start interviews. Top firms will eventually start interviews, which causes other firms to follow suit to get the best talent. I discuss the private equity interview process in greater depth here.
Off-cycle executive search firm recruitment process
The off-cycle process involves private equity positions with immediate start dates or “opportunistic” hires. While headhunters play a more pronounced role in the “on-cycle” recruiting process, headhunters can also be utilized by many firms for “off-cycle” hiring.
In this context, headhunters still collect and sort resumes and other data from applicants, and they may still conduct the first batch of interviews the same way they do in the on-cycle process. Interview events and rapid-fire interviews, however, do not occur in off-cycle recruitment.
Many firms continue to use recruiters even for off-cycle recruiting. However, an important thing to note is that you don’t actually have to go through headhunters if you want a private equity position in the off-cycle process. Whereas going through recruiters is a hard requirement for the on-cycle process.
When Should You Meet With A Headhunting Firm?
On-cycle recruiting for positions at private equity firms occurs very far in advance for investment banking analysts. Typically, analyst will start meeting with recruiters in the Fall of their first-year of investment banking.
Off-cycle recruiter meetings can occur at any point, since hiring is less regimented on a set schedule.
Typically, if you work at a top investment bank, recruiters will reach out to you over LinkedIn or email. However, if they don’t reach out, it’s best to get a warm intro from colleagues.
When you do setup a meeting, you’ll need to rigorously prepare for the interview process so that you aren’t stumped by any recruiter questions.
I’ll go into more detail on that in the next section.
How To Prepare For Private Equity Recruiter Meetings
When you’re finally ready to enter the lion’s den, you’ll need to be prepared to do so.
In addition to evaluating your resume, the recruiters will evaluate whether you interview well enough to impress at the top private equity firms.
Some of the things these recruiters will look for during an interview include:
- Whether you are able to hold a conversation for 30 minutes without mumbling, stuttering, or looking at your phone.
- Whether you can explain the thought process behind one of your deals off-hand and if you can give both a long version and a short version.
- Whether you can explain complicated financial concepts in ways that a layperson would be able to understand.
A few common questions you may be asked during recruiter interviews include:
- The ever-present: “Tell me about yourself?”. For this question, you’ll need to be prepared to explain what your background, your current role, and the overall narrative of your candidacy.
- “Why private equity?” You’ll need to explain why you are interested in moving away from investment banking or another suitable role you’re employed in.
- “What kinds of firms are you interested in working for?” You’ll need a very specific answer to this question about what you want to do and where you want to be placed, or you’ll negatively affect your chances of selection.
- “Give me some more information on some recent deals you have worked on.” You’ll have to talk about the intricacies of these deals and what prompted you to make them.
Most recruiters do not give you a case study, but I have heard of one top recruiting firm that administers a paper LBO mini-case study. Check out my guide on paper LBOs to prepare.
Top Private Recruiting Firms
If you want a career in alternative asset management, then these are some of the best firms to approach:
Amity Search Partners
Amity Search Partners was founded by Pam Esterson and Susanna Nicols after they left another executive search firm called SG Partners. The company has 15 dedicated recruiters with offices in San Francisco, New York, San Diego, and Austin.
Some of their most prominent clients include Bain Capital, Trian Partners, and Centerbridge Partners.
SG Partners is an executive search firm specializing in the global financial services industry. It was one of the first headhunting firms in the private equity sector and is, therefore, one of the most popular. SG Partners can be found in New York.
Henkel Search Partners
Henkel Search Partners was founded by Eleni Henkel, who was formerly a managing director at an investment bank. Henkel, along with some of her staff members, started her career at SG Partners, too. The firm has offices in both New York and San Francisco.
Gold Coast Search Partners
Gold Coast Search Partners is one of the smaller firms on this list, as it consists of only eleven staff members (at the time of writing). It was co-founded by two staff members that defected from CPI. This boutique search firm is located in San Francisco, as its name suggests.
CPI was founded in 1996 by Brian O’Callaghan and is one of the oldest executive search firms in the industry. The firm deals with 3,000 applicants on a yearly basis. They place candidates in many investment management firms like hedge funds, venture capital firms, and, most importantly, private equity companies.
Ratio Advisors was established by Vedica Qalbani, who originally worked at Amity Search Partners. It has locations in Boston, New York, and San Francisco. While the company is relatively new, this hasn’t stopped them from placing a number of candidates in hedge fund and private equity positions.
Do headhunters take a cut of your salary?
Headhunters make a fee that is equal to 20-30% of a successful candidate’s base salary. However, this doesn’t come out of the candidate’s salary itself. Rather, it’s paid separately by the private equity firm and is simply calculated as such.
What should you not say to a headhunter?
If you are in an interview with a headhunter, there are some themes you should definitely avoid to ensure you put your best foot forward.
One of the biggest such themes to avoid is describing your current role/experience as one that you’re desperate to leave. ALWAYS KEEP IT POSITIVE!
You want to paint a positive story about how even if your current role is one that you’re looking to leave, it’s been a very positive and worthwhile experience with many learnings that will add to your private equity candidacy.