Private equity firms have a better chance of recruiting investment banking analysts than hedge funds or other finance-driven industries, according to a new study from recruitment firm Long Ridge Partners.
Long Ridge surveyed a random sample of 100 people currently in investment banking analyst programs across the country and found that private equity firms have a slight edge over other career paths, with 39 percent of respondents saying they would prefer to work at a private equity shop and 37 percent saying they would want to work at a hedge fund. Only 9 percent said they would like to remain at an investment bank.
The responses show the increased appeal of the private equity industry over the past few years. In a similar Long Ridge survey conducted in 2011, positions at startups, corporations and venture capital firms ranked the highest among respondents, while private equity and hedge funds tied for the fifth most attractive industries for analysts.
The results from this year’s survey further reveal how recruitment season for these young prospects has been kicking off earlier each year, as pfm has previously reported. The largest portion of respondents (44 percent) said they began looking at other opportunities within the first year of their analyst program. An overwhelming amount of respondents (84 percent) said they would be open to leaving their programs early and about half (52 percent) said they had received job offers during their second years.
Indeed, it’s rare that analysts will stay on beyond two years at a bank, despite the effort that banks put in to hire and train them. An earlier survey by research recruiting start-up Vettery found that approximately 72.5 percent of bankers that started in analyst programs in 2012 had left their positions by fall 2014, with most of them leaving for private equity firms. On Tuesday, The New York Times said this year’s recruitment season kicked off this week, a jump from the normal early March, or late February starting point that became the norm over the past five years.
In these new positions, most of the respondents are expecting a salary in the $90,000 to $100,000 pay range. The second most popular response was also the highest salary option in the survey, $120,000 or more. The survey respondents’ expectations are relatively aligned with reality. The average base salary for a pre-MBA analyst/associate is $99,774, although those junior positions can expect to rake in an average of $155,658 in total cash intake, according to data from J. Thelander Consulting and Pitchbook.