Demand Builds For PE Junior Associates. Here's How You Can Exploit It
Brian Korb, Glocap Search partner and head of strategy, new product and market development, gives the low-down on private equity jobs to eFC's Emma Johnson.
The private equity market, and the market in general, is kind of static and uneventful in some ways, though it is more active for junior-level positions and there is some recovery in private equity markets, as these traditionally see less volatility with more long-term investments. Especially with so much market uncertainty, there is a renewed appetite for private equity funds.
While mid-and senior level hiring is less confident, we are seeing more activity for junior associates. Typically these are positions where people go after two years in investment banking. They stay for two or three years as a junior associate then go on to business school. The career path is pretty predictable at that level.
How is the Pay?
Compensation for these positions varies according to fund size, but in general cash compensation is in the $175,000 to $300,000 range, with funds of $1 billion or more starting at $275,000. In the past few years the high end got out of control and would top out at $350,000. There has been a concerted effort to pull it back - there is now more room for discretion. In the past it was common for these positions to pay a base plus 100% bonus. Now they set the bonus target at 75% to 100%. It's not as dramatic, but it's still pretty healthy.
What does it take to land these positions? Easy - be a top performer at a great bank. If you're the best guy in your class at Goldman Sachs's M&A division, you will be sought out, of course.
People often ask me, "What if I' not a top performer?" Well, it's not our fault. A better question is how to get into private equity if you're not at an obviously high-profile bank. In that case it is important to get in front of recruiters who do ultimately control a lot of the jobs. Get introduced through references and former colleagues and get as much experience as you can.
How to Become More Marketable
One of the challenges of the past couple of years is that the deal volume is so light that it is tough to get a lot of experience under your belt. My advice to junior-level associates is to know your stuff, make sure your valuation skills are very fine tuned and you know your deal mechanics cold.
In this environment spending a third year at a bank to get more experience can be a good strategy to get more deal experience and gain more maturity. This strategy only works if you make a thoughtful decision to hunker down for an extra year and then approach the job market even stronger. But if you don't know what to do or you're not very good in the first place, you can't stay a third year and be great. A third year can make a good candidate even better.