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Private equity firms poaching from the sell-side at a prodigious rate

One Direction, Tinder and private equity. That’s what all the cool kids are into today.

A recent study found that a surprising percentage of investment banking analysts are joining private equity firms following the completion of their two-year program. Fewer are remaining at the bank and not all that many are joining hedge funds, although there are obviously fewer seats available there.

Nearly 36% of investment banking analysts who began their two-year program in 2012 are now employed by private equity firms, startup recruiting firm Vettery told the New York Times. That’s more than the number of bankers who stayed at their own bank. Just 28% of junior bankers remained with their group, with another 3% taking jobs within other units of the firm. Roughly 10% moved on to other banks while a similar percentage found work in the hedge fund industry.

The report is especially interesting considering the relationship between banks and private equity firms, which rely on loans from Wall Street along with private investors to raise the debt necessary to buy billion dollar companies. So banks are essentially having their analyst classes poached by their own clients.

Moreover, they’re beginning the recruitment process extraordinarily early, something that’s rubbing banks the wrong way. An earlier Times report found that PE firms will sometimes make offers 18 months before the job is actually set to begin, meaning there are hundreds of 25-year-old analysts who are working at large banks while already having accepted jobs at other firms. Many are only six months into their tenure at the time.

While the pipeline to the private equity industry is clearly full, not everyone finds happiness on the other side. An April study found that just 45% of private equity staffers reportedly being happy with their career – the exact same percentage for investment bankers. Hedge fund employees, on the other hand, are doing just fine. Roughly 62% of hedge funders are pleased with their job.

How to Move From the Sell-Side to the Buy-Side (eFinancialCareers)

We asked a few recruiters who place candidates at hedge funds what they look for on sell-side resumes. Here are a few of the key elements.

Bonuses at RBC Capital Markets? (eFinancialCareers)

Yesterday, RBC became one of the first North American banks to report full year results for 2014. They were good. So RBC’s investment bankers can be forgiven for thinking they might get paid when the bank announces its bonuses in two weeks’ time.


Madhu Satyanarayana, a portfolio manager at New York hedge fund J. Goldman, has died of an apparent heart attack. He was just 33.

State Street Exiting Swaps (Bloomberg)

State Street is shuttering its U.S. swaps clearing business and shelving plans to launch a similar operation in Europe as client interest has waned following new regulations.

Women Needed on the Front Lines (Bloomberg)

The progression of women from mid-level to senior roles in financial services is worse than in any other industry. One potential fix, according to a new study, is for banks to rotate women with leadership potential into revenue-generating roles. Women make up a very small percentage of the front office.

Better Late Than Early (WSJ)

Traditionally, applying to business schools during the final round of admissions was a death blow. You are lazy, disorganized etc. But now, MBA programs are increasingly open to third round applicants. They tend to be more unconventional and confident – two attributes that are found in most startup founders.

Rich People Are Jerks (Business Insider)

Whether rich people become jerks or jerks are just more prone to becoming wealthy, the connection is clear, according to a new report. Rich people shoplift more than poor people, they give away less money to charity (as a percentage of their wealth) and brain scans find they are less empathetic.

Buzz Around the Office

Much Better than Rocky V (Buzzfeed)

After the release of Rocky IV, a joke went viral that, void of opponents, Rocky would end up fighting an alien in the next installment. The screenwriters took the joke seriously and wrote a screenplay that ended up becoming the movie Predator.

Quote of the Day: “In addition, you have enjoyed considerable non-pecuniary compensation such as perfumed sedan driver(s) and assorted assistants who spray ionized lavender water on your barren cranium.” – Carlo Cannell, the head of Cannell Capital, in a letter to founder Jim Cramer

AUTHORBeecher Tuttle US Editor

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