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The biggest US private equity firms have abandoned a controversial practice of hiring promising graduates about to start work at investment banks for roles due to begin years later.
No large buyout firm has launched its “on-cycle” recruitment process during the traditional June window since JPMorgan Chase chief executive Jamie Dimon said last month that the bank would terminate junior analysts accepting future-dated jobs.
The decision to halt on-cycle recruiting came after several firms had already started pre-screening “coffee chat” sessions with students in preparation for a late June interview process, indicating an abrupt change in approach. Offers are typically made within a day of the formal interview.
US investment banks kicked off their typical two-year graduate training programmes by Monday, in effect freezing efforts by private equity firms to interview and recruit associate candidates to start in 2027.
Buyout groups such as Apollo Global Management and KKR have typically used June as a month to snap up junior talent between college graduations in May and the start of banks’ trainee programmes in July.
The early timing was unpopular both with private equity firms, which believed that they had to steal a march on rivals but resented hiring untested graduates, and Wall Street banks, which objected to their new recruits already having secured their next job with a different employer.
But banks had largely refrained from criticising the practice of some of their biggest clients.
Early last month, however, JPMorgan gave notice to its incoming trainees that if they accepted a role with another company before they started at the bank or within 18 months of joining, it would terminate their employment.
Apollo, typically one of the big players in the June on-cycle process, announced days later that it would wait until 2026 to begin recruiting for the following year’s associates. General Atlantic and TPG followed suit.
Most other firms have remained silent about their timing, although banks and candidates said they expected that highest-profile firms would wait at least until autumn or winter to begin interviewing.
The abrupt delay to the recruitment process has frustrated some students who had been cramming for interviews and arrived in New York after graduation expecting to secure their employment for the next four years.
These students lamented that the private equity recruiting process would now happen during intensive junior investment banking stints when there was little free time.
Banks have also started to worry that they may end up with a surplus of junior analysts amid a slowdown in recruiting for post-banking roles across private equity, hedge funds and big companies.
One senior banker at Goldman Sachs said banks could now find their own hiring models upended, with a lower rate of natural attrition than anticipated — and potentially more difficulty securing the best candidates to start with.
“Private equity will now probably just start hiring straight out of university,” they said.
https://www.ft.com/content/cca6a7f9-2319-4a57-b6e5-800e6f5aff6d
