Private Equity Is Top Choice of Young Wall Street Bankers

The business of private equity has long held an allure for young bankers. But for the first time, there are numbers to suggest that private equity is the single most popular destination for Wall Street's junior workers.

Nearly 36 percent of junior investment bankers who started two-year jobs in 2012 have now joined private equity firms, according to research by Vettery, a startup recruiting firm. That level exceeded the 27.5 percent of junior bankers who stayed in the same group at their bank, Vettery said.

The data provides an unusually detailed look at a recruiting process that is shrouded in secrecy.

Even though Wall Street lost some of its appeal in the financial crisis, many graduates of the nation's top colleges continue to flock to investment banks to work as so-called analysts, typically on two-year contracts. But that is just the beginning of a fiercely competitive recruiting race. Once they are at the banks, many young workers start interviewing for jobs at private equity firms, hedge funds or venture capital firms, which can promise higher pay and more prestige. After that, many go to business school.

The popularity of private equity firms - which use investors' money and plenty of debt to buy entire companies - has fed a tense standoff between these firms and the investment banks.

Private equity firms, seeking the best and brightest of the investment bank analyst class, are recruiting on an increasingly early timeline: This year, the process began in February, only about six months after analysts started their first jobs out of college. The flurry of job offers has led bank executives to complain of conflicts of interest, since private equity firms are often their clients.

For a certain type of high achiever, private equity is "just another step in the process of evolution" of a career, said Marc Wiener, a principal at Mercury Partners, a recruiting firm that places workers in private equity and elsewhere. Compared with working at a startup, he said, "I see it as a safer path, still staying within a corporate setting."

For the analysts who started in 2012, private equity firms were far more popular than hedge funds, which claimed 9.3 percent of the class, and venture capital firms, which hired 2.2 percent of the young bankers, according to Vettery. The data covers about 1,400 analysts, which Vettery says is virtually the entire class.

While many on Wall Street see Silicon Valley as a competitive threat when it comes to hiring, tech startups claimed only 3.9 percent of the 2012 analyst class, according to Vettery. More popular, claiming 5.6 percent of the class, were jobs in corporate finance or business development at companies outside Wall Street.

The banks - which have recently made efforts to retain junior workers, including offering more days off and raising some base salaries - are a popular destination in their own right. In addition to the bankers who stayed in their groups, 10.4 percent of the analysts went to other banks, while 2.8 percent of them went to a new group within their bank, Vettery said.

Reflecting a broader imbalance on Wall Street, most of the analysts going to work for private equity firms and hedge funds were white men, Vettery found.

Vettery, which seeks to use technology to help private equity firms and others hire workers, collected the data from regulatory filings, social media profiles, other websites and its own network of financial workers who have signed up on the site.

The data does not fully capture the number of bankers who will one day leave Wall Street. It misses, for example, the bankers who may choose to spend three years in banking before decamping. One such banker was Philip A. Piro, 26, who worked a year at Citigroup and two years at Deutsche Bank before leaving finance this summer to work full time at Captains Neck & Co., a startup he co-founded that sells healthful sodas.

And some of those who do join private equity firms may later discover that the work does not suit them, Wiener, the recruiter, said.

"You'd like to think these people are still very interested in what they do on a day-by-day basis," Wiener said. "But a big part of it is they're not burned out on finance just yet."

@ 2014 New York Times News Service