Survey: PE Firms Have Slight Recruiting Advantage Over Hedge Funds Feb 10 2015 | 2:46pm ET A new survey by Long Ridge Partners suggests that private equity firms hold an edge over hedge funds when it comes to recruiting prospective candidates from investment banks. In a survey of 100 investment banking analysts across the United States, 39% of said they’d prefer to work at a PE firm once they leave their current position. Of the same pool, 37% of banking analysts would prefer a hedge fund. Long Ridge’s managing partner and founder Michael Goodman says that job security gives PE firms the slight edge given that hedge fund investors can withdraw after a lockup expiration. “That doesn’t occur in PE which typically has seven- to 10-year lockups on their investor capital,” he said. Here is a breakdown of the respondents: 27 of the respondents were in their first year of an investment analyst program; 51 were in their second year; and, 22 were in their third year. While the distribution isn’t notable, the recruiting efforts of both PE and hedge funds is remarkable. Goodman stated that firms have begun recruiting analysts in the first six months of analyst programs. And bankers are very receptive to the idea of a career transition. According to the survey, 84% are open to leaving their analyst programs early.
There are better career options for a Private Equity analyst who learns fundamental business and capital allocation skills vs for a hedgefund analyst who can become too specialized in an esoteric field within finance.
I really agree with that. In PE you can have a career in business and finance that can span verticals, industries, and regions. It's not to say that fund management isn't diverse in its own right, and honestly it's one I enjoy more, but PE takes the cake for overall life options. I also wonder how many people are seeing writing on the walls (whether it's really there or not) concerning the abandonment of actively managed funds. I know hedge funds and their clients are in a different category than Mrs. Smith and the 50K tucked away in her 403B, but if the overall industry of active fund management is shrinking, and it is, that's got to be a factor.
If I had the resume, background and education, and connections to be able to call my own shots career wise, I definitely would pick working for a private equity firm over a hedge fund. There are just so many more pluses in my opinion to private equity. As mentioned, skills wise its a no brainer, since you get to learn aspects of making private deals, to running company operations, to the financial engineering and structuring of the financing for each portfolio company. From my experience, there is also a lot more job stability and firm focus at PE shops compared to the "superstar" nature of hedge funds, which can lead to hot today gone tomorrow instability.