The Start-Up Boom

by Rebecca Liebel - PER 23. November 2015 12:44

Top ranked banking and consulting juniors are more mobile and in demand than ever. While Private Equity remains a very desirable exit point, we are seeing increased competition in Germany from the start-up world.

Junior candidates are more networked, informed and international than ever before. Well removed from any economic crisis in their lifetime, it may be a false sense of security or belief that seductively high salaries are here to stay. But driven by a greater need for self-fulfilment and social purpose in their work they often leave their homes at top tier banks or strategy consultancies to pursue a start-up. It is almost becoming a rite of passage for ambitious and entrepreneurial high potentials to found their own company or join a start-up.

The start-up culture caters to Generation Y in many respects; it affords them greater responsibility and authority from an early stage, working with cutting edge ideas or technologies, and often with products that have a higher social or moral purpose.

The market factors nurturing the start-up boom in Germany are numerous – investors seeking alternatives due to low interest rates, Government support to build Berlin into the start-up centre of Europe and the lower cost of living in Berlin attractive to first time founders living on a shoe string.

The success of Rocket Internet (now a household name) has further improved the status of the start-up sector in Germany (and abroad), and their ability to attract high calibre recruits. Rocket attracts a notably high number of McKinsey alumni to their start-ups throughout Asia, for example.

What does this mean for PE funds?

While this start-up experience may delay the initial availability of many strong candidates, we don’t regard it as a permanent hindrance. We are witnessing many wishing to return to a more established and stable work environment after just 1-2 years, where they can put their operational and commercial learnings to good use.

They bring with them a strong understanding of e-commerce and digitalisation strategies, first-hand operational exposure as well as a keen entrepreneurial spirit. This represents a great opportunity for Private Equity funds willing to harness and benefit from these candidates.

A number of PE funds have already discovered these Start-up graduates. In the spirit of “nothing ventured, nothing gained”, the learnings are still recognised even where the start-up business has not been continued. For Private Equity firms it is however imperative that the candidates have a formal base training with a top tier bank or consulting firm before entering the start-up world. That said, many may need to adjust or flex their traditional hiring profiles if they wish to capture the best candidates in today’s workplace.

It is clear to all that the market is at a high which will have to slow down in the near future. So it remains to be seen how the start-up world will react when an economic crisis hits, and in turn how this will affect candidate behaviour. Will they become more risk adverse, choosing the security of a bank or consulting firm over start-up. Or is this a sign of the new generation that is here to stay?

Helping Your Recruitment Partner to Help You

by Rupert Bell - PER 16. December 2014 11:59

We work with a wide range of private equity and venture capital clients and have a privileged opportunity to see how different firms approach recruitment. Each firm has its own way of running a process with varying degrees of effectiveness. Our checklist of best practice ideas is a synthesis of what we have seen work well in identifying the best candidate through a process where time and people are scarce internal resources.

  • Plan well in advance - A typical process lasts at least three months and can take much longer than this, especially at more senior levels. If it is important for certain people to interview candidates, block out specific dates for this in their calendar. Deals can always get busy at unexpected times but where possible avoid interview dates clashing with major conferences and exhibitions in your city or peak holiday periods which may affect availability of both candidates and interviewers and also the cost of candidate flights and hotels.

  • Be as specific as you can about your search - Ideally draw up a detailed job description to define both the tasks to be performed and the preferred candidate background. In particular, the better you can articulate your own firm’s culture and personality, the more effective the process will be, since ultimately technical and commercial skills will get good candidates the interview but ‘fit’ will get the right person the job. More...

Look After Your Analysts

by Gail McManus 4. August 2014 14:24

I really want to stress how important it is at the moment to look at your star junior team members and understand what motivates and drives them in order to retain them in your business. Why? We are seeing a significant uplift in demand for people with a couple of years of investment experience. And at the junior level this means someone who has not only got the skills but has also had the edges taken off them, learned the ropes, seen some action and is just becoming really useful. Investment banking boot camp is no longer enough. Now investment banking boot camp followed by private equity boot camp is the popular request.

Fortunately, you have been keeping your analysts and associates busy and they are enjoying their roles, but if you’ve got some stars in there and want to keep them then really think about how to do that. And if you run an analyst programme where you expect your juniors to leave you after a couple of years – then send them my way as we’ll have no trouble finding them a home.

So keep challenging your juniors and give them some interest and some excitement as they’re not going to have too much trouble finding a new home if they think the pace isn’t fast enough where they are. So make sure that move is your choice and not theirs.

Gail McManus - PER

Investment Banks and Private Equity Firms Battle for ‘Elite’ Junior Bankers

by PER-Admin 24. July 2014 14:06

Everyone wants a good junior investment banker these days. Unfortunately for any analysts and associates assuming that they’re hot stuff, both banks and private equity firms are only fighting to recruit and retain a select few.

Despite reports of rapidly rising pay for junior bankers and a red hot job market, there’s a huge amount of disgruntlement among analysts and associates in investment banks – largely centred around bonus payments.

While first year analysts are generally paid on a par with each other, second and third year analysts and associate level employees are divided into buckets dependent on their performance. According to recruiters and three analysts we spoke to, the top bucket is becoming an increasingly select band of people, while those who feel they’ve been underpaid is growing.


Read more


Maintaining Momentum With Star Candidates

by Charlie Hunt - PER 18. February 2014 08:30

Charlie HuntIs the key to recruiting the best candidates a question of keeping up momentum and managing expectations? We’re often asked for advice on the best ways to run the recruitment process as many of our clients don’t recruit that often.  We’ll take most of the strain on their behalf so all that many of our clients have to worry about is turning up at the right time for the interview, and remembering to take the candidate’s cv along with them.

However, once a star candidate has been identified, the recruiter needs to understand that they are not the only one doing the ‘buying’ and they will need to ‘sell’ the fund. There’s no doubt that there’s a huge amount of talent looking for work now and it’s a great time to be hiring. The difficulty funds are still finding is that the strongest candidates are often the people that everyone wants to employ. It’s not uncommon that the person a fund wants to make an offer to will be lining up two or three other offers at the same time. Arguably, the best way of maximising the chances of landing the strongest candidate is to keep up the momentum during the interview process and to manage expectations along the way. Whilst it sounds obvious, it’s surprising how many funds let time drift for weeks at a time without arranging further interviews or making an offer.

Recruitment is understandably often pushed down the fund’s list of priorities. However, by setting a timeline for the recruitment process and making sure that the candidate is clear about the process along the way, then the candidate will remain enthused about the opportunity and start to feel like part of the team. The strongest candidates will take into account how clear the messages coming out of the fund are, and how the fund organises itself in respect of the interviews. Interviews that are continually cancelled, rushed, or lack focus rarely create a good impression. First mover advantage is also important when making an offer as candidates will start to imagine themselves in the role and have a warm disposition to who gets there first. If a fund makes an offer first then it can also keep in contact with the candidate whilst they consider their options and make them feel wanted.

Expectation management is also important because it means a fund avoids spending time interviewing people who are unlikely to accept a position. This will mean making the role and responsibility of the position clear, and being upfront about the likely package. There’s nothing quite like dampening the enthusiasm of a preferred candidate by offering 10% less than they were expecting. Managing the candidate’s expectations will ensure that the chances of securing their services is maximised. Candidates also bear responsibility here. They too must be open with you and advise you of where they are with others. It never ceases to amaze me when they announce at the 11th hour that they have another offer on the table. It’s a bad strategy by the candidate because it puts the fund on the back foot and doesn’t give the fund the opportunity to be creative about the role or package. We therefore encourage our clients to question the candidate about where they are with other interviews, and we too do our best to ensure both parties are kept up to date. 

It’s all part of your employer brand. Letting the process drift and offering below expectations is not a successful recruitment strategy. Maintaining momentum and managing expectations along the way will considerably enhance your chances of landing a star.

Intuition, Interrogation and Body Language: how you know if a candidate really wants to work for you?

by Oliver Gilkes - PER 11. May 2013 14:58

Most firms have experienced this at some point: the candidate looks great on paper, they interviewed well, had all the right skills and seemed to fit in well with the team. But a few months down the line, you realised their heart wasn’t really in it. So they leave, or lose motivation then leave or lose motivation and stay (which can be worse) – leaving you in the lurch for months before you find a replacement.

Oliver Gileks - PERIn this economic climate, search firms and employers need to be especially diligent in finding candidates with the right motivation for joining them. At the moment there are candidates who are more likely to want any job, rather than specifically the job with your firm. 

So how do you find a “Mr or Mrs Right” – how do you hire the right candidate who really wants to work for you (for the right reasons) and will stay with you?

There are a number of ways in which you can screen for the right candidate. 


If you are working with a search firm, it is massively helpful to allow the Consultant working on your role to meet with at least one member of your team. This enables the Consultant to find candidates

·          whose long term career goals or aims are approximately aligned with those of your firm

·          with a close fit in terms of the skills required to do the job

·          and with the desired personality traits which are likely to fit into your company culture. 

When you start interviewing candidates, there are a number of questions you can ask to ascertain whether candidates truly want to join you.

Example question 1: ask the candidate “If you were offered a role with company A, company B or company C, which would you choose and why?” Make sure that one of the companies is similar to yours. If the candidate states that the company they would prefer is the one that is most similar to your firm, then this is a positive sign. If the candidate hasn’t heard of company A, B or C, it’s an indicator that they may not be committed to private equity as a career. 

Example question 2: ask the candidate  “Which other firms have you applied to and which have you interviewed with?”  If they don’t want to disclose the names of the companies, ask them what other types of roles they are considering. If the candidate says that they are also considering a wide range of other roles (such as equity research, teaching, advertising), then dig deeper to understand their motivation behind each choice. They need to have good reasons behind their choice of private equity.

Example question 3: ask the candidate what they know about your firm and why they want to work for you. Ask them who your competitors are. How is your firm different or similar to others?  

A lack of detail when answering such questions can be a giveaway that the candidate has not done much research on your firm and the role, and hence is less interested in it/you. A slight caveat here is that if your firm publishes little or no information about who you are and what you do, and generally keeps a low profile, then a lack of detail in a candidate’s answer can be understood, to a degree. 

Example question 4: ask the candidate where they want to be in five years time.

If the answer is “I want to run my own business”, for example, then dig deeper, they are less likely to stay with your firm, and could potentially be distracted by other projects.

A note about body language: If you ask the candidate why he or she wants to work for your firm, it’s worth noting their body language. Look out for whether their body language is congruent with the words they are saying. For example, if a candidate says in an upbeat tone of voice “I would love to join your firm”, but is leaning back in their chair, slightly slumped, he or she might be tired or have a back problem, but it’s more likely they didn’t really mean it.  Bear in mind that when reading body language the context needs to be considered; just because someone scratches their mouth or touches their face after saying something, doesn’t necessarily mean they are lying – they could just have an itch. Natural introverts may not display enthusiasm in such an animated way when compared to someone more outgoing. Take the context into account. 

Look out for gestures that are incongruent with what the candidate says.
Specialist interrogators use a technique called “baselining” whereby they observe someone’s natural behaviour (ie ‘natural’ clusters of gestures displayed by a person in certain situations) and look for deviations from this.  Whilst we don’t recommend you go this far, you might, for example, observe how they react and the level of enthusiasm they display when talking about their personal interests and compare this with their reaction to questions about their motivation to work for you. Trust your intuition or gut instinct about whether a candidate truly wants to join your firm for the right reasons. You will unconsciously pick up signals when a candidate is being honest about his or her motivation and if they are right for your firm.


The Hitchhiker’s Guide to Case Studies

by Gail McManus 17. April 2013 16:00

Don’t be put off using case studies by the amount of work needed to prepare them there is an easy way. We have several clients putting together assessment centre timetables for final interview rounds with candidates. Most of these include a case study and this has become an increasingly common tool for analyst and associate recruitment. We would recommend it for the final few candidates and everyone we work with is in universal agreement that these are a great tool in identifying the person that they would like to hire.

The case studies are telling in that they are the closest you will get to simulating life in the office.

·         You get a feel for how the candidate approaches problems – are they an organised thinker with a framework for reviewing large amounts of information or take a more casual approach

·         Do they think about the practical, commercial issues surrounding the business under review or take a high level generalist view

·         Can they quickly identify the issues critical to business success or do they miss the key points

·         Have they got an understanding of the basic principles of private equity or do they talk to you like an adviser selling you a deal

They also allow you to hold a conversation which would be pretty much like the ones you would have in the office on a daily basis

·         Can they support their opinions or do they change their minds with every bit of new information

·         Do they listen to what you have to say or are they dogmatic in their own view

·         Are they clear and concise or woolly and long-winded in their comments

·         Are they good humoured, relaxed and easy to talk with or is the whole conversation a bit of a trial

By the end you’ll know who you want in your team.

And if you’ve been put off from using case studies because of the work involved in preparing them, then you’ll be pleased to hear of a new trend in case study material which conveniently reflects an evolution in the associate or analyst’s job and makes your life a lot easier in putting a case study together.

Gone are the days of removing all names or signing NDAs to protect anonymity. The new trend in case study material is to identify a business you know well – usually from your portfolio - and get the candidates to review the business from the material they can find on the internet.  The questions you might ask might include their view on the company’s position in its market and what its future strategy might be. If you want them to value it then you may have to give them some extra financial information.

We have devised many case studies and can give you some good ideas on the material you might use and the questions you might ask to ensure that this is an effective tool in your hiring decision without being a drain on your time to produce and implement.

What A Difference an HR Professional Can Make

by Gail McManus 22. March 2013 09:01

We’ve seen an increasing number of skilled HR professionals join private equity businesses. And what a difference they can make.  At PER we first meet them during a recruitment process. And from our perspective, having a well informed, organised coordinator for recruitment is a fantastic benefit.  But for the private equity team itself it can make a huge difference to the success of a recruitment programme. 

The HR professional can sit with the investment team to scope out the requirements, assess current team members for potential internal moves, beauty parade recruiters, ensure value for money in recruitment costs, promote the firm to candidates, participate in and coordinate the assessment process, manage remuneration negotiations and deliver a great induction programme for the successful candidate when they join.

And those are just the benefits in the recruitment process.  We’ve seen talented HR professionals play a major role in many facets of the business such as developing its people, improving the management skills of the senior team, enhancing internal communication, streamlining comp and benefits and driving some major organisational structural changes through.

So when does a private equity firm decide to add an HR professional to its team? Usually when the growth of the business has begun to highlight weaknesses in the organisational structure. Perhaps some key people have departed, succession issues are looming, there are too many people now for the business to be run informally by the founder and  everyone has a different job title and a different pay scale.

The costs of adding this key person are soon outweighed by the benefits if star performers are retained, recruitment costs are managed and the investment team’s time is optimised.

There is now a body of experienced HR professionals who understand private equity and its nuances and know how to make a difference.  And I don’t know of any team with an HR professional on board who would go back to the good old days when they did all that ‘people stuff’ themselves.

Welcome to PER Insights

Gail McManus, PER Blog

PER Insights contains my observations on the world of private equity and its people.  Every day I meet and speak with people from across private equity giving me a broad view of the challenges and issues that they face in managing their businesses and their careers.  And it allows me to understand and help resolve some of the human issues that affect the sector.  

I hope you enjoy PER Insights and that you’re able to take away one or two tips for getting the best out of yourself and the people around you. Let me know what you think, I look forward to your comments and feedback. 

Gail McManus

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