Survey: PE Firms Have Slight Recruiting Advantage Over Hedge Funds

Feb 10 2015 | 3:46pm 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.

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