Fools rush in: the private equity recruiting cycle is all drama, no alpha
How private equity recruiting has become a $50,000 rush week race to hire people who don't matter
Sometimes I wonder what my life would have turned out like if I had been a man on Wall Street in the 1980s. No applicant tracking systems, no algorithmic screening, no gatekeepers in scaled digital walls in the forms of filters, funnels, none of that tomfoolery, just plain old one on one conversations create careers. I’ve lost count of the number of finance legends and their memoirs talking about how they walked in somewhere, convinced some irascible old-timer they should be given a shot, and somehow they started the next day. That world, of course, no longer exists.
What exists now are parallel systems in situations like when I as a woman have interviewed for roles to be asked out on a date by my interviewer, or be seriously told ‘we don’t know what to do with your unconventional background for PE, have you thought about going into sales or investor relations instead, it may be easier’ - this is a system that somehow exists suspended alongside a parallel world involving a recruiting pipeline that seriously treats 22-year-olds doing keg stands like fissile material.
There are a lot of incompetent men in finance who never really graduated maturity-wise and have been coddled their entire lives. Perhaps that explains the structure of the private equity recruiting cycle in the U.S., which resembles fraternities and sororities on college campuses. I’ve wondered why the American finance industry places such a frenzied premium on a cohort of candidates who are, broadly speaking, children who must be secured immediately.
I.
In the 1980s, a young man named Philip Waxelbaum was getting recruited to Wall Street. Dinners with managing directors. Interviews that felt like auditions. Decades later, after becoming a finance recruiter himself, he wrote about it on LinkedIn: “I wasn’t in queue for a job. I was pledging and this was rush week.” When he received his offer, he called it receiving a “pledge pin.” When he declined Lehman Brothers, he described it as “returning his pledge pin.”
Forty years later, in 2024, an analyst told the Financial Times his interviews began at 7:30am on a Monday and by 9pm, he had accepted an offer. The job itself however starts in twenty months. Classmates reportedly skipped work to shuttle between Park Avenue buildings, abandoning one firm mid-interview when another texted. One candidate hid in a bathroom stall to text a competing firm while his interviewers waited outside. He called it the most stressful twelve hours of his life and also the best day of his life. I suspect he’ll feel the same way about his first divorce in the future.
II.
Do you know why it’s called rush week?
The word “rush” in Greek life comes from a game theory phenomenon called market unraveling. Alvin Roth won the Nobel Prize for studying it. Chapters used to recruit juniors. Competition pushed it earlier. Sophomores. Freshmen. Freshmen during orientation week. Each chapter, acting rationally, tried to lock in pledges before competitors could. No one could stop because defection meant losing candidates.
They called it rush because everyone was rushing. The etymology is the diagnosis.
Private equity recruiting follows an identical pattern. Fifteen years ago, firms hired analysts about 13 months before start. By 2023, it was 20 months. By 2024, some firms were interviewing candidates before they had started their first day at the banks meant to train them. The timeline moved from August 29 in 2022 to June 24 in 2024.
Framed another way, the frenzy of the private equity recruiting cycle is mimicking the rush for Labubu releases. Think about what that means and how the secondary market for Labubus falls apart.
III.
Let me be specific about who gets rushed.
The typical candidate is 22 or 23 years old. Graduated from one of roughly 15 universities the industry has decided matter. Completed a summer internship at an investment bank, received a full-time offer, started as an analyst in July or August.
They have been working for approximately four months when the headhunters call. They haven’t closed a deal. Most haven’t worked on a deal that closed. They’ve built some models, sat on some calls, fetched coffee, learned where the bathrooms are, figured out how to expense dinner. They have not even passed the rite of “pls fix” on a slide deck.
And now they’re being evaluated for a job that will determine the next decade of their career, in a process lasting 48 to 72 hours, with offer windows that close in 24 hours or less.
Headhunters control access. Firms like CPI, Henkel, SG Partners serve as gatekeepers to the megafunds. They’re paid on commission, around 20 to 30 percent of first-year salary. A $250,000 placement generates $50,000 to $75,000 in fees. The incentive optimizes for pure speed.
Who benefits from this?
How does this timeline actually work? The 22-year-old accepts an offer for a job starting in twenty months. They spend the remaining time at Goldman in limbo. Still pulling all-nighters, still getting screamed at, but mentally checked out. Running out the clock. Tick, tick, tick. When they finally start at the PE fund, they’re 24 or 25 with two years of banking experience. They can build a model. They’ve closed some deals. That’s…it.
This is who private equity actually employs, as the 22-year-old with four months of experience is just a future claim and a pledge who won’t be initiated for two years.
IV.
No other country does this. In the United Kingdom, PE firms recruit candidates who have been working for two or three years. Hiring happens three to four months before start, not twenty. The process spans weeks. One London professional called the American system “absolute lunacy.”
In continental Europe, German funds wait until candidates have actual deal experience. French firms evaluate over months. Stockholm, Amsterdam, Madrid hire on rolling timelines. In Asia, the compressed psychodrama does not exist. Hong Kong and Singapore recruit year-round. Hillhouse Capital runs six interview rounds over two months.
The US is the only market that does this, and when it comes to money? US and European funds generate roughly the same returns. Both produce approximately 14 percent net IRRs over a decade. In Q1 2025, Europe actually outperformed.
The psychodrama produces no alpha.
V.
Now let’s look at the research on this.
London Business School partnered with Capital Dynamics, a fund of funds that conducts extensive due diligence on private equity managers. With access to 25 years of internal data across 500 funds, 138 PE managers, 5,772 deals, and nearly 6,000 professionals tracked over time, this is the largest dataset ever assembled on private equity human capital.
The researchers, Francesca Cornelli (now Dean of Kellogg School of Management), Elena Simintzi, and Vikrant Vig, wanted to know whether team stability affected fund performance. This is the conventional wisdom in the industry that stable teams are good. Investors write key-man clauses into fund documents. Limited partners get nervous when senior people leave. Everyone talks about retention. The data said otherwise and found that funds with higher turnover outperformed funds with lower turnover
Funds with higher turnover outperformed funds with lower turnover. The top tercile of turnover, the firms that churned through the most people, produced 25 percent net IRR. The bottom tercile, the most stable teams, produced 11.5 percent. That’s a gap of thirteen and a half percentage points. That means revolving doors of hires made more money, but wait, hold on, it gets better (or worse, depending on what you believe) - can you guess what happened when they broke down turnover by professional background?
Researchers were examining established PE investors who were not 22-year old recruits but an average age of 37 with an average tenure of six years in roles like partners, vice presidents, and principals.
They specifically examined three categories of professional backgrounds in PE funds: those with operational experience, those with prior private equity experience, and those with a financial and investment banking background.
When teams regularly refreshed their operational expertise, fund performance improved. Operational skills need to evolve with market conditions, so churning through fresh hires with diverse industry backgrounds actually helps.
When people with PE backgrounds left, performance declined.
When people with investment banking backgrounds left?
Nothing. Per the researchers, they had “little impact on returns”, along with the mic drop that “financial skills appear to be a commodity.”
VI.
Do you know what that means?
The entire private equity recruiting apparatus and all its psychodrama exists to sort and secure candidates whose departure, according to the largest study ever conducted, does not meaningfully affect fund performance.
Midnight modeling tests, hiding in bathroom stalls, 2:30am interviews, candidates skipping work, flying cross-country for a single meeting. All of it is for nothing. It’s but a walking shadow, a poor player in financial markets that struts and frets his hour upon the stage, and then is heard no more. A tale told by an idiot, full of sound and fury, signifying nothing.
Shakespeare clocked it 400 years ago. The system optimizes for the one talent pool that doesn’t move the needle.
Pls fix.
VII.
So why the frenzy, why the rushing, why the insanity that mirrors Greek life on university campuses? American PE runs on a fraternity-to-firm pipeline. I’ll state the obvious - it is not about meritocracy, it is about class and social reproduction.
Meritocracy in finance is a mirage, and the system self-selects not for competence but for cultural fit. After all, why doesn’t Europe recruit this way? Their infrastructure of social reproduction is different, they typically don’t have the same undergraduate Greek system feeding into the same banks feeding into the same funds feeding into the same failure of hiring for actual talent (excepting the Dutch, whose undergraduate fraternity/sorority system combines the worst of both worlds by bringing in Eurosmug along with the elitism).
None of it is merited, it just has to do with money and socioeconomics of whose family you were born into and how that shaped your access. Sociologist Lauren Rivera studied how elite firms hire in her book “Pedigree”, which documents this. The metric always comes back to not about if a person can do this job but would I want to be stuck in an airport with this person. The problem with that, of course, is what your barometer is for who you’d speak to.
Think about a time in your life where you have unexpectedly been in a situation where you’ve ended up making conversation with someone you didn’t expect to and it turned out to be a wonderful exchange or moment. Think about how unexpected that was and how it worked out to be a good time, good vibes, good rapport, whatever. Now think about how selecting for certain factors excludes that possibility from happening to begin with, and how that scales on a massive basis when an entire ecosystem is based around hiring for it. The person you’re not even considering interviewing could be the best airport lounge buddy and slide deck fixer and deal maker your firm has ever encountered. But they never made it to this pipeline to begin with because you didn’t even bother to consider them due to arbitrary criteria. The inanity of this hazing to hiring pipeline exists because systems perpetuate it.
A 2013 Bloomberg investigation found that at some investment banks, fraternity brothers outnumber women four to one in analyst programs. JPMorgan alone employs 140 members of Sigma Phi Epsilon. A reporter interviewed a UPenn Sigma Chi chapter president who approached a banker at a recruiting event with a secret handshake, and the banker’s response was that “Every Sigma Chi gets a business card. We’re trying to create Sigma Chi on Wall Street, a little fraternity on Wall Street.” In what other industry would this be considered good judgement or publicity to promote? Think about that, but we all know the other angle - do you know why he said that to a journalist out loud? Because just like Simon Le Bon of Duran Duran was once said to respond to the question - why do rockstars date supermodels?
Because they can. Because he can. Because the system selects people who are not always competent but have the confidence of the coddled, which would be fine if confidence compounded returns, but it turns out it doesn’t. The coddled are commodities, as the Cornelli study confirmed it.
So what does this mean for evaluating the recruiting arms race in finance? The research findings suggest this frenzied competition for IB analysts into PE may be solving for the wrong problem because if IB-trained professionals are highly substitutable even after years of experience, then capturing candidates 4 months into their banking career provides no clear performance advantage.
That means the key differentiator isn’t the IB training itself. Rather, the study’s emphasis on operational expertise and team evolution capability points toward a different hiring philosophy where I’m going to use everyone’s favorite buzzword right now (not): diversity. That’s right - PE funds might actually benefit from hiring people with different and diverse professional backgrounds instead of winning bidding wars over identical IB-trained candidates from the same fifteen schools. The research says so. But I’m sure the firms will get right on that…not? Perhaps - in June 2025, something cracked.
Apollo announced it would not participate in on-cycle and shortly thereafter General Atlantic followed along with TPG. For the first time in memory, megafunds opted out.
Notice how Rowan used the word rushed? Deliberate or not, it’s on the nose for the PE recruiting cycle and how it resembles Greek fraternity and sorority recruiting as I’ve been describing throughout this piece.
As I publish this in January 2026, we’re going to see how this plays out in the future. Will it hold? Will someone defect? Will it even matter? It’s telling that the people running the system are admitting it serves no one. The research says to hire differently for candidates with more diverse backgrounds. Money in the bank shows that results in higher returns. The writing is on the wall. Whether anyone reads it is another question.