News of layoffs at major financial institutions has dominated the headlines for the past few weeks. But despite the lower headcount and reduced expenses, it doesn’t necessarily mean that bonuses or compensation will change for those private equity jobs and bankers still employed, reports The Deal.
Companies that free up cash with layoffs tend to hoard it, in order to protect their margins and capital levels. The people who survive the cuts “won’t get paid more, they just don’t get paid less,” says Gary Goldstein, co-founder of New York recruitment firm Whitney Partners.
However, layoffs have affected first, second and third-year analysts, who have traditionally been safe from major layoffs because firms did not want to scare off future recruiting prospects. The Deal reports that not only has this group been targeted for cuts as well, but that only 5% of the top analysts are receiving top-dollar bonuses, as compared with 25% before the financial crisis.
The tightening of salaries and bonuses in banking is causing some analysts to eye a career move into private equity jobs. The recruiting season for junior talent at private equity firms was as intense as during the peak years of 2006-2007, according to Brian Korb, co-founder of Glocap Search LLC in New York. At that time, the surge in recruiting was driven by a wave of aggressive capital raising at PE firms. Today, it’s being fueled by pent-up demand from firms that played it safe after the financial crisis, and now have a shortage of junior talent.
Private equity firms generally hire analysts that have worked for investment banking firms for three years. But now they have a smaller pool of talent from which to choose, since banks have cut back their analyst ranks. The upside: larger, more established private equity firms are reportedly paying third-year analysts between $200,000 to $250,000. While that’s a healthy starting salary, it’s still down from the $300,000 peak before the crisis.
What about you? Have you noticed an uptick in private equity hiring at the analyst level? Add your comments below.
Comments on this entry are closed.