It's seasonal: every year, the top analysts and associates in investment banking businesses migrate across to careers in private equity after their bonuses have been banked. This year, however, the annual transhumance to the buy-side has an added urgency - M&A fees are declining and banks are culling their junior M&A professionals.
"They've over-hired," says Andy Pringle, director of recruitment firm Circle Square. "The expectation was that M&A businesses would boom this year - especially in the U.S., but volumes are down and banks are starting to cut costs."
Figures for M&A deals on both sides of the Atlantic confirm the worst. According to Dealogic, M&A deals by value are down by 20% in Europe year-to-date and by 21% in North America. Although J.P. Morgan's head of investment banking for EMEA says he's optimistic about the rest of this year, it's easy to see why you might not be.
Pringle says Circle Square the number of London M&A jobs on its books is now "less than half" the level of last year. Logan Naidu, CEO of recruitment firm Dartmouth Partners, estimates M&A openings for experienced analysts and associates are down circa 30% in bulge brackets. At the same time, banks are trimming M&A juniors. "Most places have let some people go," says Naidu. Nomura is among those known to have removed IBD juniors at the end of the first quarter.
The analysts and associates who lose their jobs as M&A fees dry up are unlikely to be the same as those who move to private equity. - The former are likely to be the worst performers, the latter the best. Nonetheless, recruiters say the cuts are creating an additional impetus to move to the buy-side.
"We've been very busy with private equity hiring," says Pringle. "If anything, it's almost become easier to find a job in private equity than in an M&A team in an investment bank."
Plenty of top juniors from investment banks have already fled to private equity funds. Mohamed Harrath, a former member of the leveraged finance & sponsors group at Credit Suisse, left for European firm PSP Investments in April. Alessandro Boggio Togna, a former member of Nomura's healthcare team, joined Peninsula Capital Advisors in February. Christian Stammschulte, an executive director at Goldman Sachs in Germany, moved to DPE Deutsche Private Equity in April. And Julian Barratt-Due left J.P. Morgan's energy group in New York City last December and turned up in KKR's European infrastructure group this January.
If you want to get out of M&A and into private equity though, you may be too late. Both Pringle and Naidu say most fund positions have already been filled. "You'll struggle if you haven't secured a private equity job already," cautions Pringle, "Most funds finish their hiring process in May."
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