Private Equity Investment Team

Recruiting Top Talent for Private Equity Investment Teams

Before 2000, most value creation in private equity came from leveraging and deleveraging debt. Firms would use significant debt to finance acquisitions and then seek returns at exit through financial engineering. This allowed firms to focus less on improving operations or scaling portfolio companies. But in the past 20 years, that model has shifted.

As financial engineering became standardized and widely adopted, its ability to produce outsized returns diminished. Now, private equity firms generate most of their value through strategic growth, both organic and inorganic, and by enhancing operations.

Investment teams remain the core of the private equity model, and firms must invest in strong talent early, starting at the associate level. Here’s how today’s recruiting landscape is changing.

On-Cycle vs. Off-Cycle Recruiting

On-cycle recruiting refers to a short, high-stakes window each year when firms compete to hire incoming associate classes. It has become a fast-paced race, often taking place more than two years before an associate’s start date. This “feeding frenzy” aims to secure top analysts from investment banking or consulting before they’re even established in their roles.

Off-cycle recruiting happens any time outside that window. For firms not participating in on-cycle, it may seem risky to skip this competitive period. But the associate profile has changed, which allows more recruiting flexibility.

On-cycle recruiting originated to target a specific A-player: someone from a top-tier school, working at a leading investment bank or consulting firm, focused on breaking into private equity. Today, that narrow profile no longer captures what many firms need. With an increasing emphasis on diversity and broader skill sets, many firms are finding success recruiting during the off-cycle period.

A Changing Associate Profile

The pandemic reshaped private equity hiring. Deal volume slowed, and remote work diluted the traditional analyst experience. This opened the door for middle-market firms to access talent that might have otherwise gone to larger platforms.

Smaller firms were able to hire high-performing bankers and consultants who were seeking more responsibility and broader exposure. These associates took on roles in both M&A and portfolio management, requiring stronger interpersonal and operational skills.

Private equity firms also began building analyst programs that hire directly from undergraduate campuses. This not only expands the associate talent pool but also supports greater diversity. Those analysts who earn associate offers after two years bring experience and institutional knowledge that add long-term value.

Ex-Bankers and Ex-Consultants in Associate Roles

Investment bankers remain the preferred background for most associate roles because of their transaction experience, deal sourcing skills and LBO modeling capabilities. But consultants are gaining ground as firms seek talent with strategy, due diligence and integration expertise.

For operationally focused firms, bringing in both bankers and consultants offers a well-rounded team. Consultants, in particular, shine in hybrid roles where associates split their time between investing and portfolio support. In these positions, they may spend up to half their time working with portfolio companies, although that varies based on deal flow and portfolio needs.

Larger private equity firms are increasingly creating dedicated portfolio operations teams, separating investment from portfolio management entirely. This structure allows associates to specialize while supporting the firm’s broader strategy.

The Takeaway

Private equity firms looking to build winning investment teams must rethink how and when they recruit. The on-cycle process remains important, but it’s no longer the only way to land top talent. A growing number of exceptional candidates are emerging off-cycle, many of whom offer broader experiences and stronger alignment with a firm’s values and goals.

Firms willing to adapt their recruiting strategies by being flexible on timing, open to diverse backgrounds and clear about the roles they’re hiring for can secure the talent they need to drive performance.