The queen of private equity recruitment: “We receive between 12,000 and 15,000 CVs a month”
Gail McManus is stepping back. 30 years after founding Private Equity Recruitment (PER), the firm that’s both literally and practically synonymous with getting a private equity job in Europe, McManus is working part-time. She handed leadership of PER to long term colleagues Charlie Hunt and Rupert Bell last year in a management buyout and now has the luxury of regularly switching on her out of office. But she hasn’t disappeared entirely: McManus is the well-established queen of private equity hiring, and she still enjoys wearing that crown.
“Jobs in this industry are all about trust and judgement and potential and whatever you do people remain gloriously diverse, difficult, charismatic, challenging, awkward and entrepreneurial,” says McManus of private capital firms and their employees. “This is why I love it.”
McManus worked in private equity herself before she began recruiting for private equity (PE). Forty years ago, she was a business development manager at 3i, the British PE firm. Private equity was in its nascence, says McManus. It was called growth capital or venture capital and was initially hampered by creditors’ fears that adding debt to companies would disadvantage them in the even of a bankruptcy. “It took a change of the law and a new requirement for companies to confirm that they had at least enough money to repay credit for 12 months before MBOs took off in the early 1980s,” she recalls.
When the law changed, private equity in the UK took off. So did private equity hiring. Suddenly, young bankers with a few years’ experience wanted nothing more than to work on the buy-side. “The flywheel from banking to PE started in the early 2000s and the number of juniors increased dramatically,” McManus says.
McManus has placed thousands of young bankers into private equity jobs during her career. Many of them have since retired. She has also screened hundreds of thousands of applicants who weren't successful.
PER receives between 12,000 and 15,000 CVs a month. McManus says she and her colleagues read them all. “It takes a few seconds, and we can immediately tell whether they are in the right ballpark,” she tells us. The numbers are daunting. At the time of its MBO last year, PER said it had filled over 800 private equity jobs during the previous two years. The implication is an acceptance rate of just 0.3%.
AI has only made the torrent of job applications worse, says McManus. But AI has also provided new opportunities for would-be private equity employees to unintentionally signal their inappropriateness for roles. - Sometimes candidates will use AI tools to apply for 150 jobs at once, says McManus. “ We have a cut off of 20-30 jobs and if people apply for more than that at a time we don’t even bother reading their applications,” she reveals.
The private equity industry has a natural constituency of people who want to work in it. It’s like the bullseye in the centre of a dartboard, McManus says. “You have people working concentric circles around it, in M&A at banks or in transaction services teams or strategy firms, and they are the ones that tend to want private equity careers and to get in.” If this is not you, and if you don't have a top academic record, your CV will be among those screened out in a matter of seconds.
Your CV will also be screened out if you are too senior. "Private equity firms don’t like hiring vice presidents or directors who have no investment experience as they have to pay higher salaries," says McManus. She says firms also don't want to give carried interest "to people who have less investment experience than their in house associates."
If you make it through the initial screening, you can expect to be sent critical reasoning, verbal reasoning and numerical tests, and if you make it through those you will be invited for interview. “If we put 10 people in front of a firm, they will do an initial online interview and then they choose 4-5 people for the in-person assessment day. Big firms might have a two-day assessment day," says McManus. The assessment day will involve a modelling assessment and a case study.
Modelling skills are a test of technical brilliance, but the case study is about understanding and curiosity, says McManus. "The case study is where you get to show that you can identify what is important to making an investment decision and that you can understand the questions you need to ask to assess that.”
In a world where AI can build models, the case study is increasingly important. Before the 2000s, private equity interviews were about assessing "personality and judgement", says McManus. Then they became about assessing modelling skills. Now the pendulum is swinging back the other way again.
Unlike in America, where private equity hiring notoriously takes place during a 24 hour period when big firms compete with each other to hire the best young people from banks, McManus says British private equity hiring is more civilised. - “I don’t think anyone in the UK wants to stay up interviewing all night as a candidate. But firms here do run very serious assessment days.”
Once you get a job in private equity, you may never leave again. Carried interest is paid out intermittently over a fund's lifecycle and recipients end up tied into funds for years on end. However, McManus says there's often a flurry of moves among VPs in PE who have three to five years' investment experience. "They know how to do the job and are starting to become valuable. At this stage, people will sometimes move on if they don’t like the culture or they think they won’t get enough carry where they are."
Thereafter, there's a lot less movement. At director and partner level, McManus says people will usually only leave private equity jobs if they can negotiate a deal as a good leaver. "In this case, they will leave, stay out of the market for a year and agree not to say anything derogatory about their former employer in return for keeping the carried interest," she tells us.
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