If you want to work for private equity firm Bain Capital, it probably will help a lot if your early career was not in banking.
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Speaking on the Capital Allocators podcast, John Connaughton, Bain’s co-managing partner and global head of private equity, said Bain has a long history of hiring consultants instead of bankers, at a ratio of 3:1.
“We hire 75% from consulting firms and 25% from investment banks,” explained Connaughton of Bain’s historic hiring practices. This turned into a source of competitive advantage for the firm, he added: the consultants that Bain hired had self-identified as wanting to leave consulting because they were, “were frustrated about just giving advice or not being able to see the impact of their advice.” They knew how to turn struggling businesses around, they wanted to achieve that, and – unlike bankers, they were comparatively risk-adverse.
Bankers have a different set of skills. They know how to extract fees for transactions and are good at financial engineering, observed Connaughton. Investment banking is probably the, “worst possible place to hire from,” he added.
Rival private equity firms don’t appear to have reached the same conclusion. Even though financial engineering is becoming harder to pull off in the era of higher-for-longer interest rates, firms like KKR and Apollo have been attempting to recruit the new class of junior investment bankers earlier than ever this year.
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