Is it Time to Take a Vacation?

With Memorial Day weekend coming upon us, for some it is the beginning of summer and for others it is time to leave the ivy covered walls of school and enter into the work force for the first time or once again if you are a recent graduate with your Masters.  Historically, the summer is a slow time for hiring in the alternative investment universe as many professionals take this time to take a break and enjoy time with their families or their other pursuits.

Will the summer of 2009 be different from this historical hiring perspective? There have been many occurrences recently which lead me to believe that yes, this summer could be different and for many it may be an opportunity to find new employment. As many professionals know hiring in the Private Equity and Hedge Fund space has been very slow for the past 6 months.  Some strategies have hired additional talent but as a whole the hiring has been anemic.  Furthermore with fundraising being as tough as it is, hiring has stayed weak even as the markets have started to rebound.

Positive Signs in the Marketplace

But in the few past weeks we have seen just how much money is on the sidelines and how desperate many professionals are to get that money working for them at rates better then T-Bills.  In the last few weeks, we have seen many secondary offerings being absorbed by the markets and even a few IPO’s have taken place.  All of these occurrences exhibit the hunger investors have for a better market and the fear that if they as professional investors do not invest soon they will miss a lot of the performance upside.  2009 will not be a year where a fund can end down especially if the markets are up. Being down in 2009 will be the kiss of death for many funds.

As these transactions continue to grow both in size and numbers the need for these firms to hire additional staff will strengthen. In many cases strong firms will look at this time as an opportunity to grab market share by hiring top talent and locking them up before a competitor is able to hire these experienced professionals.  This will be an excellent time for firms to arbitrage their professional talent and take advantage of those weaker firms/competitors.  

Besides having their balance sheets in order these funds will have to show their investors and potential investors that they still have a strong infrastructure and knowledge base within the firm.  If nothing else comes out of the Madoff scandal or numerous other ponzi schemes which have been discovered this year, institutional investors will demand even better transparency and strong fund infrastructures. I wrote about the institutional investors’ demands for better fund infrastructure last year; the events which have occurred over the last 6 months have done nothing but strengthen this belief among investors.  

Private Equity and Hedge Fund – Fund Raising

Furthermore as more and more professionals believe that the second half of 2009 may be a rebuilding year for the capital markets many firms that are stretched to thin at the present time will have to take on new hires and related cost to be ready for this growth. Additionally firms will actively begin fund raising again with the hope of trying to replenish some of those lost assets which have meant lower management fees for the past 9-12 months.  This increase in fund raising activity will only causes a greater need for additional hiring.

Hiring Frenzy?

I do not believe we will go back to the hiring activity levels we saw only a few years ago for quite some time. But too many firms laid off too many professionals and now firms will need to replenish some percentage of these empty offices or take the chance of losing clients and employees.  The overwhelming number of professionals that these firms need may cause a short term hiring frenzy during the second half of  2009 or early 2010.

The first professionals to be rewarded by this hiring frenzy will be those who possess skills sets which will make them valuable to their new firm on day one.  These skill sets could include a rolodex of clients, specific sector/strategy knowledge and experience creating new product lines to name a few.  Once the hires which add value on day one have been completed then these investment firms will look to hire recently graduated professionals and those individuals with more general skill sets.  Hence it is very important for every professional to truly understand what they bring to the table.

As we have started to see more hiring opportunities in the past few weeks, professionals need to stay alert and use every resource at their disposal to keep their resume in the “A” stack of applicants.  As the hiring continues to strengthen, professionals will find it to be a very competitive atmosphere among qualified applicants and hence these individuals must understand their value.  

Probably not the Best Time to Take a Vacation

Looks like it could be a hot summer for hiring.  If you decide to go on vacation, stay close to your Blackberry’s and stay on top of your game. Best of luck with your search!  For additional information about the hiring process and identifying your inner value keep your eyes open for an email soon talking about a new Webinar Series from related to these topics.  
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