Power Hitters Find Home, While Little Guys Strike Out

June 19, 2008

As corporate recruiters like to say, there is always a demand for talent. In other words, investment banks tend to follow a code similar to that of the Soprano family—you don’t whack a good earner. Not unless you’ve got a whopper of a reason.

Even in difficult times, banks try to hold on to their experienced, connected bankers. And even if the firm does trim them away—and we have seen cases of that this downturn—they likely won’t have much trouble finding another gig.

“By the time I call them for a job, they’re already employed,” Les Carter, veteran recruiter at Carter Stone & Co., told me. “And the reason these people get picked up is that they know how to close, not only clients, they know how to close interviews. That’s their talent. That’s what they do for a living.”

And where are they off to? While some big name investment bankers in leveraged finance and M&A have landed at other banks, many are, unsurprisingly, heading to the buy side, to private equity firms and hedge funds.

More than 45 bankers, traders, analysts and other executives have left the major investment banks this year to join hedge funds and private equity shops, according to company releases compiled by Bloomberg. And this count doesn’t include people who departed to start their own companies.

We’ve seen a number of examples of this recently in leveraged finance. Indeed, I spoke to a banker this week who plans to leave his post at a large investment bank and likely start a hedge fund.

A downturn “forces people to think about if they really love [banking],” another banker told me. “You love it in up years, when you get paid a lot of money, and when you get paid a little less, you have to think about whether it’s something you really like to do.”

But what of the rest of the folks out there? The administrative and back-office people, the go-betweens, and the lower level investment bankers? For them, finding a new position may not come so easy.

“It could take a year for them, and in many cases they leave the industry,” Carter said. He and other recruiters agree that many lower level folks end up shifting over to another part of the financial world, another sector, for example, or the corporate side. Sometimes, they go back to school and become something entirely different.

“It all depends on how quickly they can change their stripes and how portable their skill set is,” said Charles Watson, a recruiter with Russell Reynolds Associates. “If they can sell themselves as being able to develop quickly in a related field, they can always move to where the areas are hot.”