Private Equity: Put up a 4% equity piece. Borrow 94% from a stupid bank that doesn't know any better. Buy a company. Heads: You win. Tails: The bank loses. Congratulate yourself on a job well done.

The day we move back to hard currency is the day this business is instantly shuttered forever.

All of the bright minds left to go crunch numbers to justify making ever larger numbers (compensation). Meanwhile, first lupus drug gets approved in 55 years and it's a real crapper (crunch the numbers on its cost and efficacy). That's where the minds need to go, need to be directed, encouraged.

Could some of these PE firms hire some women, perhaps?

I can confirm this trend is SUPER early this year: http://www.wallstreetoasis.com...

because only people who work really really hard should be able to afford coke and strippers

A shortage of analysts driving up the salaries? Wow, time to tell the universities to quit wasting their time and money training engineers or doctors and get on with training people for the really important things in the world.

Isn't it collusive (and illegal) for these firms to make informal agreements about competing and/or paying for talent?

CY - you missed 2%. Perhaps your hard currency could fill this gap.

Is it just me; or is this reeking of silly hype designed to propagate workaholic drones without any sense of context? I'm all for Ayn Randian styled free markets, but ultimately there needs to be some balanced character development of said future players and media hack-job articles of this sort do nothing that is ultimately constructive.

The path driven by exit opportunities is getting shorter.

Could some of these PE firms hire some women, perhaps?

Why?

Land grab with thousand(s) competing for 50 slots?

"and they’re talking about what fraternity they were in.”

Puke

Just what does "talent" mean? The ability to make meaningful improvements on Black-Scholes or to build valuation models that are always right (in hind sight)?

What the heck does it mean to be a talented M&A analyst? A 4.0 GPA from an Ivy? (becaise clearly, it can't be based on any real demonstrable skills since these top talents have barely worked). Or maybe it's "fit."

I must be missing something because it makes no sense whatsoever. All this from an industry that admits that its value is highly debatable.

Getting the best undeveloped property is the best investment.

Who's the cut-throat jerk at Bain Capital that started the process way early this year?

From someone who's been through this whole song and dance...

the competition is for the most pedigreed candidates... all of these people are incredibly driven and excel in everything they do and they always have... they graduated top of their class from Andover/Hotchkiss etc..., graduated top of their class from Harvard/Princeton and as class president and captain of a varsity team. Then they moved on to Goldman Sachs or Morgan Stanley and among the sea of incredibly driven peers, they still stood head and shoulders above. How can you stand out within 6 months? Well, they pick up things in a matter of weeks that it takes others 6 months to learn, they build on top of that and understand bigger picture concepts of deal making and value creation that most of the other top of their class Ivy graduates don't understand.

They are the people you meet every once in a while and are almost disgusted by how it seems they were born to be the best at everything they do.

It may be easy for you middle America community college dropouts to hate on these kids, but they are the ones building the US economy. American doctors and engineers haven't built the most complex and successful economy in the world. We're not a superpower because of vaccines (which foreign scientists/drs developed) or Indian and Chinese engineers that come here to get an education.... we're a superpower because of our economic system.

Also... PE firms manage hundreds of billions of dollars. The social security system that will inevitably go bankrupt and the fiscal policy that would get an individual arrested for kiting checks will and has done absolutely nothing for this country. PE firms on the other hand manage public servants retirements/401K's/pensions... thats what people can count on.... I personally have no hope of getting social security I'll pay millions of dollars into along the course of my life... it simply won't be there when its my time and the gov't will turn their hands up at me and shrug their shoulders and it'll be the PE companies that doubled my money every 5 years that will give me back my life savings and then some.

If you guys are against private equity so much, why not write to your 401K plan manager and pension plan administrator and tell them you demand your monies not be invested in such evil enterprises such as Dunkin Donuts and J. Crew... you'll forgo a 20% annual return on your investment and stick to the 1% the US Treasury provides... or the 7% the overall stock market returns.... put your money where your mouth is.

Hey MH (#17),

PE and our financial system are merely parasites on the technological and other industries that truly drive our country. Nobody needs PE or investment banking. They have failed repeatedly at their purported ordainment to efficiently allocate capital. All they do is skim money, and they are permitted to do so for no other reason than because they are institutionalized. They could, in fact, easily be replaced by effective government programs if the sniveling money lenders hadn't purchased the good faith of our legislators.

And, by the way, Social Security taxes are capped at around $6,600. So, unless you plan to work for at least 160 years, you aren't putting "millions" into the system. Thanks for your splendid financial analysis though. It makes the rest of your post very credible.

The majority of private equity people are utter morons. No management or operational skills, and very little in the way of financial skills. They all follow the herd (make up some assumptions in the model, little equity, lots of debt, pay dividend to oneself, flip, or declare bankrupty - either way, money is made). Real talent, the ones that know what they're doing, either stay in investment banking or move to hedge funds or corporate development.

Yea,I wonder what these superstars put on their college applications vis a vis future aspirations:
"I want to do long hours of mind-numbing work which is, intellectually, way below what this high-priced education will qualify me to do just so I can position myself to be a parasite to the economy and society, paying 15% tax on carried interest."

Rather than hiring proven, experienced analysts, these companies are picking good prospects for on-the-job training (post-graduate training, if you will). The expectation is that the analysts who prove to be the best will be promoted, while the others will move on to other firms. But all are expected to benefit and to remain lifelong fans of the company, thus contributing to its stature and success in the industry.

Karl Marx would have loved it: capitalists doing their best to destroy capitalism.

Jeez MH, check the returns across investment styles, adjusted for survivorship bias, then go spouting off about your superiority. And put down the Ayn Rand for a moment (yeah, I read them all to when I was young) and realize just how social security functions (hint, the don't keep your money aside for you for later). Think about the rarely mentioned benefits of a social safety net that help(ed) propel our economic system. Think how mobile it has made our workforce. Take a moment to think a little deeper before you go back to "creating value".

@MH #17 - Do you write for the Colbert Report? If not, you'd be real good at it.

Thanks for the tip. Time to call up my 401K plan manager to tell him to put all my money in those pillars of the American economy, Dunkin Donuts and J. Crew.