Private-equity firms are recruiting workers with less and less Wall Street experience every year, hoping to beat out their competitors to hire the most impressive recent college graduates.

But some firms ae becoming frustrated by the pressure to hire such young workers and are seeking alternative ways to fill their junior ranks.

Over about 48 hours every year, hundreds of fist-year investment bankers file through private-equity offices for a battery of interviews and tests, hoping to land an offer in one of the world’s most highly paid industries.

This process, called “on-cycle” recruiting, is the traditional way that buyout firms have hired their associate ranks. Associates are early-career workers who do much of the day-to-day heavy lifting of number crunching and deal modeling, and form a key talent pool where private-equity firms look for future senior leaders.

This year’s recruitment process kicked off July 21—the earliest date ever—for positions starting in 2025. Firms hired candidates who have mostly just graduated from college and are beginning two-year bank-analyst programs, making offers that kick in after their programs end.

Some of this year’s hires had no experience working in finance, having not even begun their investment-banking programs, said firms and recruiters. Many firms were unable to fill their recruitment quotas, finding fewer qualified candidates than in past years when the recruitment push took place later.

The hectic July hiring period is a symptom of the growing dysfunction in the private-equity recruitment process, say firms and recruiters who take part in the process.

On-cycle “is not something anyone wants to participate in. It would be better for everyone if it were different,” said a person who works in recruitment at one of the 20 largest private-equity firms y assets. This year, the person said the firm as able to fill less than half its associate positions during the recruitment period.

“This year was much earlier and more hectic than years past, and everyone was disadvantaged by it starting this early,” said a separate person who works for one of the oldest and biggest private-equity firms in the U.S.

Large firms that took part in the July process include Apax Partners, Ares Management, Bain Capital, Carlyle Group and KKR, among many others, said people with knowledge of the firms’ hiring. Recruiters estimate private-equity firms likely hired several hundred associates during the late-July recruitment process.

But the world’s largest alternative-asset manager, Blackstone, sat it out. The New York firm, with more than $1 trillion in assets, opted not to participate in on-cycle recruiting this year.

“Blackstone will recruit from the banks on our own timeline, after allowing candidates to gain experience and learn about the firm” the asset manager said in a statement.

On-cycle recruiting evolved as a way for private-equity firms to find young finance talent without having to hire directly from college or train entry-level workers, which can be expensive and time-consuming. Instead, they try to poach the top performers among investment-banking analysts.

The on-cycle start date is not determined by any system, but begins when word gets out that one firm has started interviewing. At that point, other firms follow suit in a rush not to lose their top candidates.

The start date has been bumping up progressively for years. For the 2010 associate class, private-equity offers went out about 13 months before the jobs started, according to data from executive search firm Amity Search Partners, which works with alternative-asset managers. This year, the gap is almost 25 months.

“As it’s gotten earlier over the years, most firms have not placed their entire class during this process,” said Pamela Hickory Esterson, Amity Search Partners founding partner.

Firms keep starting earlier “due to fear of missing out, the FOMO effect,” said Anthony Keizner, managing partner of Odyssey Search Partners, an executive-recruiting firm. “The fear is that the smartest and best kids will get hired by your rival if you don’t participate.”

The process strains candidates too. Some with little finance experience are reluctant to interview, which shrinks the talent pool, Keizner said.

In years past, recruiters expected half to three-quarters of the investment-banking analyst class to interview for private-equity jobs. Now about one-quarter take part, and some firms struggle to fill their associate classes, he said.

“The frenzied competition is leading to a breakdown in the system,” said Keizner.

Firms are trying to diversify their sources of talent to be less dependent on the on-cycle process. Alternative approaches include “on-cycle” recruiting, or hiring at one’s own pace—which runs the risk of missing out on the most impressive candidates—or starting an analyst program rather than exclusively poaching junior bankers.

Ares Management, an alternative-assets firm with $78 billion under management, tries to balance its recruitment through on-cycle and off-cycle hiring as well as its own internal analyst program, said Kate Jenkins, head of talent acquisition for the New York asset manager.

Despite the challenges of on-cycle, Ares views the process as a proven source of top talent and a good way to introduce the firm to young professionals, said Jenkins.

“Many of these candidates are coming from very well-known, large banks, and their skill set is very strong,” she said. “But it’s not the only road to private equity and alternatives.”

However, the earlier start date of on-cycle recruiting causes more candidates to drop out of the interview process because they are not prepared, said Jenkins.

It also leads to more candidates accepting offers and then backing out, said Esterson of Amity Search Partners. The longer the gap, the more that can derail a hiring between signing the offer and the start date.

Candidates “are making a decision in July of 2023. But their lives might change by the time August of 2025 comes around,” said Esterson.