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Private equity is the new MBA Add to ...

Deal flow has come back and mergers and acquisitions are booming, but Canadian investment banks are finding it harder and harder to hire skilled juniors to do their grunt work.

It's not because the hours have gotten more intense -- they've always been brutal. Instead, there is new competition in town from private equity shops, especially in Toronto. Chiefly, massive pension funds have been hiring like crazy, stealing scores of juniors from the banks. The three main culprits have been Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan and OMERS Private Equity.

Historically, analysts put in their two or three years and then absconded for an MBA, ideally in a city like London or New York, or maybe at a school like INSEAD. Often they did that in hope of securing a private equity job after school. But why tack on up to $200,000 in debt if a pension fund with hoards of cash behind it is willing to hire you now?

From the sounds of it, analysts and associates are taking the bait. Sure, they endure a pay cut from banking, but the hours are so much better and those who have converted say their shops aren't nearly as political -- something this generation cares about.

This isn't to say that no one wants to do an MBA any more. Application rates are still high, and some juniors simply want a change of scenery after being hunkered down at their desks for anywhere from two to five years. But the tide is certainly changing, at least while the market recovers.

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