A $5 billion hedge fund client has just extended a job offer to a down-to-earth, great and confident senior analyst candidate after a grueling and lengthy interview/case study/references process. Our candidate, with two years of investment banking experience and nearly two years of hedge fund experience under his belt, is intent on leaving a small but successful fund where apparently the spoils are not being shared fairly and oral promises have been broken.

Our candidate is also intent on not rushing into the next situation until he feels sure he’s joining the right group and the right firm. He’s recently declined another offer and is considering a third. Our best candidates usually have two or three offers from which to pick.

I contact our client and ask if he’s going to have a congratulatory/sell lunch or dinner with the candidate or perhaps just send him a bottle of wine. His reply: “Just make sure we have a deal. Sending wine, . . . Jesus, I want to hire him, not court him.”

At that moment I knew I was dealing with a CATEGORY 2 hedge fund.

There are three categories of hedge funds that can be identified through the process of closing a search for investment professional talent: from the “either they get it or they don’t” sell-job to a fully integrated search process that includes both human resources (HR) and senior investment professionals from start to finish. These three categories are fairly neatly divided by fund size.

The $250 million-$2 billion fund

The newer fund (1-3 year track record) with good investment track records and sizable initial asset launches is most adept at the hard sell, which includes actively bringing prospective employees “into the fold” and selling them on the opportunities that are likely to occur over the next three years and the partnership track that will be available to them within the firm.

A fully coordinated search process exists where senior investment professionals are involved from start to finish. Analysts “feel the love,” and the compensation is highly competitive and often includes a higher-than-usual base salary and a higher likelihood of a bonus guarantee in Year 1.

The fund manager is typically aware that it is not realistic for someone to walk in and just “see it” or “get it.” The offer stage is usually accompanied by a lunch, a dinner, and/or significant informal time spent with a fund manager in an open discussion about the firm and the opportunity.

The potential downside of such a sell? Sometimes the sell turns out to be a little too hard, a little too rosy, and senior members in their entrepreneurial zeal might overpromise.