Women Don't Fit Into Private Equity Firms Because Male Employees Use Phrases Like "BSD" And "Balls To The Wall"

A Harvard student, Catherine Turco, was researching the day-to-day experiences of female and male African Americans in the leveraged-buyout (LBO) industry, when she discovered something interesting.

Black men have it much easier than women, black or white.

Female and male African Americans each represent only 10% of the LBO industry, and they’re employed in lower-status jobs than their white counterparts. So clearly both male and female African Americans have a hard time getting a job in the LBO industry. 

But once they’re employed, their experience changes. Turco discovered that it’s much harder for a female to fit in and advance at the firm than it is for males, regardless of race.  

Turco let us read her paper, “Cultural Foundations of Tokenism: Evidence from the Leveraged Buyout Industry.” We pulled out the best quotes and summarized her findings in the following slideshow. An abstract and the full paper are available here.

One recruiting firm's Guide to Getting a Job advises individuals without this pedigree* that ''it frankly may not be worth the effort'' to apply for a job in LBO.

*attended an elite college, worked for two years at a prestigious investment bank (or, less commonly, presti- gious consulting firm), then spent two years as an entry-level associate in an LBO firm, and, finally, attended a top business school before returning to LBO in a partner-track, profit-sharing position.

Turco discovered that it's hard for blacks to get a job at LBO firms, but once they get the job, they're treated better than women.

One reason is sports. Males fit in easily with an LBO firm's athletic culture regardless of race.

One African American male employee told her:

''Sports was the sieve through which I could connect and bond. They had firm sports teams like baseball and basketball. . . . It was really like a locker room. It had that sort of camaraderie. At night in the office, a senior guy would come out and yell 'Stop working. Let's arm wrestle.' and people would start placing bets. . . . You'd get all these goofy competitive things going.''

Women, minorities or not, can't relate as well to an LBO firm's type-A, jock-type personalities.

A minority woman noted the same thing:

''Most firms are run by and employ very aggressive, type-A, jock-type personalities. Sports can be a big part of the culture. To the extent that you weren't a football player or athlete or don't do Ironmans, that's something further that makes you different. . . . So, I do think it's easier for a minority male to integrate once he's hired.''

Women who don't watch sports can't follow office sports banter.

A white female told her:

''In LBO, I think you should check ESPN. I just think it's a question of accepting the industry you're in and choosing to be prepared or not. I know nothing about football or basketball, but if it's playoff time, I don't think it's asking too much to read who's in the playoffs and to know the star players. If you look uncomfortable in that setting--when the guys are talking about sports--because you can't follow the banter, then that's when you'll be treated differently.''

And women who don't play sports aren't invited on firm outings.

One woman noted:

''There are guys at the firm who play basketball together, and I'm never invited. I know they do serious bonding and then they talk about it on Monday at work. . . . I don't play basketball so if they asked I wouldn't go. But I hate it because I'm missing an opportunity to connect.''

So women miss out on a chance to get chummy with the boss, get the big deals, and get promoted.

Gender doesn't matter when it comes to getting invited on sports outings.

''There are guys that play golf. . . . And I won't be invited. . . . It's important to find ways to align yourself better because it's relationship-oriented in terms of who gets assigned deals.''

An African American male says:

''Honestly, women have it worse. . . . At the end of the day, it's about whether you can relate to someone. Can you talk football and bond and form a relationship? My perception is this makes it much harder for women.''

Another reason women are treated differently is more obvious: motherhood.

Here's what one white, male employee told Turco:

''It's a tough industry for women. You have to be completely, 100 per cent committed to this work. Motherhood just makes that a question mark in my mind.''

A single woman reported that her boss told her:

''I can't have you getting married or having kids. I need you committed to this job right now.''

A woman who has kids isn't as valuable to an LBO firm as someone who doesn't.

One pregnant respondent described a recent incident with her boss:

''He turned to me and lashed out and said, 'Are you even going to come back? I guess you won't even tell us if you're not. You're probably going to stay home and play with the baby.'

'He was angry. . . . He had asked me three or four times before if I was coming back to work and I always said, 'I'm definitely working.'. . . For him to ask again, to say it like he made up his mind already, I just know that now he doesn't view me as being as valuable as someone who doesn't have kids.''

One recruiter says LBO firms specify that they don't want women because they don't want to deal with them getting pregnant.

One recruiter admitted that up to 20 per cent of LBO firms direct her not to send female applicants because ''they'll get pregnant and they don't want to have to deal with it.''

One woman's solution: she didn't take maternity leave. Her pay was docked anyway.

One woman said:

''I call each of my kids my 'million dollar babies' because of how much each of them has cost me.''

Despite never taking maternity leave, her year-end bonus was substantially docked each year she gave birth.

A recruiter said:

''I can tell in a second how strong a candidate is based on his style, his confidence, his presence. If he's an alpha-male, he's right for the job.''

LBO vernacular further confirms that aggression is an important element of the ideal:

  • Senior investors are referred to reverentially as ''BSDs -- big swinging dicks''
  • Expressions used to describe the investment process are ''getting into bed with management,'' ''getting a company pregnant,'' ''looking under a company's skirt,'' ''going balls to the wall,'' and ''raping a company''

By the end of her inequality study, Turco's thesis was that gender issues are particularly salient at LBO firms.

One part of her conclusion is that there are major structural barriers to entry to the LBO industry for African American males and females.

But in the post-hire day-to-day experiences within LBO firms, gender issues are particularly salient.

NOTE: Catherine Turco got in touch with us after we ran this. Her note follows.

I'm concerned that too much is being made of the comparison of groups. This comparison was made for purely academic purposes to tease out some causal mechanisms of discrimination that scholars have been investigating for years. The 'news', in my opinion, is not that it is harder for one discriminated group than another but simply that we can, by looking at both cases in this industry, isolate some specific causal reasons why women face certain post-entry barriers to integration. The paper carefully notes that race remains an issue that minorities must navigate in the industry - both in terms of the obstacles it can pose for securing a place in the industry and for minorities' experiences in the industry post-entry.

Of course, racial issues are still alive and well.

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