THRONSBERG x PLATOW BRIEFING
... and the salaries on offer.
The private equity industry has always been renowned for its lucrative compensation packages. The more experienced the investment professionals, the higher the salary—with "carry" (carried interest, i.e., a share of the portfolio’s value appreciation) serving as a decisive factor. According to a recent study by Banking Consult, analysts at PE firms can expect an average base salary of between €70,000 and €120,000. On top of that, however, comes the bonus (ranging from €77,000 to €180,000).
Associates can look forward to a total compensation of nearly €200,000 to as much as €480,000, though this upper limit is likely to be found primarily at mega-funds such as KKR. Directors, who typically boast 8 to 10 years of PE experience, earn between €475,000 and €910,000 annually. For Managing Directors and Partners, total earnings often range between €660,000 and €1.8 million.
But how difficult is it currently to land these highly coveted PE roles? After all, it is safe to assume that the prolonged downturn in the PE market has left its mark on funds' hiring behavior.
"On the one hand, we have clients who remain focused on growth and are strengthening their team structures through the targeted hiring of experienced professionals," says Constantin Theodor Trapp, Managing Partner at executive search firm Thronsberg. On the other hand, there are funds that are more heavily impacted by current macroeconomic conditions or exhibit a lower deal flow, making them more cautious when it comes to new hires. The focus of hiring has shifted as well. "We are observing an increased demand from funds for HR advisory services that go beyond mere talent acquisition. Employee retention and personal development are steadily gaining importance," Trapp reports.
A Managing Director at Russell Reynolds currently sees demand for new talent coming from sources such as foreign funds seeking to enter the German market. "There is currently a great deal of movement, particularly at the Partner level," she told PLATOW. The expansion of investment teams in recent years has been complemented by a growing interest in professionals focused on "Value Creation" and "ESG," Trapp adds. Through this, funds are building the necessary resources to drive value appreciation in their portfolio companies, even in challenging times.
The most popular sectors from which financial investors recruit remain investment banking and management consulting, says Nienstedt, with candidates possessing consulting backgrounds currently slightly more in demand due to the overall emphasis on value creation. "The prestige of investment bankers remains unbroken, though depending on the investment strategy, candidate profiles with specific sector expertise or restructuring experience may be preferred," Trapp adds.
In short: funds continue to seek the absolute best of each cohort—individuals who bring intrinsic motivation, commitment, an entrepreneurial spirit, teamwork, and, needless to say, top-tier technical skills. "At the same time, top candidates are becoming increasingly selective. In their search for the ideal setup, they are highly willing to hold out and not simply accept the first offer that comes their way," Trapp concludes.
Thank you to PLATOW and Caro Kassella for the interview and the opportunity to discuss current recruiting trends in the private capital industry.
Read the full article here: https://www.platow.de/archiv/der-platow-brief/der-platow-brief-ausgabe-vom-23-04-2024/private-equity-worauf-fonds-beim-recruiting-derzeit-achten/