Relative to their size, smaller private equity firms offer more job opportunities, but if money is your main motivation it’s best to target the larger companies.
Making the switch into private equity is notoriously tough (and ever-more popular), so it helps to hedge your bets.
Smaller firms employ more people relative to their assets under management, according to figures provided by research firm Preqin. Private equity companies with less than $250m in AUM employ an average of just 13.8 people, but that is 111.6 for every $1bn. This figure gets smaller as firms get larger, to the point that the private equity behemoths with $10bn or more employ an average just 9.4 people per $1bn in AUM, even if average headcount is 227.2.
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The point, says Preqin, is that appears that smaller firms require more manpower for each buck, so employment opportunities there are relatively more plentiful. However, Preqin says “the operating economics of the largest funds, with higher income from management fees are often more favourable for their managers”.
So, yes, you’ll earn more in larger firms – from the outset, and substantially so at the senior levels in most funds, as the table below shows.