GUEST COMMENT: The big trends now in private equity recruitment

eFC logo
Gail McManus

Despite the economic conditions, we saw relatively stable recruitment in private equity across Europe in 2011 and increasing demand in some emerging markets. In Europe, we saw a shift in the types of roles recruited for rather than any increase in volume. In particular, there was increased demand for fund raising, investor relations and fund investing experience at all levels with more modest levels of hiring in the direct investment teams.

Nevertheless, the direct investment demand for associates soaked up a raft of 2009 bankers and by the end of the year European recruiters were struggling to put strong shortlists together from this depleted analyst pool. Looking forward, the 2010 bankers now have a bit more experience and they are starting to make their appearance on recruitment shortlists. The increased uncertainty experienced in the banks at the end of the year has resulted in some analysts and associates feeling increasingly threatened and thinking about their future. We saw their uncertainty reflected in increased enthusiasm for private equity roles.

We also saw mid-market private equity interest in big four lead advisors and financial due diligence managers throughout the year and we had a sense of improving quality from these backgrounds.

In associate recruitment, the strategy consultants are usually in least demand. However, they came into their own towards the end of the year when clients across Europe wanted to bring another angle to their largely financially-focused teams with a consultant hire. This resulted in some relaxation of the criteria for financial modelling skills and a broader focus on commercial and operational experience. We fully expect this trend to continue in the first quarter of 2012.

Outside Europe, the Middle East has picked up and Asia has been busy.  Latin America has also fuelled recruitment growth with the emerging markets of Brazil, Mexico and Columbia in particular all developing their private equity infrastructure. One of the largest areas for growth in these markets is the need for strong managerial skills to complement fast growing portfolio companies.

In the senior market, there have been relatively few partner level hires. Mid-level VP / Principal roles have been more prevalent and we’re delighted to have worked on over 50 senior and mid-level roles in the year.  We’re expecting to see more senior level experience coming into the market in 2012 as funds decrease in size. But it remains to be seen how much demand there will be for their level of experience.

Looking ahead, we expect moderate and stable demand in Europe in the first quarter with increasing demand from emerging markets as the year progresses. A strong track record of achievement will continue to be the overriding determinant in the recruitment process and, as always, no matter how few or how many roles there are, talent will always be in short supply.

Gail McManus is founder and managing director of PER, a recruitment firm focused on the needs of the private equity industry. This article first appeared on her blog.