Buyout Market Employs Few Women, Minorities

Why don’t more women and African-Americans work in the buyout business?

Based on my knowledge of industry demographics I’d estimate that at least 500 buyout firms operate in the United States, employing well over 5,000 investment professionals. I don’t know any sure way of getting to the percentage of women and African-Americans. But 10 years of attending industry events, interviewing sources, and reading trade publications tells me that the percentage is astonishingly small.

The premier issue of Portfolio magazine, published by Condé Nast this spring, carried an article investigating why so few women hold deal-making posts at the country’s top buyout shops. At the 10 largest buyout firms, together employing some 1,000 investment professionals, the author could find only four “partner-level women” that “are in charge of putting deals together.” I doubt the author would have had much more success finding African Americans in these posts.

Over the next several months Buyouts Magazine plans to take a closer look at why the diversity of people in the buyout market doesn’t more closely match that of the population at large. I’ll also try to learn what is being done about it, whether that’s enough, and what more could be done. Senior Editor Ari Nathanson kicked off the effort by interviewing Willie Woods Jr., managing director of ICV Capital Partners, a New York-based mid-market buyout firm that counts several African Americans among its partners. Edited excerpts from the interview follow below, and I encourage you to visit our sister Web site,, to read the full transcript.

Buyouts: Why isn’t the buyout market more diverse?

Woods: The private equity industry started out as a cottage industry, where a few people with relationships convinced the institutional market that there was an opportunity. And as the industry has grown, it has tended to focus on people who all look alike because of those relationships. You either have to have known somebody at a private equity firm to get a job there, or you had to have a relationship with an institutional investor to be able to raise money for yourself. So that’s the origin of this industry, and all those people happen to be middle-aged white men. …

Buyouts: What misconceptions to you run into in this industry concerning African Americans and other minorities?

Woods: We always like to say that we’re in the business because we’ve got a great team that’s got all the pedigree—Harvard Business School, Stanford University, Morehouse College, investment banking backgrounds. If you were to take our firm and match it up with any firm we would have identical or better pedigrees. But there’s always the perception out there that something was done special for you. … [Another perception] that concerns me is [one of] double standards. … If KKR blows up a deal, nobody assumes that TPG is going to blow up a deal, too. In the minority community, though, you tend to get grouped together. People assume that if one minority group is unsuccessful, then the whole group somehow can’t be successful, which can’t be further from the truth. Just like in the general market, all the minority firms have different strategies, different approaches to the market. …

Buyouts: What advantages are there for buyout firms that employ minorities as deal-makers?

Woods: As a minority investor, you tend to have more in common with lower middle-market companies, because lower middle-market companies see themselves as the underdogs. The managers and management teams of those companies see themselves as [people] who had to overcome odds, had to work hard, [and] have been successful against all the odds. So when they meet someone like us, they naturally assume all of us grew up in an environment where we had to overcome odds and were successful in spite of it—whether it’s true or not. …