Editor’s Letter: Private equity is slowly moving toward greater diversity

It’s perhaps inevitable that we would write a story on women in private equity and receive a nasty anonymous email in response.

I won’t go into the details, but suffice to say it wasn’t supportive of women. To be sure, the nasty email was only one of many responses we received on our work — all of which (save the anonymous email) were positive or constructive in how we should approach this issue. That sort of feedback is greatly appreciated and helps us do a better job.

The anonymous email was a learning experience for me because I had not previously worked on a subject like women in private equity in any in-depth way. One nasty email isn’t an indictment of the entire industry, but the fact remains that private equity has a long way to go before it can be considered inclusive.

Shortly after our women in private equity feature was published, data provider Preqin released a new study on women in private equity . It found the percentage of women in senior roles at buyout firms has declined from last year. Just 7.3 percent of senior positions at buyout firms are held by women, down from 7.5 percent last year and 9 percent in 2014, Preqin found.

The numbers get a bit better when looking at private equity overall, including buyouts, venture capital, real estate and infrastructure. Women hold 12.6 percent of senior private equity roles, up from 11.7 percent in 2015, Preqin said.

We reported recently the numbers were improving at the very top of the private equity industry, where the biggest firms have been growing increasingly progressive around attracting and retaining talented women.

Unfortunately, the trend trails off in the middle market and beyond. Among smaller firms with five or fewer senior employees, women average 9.6 percent of senior roles, Preqin said. That’s less than one per firm, which suggests there are still a “sizeable number of smaller firms with no female senior employees,” Preqin said. That number goes up as firms get bigger. For firms with more than 20 senior employees, women represent 15.3 percent on average, according to Preqin’s numbers.

“The industry as a whole must continue to work to improve the employment rates of women at the highest levels,” Preqin said.

We talked to numerous sources on this issue, and the problem seems to start when women get to the middle of their careers, when they might expect to move into senior ranks. This is the point where men seem to climb past women.

It’s not clear why that is. One source said managers promote other managers who are like them — look like them, talk like them, think like them. There probably is something to that, though I feel like younger generations of managers have been taught to at least be aware of this bias.

The flip side of this is the motivation provided by women in senior positions to younger women seeking to move their way up the ladder. Said one source, “mentoring younger folks and spending a lot of time on the issue of education, just knowing that there are successful people that look like you in a certain industry is enough to provide motivation and inspiration to pursue that goal.”

That makes me hopeful this situation will improve, even at the gradual pace the industry is now moving.

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