Hiring of partners cools but, below that level, surges, study suggests

All told, fewer than one in 10 (9 percent) North American buyout and growth equity firms responding to a survey this spring and summer said that this year they planned to add investment professionals at the partner level; for those that did, the median anticipated increase in staffing at that level was 5 percent.

By contrast, one in five (20 percent) sponsors said they actually did hire investment professionals at the partner level last year; for those that did the median increase at that level was 15 percent. For those not hiring at this level the vast majority have been holding such staffing steady; for example, just 3 percent of respondents said they planned to reduce partner-level investment staffing this year.

Results of the survey appear in the just-published study, 2013-2014 Holt-MM&K-Thomson Reuters North American PE/VC Compensation Report. Some 39 buyout and growth equity sponsors participated altogether, with median assets under management of $679 million, bottom-quartile AUM of $273 million and top-quartile AUM of $1.9 billion.

At the same time, North American buyout and growth equity firms appear to be hiring more aggressively in the junior ranks than they did last year. Nearly two in five (39 percent) sponsors responding to the survey said they planned to add non-partner investment professionals this year, with a median anticipated increase in staffing at that level at 15 percent. Fewer than a third (29 percent) of firms said that last year they actually did increase staffing at the junior investment professional level, with the median increase in staffing at that level at 14 percent. Just 3 percent of respondents said they planned to reduce staffing at the non-partner investment professional level this year.

Brant Moxley, managing director of Pinnacle Group International, a Carefree, Ariz.-based executive recruitment firm, said that this year his five-professional firm will likely end up placing several dozen associate to VP-level professionals at small and mid-market buyout funds. That is up 40 percent to to 50 percent from 2011, when industry hiring seemed to bottom out, he said.

Hiring has been particularly strong among real assets investors, energy investors, debt investment teams, and mezzanine firms, said Moxley, adding that such hiring often goes hand-in-hand with significant fund closes. “Fundraising drives the bulk of incremental hires” in which firms are adding staff rather than just replacing staff, said Moxley.