Readers respond: Why don’t more women lead deal teams in private equity?

Private equity has made strides in attracting more women into the industry at the start of their careers, but still has a long way to go in promoting women into leadership ranks on deal teams. The deal function of firms is still dominated by men for a variety of reasons.

We explored the dearth of women at the top of deal teams in the March issue of Buyouts. The article seemed to strike a nerve and we received a lot of feedback from readers, some commiserating, some sharing their experiences, others pointing out what we were missing. Below is a selection of feedback. Don’t hesitate to reach out with your thoughts to cwitkowsky@buyoutsinsider.com.

LETTERS TO THE EDITOR:

Pamela: Great article on women in private equity and lack of deals led by us. I can speak to the Canadian market and my personal experience as a minority in both gender, race and as a mother. I had enough with the biases, inequalities and lack of opportunities so I started my own investment firm and took a bet on myself.

Alexandra: I understand the points you are making but I think something is missing. A lot of men that are in those leadership roles also have families and they are able to put in all these hours into their work because they have a partner at home taking care of the kids. I agree that companies should try to accommodate for a more balanced lifestyle but in addition to that women need support from their spouses/partners at home if they want to be able to have both a family and a thriving career. In my personal experience it is too often that I have seen women in leadership roles giving up having kids or a family for their career but this doesn’t seem to be the case for men. Perhaps that is the real question people should ask themselves: Why can men have both a career and family but women have to choose?

Celina: Thank you for writing about this timely subject. I don’t believe for a second that increasing the base will lead to more women at the top in deal leadership. I have been at various organizations and seen women and men being hired in equal percentages at the junior levels and it doesn’t translate. I think getting rid of the facetime culture and letting women work on their own hours will drive women in the senior ranks of deal teams. I’ve led a deal from home during the pandemic and it works. I’ve woken up at early hours and stayed awake all night to get deals done but when I can do that and drop my son off at school and pick him up and give him dinner/bath, then I’ll make it work. If I can’t have that flexibility, I too might step away. I think it is a combination of facetime culture and unpredictability of deal work that makes women step away. Then the added bonus of, it is not as fun to always be the only woman in the room. I wonder if the deal teams need women, when we are able to diversify other areas of the business. Do we need more male teachers or nurses? In any event, look forward to reading more of your work going forward. Congrats on tackling such difficult/complex topics with an honest voice!

Hollie: For starters most senior women I know in PE have kids. Including deal partners, the few that there are. It would be more useful to write about why that’s worked than just generally say that having kids or wanting to is why women aren’t in the deal business. Tons of jobs have schedules that appear unappealing in the career-building years to the people who aren’t actually drawn to them. I don’t want to do 10 years of medical training to be a surgeon or learn to be a fighter pilot or a million other things. But that doesn’t mean those jobs aren’t jobs women excel at doing. It just means a lot of people, men and women, don’t want them. And indeed the schedule might be a reason. And indeed there are jobs that do not lend themselves to being a great parent at various points. So be it.

We can all come up with long lists of jobs that women hold that appear challenging to do while having kids, yet women keep showing up and doing those jobs in increasing numbers, while having kids. I’m happy to send a list. It makes no sense to talk to a lot of women who do not want to do legal docs and excel at midnight, for any reason including schedule, and conflate that with them not wanting to do that job because it’s hard to have kids and do it. And for men to say they don’t hire women because they might across a long career take a few months to have a baby is ludicrous. If a man breaks his leg skiing and needs surgery and bed rest for three months, is he some sort of loser who must leave the industry and maybe never should’ve been in it? Not that I’ve seen. This is absurd logic. There will be more women in senior roles in PE when firms recruit, mentor and promote them into those roles. And as you correctly note today, at this point I only see that happening when LPs demand it. For years these large PE firms have promised change and haven’t delivered. Aren’t the leaders of large-cap buyout funds the smartest, richest people in the world? Isn’t that what we have all been told for decades? Yet they are the only ones in America who can’t figure out how to hire and promote women into real leadership roles? This defies logic. Let’s dare them to be great. I know they can do it!!

Constance: Men have been prominent in most financial/deal roles for years and years. The excuse has always been women want to start families and therefore cannot be relied upon. In my honest opinion having kids has nothing to do with why there are very few women in PE. In my experience, men do not like women telling them no. Meaning, if a man likes a deal and a woman does not, for valid reasons, she is wrong and emotional, and just does not get it. Men’s perception of how a woman “should be” is the problem. Two men can have a discussion over a deal, curse and call each other names, then shake hands and brush it off. A man and a woman can have the same discussion, but it will be labeled an argument, and it never ends the same way. The man will constantly complain to his superiors about the woman, will refuse to work with the woman because she challenged him and will make it difficult for her to advance. The woman is usually berated internally and super-rarely supported.

As long as the woman is in a subordinate position it can work, otherwise, it is rare to find men who truly do not care about the gender of their colleagues, i.e. everyone is treated the same – bad, good or otherwise. Women have to constantly watch their behavior and it can be quite exhausting. A woman can literally behave the exact same way a man but would be labeled a “B”, too emotional or too aggressive. Even when one points out that the behavior of the woman is exactly the same as the man’s, the woman is still wrong. Women perceive things differently and pick up on cues that men never see. They can be a huge asset when evaluating transactions. Men should take advantage of the skill set a woman brings to the table and quite likely the portfolio will be much more successful. Today, it is mostly a no-win situation. Maybe in 50 to 75 years things will be different; as more women step up and teach their boys who really runs the planet.

Tori: Thanks for bringing this issue to light. Being home during covid and with International Women’s Day on [March 8], I have been reflecting on this. I think the excuse that women step back to have families and therefore self-select out of the industry is false. Having had two children I can tell you that my motivation to work is higher than ever and traveling for work is almost like a holiday away from everyday responsibilities (also “long hours” at the office are a breeze after raising babies). I feel that at a young age women are conditioned that at some point they will have to make a choice, that it’s impossible to “have it all.”

We are also warned that we will face gross sexism, be passed up for promotion and make 75 cents on the dollar to our male counterparts – not exactly great selling points for women looking to enter the industry. Maybe if we change the narrative, we won’t scare all these poor girls away. Women with babies might find it more convenient to return to work remotely given nursing needs and lack of sleep (easier to squeeze in a 30-minute power nap). Where I think covid has had an unfortunate impact is in places where schools and daycares have closed. Coming back to my earlier point, women are expected to pick up the extra duties that go along with homeschooling and sadly it’s impossible for one person to have these two day jobs. Honestly, I never thought about any of this until I had children – I fully expected to embrace motherhood and want to be home all the time and in my case, I still love my job and luckily have a husband that is happy to share childcare responsibilities. I know others have different experiences.

Michelle: Just want to thank you for engaging in this topic in the newsletter! You’re absolutely right that we need to focus on the crux of the power structure in PE, which is senior investment roles, investment committee roles and firm leadership for women. Until we see the numbers equalize more significantly there, the work is unfinished.

Bree: I’ve heard a lot of managers of private equity firms say they hire females into the associate ranks, which are typically the most junior, lowest-paid roles outside of support such as administrators. We were having the same conversation over a decade ago, and now in 2021 there have been enough women associates hired into private equity firms at the associate level for many, many years, but they haven’t been promoted to partner and often get sidetracked after a couple of years on the deal team into operations or investor relations roles. LPs can do their part by putting their money where their mouths are, and funding firms that have female representation in decision-making ranks (deal partners, investment committees, etc). There is plenty of support among senior men for hiring women into support roles, even senior support roles such as chief administrator, but unfortunately there is very little accountability and support for tracking and backing increased female representation among the highest paid ranks that drive businesses such as deal partner, managing partner, group head, CEO and head of sales.

Instead of simply stating that diversity is important to them, LPs could ask more specific questions in their operational due diligence that don’t allow for their managers to get around the issue with easily manipulated statistics which count the overrepresentation of females in support roles. For example, in their operational diligence LPs could ask, “What is the proportion of women with voting power on the investment committee?” Or “What is the ratio of women to men in front line or deal partner positions?” A lot of private equity firms wouldn’t be able to say they have any female representation at all in investment decision-making roles. We can always just continue to congratulate ourselves on progress made at the lowest-paid, junior levels. We’ll then continue to see managers move women into non-decision-making roles, and pay them significantly less, even if not on a cash basis, but where the gap in pay becomes dramatic when factoring in the large amounts of equity compensation that are offered to senior dealmakers.

Anonymous: Sure raising families is ONE reason, but there are plenty of women in PE (& VC) who’ve been sidetracked/kicked off the deal team partner track without choosing the “mommy track” themselves. A major reason I see is lack of having a champion among senior partners. A champion can advocate mid-level deal managers’ jobs well-done and protect them from a few minor mistakes that any human beings (no matter how highly performing) are bound to make and from unfair perceptions, if any. This relationship happens naturally/casually for many male dealmakers. Instead, I’ve seen and personally experienced getting deals stolen, being shut out of important meetings after organizing them and having the most minute actions (or unsatisfactory behaviors in the eyes of some senior partners) blown out of proportion in the performance review process. Dealmaking is hard enough of a job, but when one’s accomplishments are diminished while faults are magnified, it’s near impossible to advance to the top. The lucky few women who find a champion also have to navigate the minefield of sexual harassment as senior deal partners tend to be male and the close relationship between mid-level managers and their champion can confuse the latter about the nature of their relationship. This can be fixed ONLY if the most senior partners of a firm make gender diversity a TOP priority, set actionable measures and monitor their progress diligently, and lead by example themselves.

Comments have been lightly edited for clarity.