Story of the Year: LP Brain Drain

I knew allocators had a tough job. But I didn’t know how tough it was until I started exploring the topic of LP hiring trends, or what we came to call the “LP Brain Drain.”

Private equity funds haven’t just grown in size, they have also grown more complex as co-investments, continuation funds and financing methods. Plus, there are always pressures stemming from board members, stakeholders and other relationships. That has led to those on the LP side of private equity feeling overwhelmed, overburdened and overworked – and to incredible turnover. This has resulted in fragmented relationships, a loss of institutional knowledge and inexperienced staff members taking on more responsibility.

Private equity managers gave LPs a lot more work to do. Now, as many have reached the breaking point, LPs don’t have the means to make quick decisions, further exacerbating the slowdown in the current fundraising environment. While remote work and other changes may alleviate some of the pressure, none of the pain points have truly been removed. I expect more of the same to come this year.