PE: is anyone actually hiring?

Per this weekend's WSJ:

Private-Equity Labor Market Returns to Earth

Private equity’s labor market is showing a split personality, with aggressive hiring and layoffs taking place at once, say people who work with buyout firms on staffing.

The demand for top private- equity talent is a tick lower than during the post-pandemic boom, when firms furiously added staff to keep up with a record pace of deal making and fundraising.

That wave of activity has subsided, and the industry for about a year has been in its most serious slowdown since the period after the 2007-09 recession. As a result, some private-equity firms have slowed hiring or laid off some employees, to cope with a potentially longer-term period of muted activity.

“In the past few years, they needed bodies,” said John Rubinetti, a partner in the private- equity practice of executive- search firm Heidrick & Struggles. “Now they are taking a more critical eye toward cost.”

While the pace of hiring has slowed from last year, it remains strong by historical standards, recruiters say. There are more job seekers and fewer openings than during the boom years, but that hasn’t led to declines in pay, they say.

Sixty-five percent of private- equity professionals said their pay increased last year, according to a report from executive- search firm Eastward Partners. Total compensation ranged from $146,000 for analysts to $943,000 for senior vice presidents, directors and principals, a separate East-ward survey conducted this year found.

Private equity “may not have caught up yet with the headwinds the larger labor force is feeling,” said Brett Vecchio, head of private equity at New York-based Eastward.

The most sought-after types of workers have changed, however. Asset managers are hunting for experts in private credit—which the largest firms view as a growth area amid the decline of traditional buyouts—as well as in distressed or special-situations investing, which typically come into favor when markets fall. Demand is also high for operating partners, Rubinetti said.

While there have been some layoffs by private-equity firms, they have been on a far smaller scale than the cuts that some technology companies and banks have made, Rubinetti said.

Private-equity firms typically run leaner operations than banks and so have less need to cut jobs during slowdowns. But some have laid off about 5% to 15% of their staff, said Sasha Jensen, founder and chief executive of Jensen Partners, an executive-search firm for alternative-asset

managers. She didn’t specify which firms have cut workers.

The private-markets downturn has been deepest for technology-focused funds. SoftBank Group said last year it would cut 30% of its Vision Fund employees, and early-stage technology investor Y Combinator in March announced 17 staff cuts involving its late-stage investing team. Among private-equity firms, Partners Group Holding in Switzerland cut about 20% of its Asia private-equity team.

The slower hiring and occasional layoffs follow an extraordinary period of job-hopping and staff-b u i l d i n g . Overall, 17% of private- equity professionals in the U. S. changed employers in the 12-month period through March, and the number of available workers rose 6%, Eastward said in its recent report.

The largest firms led the hiring. Last year, Blackstone expanded its workforce by 24%, to almost 4,700, while KKR’s head count grew by 28%, to 4,150, according to Securities and Exchange Commission filings.

Over the past 12 months through early June, the top hirers have been smaller firms that added employees on a smaller scale. HarbourVest Partners added the most employees in the past 12 months, at 135, followed by H.I.G. Capital, Insight Partners and TA Associates, according to East-ward data.

Hiring has also skewed toward more senior roles, as firms have shifted from trying to handle a huge influx of work to strategically building businesses. There were 283 private-equity hires at partner level in the past 12 months, more than any other level, and 240 at managing partner, according to Eastward’s data. At lower echelons, there were 249 hires at associate level and 141 at analyst.

While private-equity fundraising has fallen, demand for fundraising specialists hasn’t, said Jensen, whose firm focuses on marketing and investor- relations professionals. More than 1,000 marketing professionals changed jobs at alternative-asset firms in the first quarter, about the same as a year ago, Jensen Partners said in a recent report.

65%

Percentage of private-equity professionals whose pay rose last year