Private Equity Employment and Compensation – 2012 Overview – January 2013

by Laura Duce

  • 16 Jan 2013
  • PE

The decrease in private equity fundraising in recent years is unsurprisingly emphasised by a slowing growth in the number of active firms. 2012 saw a small decrease in the total number of active private equity firms compared to 2011; however, at around approximately 4,800 firms in total, the amount is still similar to the previous year. Additionally, the number of new private equity firms launching in 2012 fell in comparison to 2011, with 146 new firms launching in 2012 as of November, compared to 278 throughout 2011.

Including those private equity firms that do not or have not yet raised a private equity fund, the total number of private equity firms in 2012 was over 8,000. These 8,000 firms currently employ an estimated 89,000 individuals around the world. Preqin’s data shows that the firm type to employ the largest number of people is buyout; buyout firms employ roughly 25,500 people worldwide. Venture capital-focused firms employ more than 20,000 people, and private equity real estate firms employ an estimated 14,500 people.

As expected, firms with assets under management (AUM) of $10bn or more have the largest average number of staff, standing at just over 270 employees; however, these firms have an average of only 10.8 employees per $1bn of the firm’s AUM. Firms with AUM of less than $250mn have an average number of employees of around nine, but this equates to an average of around 77 staff members per $1bn of AUM.

In 2012, base salaries remained at their current level or slightly increased; 42% of firms interviewed reported no change, and 45% of firms reported an increase of between 1% and 10%. Only a very small proportion (1%) of firms reported a decrease in base salaries between 2011 and 2012, compared to 7% reporting a decrease between 2010 and 2011. Only 19% of firms that participated experienced a decrease in bonus payouts compared to the previous year, 47% reported no change, and 34% reported an increase in their bonus payouts.

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