Preqin has partnered with FPL Associates to produce The 2019 Preqin Private Capital Compensation and Employment Review, which presents the most up-to-date data and trends on compensation and employment in the private capital industry. Here we present some of the key findings from the main publication.
Preqin estimates that there are currently an estimated 250,000 people worldwide working in the private capital industry. The overall picture for the number of active firms over time shows a clear growth trend, which is indicative of positive developments in the private capital industry as a whole. However, the rate of growth has not been constant: from 2008 onwards, the year-on-year increases in the number of firms have somewhat slowed compared to pre-GFC years.
The number of firms in the industry has started to pick up again over the past few years – notably, 895 new firms entered the market in 2017, representing over 10,000 active firms currently in the market. This is indicative of the global demand and the opportunities for employment and staff in private capital.
Employment and Compensation on an Individual Level
The operating economics, which vary according to AUM and location, also impact the remuneration available to individuals at each firm. For example, a Chief Executive Officer at a large firm (with AUM of $1bn or more) has a total remuneration package almost 3x the average total remuneration package of an individual in the same position at a smaller firm (AUM of less than $150mn). Similarly, a Chief Executive Officer at a firm headquartered in the US makes on average approximately $749,584 more in total annual remuneration than its counterpart in Europe.
Compensation on a Firm Level
In addition to compensation data on an individual level, The 2019 Preqin Private Capital Compensation and Employment Review contains analysis of participating firms’ compensation practices on a firm level.
The majority (61%) of participating firms reported that they added to the staff headcount within their company over 2017, while the smallest proportion (9%) made reductions during the year.
Firms in the study were asked about the level or function that is in highest demand from a hiring and retention standpoint; the majority (72%) of firms identified their investments team (deal team) as the most in demand, with one respondent stating that working within this team requires a “specialized skillset that is hard to find,” and another commenting that “very few finance professionals have the true entrepreneurial skills needed to assess the opportunities effectively.” Despite this sentiment, one respondent claims that this area “has experienced the highest growth rate within our organization over the past 12 months.”
Thirteen percent of surveyed firms identified functions in corporate operations (i.e. Accounting, HR, IT and Legal) as being in the greatest demand in terms of a hiring/retention standpoint, due to the resources required to scale up a company and grow its departments. One participant recognized that “there is great demand on retention of corporate operations, as those positions have less incentive (carry) and long-term career growth, as well as typical market job-hopping.”
The 2019 Preqin Private Capital Compensation and Employment Review is the industry’s leading compensation guide, detailing employment practices and compensation packages for 106 private capital firms and includes compensation data for more than 90 positions, 20 of which are real estate specific.
For a limited time only, we are offering 20% of the price of the full publication. Click here to see more information and to download sample pages of The 2019 Preqin Private Capital Compensation and Employment Review.