Private equity firms, facing shrinking asset values and tough financing conditions, are trimming staff in mature markets, but are also looking to hire in growth areas so that they deliver the returns investors seek.
Shrinking fund sizes, crisis in the euro zone and hopes for emerging markets growth are all redrawing the global private equity map, determining the locations and sectors in which buyout firms hire and fire staff.
The industry boomed last decade as investor appetite created ever larger pools of capital, allowing firms to expand and cast their nets further and wider for deals. But in the financial turmoil, many buyout groups are now retrenching.
"This is still an active jobs market, the industry is focusing on niche businesses and smaller transactions and looking for senior advisors to succeed where the deals are," said Todd Monti, who manages the global private equity and venture capital practice of headhunting firm Heidrick & Struggles.
The total capital garnered by private equity funds globally that have reached final close so far this year is about $240 billion, compared with $275 billion raised last year, according to market research firm Preqin.
The crunch has been most obvious in Europe, where a brief renaissance in private equity deals in the first half has stalled and the gloomy outlook is forcing some to reassess their approach.
Among the highest profile changes, TPG reshuffled its senior team in Europe, with co-head Philippe Costeletos taking a step back from daily duties and partner Matthias Calice leaving the firm by the end of the year.
But it is likely to be the satellite offices in European cities that come under the greatest pressure to close down.
"I think people are going to rein in on that if fund sizes shrink," said one private equity managing partner.
Vestar Capital recently closed offices in Munich and Paris as part of a plan to focus back on the United States. And struggling mid-market group Cognetas has shut its office in Frankfurt and will close its London office later this year.
In line with the wider finance sector, the private equity jobs market has been more robust in Asia, where firms are actively hiring even as they shed tens of thousands of jobs in other regions, thanks to the continent's economic resilience.
Buyouts in Asia-Pacific, excluding Japan and Central Asia, total $33 billion so far this year, up 54 percent from a year ago, compared with 9 percent growth in Europe and 36 percent in the Americas, Thomson Reuters data shows.
But there is a caveat. Language and cultural skills are key to new hires in Asia, as global and local private equity funds build teams to invest the capital flowing into the region.
"Limited partners are allocating a larger percentage of funds to Asia, and with that (private equity firms)are opening offices in the region," said Julian Buckeridge, managing director for Strategic Executive Search based in China.
In contrast with Europe, where satellite offices are coming under pressure, the capital flowing to Asia is allowing firms to create new bases in places such as Singapore to provide a springboard into Southeast Asia.
In October, KKR appointed former Singapore government minister Lim Hwee Hua as a senior adviser and the firm is expected to locate a deal team of three in the region early in 2012 - KKR previously covered Southeast Asia from Hong Kong.
With firms such as TPG Capital and CVC Capital Partners already well established in the region, Blackstone Group LP (BX.N) is also mulling an expansion.
"We are seriously thinking of expanding our presence in the Southeast Asia region in terms of people on the ground and investment focus," Michael Chae, Blackstone's regional head, told the Reuters 2012 Investment Summit this week.
DIVERSIFICATION IS KING
The global shakeout will also create winners in the west. Buyout houses that have grown into private asset managers, such as Blackstone, KKR and Carlyle Group, are actively recruiting in areas such as credit investment and real estate.
This diversification, combined with the fee-based remuneration structure of private equity funds, has helped shield the pay of dealmakers from the economic headwinds battering the financial industry.
Incentive compensation in the U.S. private equity industry excluding carried interest is expected to fall between 0 and 5 percent in 2011, compared with plunges of up to 30 percent in investment banking and 45 percent in fixed income, according to compensation consulting firm Johnson Associates.
With competition for capital from institutional investors intensifying, major private equity firms are also ramping up their fundraising, increasingly bringing operations in-house instead of relying on others for their marketing.
"Private equity firms used to raise money every five years, now they fundraise everyday. Good capital raising professionals are in strong demand," said Joseph Healy, who co-heads the private equity recruiting operations of Korn/Ferry International Inc.
For those unfortunate enough to find themselves out of work, or just looking for more job security, there are options.
Sovereign wealth funds and pension funds, with aspirations to do more deals directly and cut out the private equity middlemen, could gain as firms shed experienced staff.
"Some of those people may well be happy to be employed by a sovereign wealth fund and have a more conventional salary, knowing that there is oodles of money to invest into deals," said David Currie, chief executive of Standard Life Capital Partners.