Larger Funds Bring Increased Competition for Private Equity Investment Professional Talent, According to Annual Report from Heidrick & Struggles
- Progressively larger funds and new strategies are increasing competition for talent, especially at the partner and managing director level
- More than half (56%) of investment professionals reported a base salary increase in 2019; 77% saw higher bonuses in 2018
- Annual survey asks private equity investment professionals about their views on the fairness of their compensation for the first time
Dec 19, 2019, 13:40 ET
CHICAGO, Dec. 19, 2019 /PRNewswire/ -- Heidrick & Struggles, a premier provider of executive search, leadership assessment and development, organization and team effectiveness, and culture shaping services globally, today announced the results of its 2019 North American Private Equity Investment Professional Compensation Survey. The survey shares the major hiring trends and compensation data among investment professionals, including—for the first time—their sentiment surrounding their compensation packages.
As of November, U.S. private equity funds had raised $246 billion in 2019, more capital than in any other year recorded by PitchBook and up from a previous high of $238 billion in 2017. With several large vehicles expected to close before New Year's Day, the final total will likely be higher still.
"The state of the private equity market remains strong," said Jonathan Goldstein, Regional Managing Partner of Heidrick & Struggles' Private Equity Practice in the Americas. "Given the continued healthy returns in the private equity space, we feel that industry growth and compensation packages will continue to be robust. In addition, factors like the emergence of larger funds, new strategies and increasing retirement are creating more competition for talent at private equity firms, particularly at the partner and managing director level."
Additional compensation highlights from the report include:
Investment professionals received strong base salary increases in 2019.
- More than half (56%) of investment professionals reported that their base salary went up in 2019, which is slightly lower than the 59% who reported base increases from 2017 to 2018.
- Just over a quarter (26%) of respondents who received base salary increases reported an increase of more than 20% in 2019.
Investment professionals also received strong bonuses in 2018 (the last bonus period reported).
- More than three-quarters (77%) of investment professionals reported that their bonus went up in 2018.
- Fourteen percent of respondents who received bonus increases reported an increase of more than 50% in 2018.
- Bonuses are discretionary for 68% of investment professionals surveyed, with most still paid in December.
Sentiment around compensation was generally as expected, with higher-paid professionals more likely to indicate their compensation was fair:
- At the more entry-level end of the industry, almost two-thirds (62%) of associates and senior associates indicated they are not happy with their compensation while at the most senior level, only 18% of managing partners indicated unhappiness.
- Similarly, almost two-thirds (63%) of associates and senior associates felt they were underpaid, while roughly one-third (32%) of managing partners reported feeling underpaid.
- Of the 63% of associates and senior associates who felt underpaid, less than half (46%) were receiving compensation on the lower end of the scale reported in the survey. Meanwhile, of the 32% of managing directors who felt underpaid, nearly all (91%) were receiving compensation on the lower end of the scale reported in the survey.
- Of the 37% of associates and senior associates who felt fairly paid, 57% were in the top quartile among their peers.
Heidrick & Struggles' 2019 North American Private Equity Investment Professional Compensation Survey asked 895 North American private equity investment professionals to provide compensation data from 2017, 2018 and 2019. All data is self-reported by respondents and has been aggregated to evaluate trends in compensation packages, including base salary, bonus and carried interest plans.
About Heidrick & Struggles
Heidrick & Struggles (Nasdaq: HSII) serves the senior-level talent and leadership needs of the world's top organizations as a trusted advisor across executive search, leadership assessment and development, organization and team effectiveness, and culture shaping services. Heidrick & Struggles pioneered the profession of executive search more than 60 years ago. Today, the firm provides integrated leadership solutions to help our clients change the world, one leadership team at a time.® www.heidrick.com
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