Early insights into results from the MM&K 2020 PE and VC Compensation Survey
September 28, 2020
MM&K is in the midst of conducting its 2020 UK and European PE and VC Compensation Survey and is seeing some interesting trends that are coming through from the submissions that have come in so far.
It has been most encouraging to see so many European PE and VC firms reaching final closes on their latest fundraisings in recent weeks and months. And it also appears that deal activity is on the rise again as PE firms have begun to have greater confidence in an eventual economic recovery in the UK and mainland Europe.
The combination of these factors has, it seems, encouraged firms to take a bullish view of the near-term future and this is borne out by some interesting statistics coming out of our survey.
63% of participating firms have indicated that they have increased the size of their investment teams in 2020 and 57% have increased the number of their back-office staff. And looking forward 64% of firms anticipate increasing the size of their investment teams in 2021. Only a very small number (8%) expect to see a reduction in their investment professional numbers in 2021.
Earlier in the year I commented on the fact that some firms had indicated they were reducing their bonus levels in 2020, partly with a view to needing more cash to help in their recruitment efforts. We have not yet been able to analyse the extent to which this is true, but it is interesting to observe that two-thirds of firms expect to see bonus payments for 2020 performance to remain pretty much at the same levels as those that were paid for 2019 performance. We find this an amazing statistic as one would have expected many more firms to be cutting bonus levels given the low amount of PE and VC deal activity since March.
As far as salaries are concerned, a significant majority of firms (86%) are expecting to increase the salaries of their investment professionals at the next review date. This is less of a surprise as firms will continue to strive for having attractive base pay levels to ensure they are able to retain and recruit the best talent. Having said that, the expected levels of salary increases are fairly modest, with 5% for investment staff and 3% for back office staff.
All the evidence that we are seeing suggests that the UK PE and VC market remains in good health and is optimistic about what the future holds for 2021.
For further information about the issues raised in this article or on how to participate in the MM&K/Holt 2020 Survey, please contact Nigel Mills.