The current economic situation is adding pressure to the Private Equity firms staffing challenges

For the past 27 years MM&K has been running the Private Equity and Venture Capital Compensation Survey. In the past couple of years we have seen unprecedented demand for junior investment professionals and a commensurately significant increase in their remuneration – a factor also noted by a number of our contacts.

75% of firms across our survey have expressed their intention to increase the number of investment professionals in both 2022 and 2023.

The highest salary and total cash (salary plus bonus) increase in 2022 went to employees at Vice President level, with the total cash increase being above a staggering 50%. It is evident from the results that all the roles below partner level received significant increases this year.

60% of firms are expecting to increase their Partners’ salary this year and 90% of firms expect to increase salaries for Junior investment professionals. It remains to be seen what those increases will be.

More firms are hiring MBA graduates this year. However, the average starting salary has decreased compared to last year and is set around £90,000. In US this figure is around $150,000. Firms expect to pay bonuses around £50,000 on average.

Overall, payroll costs have increased significantly in the past couple of years, while the level of management fees is staying the same, with an industry standard of c2%. It remains to be seen how firms will combat this challenge and whether it will result in a management fee increase or an increase in the number of the deals / deal size.

In the next couple of months, we will be launching our Pulse Survey, results of which will show what happened to staffing levels at the year-end and how compensation has changed at the latest review date. Over 60% of firms reported their review month is between December and February.

If you are a partner or an executive in a Private Equity / Venture Capital/ Infrastructure or Real Estate Fund Management business and you believe that your firm might benefit from participating, please contact Margarita Skripina or request your questionnaire here.

To find out more about MM&K’s 2021 PE/VC Compensation Survey click here.

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