Remuneration trends in the Private Equity Industry: UK / Europe vs N. American perspective

2024 Private Equity landscape in UK/Europe:

Although the post-COVID momentum has started to diminish, European private equity (PE) demonstrated a robust resurgence in deal activity during the first three quarters of 2024. The total value of deals increased by an impressive 17% compared to the same period in 2023, despite a 9% decline in the number of transactions. This highlights a clear shift towards larger, more substantial deals dominating the market. As of 30 September 2024, the UK & Ireland accounted for 26.5% of all deals in Europe.

During the first half of 2024, the number of exits across Europe declined significantly, with only 480 exits recorded—representing a 27% drop compared to the same period in 2023. Despite this reduction in volume, the total monetary value of these transactions proved resilient, decreasing by just 4% year-on-year. This disparity highlights a notable increase in the average value per exit, reflecting a market shift towards higher-value transactions within Europe during H1 2024.

2024 Private Equity landscape in N. America:

According to PitchBook data, General Partners (GPs) closed 7,346 deals in 2023, with a total value of $645 billion, reflecting a notable decline from 2022 when 8,755 deals were closed at $915.1 billion. Within this, private equity accounted for $282.1 billion in 2023, down from $306.6 billion the previous year. However, the exit environment showed signs of recovery, with H1 2024 exit value increasing by 15% compared to the same period in 2023.

This improvement in exit activity is providing investors with much-needed distributions, offering support for new fundraising efforts. That said, a more significant increase in deal volumes will be necessary to further enhance fundraising conditions.

So what does these trends mean for the remuneration trends in Private Equity industry.

Our recently published reports concentrate on the UK/European and North American markets, providing comprehensive insights into the adopted remuneration policies and quantum, not only within Private Equity but also Venture Capital firms. More than 120 firms participated in our 2024 survey, providing valuable data on more than 5,300 individual incumbents.

Private equity firms usually charge investors management fees ranging from 1.0% to 2.5% of committed capital, with smaller funds often charging higher percentages. Management fees are also higher during the investment phases of funds due to the higher workload. In North America, around 57% of general partner fees (revenue) find their way into payroll expenditures, while in the UK/Europe this figure is 60%.

Interest in hiring MBA graduates continues to decline, with a 10% reduction in MBA hires in North America and a 3% decrease in the UK and Europe. As a result, the overall proportion of firms hiring MBA graduates now stands at 47% in North America and 37% in the UK and Europe. This trend highlights a shift in hiring priorities and potentially signals changing employer expectations in these regions.

When comparing year-on-year salary increases among professionals at both Partner and Non-partner levels, US Private Equity firms witnessed a remarkable 18% surge in total cash (2024 base salary plus the most recent cash bonus) at Partner level this year. In contrast, salary increases in UK/Europe were more moderate, with the average median increase in Investment Partners’ total cash pay of 2%.

When it comes to staffing levels, just over half of firms are planning to increase the number of investment professionals in 2025. Additionally, 39% of firms are aiming to expand their support functions, reflecting a broader focus on both core investment capabilities and operational infrastructure.

For more insights into the 2024 MMK-Holt Private Equity and Venture Capital European Compensation Report, please click here.

For more insights into the 2024 Holt-MM&K Private Equity and Venture Capital N. American Compensation Report, please click here.

For further information, please contact Margarita Skripina.

Sources:

Deal activity data: PitchBook 2024 European PE Breakdown;

Remuneration data: 2024 MM&K – HOLT Private Equity and Venture Capital European and N. American Compensation Reports.

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