Remuneration and Market Dynamics in Private Equity: UK & Europe vs US Perspectives (2025 MM&K-HOLT Compensation Survey Insights)

UK & European Private Equity: Navigating Market Pressures

The UK and European private equity market in 2025 continues to face a complex macroeconomic influences, including interest rate pressures, valuation uncertainty, and constrained exit activity. In H1 2025, European deal activity declined by 18% to 3,182 transactions. Interestingly, while fewer deals closed, the total exit value fell 40%, reflecting longer holding periods and a recalibration of valuations. Fundraising remained selective, with 56 funds closing for a combined £46.0bn in commitments, demonstrating the continued scarcity of capital in a cautious market.

Compensation & Structure
Despite these market headwinds, firms remain focused on talent retention through competitive compensation packages. The 2025 MM&K PE/VC survey shows:

• Median committed capital across funds rose 38% to £2.9bn, highlighting a trend towards larger fund sizes.
• General Partner (GP) commitment requirements are now a standard practice across Europe, reinforcing alignment between senior managers and investors.
• Base salary growth across investment roles ranged 0–7%, while non-investment roles increased 0–6%.
• Total cash compensation for non-partner investment roles rose by an average of 8%, indicating a strategic approach to retain critical investment talent despite slowing deal activity.

Insight: Even as deal volumes soften and exits are fewer, UK and European firms continue to invest in human capital. Rising cash compensation demonstrates a clear commitment to retaining top talent and maintaining organisational stability.

Download a preview of the European report here

US Private Equity: Capital Depth Amid Macro Pressures

In the US, private equity benefits from deeper capital pools and larger fund structures, yet macroeconomic pressures have moderated fundraising growth. In H1 2025, the market raised $250.2bn, marking a 13% year-on-year decline. Average fund sizes fell slightly from $526m to $499m, while 3,763 managers competed for total commitments of $749bn, reflecting a highly competitive fundraising environment.

Compensation & Operational Metrics
US firms continue to manage costs and operational efficiency while rewarding top performers:

• GP payroll as a proportion of revenues averaged 56%, with a wide range across firms from 37% at the lower quartile to over 76% at the upper quartile.
• Management fees remained relatively stable: 0.8% for LBOs and 1.0% for VCs, with median fees for recent funds at 1.4% for LBOs and 3.7% for VCs.
• Hurdle rate adoption remains standard at 8% for LBO and Growth Equity firms, while the proportion of VC funds employing hurdle rates rose to approximately 50% from 25% in 2024, reflecting increasing sophistication in fund structures.

Insight: US private equity compensation is strongly correlated with fund scale. While top-tier roles continue to command premium pay, mid-level and operational compensation reflects more restrained growth, showing how firms balance competitive talent retention with operational discipline.

Download a preview of the North American report here

For further information, please contact Margarita Skripina margarita.skripina@mm-k.com or Surveys@mm-k.com.

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