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PRIVATE EQUITY HIRING TRENDS - A LOOK AHEAD TO 2023

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With significant turbulence and headwinds in the macro economy, we glance at what the Private Equity hiring market will look like in 2023, summarising findings from the latest Pitchbook and Preqin research.

Retention:

Data and statistics show that the industry has struggled with retention in recent years. Research shows that the average tenure for a private equity investor is now 4.3 years, down from 5.5 years in 2015 (Pitchbook). The churn rate for private equity firms has also increased, with 36% of firms experiencing at least one member leaving in the past year (Preqin).

Strategies:

In 2023, growth equity and value-added strategies are expected to see the most hiring activity, according to a report from Preqin. Preqin’s latest “Career Paths in Private Equity” report shows that 46% of respondents expect growth equity firms to hire in the next 12 months, while 40% expect value-added firms to do so. This is in line with recent trends: over the past five years, growth equity has been one of the most active areas of private equity hiring, with an average of 37% of firms adding staff each year.

Focus:

The report also found that 47% of respondents believe fundraising will be the primary driver of hiring in 2023. This is unsurprising given the current fundraising environment, which has seen a record dry powder and an increase in mega-funds.

Other key findings from the report include:

- 42% of respondents expect firms to hire more senior professionals in 2023

- 36% expect firms to hire more junior professionals in 2023

- 55% of respondents believe that technology will significantly impact private equity over the next five years.

Skill-set:

Data analysis has been identified as the most in-demand skill set for private equity firms over the next five years (Preqin).

As mentioned above, data analysis skills will be in high demand as firms look to make informed decisions in a volatile market. However, technology is also changing the way that private equity firms operate, and this is reflected in the skills that are being sought after. In particular, 55% of respondents to Preqin’s survey believe that technology will significantly impact private equity over the next five years.

As a result, firms are looking for professionals with experience in data analytics, machine learning and artificial intelligence.

ESG:

Finally, another key trend expected to impact private equity hiring in 2023 is Environmental, Social and Governance (ESG) investing. A recent survey by Preqin found that 78% of private equity professionals believe that ESG considerations will be “extremely important” or “very important” to the industry over the next five years.

As a result, firms are likely to increase their focus on recruiting professionals with experience in ESG investing.

Conclusion:

Overall, the private equity market is expected to experience a significant change in the next five years. In particular, data and technology are expected to play an increasingly important role in the industry. As a result, firms will be looking for professionals with experience in these areas. Additionally, ESG investing is anticipated to become a key focus for many firms, which will likely impact hiring decisions in the future.

What should you consider when looking at a new role in private equity? Get in touch with us now to discuss your future: info@altus-partners.com