More junior private equity roles but more competition
Burgeoning funds and the use of auctions to allocate deals are encouraging mid-market private equity firms to increase their intake of juniors. But recruiters say it's as hard as ever to land a job.
"Junior private equity roles are up 15%-20% on last year," says James West, head of the private equity and venture capital at recruitment firm Astbury Marsden. "Private equity activity is up, and more deals are going to auction, which can be more labour intensive."
The value of global buy-outs rose 39% in the first quarter of this year, to $126bn, and the mid-market has been one of the beneficiaries. Recent deals in the sector include the sale of Paragon Healthcare to mid-market player HG Capital. A recent study by accountancy firm Grant Thornton found nearly half of mid-market private equity firms plan to focus on new investments in the second half of this year.
Ian Armitage, partner and chief executive at HG, told Financial News the company has hired additional staff to cope with higher work volumes. These include five junior associates so far in 2006.
The growing use of auctions, for which funds have to do prior due diligence on potential targets with no guarantee of success, is contributing to the need for extra staff, said Armitage: "You need to put larger teams on deals."
Despite the increase in hiring, West says it hasn't become any easier to get a foot in the door of mid-market private equity. If anything, given the increased junior corporate finance headcount at investment banks, he says it's become harder: "There are more investment bankers now than there were two years ago. By virtue of that, there is now a larger pool of talent to hire from."
Following increases in base pay and bonuses, West says investment banks now pay junior staff considerably more than private equity firms. But he says this hasn't dissuaded bankers from wanting to work in the industry: "Compared to banks, private equity funds offer better work life balance and better long-term rewards."
