From partnership to wedded bliss

Would you be better off working for a partnership than owning stock in a megalithic investment bank? Maybe.

Partnerships have had a good press in recent weeks. First there was Hugh Sloane, founder of hedge fund Sloane Robinson. At 58m, Sloane earned what the Sunday Times dubbed "the biggest pay packet in Britain". Next it emerged that rival hedge fund Cheyne Capital Management is to become a limited partnership in an effort to lure investment managers.

What is it that makes partnership status so appealing? Cheyne is being tight lipped on the subject, so we asked a few people with first-hand experience of the matter.

Robert Colthorpe, co-head of the financial institutions group at corporate finance boutique Europa Partners Limited (and a former director in investment banking at Deutsche Bank, Soc Gen and ABN AMRO), told us partners feel closer to being owners of the business than mere shareholders do: "There is probably more certainty and more permanence in a partnership arrangement. Unlike a bank where you have an employment contract, a partnership involves you entering into a contract with each of the other partners."

This partnership deed governs your entry, exit and remuneration, says Colthorpe - the only downside being that it can be hard to back out of.

This doesn't appear to be putting people off. The head of hiring at one of the Big Four accounting firms (all partnerships) tells us she's frequently able to entice people from banks with the promise of partnership status. Most have been working in product control.

"You don't tend to leave a partnership," she says. "Staff turnover is very, very low. I haven't seen anyone leave to join a competitor and I don't believe we've ever made any partners redundant."

Is this the ace up Cheyne's sleeve? Not only will its partners receive a healthy share of the profits, they'll also be wedded to the company for life.