Boston continues to see a steady need for private equity talent, though the demand and compensation offered are leveling off as banks taper their personnel spending.
Boston's strong private equity market is rooted in the city's long history as an asset management center, says Bruce Johnston, TA Associates partner. "Certainly there is a lot of private equity in New York and overseas, but Boston firms are established and continue to grow," he says. "They're growing along with the rest of the private equity industry for sure."
At TA Associates - which manages $12 billion - that translates into six to eight new hires into the firm's three-year associate program. These people tend to be "hard-charging" MBAs from top schools with an average of two years experience as investment banking analysts or with consulting programs, according to Johnston. The number of hires grows gradually along with the firm.
TA also hires one or two senior people as top candidates are identified, though it could hire more if it finds what Johnston calls a "best athlete." Hired onto the partner track as vice presidents, these folks are selected for their combination of business experience and expertise in areas of interest to the firm, such as health care, technology, branded consumer products and financial services.
Although Johnston wouldn't disclose compensation packages, he echoed others who said salaries and bonuses have risen dramatically in recent years, mirroring investment bank compensation packages. However, most everyone expect package sums to level out in the face of troubled banks and a slowing economy. Johnston says the hiring cycle has been unusually tight in recent years, with candidates committing to new positions a full year before matriculating, something he expects to slow dramatically in the near future.
Specific Skills Needed
Dana Callow, managing general partner at Boston Millennia - which manages $750 million - says his firm no longer defines attractive hires as generalists, but those with skill sets very specific to Millennia's investments. This can include expertise in different sectors or business types, or languages that jive with the growing number of overseas buyouts available. "We're not looking for rookies anymore," Callow says. "Five years ago we were willing to train. Now we're looking for something more sophisticated."
Callow has seen salaries increase annually by 10 percent, which he expects to flatten to 5 percent starting this year. (Salaries at Millennia range from $500,000 to $1.5 million.) On average, private equity salaries in Boston are 70 percent of those in New York, but Bankrate says Boston's cost of living is 66 percent that of Manhattan. Bonuses at Millennia are 50 to 75 percent of salaries, and top candidates expect payouts on the sale of investments to be at least $25 million. These are people with a decade of experience, Callow notes, many of whom are operating executives who ran public companies.
Callow doesn't believe Boston as a location deters hiring the right people. "I don't think people come to Boston for the salary," he says. "They come here for a different type of experience and to get away from New York - which is what we want. We're looking for people to spend 10 years with us, not two." Also, Boston is a growth center for clean technology and energy and smaller buyouts, and firms there are active in European and family buyouts.
Ryan Moore, general partner at Grand Banks Capital, which manages $125 million and employs nine people, says the sector has recently experienced lots of successful fundraising and hiring trends reflect that. His firm is seeking a junior person with a couple years of investment banking experience and is "used to our work ethic and transaction flow." He likes people who are "Internet natives" - younger staffers who use new technology in their free time. "People in their mid-20s grew up on MySpace," he says. "It benefits us to hire people who understand the product well."
PE packages have increased by 30 percent in recent years, Moore says. But he expects that to change soon: "Today people are a bit tentative because of challenges in the market."