MARKET INSIGHTS

Private Equity Update 2023

Amidst the turbulent macro economy, we now turn our attention to the predictions for the Private Equity hiring landscape in 2023, based on the latest research from Pitchbook and Preqin.

Employee Retention:
Recent data and statistics indicate a struggle with employee retention in the industry. According to Pitchbook, the average tenure for a private equity investor has decreased to 4.3 years from 5.5 years in 2015. Furthermore, Preqin’s research reveals that 36% of private equity firms have witnessed at least one member leaving in the past year, leading to an increase in the churn rate.

Hiring Strategies:
In 2023, the most active hiring activity is expected in growth equity and value-added strategies, as stated in Preqin’s “Career Paths in Private Equity” report. The report highlights that 46% of respondents anticipate growth equity firms to engage in hiring within the next 12 months, while 40% foresee the same for value-added firms. This aligns with the recent trend where growth equity has consistently been an area of significant hiring, with an average of 37% of firms expanding their workforce each year.

Focus Areas:
Fundraising is expected to be the primary driver of hiring decisions in 2023, according to 47% of respondents in the report. This projection comes as no surprise considering the current fundraising landscape, characterized by record dry powder and the rise of mega-funds.

Additional key findings from the report include:

– 42% of respondents anticipate an increase in hiring of senior professionals in 2023.
– 36% of respondents expect more junior professionals to be hired in 2023.
– 55% of respondents believe that technology will have a significant impact on private equity over the next five years.

Skill Requirements:
Data analysis emerges as the most sought-after skill set for private equity firms in the next five years, as indicated by Preqin’s research.

As previously mentioned, the demand for data analysis skills is expected to be high as firms seek to make well-informed decisions in an unpredictable market. However, technology is also reshaping the operational landscape of private equity firms, leading to a shift in the desired skill sets. Notably, 55% of respondents in Preqin’s survey believe that technology will have a profound impact on the industry in the next five years. Consequently, firms are actively seeking professionals with expertise in data analytics, machine learning, and artificial intelligence.

ESG Considerations:
Furthermore, Environmental, Social, and Governance (ESG) investing is projected to significantly influence private equity hiring in 2023. A recent Preqin survey reveals that 78% of private equity professionals consider ESG considerations to be “extremely important” or “very important” to the industry in the next five years.

Consequently, firms are likely to place greater emphasis on recruiting professionals experienced in ESG investing.

Conclusion:
In summary, the private equity market is poised for significant transformation in the next five years. The increasing reliance on data and technology is expected to reshape the industry, necessitating the recruitment of professionals well-versed in these areas. Additionally, ESG investing is anticipated to become a focal point for many firms, influencing their hiring decisions in the future.

If you are considering a new role in private equity, we encourage you to reach out to us to discuss your future prospects.

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