Compensation for French private capital professionals has been stable most recently. Other highlights from this year’s report include: The 2018 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees. The medium-term view for Europe—both for the industry and for compensation—appears less clear and more uncertain. In addition to private capital firms, other financial firms—notably banks, insurers, and asset managers—are increasingly seeking the same expertise. Seeds of this trend surfaced in 2014, sprouted in 2015, grew in 2016 and matured in 2018. A private equity CFO not only has to operate as part of a leadership team working resolutely to improve business performance but also has to work closely with and deliver to demanding investors. Please note that the mean can be influenced by particularly high or low data points, especially in small sample sizes. To be competitive, investors must have strong French-language skills and be deeply plugged into local networks.
Positive investment fundamentals are very much intact. France is additionally attractive because its biggest European competitors—Germany and the United Kingdom—are suffering from an industrial slowdown and Brexit woes, respectively. This level of rigour is a necessity as it reflects the detail orientation and approach of the typical private equity investor and consequently what they will expect from the CFO. This year marks the fifth straight year of compensation gains in the private equity and venture capital industry, with 64 percent of this year’s respondents expecting total compensation levels to increase over last year, while only 5 percent expect to earn less. A CFO operating within private equity needs to have the fortitude to adapt and thrive throughout the accelerated pace of transformation a business will experience following investment. Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. This focus on detail cannot be overstated and is a principal feature of accomplished private equity CFOs. The strategy in which professionals earned the highest cash compensation varied by level, with secondaries the highest for managing partners/partners; direct lending the highest for principals; and distressed the highest for associates. The task at hand for a CFO working within private equity is to improve a company’s valuation during a broadly defined period of time. Continue, This year’s survey includes a review of private capital activity in Europe and Africa for the full year of 2018, as well as our thoughts on the major hiring trends for private capital professionals this year, an in-depth look into the structure of 2019 compensation packages, and an analysis of compensation trends in France. In 2019, 35% of respondents reported an increase in their base compared to 2018, and 39% received a higher bonus. Pitchbook looks at where venture capital firms and corporate venture capital groups source their talent. This creates time and performance pressure which can be daunting for the uninitiated but is mandatory to subscribe to within private equity. Cash compensation was highest at secondary funds for managing partners/partners for the first time in this survey. The meticulous nature of a private equity CFO is evident when applied to the forensic attitude CFOs will take to the fundamental numbers within a business. However, the real money in private equity is in the form of carried interest, which is paid around once every five to seven years, when companies that have been invested in go public. As CFOs entering into private equity will face new challenges, it is worth reviewing the traits and characteristics that are consistent with experienced and successful private equity CFOs. 16 March 2020. (Candriam, 2020), Improving Diversification with Uncorrelated Market Exposure (Nuveen, Sep 2020), Inverting Factor Strategies: No more ‘monkey business’ (FTSE Russell, 2020), Decarbonizing Everything: Climate data and portfolio construction (State Street, Sep 2020), Model Portfolio Management: Consistency or customization? CFOs with private equity expertise recognise this and welcome this level of risk exposure. 10 African Private Equity and Venture Capital Association, 2018 Annual African Private Equity Data Tracker, March 2019, avca-africa.org. 2020 PE & VC Capital Report – Participate. The medium-term view for Europe—both for the industry and for compensation—appears less clear. With French assets fetching prices and enterprise values that have exceeded 2007 levels, firms are looking to build or strengthen their operational teams to fuel value creation. 11 African Private Equity and Venture Capital Association, 2018 Annual African Private Equity Data Tracker, March 2019, avca-africa.org. We are seeing French general partners seek individuals with strong origination skills and an eagerness to compete.
This survey by Heidrick & Struggles includes responses from 440 private equity professionals working across Europe and Africa, as well as a section dedicated to private capital compensation in France. All experienced CFOs within the private equity sector are accomplished at examining the minutiae and have developed a highly detailed and analytical approach to finance. by Private capital activity in Europe was quite healthy in 2018, maintaining its solidly upward trend of the past few years. These disparities also exist within firms, with senior employees working in investment roles reaping the vast majority of the benefits.".
While title structures vary according to firm, we have divided respondents into three groups based on level and responsibility. Our 11th annual report shows another great year for PE. 8 Leah Hodgson, “No-deal means no deals? (For the definition of each group, see sidebar, “A note on role definitions.”), Private capital: The big picture (full results here), Compensation findings (full results here), All professionals: Base and bonus (full results here), Investment professionals: Compensation by fund size (full results here), Investment professionals: Compensation by investment strategy (full results here), Investment professionals: Compensation by years of experience (full results here), Fundraising and investor relations professionals: Compensation by year, 2017‒2019 (full results here), Operating professionals: Compensation by year, 2017‒2019 (full results here). There were large gains for managing partners/partners and principals at both credit and direct lending strategies in 2019 compared to 2018. All compensation figures in tables and charts are reported in EUR thousands unless otherwise noted. A somewhat longer-term view, however, reveals that cash compensation has steadily risen over the past two years, driven by positive market conditions. Managing partners/partners interact directly with management teams, lead negotiations, and are part of, or deal with, the firm’s investment committee. We believe private equity teams in Africa must be more hands-on and in tune with their respective markets than their developed-market counterparts, given the lack of reliable data. Joining a private equity company involves sharing in both the heightened risks and rewards of success and failure. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced directly from professionals working within the industry. Between 2013 and 2018, West Africa—dominated by oil-rich and commerce-heavy Nigeria—had the biggest share of PE deals by volume (26%), while multiregional transactions accounted for the bulk of deals by value (42%).12 East Africa, North Africa, and southern Africa also have generated significant levels of activity. Does it still help to have a relative in banking? 4 African Private Equity and Venture Capital Association, 2018 Annual African Private Equity Data Tracker, March 2019, avca-africa.org. We conducted an in-depth survey of 106 leading private capital firms across private equity, private debt, real estate, infrastructure and natural resources They tend to be entrepreneurial with an appreciation that both growth and turnaround situations can be riskier ventures. This report by Preqin explores the compensation and employment trends emerging in the world of private capital. In-house training continues to receive unfavorable reviews, despite last year’s movement in a positive direction.
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