CLEVELAND, Dec. 17, 2024 (GLOBE NEWSWIRE) — ON Partners, a pure-play retained executive search firm building diverse C-level and board leadership teams, recently launched its 2024 Private Equity Talent Trends Report. This report leveraged its exclusive search data in partnership with insights from HR Signal®, a platform delivering bespoke People Analytics and Predictive AI. The data disclosed five critical key trends reshaping talent acquisition and retention in today’s private equity (PE) market. The report highlights the rising compensation demands of candidates when considering career opportunities in the industry, as noted in a recent Fast Company article by Managing Partner Bryan Buck. ON Partners also identified three emerging scenarios in PE firms where transaction bonuses are used to attract and keep talent.
“Compensation expectations have risen across the board, but private equity stands out with the highest rate of increase compared to other sectors,” said Buck. “The PE industry experienced a 7.7% average rate of increase in overall compensation, according to an analysis that incorporated base and bonus compensation and excluded equity and stock options. While the venture capital (VC) sector also saw a significant increase, it started from a lower baseline, which resulted in PE’s rise becoming more pronounced.”
In contrast, research confirms that private companies showed the flattest rate of increase at just 1.7%, and public companies rose only 3.8%. This increase in PE compensation can be attributed to the sector’s focus on optimizing existing portfolios amid challenging market conditions. Due to fewer new deals on the table and heightened pressure to drive operational value, PE firms are offering higher cash to attract top talent capable of leading these crucial transformations.
According to the United States Private Equity Council (USPEC), four respective categories impact private equity salaries: firm size and reputation, professional experience and performance, economic and market conditions, and fund performance. While the industry is constantly changing and evolving, these noted factors highlight the complexities and determine how existing and aspiring professionals alike can maximize their income in the sector.
In all, the top three scenarios where ON Partners research found transaction bonuses are being leveraged to attract and retain new talent are as follows:
- Retention During Downturns: In businesses that have fallen behind original investment goals, PE firms use transaction bonuses to incentivize key executives to stay in place, even as the equity plan becomes more challenging.
- Near-Exit Hires: Transaction bonuses are used to attract executives hired close to an expected exit, as they may need more time to meet equity vesting thresholds.
- Turnaround Situations: With “turnaround” or “fix-it” scenarios becoming more prevalent, incoming leadership often inherits an underwater equity plan. Transaction bonuses ensure these new executives are compensated adequately.
Overall, according to the October Marketplace industry overview, the number of PE firms has grown from just 24 in 1980 to 17,000 in the U.S. as of this month. In addition, the global PE market was worth $579 billion in 2000 but is over $8 trillion today. As the PE industry continues to expand throughout various industry sectors, such as medical, real estate, and hospitality, the demand for qualified, dedicated executive leaders continues to increase.
To learn more about the five key trends reshaping executive talent in the 2024 Private Equity Talent Trends Report, visit https://onpartners.com/reports/2024-private-equity-talent-trends-report.
About ON Partners
Established in 2006, ON Partners is the only pure-play executive search firm building diverse C-level and board leadership teams. We rebuilt the institution of executive search in the way you work, with an approach that includes present partners who engage with clients from the first brief to the final decision, individually crafted solutions unique to each client, and an easier experience overall. Named by Forbes as one of America’s Best Executive Recruiting Firms and to the Inc. 500/5000 List nine times, ON Partners is consistently ranked among the top 20 retained executive search firms in the U.S.
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