Private equity showers junior staff with rewards to retain talent

Higher base salaries, more paid time off, gym discounts, travel insurance — private equity is doing all it can to retain talent as the industry weathers a prolonged slump in deals.

With rising borrowing costs making fundraising and stake exits more challenging, buyout firms have become more selective in their hiring and are focusing more on keeping their existing staff happy, a Preqin report found. The data provider surveyed 84 private capital firms globally for its findings.

While salaries were pumped up and down the ranks in 2023, those in junior and midlevel positions saw the biggest increase. Mid-level professionals got an average increase of about 10% year on year, the most among all other levels of seniority, according to Preqin’s 2024 Private Capital Compensation and Employment Review. Seniors saw about 9%.

Performance shares, which are usually reserved for upper management, are becoming increasingly popular, with almost half of the firms offering them this year, up from 24% in 2022. Cash-bonus payouts in 2023 could be muted compared with the past two years, the report said, adding that fewer firms expect base salaries to rise more than 10% in 2024.

Global deal values are down about a third this year as economic uncertainty, geopolitical tensions and a series of interest rate increases by central banks globally to combat inflation curtailed mergers and acquisitions.

Aggregate capital raised in 2023 is still following a downward trend. Fundraising reached $900 billion for the year through September, and it’s likely to fall short of the $1.4 trillion raised in 2022, Preqin’s report said. Meanwhile, the number of funds closing dropped an annualized 48%, from 4,471 in 2022 to 1,745 as of September, it said.

In this environment, staff are being offered nonsalary benefits such as student loan repayments, personal leave and car insurance assistance. Employee personal time off has increased by two days in the past two years, while vacations increased by a day for all levels except managers, who received two additional days in 2023.