Private equity funds are cutting partners amid a challenging period for exiting investments

Despite tough times for private equity firms, Charlie Hunt believes private equity jobs are as popular as ever with young bankers, and is expecting things to be better next year.

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Private equity firms are facing their toughest year-end in 2023, experiencing the most challenging period for exiting investments since 2008. Traditionally adept at cost optimisation, these firms are now turning their attention inward, with senior executives becoming the primary targets for job cuts. This departure from the norm, favouring senior partners over juniors and mid-level staff, echoes trends not seen since the 2008 financial crisis.

Notable funds are undergoing a comprehensive spending review, leading to reported staff cuts at various levels, including reductions at senior levels. Signs of retirement, voluntary or otherwise, are apparent, with key figures leaving.

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Cost-cutting initiatives are focusing on senior positions due to the significant compensation at that level, with partners at major private equity firms earning $2.2 million annually, according to Heidrick & Struggles' survey. Amidst these challenges, private equity firms are adapting by diversifying into alternative asset classes like infrastructure and private credit and emphasising secondaries, where one fund purchases assets from another. 

Despite the tribulations, Charlie Hunt, Director of UK, says private equity jobs are as popular as ever with young bankers. "It's a robust industry and funds are still hiring. We're expecting things to be better next year as there's now more clarity and people can make plans."