Navigating the Compliance Landscape in Private Equity
The regulatory environment for Private Equity is becoming more intricate, with new rules and requirements always emerging. Navigating this complexity demands a proactive approach, meaning staying on top of changes and embracing continuous learning is as important as ever.
Robust compliance practices aren't just about meeting minimum standards; they're about mitigating future risks, avoiding financial sanctions and fostering confidence.
Why is compliance important?
In today's world, where a damaged reputation can lead to financial setbacks, having a strong compliance framework is like having a protective shield against unexpected challenges. Private equity operates on a global scale, crossing various jurisdictional boundaries. As portfolios grow internationally, compliance ensures that operations meet the diverse regulations of different regions. Compliance teams work to achieve key regulatory goals to protect investors and ensure that markets are fair, efficient, and transparent. This makes compliance a crucial factor in boosting investor confidence. A firm commitment to regulatory adherence showcases dedication to transparency, integrity, and ethical business practices.
Additionally, in the eyes of the law, and regulatory boards, private equity funds are often responsible for the compliance of their portfolio companies, in what is known as “successor liability” – in other words, it trickles down from the top, and strong frameworks could and should be put in place both at General Partner and corporation level.
Additionally, in the eyes of the law, and regulatory boards, private equity funds are often responsible for the compliance of their portfolio companies, in what is known as “successor liability” – in other words, it trickles down from the top, and strong frameworks could and should be put in place both at General Partner and corporation level.
How does compliance aid the success of Private Equity firms?
There is a strong link between successful firms and a strong compliance function. As regulations constantly evolve, the best private equity firms stay ahead by embracing these changes and taking a proactive approach. This not only helps them meet current standards but also prepares them for future regulatory shifts. While oversight is primarily the responsibility of the compliance officer or legal team, it should be a collaborative effort across the entire business on a day-to-day basis. Compliance is more than just a regulatory necessity; it's a cornerstone for sustainable growth and ethical leadership in the private equity space.
From our perspective, we have seen the compliance market become more and more buoyant in recent years. A number of firms have recently hired at the Associate – Manager level, where this individual will likely cover a very broad range of generalist tasks. Additionally, as is visible through our 2024 compensation report, compliance base salaries have steadily increased this year.
From our perspective, we have seen the compliance market become more and more buoyant in recent years. A number of firms have recently hired at the Associate – Manager level, where this individual will likely cover a very broad range of generalist tasks. Additionally, as is visible through our 2024 compensation report, compliance base salaries have steadily increased this year.
What skills are required?
From a candidate's perspective, generalist compliance skills are transferable within the private markets and alternative investment space. Tangible skills include exposure to regulatory monitoring, KYC/AML requests, due diligence, anti-financial crime, providing advice and counsel, horizon-scanning and providing firm-wide training, among others. From a personality standpoint, you need to be adaptive, have an excellent eye for detail and be headstrong; ease with chasing people up is always helpful.
If you are interested in a compliance role within funds or would like to speak about the market please get in touch with Dean Terry.
If you are interested in a compliance role within funds or would like to speak about the market please get in touch with Dean Terry.
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