MiddleGround Capital, which closed its debut fund late last summer above it hard cap, plans to launch a search for a junior-to-mid-level professional to work on deal origination and investor relations.
The ideal candidate would have three to eight years of professional experience and a background in a related field such as investment banking, private equity or management consulting. Christen Paras, head of business development and investor relations, said that the search “will be getting kicked off pretty soon.” The new hire will report to Paras (pictured).
MiddleGround Capital has been on a deal-making, fund-raising and hiring tear since its founding in March 2018 by Partner and CCO Scot Duncan, Partner Lauren Mulholland and Partner John Stewart.
Ever wonder why so many private equity firms strive to raise ever larger funds? Simple. Larger funds generate more income–more management fees for certain, and more carried interest so long as their deals turn out to be sufficiently profitable.
More management fees translate into higher individual pay, since firms don’t hire at the same pace that they expand their assets under management. And that has led to some remarkable differences in pay for folks doing similar work at large and small shops. More evidence for these disparities comes from the 2019 employment report released by Columbia Business School this fall.
In his early career José Miguel Guzmán has worked in positions at one of the largest PE shops in the world, and one of the largest pensions–putting him in a unique position to compare and contrast the experiences.
From 2013 to 2016 Guzmán served as an associate at New York, New York-based Cerberus Capital Management. Then, from 2016 through earlier this year, he served as a private equity investment officer for the New York City Employees’ Retirement System. I caught up with Guzmán this week to get his insights into the advantages and disadvantages of working for GPs and LPs. Below is a record of our conversation, edited for length and clarity.
Women make up about one in five employees at private equity firms around the world–far from parity but still an improvement over two years ago when data providerPreqin last studied the question. At senior levels, women make up barely more than one in 10.
According to a fact sheet released in advance of its full report, Women in Alternative Assets 2020, Preqin found that in the two years since its 2017 study, the percentage of women in private equity has grown to 19.4 percent, up from 17.9 percent–see chart above.
Jay Heilbrunn, president of The Distributor Board Inc and a director on the boards of private companies and organizations over the years, recalls a board meeting at a company whose biggest customer represented a substantial slice of its business.
“What’s the plan for taking $2 million out of expenses next week?” Heilbrunn recalled asking the managers. “They kind of looked at me like this is really a strange question.” Heilbrunn said he persisted: “Well, when this customer leaves, we’re going to have to jettison $2 million of expenses, and where’s it going to come from?”
Olga Kaplan, a technology investor at Goldman Sachs, recalls a time earlier in her career when she was in her 20s sourcing new investments in b-to-b software. That meant spending a lot of time with male executives 20 to 30 years her senior.
“I would say probably once every two weeks there was some sort of inappropriate comment…or an offer to fly to Paris in a private jet, which happened multiple times,” said Kaplan (seated at left in picture). Then again, she added, “It’s a lot better now than it used to be.”
Private equity firms, scrapping for every possible advantage to meet stratospheric investor expectations, continue to binge on the hiring of operating professionals.
In a recent survey-based report, executive recruitment firm Heidrick & Struggles found that as investment professionals spend more time looking for deals, and less time tending to portfolios, “PE firms are adding generalists, industry specialists, and functional specialists from the middle level through the most senior ranks.” Two of the most popular hires? Head of talent and CFO of portfolio operations.
Turning Rock Partners, a New York City-based shop that closed its debut fund earlier this year at more than $400 million, plans to expand its nine-person payroll over the next 24 months by adding up to two investment professionals and a client services professional.
Managing Partner Maggie Arvedlund (pictured, second from right) said that the investment hire or hires would likely be at the junior or mid-level, although the firm is flexible. “We like to meet exceptional talent, and we can often flex up or down for the right individual,” Arvedlund said. The firm is committed to building a team with varied backgrounds. “We are a woman-owned business, and we take [diversity] seriously,” she said.
A large and growing number of private-equity firms have at least one full-time deal originator on staff. But it can still take the skills of a consummate originator to break into the field at the junior level.
All told, 59 percent of the 144 private-equity firms that participated in this year’s Deal Origination Benchmark Report have at least one business development professional, or originator, whose full-time job is relationship-building with deal intermediaries or business owners. That’s up from 47 percent in the 2017 edition.
The report is produced every year by deal-sourcing platform provider Sutton Place Strategies. All the participants are clients of Sutton Place Strategies, so the sample may not be representative of the broader industry. (Sutton Place Strategies is a consulting client of mine.)