Source Talks is a series where we discuss deal origination with PE and M&A pros, in collaboration with David M. Toll.
In this interview, David speaks with Erin Carroll, Partner at BraddockMatthews, on trends in hiring and compensation for Business Development professionals at Private Equity firms.
Erin start off telling us about your role at the firm
So BraddockMatthews, we’re a retained executive search firm and we focused exclusively on the buyside. I spend the vast majority of my time focused on private equity recruiting, and my role really is to lead a search from cradle to grave, to work with the client, help the client build out kind of an ideal candidate profile or pool of candidates, and then also execute the search through completion.
Tell us how busy it’s been placing origination professionals at private equity firms for you this year.
Going back, I mean, we’ve been very active in business development recruiting, for over a decade. And the first probably five years or so of that decade, we average probably three to four searches a year. That has tripled in the last five years. If you look at the last five years, 20,20 was definitely different, I think, based on the landscape and covid and uncertainty. But this year will be 50 percent north of where we were in previous years, 2019, 2018, 2017.
Firms are raising more capital and they are maturing and evolving and they’re investing in these different centers of excellence, business development included, with a level of competition for sourcing, in the market and having to deploy all this capital. I think it’s a natural kind of maturation cycle from a private equity firm. I also think what’s driving it is the increase in team members. Many firms have stood up this function and there might be a single person in the role today where now they’re adding that second and third person
Erin, what trends are you seeing in compensation for mid-level and senior level BD professionals? Give us a give us a feel for that.
I think from a trend perspective, specific to business development, beyond kind of increased cash compensation, carry is definitely normalizing and it’s almost kind of becoming expected as I think the function evolves and really becomes an integrated part of the investment team. Carry is definitely becoming normalized.
I also think another trend that we have seen, and this is even going back like ten years ago, it was very different many times compensation, the incentive compensation was based on metrics, deals, close capital deploy. I think more it is trending away from at least from a pure metrics perspective, there’s always some level of accountability, but we’re finding firms really compensate more similar to their investment peers in a discretionary situation. We are finding that the gap is closing between mid to VP, principal level business development professionals and their investment team members. It is pretty close, it’s almost par at this point.