The past week has seen a couple of notable additions and departures in the private equity industry. Earlier this week it was reported that Richard Hurwitz, a long-time fundraiser at Sun Capital Partners, had left the firm. Hurwitz had joined Sun in 2005 was an integral part in the raising of its fifth fund, which closed on $6 billion in 2007.
Meanwhile, Advent International announced that Bruce Barclay, a managing director with responsibility for fundraising, is leaving the firm to focus on more direct private equity investment activity. It is not yet known if Barclay, who managed fundraising on Advent’s €6.6 billion Global Private Equity VI fund which closed in 2008, will join a competing firm or found a new venture.
However not all funds are losing people: Providence Equity Partners announced it is bringing on former GMAC chief financial officer Robert Hull to take over the same duties at the firm in April.
Until recently, human resources consultants said they hadn't seen many new hires in the industry, simply because people were “bunkered down” for the crisis. But now that it appears that firms are hiring and firing again, some GPs are rethinking their approach to compensation and retention.
One aspect of this that firms are evaluating is how to handle pay cuts, when they are necessary. While some are cutting across all levels of the business, others are targeting pay reductions based on performance. Meanwhile, the senior people are some firms are voluntarily taking on a bigger share of the cuts in order to keep the junior talent from leaving.
Meanwhile, firms like Providence that are building up their back office will have to decide whether to give these new professionals a piece of the carry. As firms grow, giving new hires a piece of the carry can lead to an undesirable dilution of carry throughout the firm. And as firms expand into new lines of business or add staff to the back office, sometimes giving out carry doesn't make sense for the job description.
While the options available for addressing these issues are myriad, it seems the all-for-one and one-for-all ethic that has characterised private equity for decades may be diminishing.