Buyout firms cool hiring plans

The market’s stutter in the latter half of 2011 has resulted in more than half of US private equity firms (58 percent) putting on pause any plans to increase employee headcount in 2012. 

BDO’s annual survey of private equity executives revealed 44 percent of firms had increased their rosters in 2011, a slight uptick from the 42 percent of firms who said they had expected to do so in the professional services firm’s 2010 survey. 

However, the difference between expected hiring and actual hiring in 2011 was more pronounced for firms of a certain size. 

The biggest mismatch was for firms managing $500 million to $1 billion in commitments. At the end of 2010, around half (55 percent) of GPs in this category expected to hire more employees in 2011, but 68 percent had actually done so when asked again one year later, suggesting better than expected performance for mid-market firms last year. 

Lee Duran, a private equity partner at BDO, suggested this was the result of a relatively active mid-market arena and the more fluid nature of these firms when hiring or shedding in-house operating partners.  

However, while 48 percent of firms managing $250 million to $500 million had expected to increase staff levels in 2011, only 36 percent had actually done so, according to the latest survey. 

The study canvassed the opinions of some 100 US-based private equity executives from a diverse range of firm sizes.