In private equity, compensation lags for women in senior positions
June 16, 2021
In general, 2020 proved to be a good year for private equity dealmakers.
Even as deal value and volume slipped slightly compared to the year prior, 57% of respondents to Heidrick & Struggles 2021 North America Private Equity Investment Professional Compensation Survey saw an increase in their base pay, while 67% said their bonus also increased.
But for some, the increases were not yet enough to level the playing field. While the study, released Wednesday, found that pay was roughly the same when accounting for gender and race in more junior positions, the trend broke down when it came to senior leadership.
Men in managing partner, partner, and managing director positions made an average of about $1.4 million. Women made about $845,000 in those same roles—about 40% less.
“Our feeling is that this is more of a reflection of the fact that there are relatively few females at senior levels at private equity firms. That pulls the average down,” the report’s authors stated.
In short, compensation for women in more junior positions seems to be headed in the right direction (though the industry is still very male-dominated, with a Preqin report showing that women made up 32% of those roles). The challenge now is getting women higher up in the business.
Another interesting point to note in the survey: At three of the five levels of seniority, those without an MBA appeared to out-earn their peers who had a business degree. Those without an MBA earned slightly less in the realms of associate/senior associate ($254,000 with an MBA vs. $247,000 without) and principal ($646,000 with an MBA vs. $624,000 without). But vice presidents, partners/managing directors, and managing partners all fared better when they skipped the hallowed halls of such a master’s program.
While the difference for vice presidents ($393,000 with an MBA vs. $420,000 without), as with the associates and principals, is minor in percentage terms, it grows at the two more senior levels of partner/managing director ($1.1 million with an MBA vs. nearly $1.3 million without), and managing partner (nearly $2.2 million with vs $2.6 million without).
WHAT WILL PLAID BE? That’s the big question surrounding the fintech startup whose agreement to be acquired by Visa in 2020 for $5.3 billion was scuttled, in part, by a Department of Justice lawsuit. The lawsuit, as it so happens, became a blessing in disguise: The company’s valuation more than doubled, to $13.4 billion, after the deal broke down.
The DoJ had laid out what may well have been the most bullish case for Plaid—that it could one day go directly up against giants like Visa. But the company itself has denied plans to build a massive payments network of its own. To quote my colleague Rey Mashayekhi’s story on the company:
Outside observers harbor their own doubts over whether the startup would have the ability or desire to establish such a platform, given the extensive back-end capabilities required. “At the end of the day, Plaid doesn’t have any connectivity to merchants,’ notes Bank of America analyst, Jason Kupferberg.”
Instead, and somewhat ironically given its early history of angering incumbent banks, the company says its focus for now remains on helping consumers as they use a proliferation of financial services. Read more.
SORRY, REDDIT! Yesterday I wrote about how few social media unicorns there have been despite a surge in investor interest, noting that Clubhouse and Nextdoor were the only U.S.-based social media company to become unicorns since Snap in 2014, based on Pitchbook data. Unfortunately I missed Reddit! That company became a unicorn in 2017. Thank you to the reader who pointed that out.
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