It is now almost a year since we opened our office in Munich, headed by Rupert Bell. We would like to use this occasion to give you a brief update on our progress to date, including some of the placements we have made, and our thoughts on the market situation as we approach the final quarter of 2011.
What a difference a year makes....
The last 12 months have seen a pick up in market activity, with even large cap deals finding a match between buyer and seller as well. Direct deal activity has been cautiously growing in the buyout and growth space. Venture deals remain few and far between, though a number of strong exits have added momentum. We have seen considerably more activity in the secondary market, for both fund and direct holdings, as investors trade value for liquidity. Fund of funds strategies continue to attract investor support.
Until recently, debt funding was starting to come back into the market, though we heard mixed views on whether this is driven by more confidence in the economy or by the need for funds to deploy dry powder before the end of investment periods. However, in recent weeks the debt market has drawn back noticeably. Anecdotally, much of the mid sized and larger dealflow in the direct buyout market remains driven by secondary opportunities.
Whether this resurgence will continue short to medium term is very much a moot point. Uncertainty over debt and currency dominates the US and European markets. Corporate earnings may be more visible than two years ago but they remain brittle and the impact of new regulations on lending banks is still far from clear. As ever, there is a lot of talk, but rather than actually being done.
As for recruitment in private equity....
Our market has been busy so far in 2011. A lot of recruitment has followed the natural cycle to replace team members lost in the downturn and for genuine expansion. We have seen more mid-level activity, possibly driven by a market need to deploy capital quickly ahead of closing investment periods, and also several strategic appointments at senior level, as funds broaden their investment strategy, enter new markets and sectors and deepen their investor base. We have also been involved in helping a number of new funds to build teams, taking advantage of spin out situations and investor appetite for differentiated strategies. It is worth noting, however, a number of assignments have been aborted by clients who have revisited their strategy or growth expectations and taken a more cautious view, postponing further hiring for 6-12 months.
PER is delighted to have already supported a wide range of funds with their recruitment in Germany, or of German candidates. Successful placements made so far in 2011 range from funds such as 3i, to independent teams such as Afinum, ECM and semi-captives like Nord Holdings. We are especially delighted to have made multiple candidate placements at firms including EQT, Parcom Deutsche Private Equity, Stirling Square and Auctus Management. Outside the domestic investor market we have made placements with the EVCA in Brussels, Jacana Venture Partners in Africa / London and FCF Corporate Finance, all from our office in Munich.
Our results to date have been ahead of our expectations and we are grateful to all our clients for their support. PER is well placed to advise private equity and venture capital clients on recruitment and retention of team members across the market, working with firms of all sizes and at all levels within the team. We are particularly pleased to be engaged to advise on several ongoing senior and mid level assignments, as well as the more active associate / analyst levels, where our first hand market knowledge can add insights and value to clients. We see ourselves as private equity people, for private equity people and are available to discuss these important matters at all times, whether as part of an active recruitment exercise or not. We take the long term view of client relationships.
Looking ahead to Q4....
• More talk about fundraising plans, though still much uncertainty over results for many funds, and this will continue to hang over the market for recruitment, with several assignments still somewhat speculative.
• Top class candidates are often securing more than one offer, so there is pressure on funds to articulate their own selling points to new team members as if to prospective investors, and to manage their recruitment processes smoothly and effectively – we can help with this.
• Compensation will always be a critical factor, though if expectations are managed properly from early in the process, this need not be a fundamental reason why firms are unable to secure the people they want. We are completing our latest junior banking survey, specific to the German market, and would be pleased to share the summary results.
• PER continues to work with many of the leading funds in the German market, large medium and small, and is developing an ever-stronger pool of candidates from analyst to managing partner across the asset class.
• We are seeing already the value of personal recommendations. Both within our client base and in our candidate pool, these referrals are usually of the highest quality and key to developing our business. Spending more time in the market, meeting people and hearing their story, will continue to add to our profile – good people recommend good people.
• Our priorities for the next year include deepening our client base and we will be more regularly in client locations including Frankfurt, Düsseldorf, Hamburg and Berlin, as well as in other key DACH locations, in particular Zurich. We continue to stress our capabilities – defining client requirements; finding the right people for them and benchmarking them in a rigorous, structured process; helping clients sell themselves appropriately as the right new platform; managing candidate expectations and presentation throughout; and ensuring remuneration and other terms are pitched and explained appropriately to ensure all parties reach understanding and agreement as efficiently as possible.
If you are in Munich already or due to visit, perhaps for the Oktoberfest next month, please do get in touch - we'd be delighted to meet up.
Rupert Bell - PER
rupert.bell@perecruit.com
Tel: +49 176 7084 4803
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