Private Equity Firms Expect a Wave of Hiring in 2012

You can add private equity investment firms to the short list of companies that are planning to ramp up hiring in 2012. After two long years of staff reductions, PE firms are gearing up for what they think will be a stronger year for investment and exit activity. According to its most recent Perspective report in which BDO USA surveys PE firms across the AUM spectrum, more than half of the firms expanded their staffs in 2011, and a greater number project additional hiring in 2012.  Just three years ago, the same report revealed that nearly 90% of PE firms were planning on cutting their staff.  Many analysts suggested that such a sharp reaction to the financial crisis would have to be reversed fairly soon, if the PE industry hoped to regain its footing. Apparently that time has come.

On the heels of a couple of down years in fundraising and exit activity, PE firms are poised for some acceleration in the economic recovery which should encourage greater LP interest and spur more exits; however, they see more of the same in terms of the type of exit activity which was dominated more by strategic buyers than it was the public markets in 2011.  And, as investment trailed off last year, PE firms are sitting on mounds of dry powder that their LPs expect to be put to work in new investments.

While the glimmer of optimism may result in a wave of hiring for private equity job opportunities, there are still challenges and uncertainty that could dampen enthusiasm. Private Equity is still under fire from the left and the Romney spotlight won’t go away anytime soon. It has yet to be determined how the Volker Rule will ultimately impact PE firms, and they can expect the carry interest barrage of attacks to continue through the elections.  And, few would be willing to bet against the possibility of a Euro-induced, double-dip recession that could make the 2011 stock market look like kiddie-ride at the carnival.

But for now, it’s time to catch the private equity wave while the sea wall is still far off in the distance.