Yes, hiring is still occurring in the Hedge Fund and Private Equity industries.  It has slowed down and there are fewer firms actively hiring, but that is not to say that hiring is not occurring.  During the past six months we have written at least three pieces on the hiring marketplace within either the Private Equity or Hedge Fund industries.

The common theme of every article has been that the hiring has become more selective, and more importantly there have been specific strategies within each investment style that have produced new hires in the past six months and will continue to do so. The most important components for today’s job seeker is their ability to know themselves, identify the value that you as a professional bring to your perspective employer, and understand the firm which you are marketing yourself too.

Hedge Funds

The constant theme for Hedge Funds has been that large multi-strategy multi-billion dollar funds have been using the downturn in the economy to hire experienced professionals with excellent track records and strong rolodexes.  These funds see this as a time to enter into new strategies at an affordable price; and being able to incubate these funds for a short while in-house before actively marketing them to their clients. I actually know many firms which are hiring whole teams to compete with their present in-house team; and which ever team performs best will become the multi-strategy fund’s “go to” team for the strategy.  Strategies which have been very sought after include; distressed debt, real estate, industry focused long/short equities and until recently energy and commodity related products.

A second theme which resonates itself both with Hedge Funds and Private Equity firms is the need for experienced, educated and professional accounting professionals.  Accounting is one of the main infrastructure areas which many Institutional Investors are demanding be strengthened and given its due respect. In today’s investing world these positions are filled by proven communicators who can effectively convey information with investors and the portfolio managers while learning the accounting specifics of new investment products and maintaining very organized and real time accounts.  (For those with children I strongly suggest you let them know that experienced Hedge Fund and Private Equity Accountants have a very bright future.)


Private Equity

The continuous theme in regards to Private Equity hiring for the last 6 months have been, Middle Market specific funds, Infrastructure focused funds, and internationally focused funds.  Although we have seen a slight drop off in regards to internationally focused roles based here in the US, we have continued to see internationally focused roles with US domiciled funds being based overseas.  For Middle Market funds which either have been straying of the sidelines for the past few years due to high valuations or those that completed their fundraising in the last 18 months these are great times to be putting their money to work. The valuations are lower and the playing field has been reduced as many competitors have to wait on the sidelines until they are able to either raise assets or find  banking partners willing to provide them credit.  Even in a weak credit market we are finding that those funds based on Infrastructure investments are continuing to hire as they are able to raise assets and provide their actual investments as collateral.

We have recently seen a drastic pick-up in Private Equity Accounting roles as mentioned above.  With the pick-up in accounting role has also come the normal January hiring season that some Private Equity funds maintain.  These funds are finding that their candidate pool is large and in many cases because of those individuals coming from banking many of their prospective candidates are not presently working.  But as has been the case in the past, we find that funds would prefer to hire someone from another Private Equity firm or someone who is presently employed and working on present deal flow.

Furthermore, many firms are already starting their hiring process for the summer of 2009; although we have seen a decrease in the hiring numbers for many firms. This is not a lack of hiring mind you but rather these firms will hire one professional this year instead of the two professionals the firm has hired for the last several years.  We have also witnessed a small increase in hiring with firms that focus on more traditional venture capital, early stage investment deals, and those funds focused in biotech/life sciences.  The one big in uptick in regards to hiring is in the Clean Tech area where many firms are expanding their team or starting from scratch.

Overall – “The Time Squeeze”

The hiring marketplace for experienced professionals in the Private Equity and Hedge Fund space has continued to stay relatively strong, especially compared to the bleak hiring environment in the investment banking and more “sellside” oriented roles.  We believe we will continue to see this hiring occur in the Private Equity and Hedge Fund space, although in regards to Hedge Funds if the market does not turn upward soon the majority of Hedge Funds, except for the largest 5 to10% which will continue to hire and may even increase their hiring, will have a very hard time justifying any hiring this year or early into 2009.

Hedge Funds need to report yearly numbers and a large percentage of their revenue is based off of their yearly performance numbers while a Private Equity fund only reports hypothetical yearly performance numbers and hence is not feeling the “time squeeze” which many Hedge Funds are experiencing with 2008 ending in less then 75 days.  This squeeze will cause many Hedge Funds to stop hiring and to concentrate on retaining their key employees and clients.  To retain their key employees will mean a greater portion of the firm’s overall revenue will go to these top performers.  Furthermore, if these firm’s need to cut fees, which has become more of a trend in today’s market, these Hedge Funds will be facing a double whammy; with not only being down for the year and having a high water mark to beat for the next year, but also a cut in the management fees they were expecting to receive this year and into 2009.