Wednesday, September 4, 2013
Private equity market will experience massive fundraising growth in 2014
Private Equity Headhunters, an executive recruiting firm that specializes in the private equity space, announces a new article making the bold prediction that the private equity market will experience massive fundraising growth in 2014. On the heels of Private Equity Headhunters' recent executive compensation survey, the firm feels that this industry marker points to investors' increasing confidence in an improving economy that will lead to phenomenal fundraising growth in the next year. Private Equity Headhunters has specialized in placing top executives in private equity and venture capital firms for over 15 years.
According to the details of the Private Equity Headhunters survey released this week, senior executives' total cash compensation, including salaries, bonuses and incentives, continued to rise in 2013, with an average increase between 3 and 7 percent.
"Based on the results from our survey, we see that compensation in the private equity and venture capital space has experienced significant growth," explained Frank Weston, Private Equity Headhunters' Chief Operating Officer. "We believe the reason can be traced to an overall rebound in the private equity market. Although we are a seeing a slow economic recovery from the 2007 recession, private equity markets are coming back, with fundraising, deals and M and A exits beginning to rise again."
Fundraising has traditionally determined how companies and firms elect to compensate their executives, which slumped considerably for both buyout and venture capital firms in 2010. The company's survey results and a steady increase in executive compensation indicates that investors are gaining confidence again in a recovering economy. Private Equity Headhunters sees the compensation increase trend as a precursor to a natural increase in fundraising in the private equity and venture capital space for 2014, and therefore predicts that a massive upswing will take place.
Many of the largest buyouts from 2005 to 2008 in the private equity sector were due to overly optimistic revenue and profit expectations that could not hold firm when the recession hit. Private Equity Headhunters cites companies such as Caesars Entertainment Corp and Energy Future Holdings as two such organizations left with great amounts of debt when business declined.
Often, an IPO is the only way for a private equity firm to exit gracefully, although this takes a significant amount of time and the outcome is not always certain. Because of the duration of this process, it takes a long time for this process to show and indicate growth, giving the increase in executive compensation even more weight as an indicator of overall market growth.
Though private equity firms have not completely bounced back since the crisis, these firms are raising multi-billion dollar funds again, which raises the need to find good investments. Large deals are in the works, and Private Equity Headhunters makes note of two deals worth more than 20 billion dollars including the proposed buyout of Dell, Inc. by Michael Dell and Silver Lake as well as the takeover of H.J. Heinz Co. by Berkshire Hathaway Inc and 3G Capital. In addition, according to Blackstone Group LP's figures, the firm's investment in hotel chain Hilton Worldwide Inc. was worth 50 percent more in 2013 than when the company invested in 2007.
"We see several indications that lead us to believe that 2014 will be the year of phenomenal fundraising for private equity firms," explains C. Nicholas, CEO of Private Equity Headhunters. "We're seeing multi-year highs in the volume of large exits for venture-backed companies. Couple this with an improving economy and a steady increase in executive compensation, and we see all the signs of improving market conditions and overall growth that make private equity and venture capital fundraising very successful."
About Private Equity Headhunters:
Founded in 1998, Private Equity Headhunters specializes in locating jobs for executives and matches investment seekers with private equity and strategic buyers. The company utilizes its network of 2,400 recruiters and relationships with more than 1,600 PE/VC firms to achieve a job placement rate of 86 percent for national and international executives, even in a weak economy. With a 100 percent interview rate and impressive placement rate, Private Equity Headhunters has consistently ranked first in PE/VC space as a senior executive recruiting firm. For more information, visit http://www.PrivateEquityHeadhunters.com.