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Financial sponsors are hot, hot, hot (and so are PE hires)

Nick Lord, a principal at recruiting firm Heidrick and Struggles in Hong Kong, says that private equity coverage banking positions will be red hot this year.

"Kohlberg Kravis Roberts paid nearly $900 million in fees to investment banks worldwide this year, so the coverage bankers for financial sponsors will be in a key position. Leveraged finance experts will also continue to play an important role in raising funds for private equity deals," he tells us.

At the same time, recruiters say the search for private equity (PE) hires is getting more intense than ever. "We are seeing recruiters attacking other private equity firms for staff - last year, they were hiring more from other industries, such as investment banking," he says.

And recruitment is not confined to the top echelons: the search for talent is extending downwards, to directors and vice presidents, as well as managing directors and above.

When PE firms hire from each other, the costs involved can be huge - thanks to the need to buy out carried interest.

According to one recruiter, one multi-country private specialist was going to be paid $10m to move, including his carried interest, his bonus and his commission.

"The amazing thing is that he was not even a managing director, although he would have been made one after the move," says the recruiter. Unsurprisingly, the deal collapsed when the recruiting company decided that the package was simply too much.

Buying out carry is all the more expensive because hiring firms usually pay a significant premium - one recruiter tells us most hirers will offer an additional 30%.

According to an industry source, private equity specialists are pulling vast sums of money: $40m was mentioned for a Taiwan-based PE specialist. This outstrips anything but what the top investment bankers are paid. Time to look at buyout firms, we think?

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