The search for secondaries talent

Explosive growth has ignited a recruiting war among new and growing secondaries operations.

Our industry expert James Holm discusses the growth of secondaries, what firms are looking for in candidates, and the diversity and appeal of the roles within the sector for a recent Buyout article.


To keep up with the market boom – $134 billion in secondaries sales in 2021, up 124 percent from 2020 – investment banks and private equity firms are scrambling to fill the ranks in their new and expanding secondaries operations. Their search for talent is complicated by a shortage of experienced candidates, especially in GP-led secondaries deals, and competition from others M&A businesses.

“It is exceedingly difficult to build a secondary private equity practice from a talent standpoint,” says Angela Cunningham, a London-based partner at executive search firm Hanover. She cites a single reason: timing. Secondary professionals who were eager to make a change already did so in 2020 or 2021.

“You have a finite pool of talent that is being bombarded with outreach for other opportunities, and many don’t feel they can leave their current place yet because they just joined six months ago or they just joined 12 months ago,” she says.

Meanwhile, job competition within the investment banking industry is exacerbating the problem. Investment banks are offering outsized compensation packages with elevated titles even to candidates with minimum qualifications, Cunningham says. Investment banks across the board have hiked their comp significantly in 2021 and early 2022, which makes it hard for private equity secondaries startups to compete for talent unless they pay top dollar.

On the advisory side, most firms want to start or build secondaries operations so they can offer a complete solution to their GP clients; for example, to advise on dealmaking for creating a continuation fund, in addition to providing advisory services for buying or selling portfolio companies, says James Holm, who leads investment and advisory secondaries mandates in Europe for the Carpenter Farraday recruiting consultancy. The list of firms launching or building out secondary advisory businesses over the last few years includes Baird, Citigroup, Guggenheim, Houlihan Lokey, Jefferies, Lincoln International and William Blair.

Explaining secondaries

Most of the secondaries hiring has been at the associate and vice-president levels because people are needed to execute deals and keep up with the volume of sales, Holm says. While the pool of potential candidates working at the associate level at investment banks is large, most of those professionals are aiming for careers with large or mid-market firms in buyout or growth investing, or – more lately – ESG and impact investing.

“The talent challenge is trying to switch people on to what secondaries are, what they do, why it’s become so big so quickly,” Holm says. “A lot of the time they haven’t listened or considered secondaries because they’re just not programed to maybe consider it.”

Holm says his clients often are willing to even pitch the advantages of working in the secondaries business to win over candidates. Usually, candidates become interested once they understand the growth of secondaries and the diversity of roles within the sector. In a short time, the secondaries market has grown from tens of millions of dollars per year to $134 billion in 2021, according to figures from Evercore.

“What other industry at the moment has a 10x growth rate in finance?” Holm asks. “There isn’t one.”

Another advantage of the industry: secondaries associates who are good at their jobs will ascend to vice-president positions in a year, compared to 18- month or two-year promotion cycles that are more typical in finance, Holm says.

Secondaries operations want candidates with strong technical skills in mergers and acquisitions who are able to lead and execute deals, and understand and model company performance, Holm says. Candidates also need an emotional intelligence to work with limited partners and convince them of the benefits of closing a particular deal.

For secondaries advisory work, the skills are similar to traditional mergers and acquisitions advisory.

“You probably spend more time doing deals because the market is so busy; with M&A you tend to do a lot of pitch decks” as multiple banks compete on each deal to become the adviser, Holm says.

Demand to fill secondaries positions has pushed recruiters and their clients to cast a wider net, beyond investment bankers or private equity firm professionals with M&A experience, to investment bankers with leveraged finance or capital markets experience, or employees of the Big Four or regional accounting firms with audit or transaction advisory experience.

Personnel can be lured from the buyside to sellside secondaries groups because they can earn annual bonuses of 1.5 to 2.5 times their salary with an advisory instead of having to wait years for performance fee payouts at a private equity fund, Holm says.

Candidates for positions above the vice-president level are in short supply because those positions require deal origination skills, so there is more of a war for talent and poaching between firms, Holm says.

Within secondaries, GP-led sales accounted for 51 percent of overall secondary deals in 2021, according to Evercore, and market experts predict GP-leds will take over an increasing share in the future. For secondaries operations that do both GP-led deals and LP transactions, at least half of their deals are on the GP-led side, but the time spent on GP-leds is an even greater proportion, says James Ellis, head of primaries, secondaries and co- investments at recruitment firm PER.

So, the leader of a secondaries team should have GP-led experience. “That’s probably going to be the bulk of what you’re going to be doing and it’s the harder thing to learn,” Ellis says. “It’s a very different skillset.”

Someone with private equity fund of funds experience could probably handle LP secondaries deals, but GP-led deals require a different set of skills, such as in underwriting companies, leveraged buyout modeling, discounted cashflow modeling and deal structuring, Ellis says.

Meanwhile, an LP secondaries professional must evaluate portfolios that can contain hundreds or even thousands of underlying companies, so they’re analyzing the GPs represented in the portfolios. Secondaries professionals on the LP side need to excel at building networks of relationships with advisers who are selling LP portfolios, to win the deals, and with GPs to know how they’re performing.

Associates in secondaries advisory are paid the same as – if not slightly more than – M&A associates, Holm says. At the next level up in secondaries advisory – vice-president positions – with individual and team performance bonuses included, annual compensation can reach into the $750,000 to $1 million range because deal flow has been so strong recently, he says.

For secondaries funds at established firms, a vice-president in London can fetch £250,000 ($310,000; €290,000) per year in total compensation – base pay and bonus included – or £200,000 at a smaller firm, Ellis says. In New York, the range for a vice-president is $350,000 to $400,000 per year, with payout from carry (performance fees) on top of that after a 10-year wait.
Traditional private equity M&A pays about 10 percent more.

“If you’re from an M&A background and you have good commercial skills, and you can articulate your skills and show real interest in secondaries, you’re going to get a job; you’re going to get paid very well,” Holm says.

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