Private equity firms differ substantially in size as measured by factors like fund size, assets under management, or the number of portfolio companies, employees, or dealmakers. For the latter category, we define a dealmaker as an investment professional with the title of Vice President or higher, which excludes junior staff and support roles.
In 2018, the median number of dealmakers per PE firm was four. Today, the median number of active dealmakers for PE firms is five, and approaching six. By the definition of median, roughly half of the PE firms have more than five dealmakers and half have fewer than five dealmakers.
The rise in the number of private equity firms and the expansion of teams at existing firms have both driven private equity industry growth, outpacing population growth. Private equity thus employs a growing share of the overall workforce.
The graph below shows the distribution of the number of dealmakers per firm, across 3,244 PE firms in the sample. The smallest firm has a single dealmaker while the largest firm has 231. The largest private equity firms tend to dominate M&A industry news, but only 13 PE firms have more than 100 dealmakers and only 53 firms have more than 50. We also see a long tail to the distribution of private equity firms as smaller firms strive to carve out their respective niches.
Our data shows that the smallest firms with just one to two dealmakers typically hold two current portfolio companies per dealmaker, while larger firms with 50 or more dealmakers typically have closer to one current investment per dealmaker. In other words, the smallest private equity firms hold about twice as many portfolio companies per dealmaker compared to the largest firms.
This stands to reason, as the firms with the most number of dealmakers are also more likely to work on much larger deals with more moving parts. As deals increase in size and complexity, private equity firms adapt by enlarging their teams to ensure detailed and focused management for each investment.
The bar chart below shows the median number of current portfolio investments held by the PE firms per dealmaker, relative to the size of the firm.