A fresh perspective on European private equity, by Nick Stephens

10 July 2019 | Nicholas Stephens, Consultant

 

 Having spent much of the last ten years recruiting in the corporate banking world in Hong Kong, London-born Nick Stephens has joined PER as one of our newest consultants. Based in our Munich office and recruiting for private equity and venture capital firms, we wondered what his observations and thoughts on the differences between these two markets would be.

Nicholas Stephens

How do clients differ in these two markets?

“With compliance becoming an increasing issue, there’s some evidence to suggest that the field of corporate banking competitors is narrowing rather than increasing. In recruitment that means that deep relationships within a small number of organizations are important. It’s very different in European private equity; knowing our clients is still crucial with the additional challenge of a larger number of players. There’s a much broader field with funds of all different sizes and vintages.”

How do the roles you work on differ?

“Mandates in the private equity world tend to be smaller in scale than in corporate banking as private equity firms tend to be lean headcount-wise. Because of this and the sheer number of funds, it’s essential for us to have a wider understanding of the market, as well as deep insight into the respective cultures of the funds we represent. Partners in private equity firms have a significant impact on the culture of the organization, perhaps more than any single MD of a bank, CEO or shareholder is likely to have. This personal dimension makes it an interesting field to operate in as a recruiter. Part of our role, particularly when we bring people from larger institutions into a private equity firm, is to educate them on what to expect.”

Are there similarities between the two markets?

“Although China and Germany are vastly different places, there are a lot of commonalities. I always had the impression that China looks to Germany as an economic model – its combination of scale and quality. Germany has a culture of passing wealth from generation to generation in family enterprises, and it’s similar in China. Germany is the terminus of China’s Belt and Road initiative to move Chinese influence westwards. So, what seems like a big move made sense to me.”

Why did you choose to move to Germany?

“Germany is an exciting prospect for me, partly because I studied German literature at university – hence there were personal reasons for the move. The definition of happiness is to be using all the skills at your disposal. Germany is increasingly seen as the centre of Europe and has the perfect economy. It has service industries alongside well-developed precision engineering and industry, across different centres around the country. The Mittelstand economy means a lot of businesses are still family owned, which is a great opportunity for private equity firms to move those businesses to the next stage.”

How has your job changed in your new location?

“In Hong Kong things tend to happen fairly quickly. Partly it’s due to client expectations, and partly because of the entrepreneurial nature of the city. The compact layout of the financial centre helps too. Sometimes you’re meeting candidates 30 minutes after your initial call! Also, candidates can often buy themselves out of their notice period and start at a new company the next day. It's a quirk of the market. In Germany, candidates may have to wait until the end of the quarter to resign, so you could be working up to six months before starting a new role. There’s a structure and thoroughness in Germany which repays good research and preparation on our part, although things may take a little longer.”

Why did you choose to move to private equity?

“There’s no doubt that the banks are becoming a little more constricted in what they can do (sometimes for good reason) and that the entrepreneurs of the financial services world are often finding their home in smaller, more agile organizations. Our clients and our placed candidates can really feel the immediate link between what they do, and the result for themselves, their firms and the portfolio companies. It’s not a zero-sum game. Wealth is created not just for our clients but for the businesses they invest in, and therefore for the wider economy. When I meet our clients, I can see the passion they have for the sectors and companies they have in their portfolio, and the definition of success tends to be something more lasting than the exit itself. There’s a real hunger to build businesses – a genuine entrepreneurial spirit which I find very attractive.”

About the author

As a Consultant in our Munich office, Nick partners with clients on a variety of roles based in DACH and internationally.

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