The Biggest Talent Acquisition Challenges Facing Private Equity Today

Tony Cinello

20-Year Trusted Retained Search Partner to C-Suite | Founder & President, Anthony Andrew | Value Creation Talent

How competition, shifting economics, skills gaps, and DEI demands are reshaping how PE firms hire — and what to do about it.

Private equity (PE) firms are operating in an era of slower deal flow, higher expectations for operational value creation, and intensifying competition for a finite pool of senior operating and investment talent. Those forces are exposing structural gaps in how PE sources, hires, and retains leaders both at the fund level and inside portfolio companies. Below I map the most significant TA (talent-acquisition) challenges PE firms face today, why they matter, and practical steps firms can take to close the gap. McKinsey & Company

1) Fierce competition for early-career and experienced deal talent

Private equity is no longer competing just with other buyout shops — it’s competing with elite investment banks, consulting firms, and high-growth corporate roles for the same analysts, associates, and operating leaders. In recent months the recruitment war has heated up, with aggressive early-stage recruiting, counter-offers, and even bank policies designed to discourage analysts from accepting future PE offers. That dynamic raises acquisition costs, shortens hiring timelines, and increases turnover risk for entry-level pipelines that many firms depend on. Wall Street JournalPrivate Equity Insights

Why it matters: losing top early-career talent or paying premiums to secure them reduces IRR (via higher operating expense) and erodes longer-term bench strength.

2) Lower deal activity, compressed carry and retention pressure

Slowing fundraising and reduced exit activity change the economics of PE careers. With a “slower era” for private markets, carried-interest upside is less certain and firms face a tougher sell when recruiting on long-term payoffs and upside. That reduces one of PE’s historic retention levers and forces firms to rethink cash compensation, performance-linked bonuses, and non-monetary incentives. McKinsey & Company+1

Why it matters: when carry becomes less compelling, PE must rely on culture, career pathways, and nearer-term pay to attract and keep top performers.

3) The skills gap: demand for operators, data, and sector specialists

Modern PE value creation increasingly depends on operational improvement (supply chain, digital, commercial excellence) and data-driven transformation inside portfolio companies. That raises demand for “operator” hires — CEOs, CFOs, and functional leaders with P&L and transformation experience — and for talent fluent in analytics and AI. These individuals are scarce, highly mobile, and usually have fewer ties to the PE talent pipeline than traditional finance hires. McKinsey & CompanyKorn Ferry

Why it matters: without seasoned operators and data-native talent, portfolio companies underperform their potential and exits suffer.

4) Portfolio-company hiring & retention is a separate (and harder) problem

PE firms frequently under-index their investment in recruiting for portfolio companies. Survey data shows that portfolio leaders consistently flag talent retention and replacement as a top constraint on growth — and PE investors themselves rate talent recruitment as a primary hurdle. Sourcing and onboarding leaders who can scale businesses requires a different playbook (market mapping, robust assessment, cultural fit analysis) than hiring at the fund level. AcertitudeBespoke Partners

Why it matters: poor portfolio-company hires can wipe out operational gains and materially decrease exit multiples.

5) The clock is changing — timelines, remote work, and geographic concentration

PE hiring historically clustered in financial hubs (e.g., NYC, London). While remote work opened new pools, many operational roles still require onsite leadership across regions. Meanwhile, firms that move earlier (accelerated recruiting cycles) often capture the best candidates — but earlier cycles strain both recruiters and compliance teams. Geographic concentration, hybrid expectations, and compressed timelines make coordinated TA strategies more complex. Aura BlogPrivate Equity Insights

Why it matters: misaligned timing or location strategy loses candidates to employers who better match candidate preferences and speed.

Practical steps PE firms can take now

1. Broaden the sourcing funnel. Tap non-traditional pools: industry operators, growth-company execs, and domain specialists rather than only ex-bankers. Use targeted market mapping and retained searches for senior operating hires. odysseysearchpartners.com

2. Rework comp and retention packages. Combine nearer-term cash incentives, deal-level bonuses, and meaningful career pathways when carry is uncertain. Be transparent about economics. McKinsey & Company

3. Invest in talent operations and assessment. Build an internal TA & talent-ops function that can conduct calibrated assessments, onboard leaders, and ensure portfolio companies get dedicated TA support. Acertitude

4. Use data and AI to scale sourcing and assessment. Apply analytics to prioritize sourcing markets, predict attrition risk, and speed screening without sacrificing quality. (But pair tech with human judgment for cultural fit.) Korn Ferry

5. Align portfolio TA with ownership plans. For every investment, build a 12- to 36-month talent roadmap linked to the value-creation plan and headline KPIs. Bespoke Partners

Conclusion

Private equity’s talent challenge is multi-dimensional: it’s not just hiring more people, it’s changing how firms find, evaluate, and keep the specific types of leaders that create operational value in slower, more competitive markets. Firms that invest deliberately in broader sourcing, modern compensation mixes, talent operations, will stand the best chance of converting human capital into durable portfolio returns. The firms that treat talent as an operating lever — not an HR afterthought — will win the next cycle. McKinsey & CompanyWall Street Journal

Footnotes & References

1. McKinsey & Company, Global Private Markets Report 2024: Private markets in a slower era, March 28, 2024. McKinsey & Company

2. McKinsey & Company, Ten private-markets considerations shaping 2024 so far, Sep 30, 2024. McKinsey & Company

3. The Wall Street Journal, Inside the Wall Street Recruitment Wars Pitting Banks Against Buyout Firms, (reported recently). Wall Street Journal

4. Korn Ferry, CEO & Board Survey 2025: Risky Business (summary/insights on talent shortages), (2025). Korn Ferry

5. Acertitude, What’s Next for Private Equity Talent Management? (insights on portfolio company talent/retention). Acertitude

6. Bespoke Partners, Key Findings From the 2H 2024 Private Equity Talent Report, Oct 2024 (executive recruitment trends and compensation commentary). Bespoke Partners

7. Prospect Rock Partners, The Great Private Equity Recruiting Reckoning, June 14, 2025 (on recruiting shifts). Prospect Rock Partners

8. PE-Insights, Private equity firms intensify early talent race as Wall Street fights back (on early recruiting acceleration). Private Equity Insights

9. Korn Ferry Institute, How AI Is Reshaping Mid-Market PE-Backed Industrials, (AI and skills implications, 2025). Korn Ferry