Because they have different ownership structures than the large, stock market-listed firms that have collapsed recently, private equity funds may escape a similar fate, according to an article in the Financial Times. The big companies often had very little control over their trading desks, who were free to gamble other people’s money with little oversight or sanctions if they failed. In contrast, PE funds are typically structured as private partnerships. Fund managers also have “skin in the game,” often investing their own money side-by-side with investors and making key decisions themselves.

In the midst of the current financial crisis, though, many fund managers are reining in their leveraged positions and seeking safe havens for preserving capital. Fund managers are waiting for signals that the market has finally reached bottom. However, they are also adding to their shortlist of sectors and companies whose values have fallen to the point where they present attractive buying opportunities. All this bodes well long term for those looking for work in the hedge fund and private equity sector.

Private equity investors will play an important role in the historic bailout just announced by congressional leaders, and there’s money to be made, according to David M. Rubenstein, co-founder of the Carlyle Group.

The Carlyle Group is one of the wealthiest and most successful private-equity firms in the world, with around $80 billion under management, $40 billion of which is in cash that is ready to be deployed, according to an article in the Washington Post online.

Rubenstein was quoted as saying “Private equity has a lot of experience buying assets at distressed prices and we expect to see a lot of attractively priced assets. It’s good that private-equity firms are in good shape and have the resources to buy some of these assets and help the system.”

Carlyle is looking to hire Wall Street private equity specialists and other financial professionals who have been orphaned by the recent turmoil, to help the firm pursue opportunities generated by the bailout and with other distressed financial properties. According to Rubenstein, Carlyle will “be on the hunt for the next 18 months” for qualified professionals looking for jobs in private equity.

Alternative energy and other clean technologies are already the third largest sector for venture capital investment and jobs in the U.S., after information technology and biotech, according to an article in the Boston Globe online. The article cites a new United Nations report that says clean technologies such as biofuels will create millions of new jobs in the next two decades. The report states that roughly 2.3 million people have found new jobs in the renewable energy sector in recent years, and the potential for job growth in the sector is enormous.

In addition, firms such as Och-Ziff Capital Management, GLG Partners, GAM, ABN Amro, Ermitage Group, PCM Capital and Akeida Capital Management have launched funds to exploit opportunities in the alternative energy space, according to FINalternatives.com

Giant private equity group Kohlberg Kravis Roberts (KKR) has announced it is expanding its presence in the Middle East, hiring Makram Azar from Lehman Brothers to head the new venture, according to the National, in UAE. KKR has reportedly committed 1.5 billion Euros (US $2,162,000,000) to focus on oil and gas investments in the region, as well as co-investing around the world with sovereign wealth funds. The move underscores the growing importance of the Middle East a promising region for private equity and venture capital investments and jobs.

Switzerland is dangling the carrot of more attractive tax rates in an effort to lure hedge funds and private equity groups to the country, reports eFinancial News. Corporate tax rates on hedge funds in Switzerland can range up to 40% a year. Now, some regions of the country are being permitted to offer better terms to fund managers who launch funds and create local private equity and hedge fund jobs.

Nevertheless, the Swiss tax rates are still considerably higher than the 10% to 15% levied on hedge funds in the U.S. and UK. Swiss companies have been successful in setting up fund of funds but the Swiss market still lags in the number of single-manager hedge funds and private equity groups.

A growing number of MBA students at top U.S. business schools are skipping the traditional on-campus interview process and conducting their own searches to get the job they want, according to Wall Street Journal.  Some students say they don’t want the standard jobs in finance or consulting typically offered on campus. Others are looking for jobs in a particular geographic location or know that firms hiring for venture capital jobs are known for last minute activity. The good news: despite the current economic slowdown, the job market for MBA graduates, especially those from top schools, is strong. Many top schools are also tapping their alumni networks to help self-directed job seekers in their efforts.

“Start Up” may not be the first thing that pops into mind when you think of Michigan. But the state is making all the right moves to attract venture capital funds and create an entrepreneurial culture, reports The Detroit News. The effort appears to be paying off. The amount of venture capital managed by Michigan firms has grown by 73% since 2001, with concentrations in life sciences, information technology and alternative energy.

The uptick in venture capital investing could be crucial to diversifying Michigan’s economy, which has suffered with the decline in auto-related manufacturing in recent years. Michigan also hosted the 2008 Annual Conference of the National Association of Seed and Venture Funds, September 10^th to 12^th, which should further raise awareness of venture capital opportunities in the Midwest.

Good news for those seeking jobs in private equity. Salaries and bonuses for private equity professionals in North America continued to rise through 2007 and into 2008, according to the latest edition of the Private Equity Analyst-Holt Compensation Study, which appeared in Private Equity Analyst, a newsletter published by Dow Jones & Co. The survey shows salaries rose 5.3% to $200,000. When you include bonuses and carried interest, compensation packages climbed a total of 27.3% to $401,000 from $315,000. These figures reflect salaries as of April 1, 2008 and bonuses reflect performance in 2007. Figures cover investment and administrative personnel at independent and institutional buyout, venture capital and mezzanine firms. Median compensation for managing general partners, senior partners and partners, including salary, bonus and carried interest, was listed at $1.3 million, up 18%. While the median compensation at venture capital firms was $956,000, up 37%. Whether compensation will continue at these robust levels through the remainder of 2008 is an open question, however. The credit crunch and economic downturn in the U.S. have already impacted hiring at many firms. Observers also note that while salaries may not decline, economic conditions will likely affect bonus pools.

Despite the carnage sweeping through some sectors of the financial industry, New York’s venture capital scene is thriving, reports VentureSource, a research unit of Dow Jones & Co.  67 New York-based start-ups received funding in the first half of 2008, the highest amount since 2001. Investments rose to $828 million from $480 million in 2007.  

The article cites several factors that are contributing to the revival of “Silicon Alley” after the boom-and-bust days of 2000. These include a jump in digital media start-ups to attempt to monetize online advertising and content for Madison Avenue firms, and a plethora of financial software and services companies offering money-saving tools for banks and brokerages.

Employers have two issues to deal with. First (and presumably most important), employers should take a hard look at current compensation plans of the top performers in the firm. Compare plans to current industry standards and discuss specific compensation expectations with the employee. If there is a gap between the employee’s expectations and the current plan, make closing that gap a priority or risk losing that team member to a more competitive firm.

Second, when courting potential new employees, there is an opportunity to differentiate the firm by offering something better, especially to newly minted MBA’s. In addition to base salary, consider more attractive variable compensation and a share in the upside through carry participation. Discuss the typical partner path and earnings targets (both short and long term), and consider anonymously sharing some compensation ranges earned by the top 10% in the previous year to demonstrate what is possible in the firm.

From the 2007 Private Equity and Venture Capital Compensation Report by Job Search Digest