On a Friday evening earlier this month Secondaries Investor sat down – virtually, of course – with four prominent industry professionals to discuss gender diversity in the secondaries market.
Joining the discussion were Kate Ashton, partner at law firm Debevoise & Plimpton; Martha Heitmann, partner at LGT Capital Partners; Johanna Lottmann, managing director at PJT Park Hill; and George Anson, HarbourVest Partners veteran and chair of non-profit organisation Level 20, which promotes gender diversity in private equity.
Up for discussion was why women are less aggressive than their male counterparts when it comes to self-promotion – particularly in light of the initially dismal number of nominations for female candidates we received for our Young Guns of Secondaries list; how to encourage more women in the secondaries industry; recognising and dealing with unconscious biases; and why the sector may be well-suited to women.
As far as we are aware, there are no statistics collected on women’s participation in the secondaries industry, so it’s hard to say how the sector compares with other strategies, such as buyout, growth or venture. The best we could find is one estimate from Level 20. Two surveys the organisation conducted in 2017 and 2018 found women occupy 6 percent of senior positions in the wider private equity industry and 21 percent of such positions at LPs. The percentage of women in senior roles in secondaries is probably somewhere between those two figures.
What is clear is there are structural elements specific to secondaries that prevent more women from entering the sector. One of these is the industry’s tendency to recruit laterally, restricting the talent pool to those who have already risen through the ranks within finance.
“Our industry, at least historically, has not necessarily recruited out of universities directly,” says Lottmann. “We need to make sure that as employers, we get in front of the young talent at the very early stages and educate the world [about] how amazing our industry is and the opportunities it provides also for women.”
Another is a lack of knowledge that the industry even exists. Students may know about the world of M&A, but private equity is a niche, and secondaries a niche within that niche – making it even less likely young women may consider it for a career.
This is a huge loss for the industry. It also means potential candidates are missing out on a career in what can be a thrilling and demanding sector, due to its transactional nature.
“I think many people like direct buyout funds because they think that it’s on the deal side and they can get deals done,” says Heitmann. “The reality is many people don’t know that in secondaries you have a higher conversion rate in terms of deals done than on the buyout side. You can do two, three deals sometimes per month.”
Having fewer female secondaries role models – something that appears to be more important for women than for men – also adds to the challenge, according to Ashton. Demonstrating to younger women that it is possible to maintain a happy life alongside a happy and successful career is crucial, she adds.
A McKinsey study in May found executive teams with more than 30 percent women are more likely to outperform by up to 48 percent. If a near 50 percent boost to your fund returns, advisory revenue or legal work isn’t incentive enough to have a more gender diverse team, we don’t know what is. Look out for the podcast next week.