private equity market in brazil compensation survey - GVcepe
private equity market in brazil compensation survey - GVcepe
private equity market in brazil compensation survey - GVcepe
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
PRIVATE EQUITY MARKET IN BRAZIL<br />
COMPENSATION SURVEY<br />
JANUARY 2012
Private Equity <strong>in</strong> Brazil<br />
hir<strong>in</strong>g trends<br />
Despite the great growth over the last five<br />
years, 2011 was probably one of the most<br />
important years for the <strong>private</strong> <strong>equity</strong><br />
<strong>in</strong>dustry <strong>in</strong> Brazil. A record amount of<br />
funds raised by the <strong>in</strong>dustry and the arrival<br />
of several new players were the highlights<br />
of 2011.<br />
The comb<strong>in</strong>ation of the country's favorable<br />
economic condition, the growth<br />
perspectives for companies and the<br />
possibility of consolidation <strong>in</strong> various<br />
sectors and geographies, forms a very solid<br />
tripod for PE development. Despite all the<br />
<strong>in</strong>stability <strong>in</strong> the global economy, there is a<br />
sentiment that the Brazilian real economy<br />
is seen as a land of great opportunities. But<br />
this perception is accompanied by a very<br />
similar level of challenge.<br />
Brazilian real<br />
economy is seen as<br />
a land of great<br />
opportunities<br />
One of the ma<strong>in</strong> challenges for PE firms is<br />
related to the lack of corporate<br />
governance <strong>in</strong> family-owned companies<br />
and a lack of human capital. It has never<br />
been harder to recruit an experienced PE<br />
professional or professional management<br />
for portfolio companies; especially CFOs<br />
and CEOs.<br />
Scope and Methodology<br />
Our objective <strong>in</strong> conduct<strong>in</strong>g this <strong>survey</strong><br />
was to provide guidance to our clients on<br />
<strong>compensation</strong> for the <strong>private</strong> <strong>equity</strong><br />
<strong>market</strong> <strong>in</strong> Brazil.<br />
We have collected data directly from<br />
employers and professionals from the<br />
<strong>private</strong> <strong>equity</strong> <strong>in</strong>dustry.<br />
Twelve of the ma<strong>in</strong> <strong>private</strong> <strong>equity</strong> firms<br />
currently operat<strong>in</strong>g <strong>in</strong> Brazil are<br />
represented <strong>in</strong> this sample. Every care has<br />
been taken <strong>in</strong> compil<strong>in</strong>g data. Nevertheless,<br />
the <strong>survey</strong> is <strong>in</strong>terpretive and <strong>in</strong>dicative;<br />
not conclusive. Therefore, <strong>in</strong>formation<br />
should be used as a guidel<strong>in</strong>e only and we<br />
do not make any representation or<br />
warranty <strong>in</strong> respect of such <strong>in</strong>formation.<br />
Twelve of the ma<strong>in</strong><br />
<strong>private</strong> <strong>equity</strong> firms<br />
currently operat<strong>in</strong>g <strong>in</strong><br />
Brazil are represented<br />
<strong>in</strong> this sample.
PRIVATE EQUITY MARKET IN BRAZIL | COMPENSATION SURVEY<br />
JANUARY 2012<br />
Compensation and hir<strong>in</strong>g trends<br />
Private Equity Professionals<br />
Growth <strong>in</strong> the PE <strong>in</strong>dustry s<strong>in</strong>ce 2005 has<br />
been greater than its own capacity to tra<strong>in</strong><br />
and develop professionals with the entire<br />
PE cycle experience. That's the ma<strong>in</strong> reason<br />
why it is so hard to recruit PE<br />
professionals; especially directors and<br />
manag<strong>in</strong>g directors.<br />
Hir<strong>in</strong>g a Director or Manag<strong>in</strong>g Director<br />
with solid experience <strong>in</strong> PE management is<br />
almost impossible. The universe of<br />
professionals with solid experience <strong>in</strong> the<br />
entire PE cycle is limited to 20 or 30<br />
people. In addition to that, the lack of a<br />
local track record for most players makes<br />
it harder for professionals to estimate how<br />
much greater their 'carried <strong>in</strong>terest'<br />
participation will be when chang<strong>in</strong>g jobs.<br />
For junior roles up to a VP level, PE firms<br />
have also been sourc<strong>in</strong>g candidates from<br />
other <strong>in</strong>dustries.<br />
However, they search for exceptions and<br />
not for the average profile of those<br />
alternative sources:<br />
Investment Bank<strong>in</strong>g: easy to f<strong>in</strong>d professionals<br />
with appropriate technical background but hard<br />
to f<strong>in</strong>d the appropriate soft skills. Long term<br />
th<strong>in</strong>k<strong>in</strong>g, lack of “deal-clos<strong>in</strong>g orientation”, depth<br />
of th<strong>in</strong>k<strong>in</strong>g and short term <strong>compensation</strong> are the<br />
ma<strong>in</strong> aspects to be evaluated.<br />
Strategic Consult<strong>in</strong>g: professionals have great<br />
strategic th<strong>in</strong>k<strong>in</strong>g but not all of them possess<br />
solid model<strong>in</strong>g and f<strong>in</strong>ancial skills. On the softskill<br />
side, it is important to f<strong>in</strong>d professionals<br />
with an entrepreneurial profile and not the<br />
“PowerPo<strong>in</strong>t presentation-mak<strong>in</strong>g” k<strong>in</strong>d of<br />
professional.<br />
Professionals from corporate organizations <strong>in</strong><br />
general: an <strong>in</strong>terest<strong>in</strong>g option when PE firms are<br />
look<strong>in</strong>g for sector specialists. Typical background<br />
will be <strong>in</strong> f<strong>in</strong>ancial plann<strong>in</strong>g, new bus<strong>in</strong>ess<br />
development, strategy and M&A. International<br />
MBA from a top-10 university is almost a<br />
prerequisite.<br />
Average Ranges for Monthly Salary and Bonus (BRL)<br />
Title Monthly Salary* Bonus Total Comp<br />
average m<strong>in</strong>. average max. average m<strong>in</strong>. average max. average m<strong>in</strong>. average max.<br />
Analyst 7,000 12,000 80,000 150,000 171,000 306,000<br />
Associate 11,000 18,000 150,000 250,000 293,000 484,000<br />
VP 22,000 28,000 240,000 400,000 526,000 764,000<br />
Director 28,000 35,000 420,000 525,000 784,000 980,000<br />
MD 45,000 60,000 600,000 800,000 1,185,000 1,580,000<br />
CFOs for Portfolio Companies<br />
Regardless of the size of the deal or its<br />
structure, replac<strong>in</strong>g the CFO once the<br />
<strong>in</strong>vestment is made is almost the rule. In<br />
this situation, hir<strong>in</strong>g a CFO is a critical and<br />
challeng<strong>in</strong>g mission.<br />
PE <strong>in</strong>vestments are typically made <strong>in</strong> familyowned<br />
companies with no professional<br />
management. Thus, hir<strong>in</strong>g a CFO is key to<br />
address all the issues identified dur<strong>in</strong>g the<br />
due diligence process and to create a<br />
framework of processes, controls, and<br />
systems which will be fundamental to<br />
* Annual salary equals monthly salary x13<br />
support high growth after the <strong>in</strong>vestment,<br />
and generate returns. In most cases the<br />
CFO will also have great <strong>in</strong>volvement with<br />
capital <strong>market</strong>s and M&A transactions.<br />
This requires a CFO with a complex and<br />
rare set of skills. The ideal CFO profile will<br />
be closely related to the profile of the<br />
company and to the bus<strong>in</strong>ess plan of the<br />
<strong>in</strong>vestment. The differences <strong>in</strong> profile will<br />
also impact the level of <strong>compensation</strong>.<br />
Therefore, we are present<strong>in</strong>g 3 of the most<br />
common scenarios we've encountered.
PRIVATE EQUITY MARKET IN BRAZIL | COMPENSATION SURVEY<br />
JANUARY 2012<br />
Scenario 1<br />
CFO to improve level of corporate governance<br />
Candidate Profile<br />
Solid experience <strong>in</strong> account<strong>in</strong>g, controll<strong>in</strong>g,<br />
taxes and f<strong>in</strong>ancial plann<strong>in</strong>g. No previous<br />
experience with capital <strong>market</strong>s operations<br />
or with M&A transactions.<br />
Company profile<br />
Total revenue rang<strong>in</strong>g from R$100M to<br />
R$300M, no IPO perspectives <strong>in</strong> the short<br />
term and expectations to grow organically.<br />
Average Monthly Salary Average Bonus Stock Options<br />
between R$30 and R$35K 4 to 8 monthly salaries up to 0.5% of total <strong>equity</strong><br />
Scenario 2<br />
CFO to improve level of corporate governance,<br />
lead M&A and treasury transactions<br />
Candidate Profile<br />
General experience <strong>in</strong> account<strong>in</strong>g,<br />
controll<strong>in</strong>g, taxes and tax plann<strong>in</strong>g. Previous<br />
experience with capital <strong>market</strong>s operations<br />
and M&A transactions. No IPO<br />
experience.<br />
Company profile<br />
Total revenue from R$200M to R$500M,<br />
heavy M&A and fundrais<strong>in</strong>g activity and<br />
IPO expected from 2 to 4 years.<br />
Average Monthly Salary Average Bonus Stock Options<br />
between R$40 and R$50K 6 to 10 monthly salaries up to 0.75% of total <strong>equity</strong><br />
Scenario 3<br />
CFO with previous IPO experience<br />
Candidate Profile<br />
Professionals with a complete technical<br />
background, respected track record and<br />
previous experience with IPOs.<br />
Company profile<br />
Total revenue rang<strong>in</strong>g from R$300M to<br />
R$800M, aggressive growth perspectives<br />
and IPO expected <strong>in</strong> 1 to 2 years.<br />
Average Monthly Salary Average Bonus Stock Options<br />
between R$50 and R$70K 8 to 12 monthly salaries up to 1% of total <strong>equity</strong><br />
Disclaimers<br />
Confidentiality<br />
Flow Human Capital fully recognizes the sensitivity of participant data and holds <strong>in</strong>dividual company and employee data <strong>in</strong> the strictest<br />
confidence. Survey data is only published <strong>in</strong> aggregate form and is never displayed or released <strong>in</strong> such a way that a specific professional or<br />
firm's pay levels could be determ<strong>in</strong>ed.<br />
Responsibility<br />
Flow Human Capital will not be liable for damages of any k<strong>in</strong>d aris<strong>in</strong>g out of or relat<strong>in</strong>g to the use of or <strong>in</strong>ability to use this <strong>in</strong>formation.<br />
These Indices are not <strong>in</strong>tended as a basis for f<strong>in</strong>ancial decisions. No responsibility whatsoever is assumed for their accuracy or suitability<br />
for any given purpose.
FLOW HUMAN CAPITAL is an<br />
executive search firm with a<br />
ma<strong>in</strong> focus on F<strong>in</strong>ance, F<strong>in</strong>ancial<br />
Market and Top Management.<br />
The company consists of<br />
executive search consultants<br />
who have successfully hired<br />
over 750 executives for its<br />
customers and whose<br />
comb<strong>in</strong>ed experience makes<br />
up over 30 years of professional<br />
activity <strong>in</strong> Executive Search.<br />
Directors:<br />
Bernardo Cavour<br />
cavour@flowhc.com<br />
Igor Schultz<br />
igor@flowhc.com<br />
Joseph Teperman<br />
jteperman@flowhc.com<br />
Luiz Gustavo Mariano<br />
mariano@flowhc.com<br />
Rafael Gregori<br />
gregori@flowhc.com<br />
Rua Iguatemi, 192 14º andar Itaim São Paulo - SP, Brazil<br />
(55-11) 3707-0000 | www.flowhc.com