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Pondering the lack of women-led deals in private equity

Happy Thursday!

What is it about private equity M&A that requires it to be led by men? I’ve heard all kinds of theories over the past few months interviewing folks for our Women in PE coverage. And I’ve yet to land on a definitive conclusion about why women are so severely underrepresented in the leadership ranks on deal teams.

To be clear, this is uniquely an aspect of deal leadership. Women have made strides moving into senior roles in other areas of private equity like investor relations, financing, human resources and even new and growing areas like ESG.

But deal-making? That’s a man’s world. And make no mistake: the true power of any private equity firm emanates from the deal team and the investment committee.

So what gives?

One thing that seems clear is that this is a matter of timing — women and minority representation in the industry is growing, very slowly. And as more women come into the industry at the beginning of their careers, inevitably more women will move into deal leadership. But it will take time, and to many sources, it’s taking way too long.

Out of all the excuses I’ve heard, the most common is that women want to have families, and deal leadership and raising a family are incompatible. Deal leadership requires long hours, lots of travel and a commitment to immerse in the work above all else. Many women on deal teams, when they move to that critical moment when they are ready to move on to a deal leadership path — say around vice president or principal level — choose to take a step back because that also coincides with the time they are considering starting families.
But if this is indeed the case (and I’ve never seen data backing this up), firms themselves bear responsibility for providing flexibility for their talented dealmakers to start families and maintain career momentum. It begs the question – why invest time and resources in talented women only to allow them to slip away because they want to have a family?

“We all know people on the investment committee make all the decisions at the firms, and they make all the money, and they decide how the companies are run. That’s what has to change, and it’s kind of not talked about,” a woman GP told me recently.

LPs are not focusing on this issue, this person told me. They will ask about investment professionals and senior people, but they don’t ask about investment committee membership or deal leadership, she said.

Things would change, “if the biggest LPs in America made this matter, said, ‘we’re not going to invest in your next fund unless you make progress getting women on your investment committee. You have zero now, you better go find two and put them on the IC and we want to know what the economics look like.”

Lots to think about. Read our Women in PE project here for our 10 women making strides in the industry, and here for more coverage of the lack of female leadership on deal teams.

What do you think? Do you see this situation changing and what needs to happen for more women to move into deal leadership? Reach me at cwitkowsky@buyoutsinsider.com.