In the realm of finance, private equity (PE) is particularly male-dominated. In the U.K. and Europe, there are approximately 23% of women in mid-level investor roles, dropping to about 11% for senior-level roles. The U.S. touts similar figures for mid-level investor roles, doing slightly better at 15% for senior-level roles. This gender imbalance is not ideal.
The power of PE to shape the world through the products and services people use daily is phenomenal: the sector manages $11.7 trillion in assets. More women at the tables where deals are chosen and made will allow more deals to be made with companies led by women. This will get us closer to living in a world that designs products and services that serve women better. Right now, we are stuck in a world where they are designed with biases to the detriment of women users.
Many PE firms also want to attract women. Leading firms have recognized the benefits of a diverse workforce, both in terms of performance and decision-making. They are actively recruiting and promoting women to senior positions, offering mentorship programs, and creating a more inclusive culture. These activities demand a diverse skill set, including analytical prowess, strategic thinking, and effective communication—all qualities that women can bring to the table just as effectively as men. What is more, there is some evidence that institutional investors want more diversity in PE and tend to allocate capital to more diverse PE firms.
Why aren’t women choosing PE?
PE is still perceived as an unwelcoming field for women. I recently found that these perceptions are correct 50% of the time. Partnering with Level 20 and my colleague Nikita from The Inclusion Initiative at LSE, I undertook a detailed qualitative study that involved one-to-one interviews with 41 women working in mid-level investment roles across Europe. I complemented these interviews with focus groups that involved 51 additional participants from PE.
Strikingly, we found that there is a polarization of cultures within PE. The polarization of cultures is most evident within small and mid-cap PE firms, where women thrive 50% of the time. For large firms, micro-cultures were identified: the experience of the women was driven by the senior leaders and managers to whom they were exposed. Once again, 50% of the time women thrived.
As for the other 50%? The experiences of these women aligned pretty much with the widespread perception that PE as a sector is horrible. Women were called “pretty,” asked to make coffee, expected to play golf, and asked out on dates by married senior men within their company. They dealt with sexism, misogyny, and micro-aggressions, leading to slower progression and a higher propensity to quit the sector. Despite this most of these women still stated that they loved the content of their work—it was the culture that was giving them sleepless nights and daily nausea.
Still, I couldn’t help being drawn in by the stories of so many women thriving in the sector. These women had advocates who enabled them to get access to deals and networks they otherwise would not have. These women were in environments where they had equal opportunities, visibility, and voice as compared to their men peers. These women did not worry about the unwritten rules that held women back in the other half of the sector. Rather, they had transparency over what it would take to get promoted. Recognizing these patterns in the interview data, caused us to create the ACCELERATE framework. This framework recommends that PE firms seeking to attract, retain, and progress women in the sector focus on advocates, inclusive cultures, and transparency. The framework also lays out clear actions that can be taken by any manager in PE to improve the environment in their firm so it is more attractive to women, regardless of the current culture.
Shaking off the impostor syndrome
Having never fully understood the day-to-day grind in PE, studying the sector also allowed me to de-mystify what a job on a deal team entails. In hindsight, if I could go back in time I might choose PE for my career.
When I was finishing my degree in economics at 21, I did not know what PE was. This lack of information about careers in the sector continues to prevail. According to our research, women are less likely than men to be aware of PE as an option. If PE wants to attract women to the sector, women need to know it is a viable option for an amazing career. This means that PE has to do better in schools and universities in getting the word out.
PE must communicate better how interesting a job on a deal team actually is. Very often, those who turn away from investor roles in PE as a career option are frightened by the need to be skilled at financial modeling. This is a mistake. It is pretty easy to get a grip on modeling skills if you shake off imposter syndrome and get some practice. Even if you find financial modeling boring, after a couple of promotions (about 5 years if you get it right), you advance to far more interesting tasks. You need to play a medium-term game that allows you to end up in one of the most interesting jobs available today. From deal sourcing to due diligence to deal structuring to portfolio management to exit strategies, there is an opportunity to get involved in every part of the value chain. If you are successful in PE, you will also get access to coveted board seats in the companies you choose to back.
It is impossible to ignore the financial perks of PE. The compensation packages are like winning the lottery (well, almost). High salaries, performance-based bonuses, and the wonderful world of carry—it really is a golden pathway to financial security. Early retirement, anyone?
The positive experiences of 50% of women in our study underline the polarized culture within PE. The research shows that any notion that PE is inherently unsuitable for women is far from accurate. In fact, if a woman chooses the right company, she will be afforded a wealth of opportunities to thrive and succeed.
Given the positive attitudes of institutional investors towards diversity, I suspect that companies doing things right are setting themselves up for a major competitive advantage. They just need to shake off an outdated image of PE that is being perpetuated by the horrible companies that survive.
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