Human Capital special: Brexit brain drain is good news for continental PE

European firms could be well-placed to snap up talent from their London-based peers.

The UK’s decision to leave the EU may have an unintended side-effect for the country’s a equity industry: an exodus of its finest talent.

Two-thirds of EU nationals in the financial sector have plans to leave the UK, with more than half of these intending to do so within the next two years, according to Private Equity Recruitment’s Brexit Impact Survey, which surveyed 1,144 finance professionals. Brexit influenced the decision in 90 percent of cases.

Brits aren’t immune to the Brexit effect; of the 23 percent that had plans to leave, 70 percent said the referendum influenced their decision.

“In just about every search we’d do, we will talk to somebody who we would normally put on a shortlist who says I don’t want to stay in London,” PER founder Gail McManus tells PEI.

“Unless it’s a domestic private equity firm we rarely have a role where another European language besides English isn’t required. If even a small percentage of those are not interested in staying in the UK it will impact on the quality, the diversity and the ability of recruiters to put shortlists together and firms to hire people.”

The UK’s loss could be the continent’s gain. One-third of EU nationals planning to leave said they were strongly considering a move to Switzerland, while one-quarter said the same for France and Germany.Private equity due diligence roles could be among the worst affected. Sixty percent of analysts with EU nationality and 46 percent with dual UK and EU nationality plan to leave within five years.

“We are seeing much-improved quality of shortlists for firms in continental Europe,” McManus says. “If you’re a mid- or upper-mid DACH focused private equity firm and you wanted to hire at all levels, whereas before you’d probably only be looking at the domestic market for your shortlist, now you’d be looking at the London market as well and getting a much better response.”

It’s not all bad news for UK private equity. Those with an established continental presence – such as Oakley Capital, which set up its first office outside the UK last year in Munich – should be able to navigate migration-related issues by transferring staff wishing to leave to European offices or simply hiring in those bases.