The headcount headache
How to scale operations without haemorrhaging cash in the era of consolidation
At last month’s Barclays Global Financial Services Conference, Apollo Global Management President Jim Zelter put a tremor under the chairs of GPs when he cautioned that private equity is heading for a “wash-out” with only a “handful of winners” likely to endure.
His warning reflected the reality that the market is in a drought and in an era of mass consolidation, with capital concentrating and LPs cutting the number of manager relationships they maintain.
In this current environment, scale has become a condition of survival rather than a choice, and many firms, especially those still maturing, are feeling pressure to build out their operations teams even as the cost of doing so is soaring.
At the same time, demands on investor relations and fundraising operations are rising, with MSCI’s 2025 General Partner Survey finding that LPs across the private markets are demanding more from GPs than ever before and show no sign of easing expectations.
However, in this climate, increasing headcount cannot be treated as the default solution. Firms should instead turn to well-structured CRM systems to scale investor relations and fundraising without the massive expense of adding staff.
Cost pressure
The financial strain of hiring for private market firms has been snowballing for some time, and compensation has become the dominant cost line for managers of every size.
According to a Gen II Fund Services report, compensation accounts for 63 percent of total costs at smaller firms with AUM between $50 million and $500 million, and 72 percent at both midsize and large firms with AUM above $500 million.
That pressure is worsened by the fact that compensation is still rising rather than stabilizing. A Heidrick & Struggles 2024 compensation survey shows that base pay across private market roles continued to rise year over year, while a 2025 study from Preqin found that nearly nine in ten firms still plan to maintain or increase headcount, intensifying the wage spiral.
Furthermore, executive search firms typically charge up to 35 percent of first-year cash compensation for senior hires, and searches are taking longer to close, pushing more work back onto already-thin teams.
Don’t repeat what you were built to fix
Private equity was built on eliminating inefficiency. In the late 1970s and 1980s, firms like KKR and Blackstone created outsized returns by stripping waste out of portfolio companies and forcing discipline into how capital was used.
The irony of the current moment is that many PE firms are now at risk of allowing inefficiency to accumulate inside their own walls. As David Rubenstein, co-founder of Carlyle Group quipped in a famous Financial Times interview, “People used to think that private equity was basically just a compensation scheme but it is much more about making companies more efficient”
Today, the same creeping operational slack is clearly evident in investor relations and fundraising infrastructure, where three recurring failure points dominate: lack of visibility, duplicated work, and misaligned system architecture. Well-planned CRM can help bring back the efficiency of private equity’s majestic past.
Visibility is a bottleneck: In many firms, the CEO or partners lack a single trusted view of fundraising activity or LP engagement. To compensate, teams build one-off reports, decks, and trackers, which multiply work and slow response times. This is fixable when there is a single system, and the team works from one shared view.
Duplication drains capacity: The same data is entered, reformatted and stored in different places because current systems are not built around how leadership reviews information. Removing this rework frees capacity and lets teams focus on investor relationships and deal pursuit instead of administration. This is not a structural problem; it is a system design problem.
Architecture is fundamental: Most current technology stacks were built to collect data, not to run a fundraising operation. When a CRM is structured around how a firm actually raises capital by stage, investor tier, touchpoints and cadence, the system begins to do the work. Forecasting becomes accurate, reporting stops being a separate job, and leadership can manage the process with fewer people. That is key to how firms build scale without headcount.
The future
A recent PE strategy report from Bain & Company echoes Zelter’s blistering assessment, stating that “fund-raising is hard and getting harder.” It also stresses that “scale is only becoming more important” and that efficient operations are now central to achieving it.
Therefore, in this climate, firms cannot rely on adding headcount or leaning on heavy automation to maintain momentum. The firms best positioned for the next decade will be those that treat CRM as foundational infrastructure, creating a single view of fundraising, eliminating duplicative work and allowing operations to scale without more people.
As the Bain report notes, “Private equity is in a state of change, one that may reorder winners and losers across the industry.” A disciplined CRM strategy is one of the few levers that can determine which side of that divide a firm ends up on.
