Count hours, not names: tier the LP base, add the fixed reporting load, and size the team for the fundraising year rather than the quiet one.
Size an investor relations team in hours, not in names: tier the LPs by the servicing they need, add the fixed reporting workload, and divide by the hours one professional can give to existing investors. On an illustrative base of 120 LPs needing 2,935 hours a year, the firm needs 2.17 IR professionals outside a fundraise, about 55 LPs each, and 4.08 during one, about 29 each.
Worked in full in Private Equity Investor Relations by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
"One IR person per so many LPs" is the rule of thumb most firms start with, and it fails for a simple reason: LPs are not the same size and do not ask for the same things. A sovereign fund with a co-investment programme and an annual on-site review takes many times the hours of a family office with a small ticket that reads the quarterly letter. The calculation below makes the mix explicit, then shows how far the answer moves when it changes.
| Activity | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|
| Quarterly calls and updates | 6 | 6 | 2 |
| Annual meeting and LPAC | 6 | 4 | 2 |
| Ad hoc requests and data | 24 | 10 | 3 |
| Annual review or site visit | 16 | 3 | 0 |
| Questionnaires and DDQ refresh | 8 | 2 | 1 |
| Hours per LP | 60 | 25 | 8 |
| Number of LPs | 15 | 35 | 70 |
On top of the per-LP hours sits a fixed load that does not depend on how many LPs there are: drafting the quarterly letter, the reporting templates, organising the annual meeting. It is set at 600 hours a year. Each professional works 1,800 productive hours, of which 75 per cent goes to existing LPs in a normal year and 40 per cent during a fundraise, when the rest goes to new investors, the data room and due diligence.
Hours needed = Σ (LPs in tier × hours per LP) + fixed reporting hours
= 15 × 60 + 35 × 25 + 70 × 8 + 600 = 900 + 875 + 560 + 600 = 2,935
Capacity per professional = 1,800 × 75% = 1,350 hours, or 1,800 × 40% = 720 in a fundraise
Team = 2,935 ÷ 1,350 = 2.17; in a fundraise 2,935 ÷ 720 = 4.08
Excel, LP counts in B2:B4 and hours in C2:C4: =(SUMPRODUCT(B2:B4,C2:C4)+600)/(1800*75%)
The average is 24.46 hours per LP including the fixed load, and 120 LPs over 2.17 professionals is 55.2 LPs each. In a fundraise the same base needs 1.90 more full-time equivalents and each covers 29.4.
A firm with this base can run with two IR professionals and some help from the deal team in a quiet year. It cannot run a fundraise with them: either it hires ahead of the raise, borrows capacity from a placement agent or the partners, or servicing of existing LPs slips at exactly the moment they are deciding whether to re-up. How long that period lasts is worked in how long it takes to raise a private equity fund, and why the existing LPs matter most to the outcome in what re-up rate a successor fund needs.
| LP base | LPs | Hours a year | Team, quiet year | Team, fundraise | LPs per person, quiet |
|---|---|---|---|---|---|
| Base case | 120 | 2,935 | 2.17 | 4.08 | 55.2 |
| Add 40 Tier 3 LPs | 160 | 3,255 | 2.41 | 4.52 | 66.4 |
| Add 5 Tier 1 LPs | 125 | 3,235 | 2.40 | 4.49 | 52.2 |
| Ad hoc requests halved | 120 | 2,475 | 1.83 | 3.44 | 65.5 |
| 120 LPs, all Tier 3 | 120 | 1,560 | 1.16 | 2.17 | 103.8 |
| 120 LPs, all Tier 1 | 120 | 7,800 | 5.78 | 10.83 | 20.8 |
Forty small LPs and five large ones add almost the same workload, 320 and 300 hours. Halving ad hoc requests, by publishing a better data pack each quarter, saves 460 hours, more than either. The cheapest capacity an IR team can find is usually in the questions it stops having to answer one by one.
The base case also shows where the hours concentrate. The fifteen Tier 1 LPs take 38.5 per cent of the servicing time and the seventy Tier 3 LPs 24.0 per cent. A senior IR professional who owns the Tier 1 relationships and a junior who runs the reporting cycle and the smaller LPs is a common split for a team of two, and the table tells you when it stops being enough.
Tiers are usually set by commitment, and the hours per LP follow. Per unit of capital the order reverses. On assumed tickets of 40m, 15m and 3m, the three tiers hold 600m, 525m and 210m of commitments. Tier 3 holds 15.7 per cent of the capital and absorbs 24.0 per cent of the servicing hours: 2.67 hours per million committed against 1.5 for Tier 1. A fund that widens its base with many small tickets, often through a wealth channel, should budget IR time for them explicitly, or route them through a feeder that reports on their behalf.
The hours in the assumptions table are illustrative. Replace them with a fortnight of time records from your own team before using the result for a hiring case: the ad hoc line is the one firms underestimate most.
Team = (Σ LPs × hours by tier + fixed reporting) ÷ servicing hours per person. Here 2,935 ÷ 1,350 = 2.17 professionals, or 4.08 in a fundraise. Size for the raise, tier by hours as well as by ticket, and measure the ad hoc requests before hiring to absorb them. The book's 24-week fundraising workplan, the LP meeting brief and the DDQ checklist are among the working documents with the free companion files for this book.
There is no reliable universal ratio, because the hours per LP vary by a factor of more than seven between the largest and the smallest. On the illustrative base here, one professional covers about 55 LPs outside a fundraise and 29 during one. The same 120 LPs would need 1.16 professionals if all were small and 5.78 if all were large, so a ratio quoted without the mix means little.
Less per investor, more per unit of capital. In the worked base a Tier 3 LP takes 8 hours a year against 60 for a Tier 1, but on assumed tickets of 3m and 40m that is 2.67 hours per million committed against 1.5. Seventy small LPs hold 15.7 per cent of the capital and absorb 24.0 per cent of the servicing hours.
In this model the servicing hours stay the same but the share of each professional's time available for them falls from 75 to 40 per cent, because the rest goes to meetings, data room and DDQs for the new fund. The team needed rises from 2.17 to 4.08, an extra 1.90 full-time equivalents, for the twelve to eighteen months of the raise.
This article is one calculation from Private Equity Investor Relations. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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