A recently published report by Hunt Scanlon entitled ‘Private Equity Recruiting – The Widening War for Leadership’ looked at the continuing phenomenal growth of the sector and its hiring challenges.

In the US alone last year, 40,000 deals involving private equity or venture capital funding, mergers or acquisitions were completed.

In 2018, PE firms in the country realised a total deal value of $713billion from a record 4,828 deals – an increase of 17.2% and 5.5% on 2017’s figures.

But as Hunt Scanlon reports: “Beneath the unflagging optimism that PE firms will continue to produce stellar returns lurks a growing pressure to deliver the goods.”

The report goes on: “To overcome such obstacles and to continue to provide value for their investors, private equity firms are looking to top talent more than ever before. These days, and for the indefinite future, finding the best leaders for their portfolio companies is not just important - it is imperative.”

At Armstrong Craven, we are partnering with an ever-growing number of PE firms both in the US and Europe to help them win the war for talent.

Whereas previously, the tendency among many PE outfits was to take a reactive approach, paying expensive search fees to fill urgent roles, now we are seeing firms adopt a more proactive talent acquisition strategy.

Examples of recent, relevant projects we have undertaken for clients include:

  • Mapping and pipelining of CFOs with specific experience from PE portfolio companies. This enables clients to build relationships with, and have access to, the right CFO at the right time.
  • Pre-deal insight focused on competitor compensation levels as part of their commercial due diligence. This allows clients to better understand HR/attraction/retention issues and as a result they will be better informed if the investment case makes sense or not. They will also be better informed of what must be addressed, should they go ahead with the deal.
  • Mapping and pipelining of Chairs and Non-Executive Directors; e.g. a global bank, a medical devices manufacturer, a biotech company, a healthcare provider, a telco/tech corporation, a multinational publishing company and an international law firm.

PE portfolio companies often need to build teams quickly, but struggle to find the best talent. With record levels of employment in the US and elsewhere, it makes attracting the best candidates even harder.

A further complexity is that sometimes the best talent is not necessarily the right talent. The cut-throat environment of a PE-backed business is not for everyone.

Some of the best candidates for senior roles such as CFO, COO, CIO, CTO and CMO will never be the right fit, perhaps because they are too used to a more corporate environment and less suited to the more dynamic, sleeves-rolled-up requirements of many scale-up PE businesses.

Building mapping and pipelining services into your talent acquisition strategy can make such a difference. It means that you will end up with a highly qualified list of candidates who we know would be perfect hires for your PE-backed business.

The nature of many PE companies is that they typically have both immediate roles to fill, but will also be recruiting aggressively over the short and medium term too. Putting in place an organizational road map to plan how your team is likely to evolve over such a period is business critical.

Leslie Lazarus is Armstrong Craven's Senior Client Partner & Head of Americas and Jon Stephansen is Practice Director – Financial Services