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How Private Equity Can Build a Leadership Team with Top Talent

Private equity talent is in high demand but filling vacant roles with the right candidates has never been easy. The challenge has been made even more difficult with the current talent shortage creating even more competition for valuable candidates. At a time when it’s more important than ever for private equity companies to be building teams that exhibit operation excellence, many organizations are struggling to recruit the necessary talent. If you’re wondering how private equity companies can build top leadership teams, there are four steps every PE business can take to see better results.

Nation’s Top Private Equity Executive Search Firm Explains

Focus on talent retention

There’s no point in recruiting top talent to your private equity company if you can’t retain the talent you already have. Talent retention is vital to the success of a company, but too often the hiring team simply focuses on filling vacant positions. Slow down and consider why the position is vacant in the first place. Ideally, you will have exit interview criteria to assess after an employee has left the company. If you don’t, now is the time to implement an exit process that includes an exit interview and honest assessment of the company so any issues in the company culture or process can be addressed.

Recruit in the right places

Building a leadership team full of top talent requires more than just posting a job description on the company website. Consider where valuable candidates are currently. Perhaps they’re working for a competitor or even in a different industry. Look for ways you can recruit these proven performers to your team. Ideally, the hiring team will have a pool of potential candidates they’ve been nurturing while waiting for a vacancy to appear. If your company doesn’t have a talent pool, then hiring a recruiting firm is another excellent option.

Recruiting firms know exactly where to look for the best talent in the industry. In many cases, recruiters already have relationships with experienced, sought-after candidates. A recruiter is then able to work with your ideal candidate and bring them through the application process. If you’ve been struggling to find the right talent for your team, hiring a recruiting firm could be the solution to your problem.

Create an attractive package

Once you find a talented professional, your company needs to be able to present an attractive package to the candidate. It’s likely the person you’re trying to hire is in high demand, so you need to be able to beat out the competition. When composing the valuable aspects of your company, compensation isn’t the only area you need to make a good offer. Company culture, flexibility, and future opportunities are all aspects of a company that can attract top talent. For example, a promising candidate may be looking for a business with healthier company culture or room for advancement. If you can clearly demonstrate the advancement prospects for the position and give concrete examples of the processes in place to ensure a healthy company culture, a candidate will take more time to consider your business.

Improve hiring processes

The hiring process is the first impression a potential candidate will have of your company, so it’s extremely important to ensure hiring practices are efficient and smooth. For example, nonresponsive hiring managers and slow decision-making times are not how you want people to view your company. This type of hiring process will leave candidates with the impression that the company has poor communication skills and that changes don’t get pushed through very quickly. Consider the process from the candidate’s point of view and try to make the hiring process as smooth as possible.

Private Equity

Don’t stop at the hiring process, either. Pay attention to the new talent’s onboarding process. Procedures need to be in place to ensure the new hire is given the right tools to succeed in the position. Otherwise, what’s the point of hiring top talent if you’re not going to train them on the business properly.

Private Equity Recruiters Conclusion

Private equity talent challenges don’t have to be a crisis. Slow down and assess what the company could be doing differently to improve talent recruitment and make the company more attractive to valuable candidates. It may feel like there isn’t enough time or resources to invest in talent recruitment, but this is one area of private equity that can’t be neglected. Top-performing leadership can boost revenue, improve efficiency, and even increase employee satisfaction. Investing in company talent is a valuable move that can give your company a competitive edge and lead to more success in the hiring process in the future.

The Making of a Private Equity Portfolio Company CEO

CEO turnover within private equity portfolio companies is shockingly high. According to a 2017 survey by AlixPartners, as many as 58 percent of private equity CEOs are replaced within the first two years of acquisition. Switching CEOs after two years can be detrimental to a PE firm’s return on investment given that most PE acquisitions are only held for five to seven years. Attempting to introduce new leadership in the middle of a PE investment life cycle can be damaging to the company’s success and ultimately the profitability of the company.

PE firms often experience high turnover because the CEOs hired or brought on during an acquisition do not meet the firm’s expectations. It is difficult to select the right CEO candidate for a private equity or venture backed company. Most candidates come from impressive backgrounds and have the first-hand experience that initially makes them seem like a good fit. However, if you really want to make sure you’re bringing on the right person to manage your investment look for a candidate who has the below qualities of a successful private equity CEO.

Award-Winning Executive Search Firm & CFO Consulting | Cowen Partners

The Team Comes First

CEOs need to be able to create a high-performing team, and a big part of that includes being a team player. Arrogant, self-involved leaders do not fare well in PE firms because they have a hard time motivating people to strive for the company’s goals. In some cases, an overbearing leader can even drive away top talent from the company.

A private equity CEO should be able to empower direct reports and make sure everyone is on the same page when working toward company goals. This means a CEO is willing to delegate tasks to the team without micromanaging the process. A strong leader also knows how to promote talent development. Key jobs within the firm can be improved through skill development and training. A team player is more equipped to notice areas of improvement because they’ll be more familiar with the department duties and be more willing to listen to concerns from those under them.

A few warning signs that indicate a candidate might not be the best team player include arrogant behavior and using “I” too much. If a CEO candidate is talking about past accomplishments and not giving any credit to his/her previous team, it’s an early warning sign that the person isn’t a team player. The number of colleagues a candidate can pull into their current venture also speaks volumes. If people who previously worked with the CEO want to stay on his/her team, that’s always a good sign.

Resilience Required

Resilience is made up of five pillars: self awareness, mindfulness, self care, positive relationships & purpose. By strengthening these pillars, we in turn, become more resilient. PE firms are bound to face a few setbacks and roadblocks when turning around a company. The CEO needs to be able to face these challenges and take them in stride. A candidate who can give examples of overcoming past errors and setbacks is able to demonstrate their resilience. A firm can have confidence in a CEO who knows how to take a negative result and work toward a solution.

You should be skeptical of candidates who have skated from success after success, or who at least try to make it seem that way. A CEO candidate who can talk about setbacks and how they overcame problems will give you a glimpse into how that CEO can adapt and work for your firm.

Strong Communicator

A CEO needs to have excellent communication skills to succeed. Open, straightforward communication can motivate team members and ensure everyone is on-target to reach company goals. It’s also imperative the CEO knows how to effectively communicate with other PE executives. Some CEOs do an excellent job managing their teams but struggle to convey information and needs to investors. In other circumstances, the opposite is true. The CEO works well with PE investors, but struggles to create a team environment within the company. A good CEO should be able to demonstrate an ability to communicate across all levels of management.

When selecting a private equity CEO, executive recruiters also really pay attention to how a candidate will fit in with the PE house culture. PE executives don’t realize how important culture fit is when hiring a CEO for one of their portfolio companies. Executives have to take the culture into consideration for a number of reasons. If the current culture has been doing well for the company then sticking with the current CEO could be beneficial, but if the culture needs to be altered to produce the desired results then looking into other candidates is best. A clear understanding of the culture shifts that need to happen for the company to reach its full potential will help you make the right choice when selecting a private equity CEO.

Choosing the right CEO for a portfolio company can make the difference between a profitable exit and stagnation. A CEO who demonstrates strong collaboration, resilience, and communication qualities will ensure your private equity investment is in good hands.

Cowen Partners Private Equity Executive Search

Cowen Partners is a national executive search and consulting firm. Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 100 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and director level leadership roles.

Cowen Partners Executive Search has particular expertise in the following areas: accounting and finance, IPO preparation, SEC reporting, corporate tax, financial institutions (banks and credit unions), enterprise software sales including technology, SaaS, and managed services, and rapid growth private equity/venture capital backed deals.

In addition to executive search, Cowen Partners Consulting offers CEO succession planning and CFO consulting for middle market companies on an interim, project, and fractional basis. CFO consultants provide forecasting, financial cashflow, treasury, software implementation, and M & A services. Cowen Partners maintains a multimillion dollar payroll service for even the largest of client consulting and staffing engagements.

With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, commercial real estate, healthcare, financial services, sales and finance.

National Executive Search Firm | Private Equity Recruiters

Cowen Partners is a national private equity executive search firm. Read more of our industry-leading C-Suite resources to see why Cowen Partners is one of the top executive search firms in New York City, Chicago, Seattle, San Francisco, Dallas, Los Angeles, and beyond:

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