The financial crisis has forced private equity to return to its roots and focus on improving performance of portfolio companies. This also appears to be true in the industry’s recruitment trends.
Fredrik Bürger, a director in the operational due diligence team at professional services firm Deloitte, said he had seen a large increase in the recruitment of senior operational specialists at both large and small private equity firms. Bürger said: “Almost half of our clients seem to be upgrading and bolstering their operational teams. Over the last 12-18 months they have been doing so and that is continuing.”
Advent International, for example, hired about 30 figures from across financial services and other industries to its operating partner programme last year.
Firms are also looking to hire for similar reasons at their portfolio companies. Search consultancy Marble Hill Partners specialises in interim senior appointments. Its managing director Sam Smith said there had been an increase in interim chief executives appointments as private equity houses look to rescue and turnaround under performing portfolio companies.
Smith added: “One role that is more in demand than any other is that of finance director. In new deals there is often a need for a new person and in existing portfolio companies if there is any sense of under performance, the FD is the first to be removed.”
For those seeking to enter the industry in other capacities, the opportunities are around, if more limited. Will Moynahan, a recruiter at Heidrick & Struggles, said that another main area of recruitment was investor relations teams, which involves raising commitments for new funds.
He said: “Recruitment by [private equity] funds into their own ranks lies in two main areas building or rebuilding portfolio management functions; and enhancing or reinvigorating fundraising/investor relations teams.”
One example is BC Partners, which have been bulking up in investor relations ahead of its next fundraising. However, with the fundraising market at a low ebb – last year saw the lowest number of private equity funds raised for 13 years – most of the attention has been on management teams and operational experts within firms.
Sam Smith of Marble Hill Partners said the industry’s recruitment cycle had been similar to that at investment banks meaning private equity firms had begun to hire to their own ranks again but added most of the new hires were at the more junior investment manager and analyst levels.
According to a panel of private equity professionals, who spoke at the venture capital and private equity conference held at Harvard Business School last month, most hires in the industry were at the junior and senior ends which did not bode well for business school graduates.
Krista Parker, co-founder of recruitment firm Parker Linton Associates, said the majority of private equity firms were looking to expand their junior resource but they also had assignments at the slightly more senior principal level.
However, she said added potentially good news on the salary front, saying: “The banks are steadily increasing compensation packages, therefore private equity firms will need to take this in to consideration when making offers. A typical entry level candidate at a bank will be due a bonus in June or July and some private equity firms looking to bring the candidates on board before then need to be prepared to offer guaranteed bonuses and sign-ons.”
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