The private equity sector continues to seek new talent in spite of the deepening recession and promise of increased government regulation, according to a report by global executive sear
The private equity sector continues to seek new talent in spite of the deepening recession and promise of increased government regulation, according to a report by global executive search and assessment firm Russell Reynolds Associates.
The report details how the private equity market is actively recruiting new talent to build capabilities in new directions including distressed debt, secondary purchases or sales, and sector-specific activity.
Some middle market firms are seeking to exploit turmoil in the larger PE funds by selectively adding talent, while PE portfolio companies are changing or adding to leadership teams, often at the highest levels.
‘Boards and PE investors are coming to the conclusion that the strategies and competencies needed to run their businesses in this economy are different from what was needed in the past,’ says Abby Adlerman, head of the private equity practice in the Americas at Russell Reynolds Associates. ‘To the extent that the current leadership has recognized this and has adapted, these companies are well-positioned and will have a critical head start in the competitive environment.’
The report says the consumer packaged goods segment has sharpened its focus on talent associated with generating revenue as the relationship between product companies and retailers continues to evolve. Thus, channel management skills are at a premium. In addition, brand building talent remains highly valued since product differentiation in a highly competitive world is increasingly important. With ongoing competitive pressure and globalization of all aspects of CPG, broad general management skills that include a good understanding of all aspects of the business-from supply to demand-are needed in the C-suite.
In the pharmaceuticals/biotechnology sector, companies are looking for proven talent versus untried leadership. This is particularly the case in chief executive searches for private equity and venture capital portfolio companies. Chief executives with a track record of successful merger and acquisition activity are in particularly high demand. Due to industry consolidation, executives who have traditionally considered only mid- to large-cap opportunities now are willing to consider leadership roles in earlier-stage, private companies. Strong research and development and business development talent are in high demand.
In the global banking and markets sector, demand is high for bank chief executives who possess a track record of success in advising and conducting due diligence on troubled banking institutions to identify those institutions with growth possibilities and limit potential future losses. In some cases, the chief executive will run the bank post-investment. Regulators will place a high priority on ensuring that the proper management infrastructure is in place, which will result in a high demand for talent in risk, finance and compliance. Finally, boutiques that have been mainly equity execution-oriented are expanding into fixed income, which has seen a flow of talent from large financial institutions, the report says.
In real estate, depending on the firm and its existing personnel and resources, sought-after talent ranges from midlevel communications and analytical talent to field incoming inquiries from existing clients to rainmakers with deep pension fund and consultant relationships. While there has been an insignificant amount of movement thus far, a period of repositioning is anticipated among senior players seeking viable and diversified investment platforms. While voids in asset management personnel have been addressed in some cases by underutilized investment professionals, there has been a significant increase in demand for workout and operating talent. Of most significance, those with workout experience from the early 1990s are in tremendous demand, particularly sought after by special servicing and restructuring firms. Finally, regardless of asset class, owners and third-party providers now are seeking best-in-class operating talent to more effectively run portfolios.
