PE Operating Partners Integrate New Role In Value Creation
June 7, 2024 – After a sluggish year for PE hiring, executive recruiters are beginning to see the pace of staffing mandates pick up across private equity. This, say search consultants, is coming at a time when the sector’s approach to talent is growing ever more complex.
According to chief talent officers at PE firms and their portfolio companies, the imperative for securing top-tier talent has never been more pronounced.
According to a newly released market intelligence report from Hunt Scanlon Media, talent recruitment was once the sole domain of these CTOs and their internal recruitment teams. Now, concludes the report, there is an evolving and growing role for operating partners in the talent equation.
No longer confined to traditional deal-making functions, operating partners are now instrumental in identifying, nurturing, and retaining top talent within portfolio companies.
“Their expertise in operational optimization and strategic guidance is an invaluable asset in navigating the talent landscape,” said Drew Seaman, managing director of Hunt Scanlon Ventures. In fact, the more reason, he said, “given the individuals at portfolio companies are what ultimately leads to value realization.”
Competitive Edge
According to Mr. Seaman, it is imperative that PE operating partners and their talent teams adapt as the industry continues to embrace technological advancements, such as AI. “No one is better suited to integrate these innovations to optimize the talent function than operating partners,” he noted.
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“Firms that effectively harness the power of AI and other cutting-edge technologies stand to gain a big competitive edge in talent acquisition, portfolio management and, of course, value creation,” he added.
A Look at the Landscape for Hiring a PE Operating Company CEO
Leaders of private equity firms looking to hire a portfolio-business CEO have a great deal to consider. The U.S. PE talent landscape is changing dramatically in real time, due to multiple forces related to economics, industry, and consumer habits, according to a recent report from Heidrick & Struggles’ Jason Henderson and Amanda Worthington. “They’re all converging to make hiring a CEO much more challenging than in the past,” the report said. “Most importantly, it means that the tried-and-true ways of identifying and assessing top PE-owned talent will no longer work.”
“By recognizing the critical importance of talent, embracing the evolving role of operating partners, and prioritizing culture in talent considerations, PE firms will position themselves for success in the dynamic landscape of private equity that lies ahead,” said Mr. Seaman.
Talent strategy has evolved significantly for PE sponsors as they increasingly embrace talent as a critical driver of value creation, noted the Hunt Scanlon report. Not only is talent a greater priority, but PE firms are increasingly integrating talent into their overall operational strategy. Enter the operating partner.
Enter the Operating Partner
According to recruiters and PE talent leaders, operating partners play a key role in identifying strengths and weaknesses throughout their portfolio companies. But there is now a broader talent management mandate layered on top of that.
“This shift in the role of operating partners is just beginning,” said Mr. Seaman. “We believe it will be a fundamental change as time goes on.”
So, too, will the operating partner’s role in shaping the private equity sector’s approach to AI and integrating it within the talent function.
“AI integration will be a strategic pivot towards innovation and competitive differentiation,” said Mr. Seaman. “But it is AI’s adaptation to talent management that will optimize everything from how people are identified and recruited to coached, assessed, and retained,” he noted.
Enter the operating partner.
Reprinted from with permission from ExitUp!
Contributed by Scott A. Scanlon, Co-CEO, Drew Seaman, Managing Director – Hunt Scanlon Ventures
