Private Equity Growth & Evolution

June 19, 2020 – In order to adapt to the nuances of modern private equity recruiting, it is necessary to first understand how the industry has changed, according to recent insights report by Chicago-based executive search firm Slayton Search Partners.

The private equity environment has seen explosive growth in the 2000’s. “Twenty years ago, there were perhaps only 20 private equity firms with over a billion dollars in assets,” the search firm noted. “Today, there are over 1,000. Assets under private equity management are not just growing rapidly, but they represent larger and more sophisticated businesses. This type of evolution makes clear that the strategy of private equity firms is changing.”

Talent Reengineering

Slayton points out that before, firms used to emphasize operational reengineering. “Firms could take portfolio companies that needed direction, streamline processes, and turn that business over for a healthy profit,” the search firm said. “Today’s private equity firm focus is on talent reengineering, emphasizing getting the right talent in the right seats at the private equity and portfolio levels. Not long ago, the tenure of executives in portfolio companies, once acquired, was one to two years.”

Today, Slayton said prior to purchasing a business, a private equity firm will assess a company’s executive team and make personnel changes that take effect immediately so that their strategy can be instantly employed and the company can hit the ground running. “In 2020, we have the luxury of analytics and data that can better support the vetting of talent,” the search firm said. “Now, even before an interview, we can know what kind of person, leader, and developer of talent a candidate really is. Knowing the cultural fit of a candidate and how they respond to difficult situations sheds a new light on the evaluation process.”

“Hard skills and soft skills are both essential to private equity roles, and the talent management processes of today are better able to vet those areas,” Slayton said. “There’s no question that it is a candidate’s market in private equity. So much growth and focus on talent can only be sustained by steady hiring, and yet the pool of qualified talent is quite limited. It takes time and effort to capitalize on today’s new strategic directions. Engaging with experienced recruiters is how many private equity firms are solving the difficulties that recruiting in the space brings.”

Slayton Search Partners recognizes that to successfully infuse talent and capital into languishing portfolio companies, an innovative, client-focused search approach is crucial. “Our skilled search executives are highly cognizant of the nuances of the private equity industry, building wide networks of talented executives who can fulfill the unique cultural fit and exclusive demands of the sector,” the firm said.

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