Redefining the Search Sector for PE Leaders
July 18, 2022 – The private equity sector changed drastically in the past 30 years and even more so during recent times which have presented plenty of obstacles. However, private markets bounced back in 2021. After a year of pandemic-driven turbulence that suppressed fundraising and deal activity, private markets rebounded. Fundraising was up by nearly 20 percent year over year to reach a record of almost $1.2 trillion. A new set of risks emerged at the beginning of 2022 with the potential to undermine growth and performance.
“With the pandemic’s effect on the talent equation, I believe PE firms have a clearer understanding that talent identification and recruitment of exceptional talent has become more highly competitive,” said Smooch Repovich Rosenberg, founder and CEO of SmoochUnplugged. “This is a direct result of CEOs, boards of directors, and overall management teams raising the bar on performance for those recruited into their leadership teams. In addition, I believe that PE firms are seeking more sophisticated search partners whose knowledge and expertise is not only highly focused such that they are considered subject matter experts, but there is a strong appetite to collaborate with firms who actually have long-standing relationships with specific talent sectors.”
Ms. Repovich Rosenberg recognizes that the economic downturn of late has had a significant impact on the private-to-public path, however, that PE firms should stay the course during downturns and continue focusing on how to get a return on their investments, which is where a firm like SmoochUnplugged has distinct leverage as a result of focusing in recruiting of investor relations officer talent. “There are a couple of ways that PE firms obtain a return on their investment – sell a portfolio company to a larger entity, or take them to the public markets which requires specialized preparation long ahead of the listing date,” Ms. Repovich Rosenberg said. “This demands the attention of a seasoned IRO who knows intellectually and intuitively how to position a private company’s brand and financial metrics for the IPO (IPO readiness) and an IRO who has an exceptional track record with the global investment community as it relates to advancing a company to the public markets.”
Looking ahead, Ms. Repovich Rosenberg foresees an increased focus on the IPO process which the markets seems to favor more than a SPAC that non-PE firm sponsored entities have seemed to choose in the past couple of years; it seems that SPACS have fallen out of favor with talent as well. She believes that there are a tremendous number of positive outcomes that the marketplace is already experiencing, and there will be more to come, such as:
- Raising the Bar Effect: CEO and boards’ increased expectations of senior leadership team members – the “raising the bar” effect, which has been a necessary shift for many years.
Related: Private Equity Firms Invest in Raising Their Talent Game
- The Flexibility Pivot: Shift to more intellectual and psychological flexibility in terms of corporate structures, working environments, and how executives lead their organizations and teams. This, most likely, will result in developing savvier professionals whose intangible leadership attributes will be sharpened.
Spotlight: Redefining the Search Sector for PE Leaders
Smooch Repovich Rosenberg is the founder and CEO of Smooch Unplugged. She brings strategic investor relations officer search consulting focus to the PE arena as a means to helping firms realize their portfolio company valuations as these entities contemplate entering the public markets. Her 30-plus year collaborating with pre-IPO companies across industry sectors is one of the most unique search consulting strategies in the marketplace. Working with PE firms’ portfolio companies and other pre-IPO companies across North America, Europe, and Asia has been a brand enhancer for her as an expert in the capital markets and the deep and broad investor relations officer search work she and her team conduct.
- Intentional Inclusiveness: The notion of people being inclusive historically has been left to individual mindsets, and now management teams are making an intentional pivot to weave inclusiveness into the fabric of their cultures, which means advancement for a broader slate of talent than ever before.
Functions in the Spotlight
Ms. Repovich Rosenberg notes that for roles in the most demand, all functions that are direct reports to a CEO as well as two additional key leadership roles – investor relations officers and chief communications officers, both of which are essential to advancing companies’ brand stewardship with the investment community and evolving a new partnership with internal constituencies. “Both functions make the good times great and make the unfortunate times better, with all internal and external constituencies,” she said.
Today, PE firms demand that search firms serve as very specific subject matter experts in niche areas, especially those functions that are evolving constantly, year by year, according to Ms. Repovich Rosenberg. “Investor relations is a terrific example – when a pre-IPO company is contemplating becoming a public entity, the private-to-public journey can be a very foreign one to the portfolio entity management teams,” she said. “As such, if the search consultant is not a subject matter expert who can advise CEOs and CFOs about the complicated process and critical nature of the responsibilities of creating an effective stewardship/relationship with the investment community, many portfolio companies will be ill-prepared to become a public entity management team. This is where knowing the intimacies of the IRO universe and IR talent becomes paramount to the future success of the portfolio company.”
Ms. Repovich Rosenberg serves as much as advisor to PE firms and their portfolio companies to assist them in understanding primarily two sentiments: a) the rigors of the journey of becoming a public company management team and the considerations that require an intellectual investment prior to becoming a listed company, b) coaching leaders of private companies about the critical nature of being “ready” to embark on the private-to-public path as it relates to recruiting an IRO. “Let’s face it, there are certain elements of preparedness that need to be in place before recruiting an IRO so that a management team is educated about the role, its stewardship of the conversation with the investment, community, etc.,” said Ms. Repovich Rosenberg. “Serving in an advisory capacity like this is a win-win for everyone.”
Related: Private Equity Recruiting and What it Takes to Find the Right Candidates
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media