The Evolving Dynamics of Executive Search in a Leaner Private Equity Environment

December 17, 2024 – The interplay between private equity firms and executive recruiters has transformed dramatically over the last decade. No longer confined to a simple client-vendor relationship, these interactions have grown into strategic alliances that are essential for success in a highly competitive environment, executive recruiters tell Hunt Scanlon Media. As the demand for exceptional talent escalates, the need for a collaborative approach has become evident, shaping the future of talent acquisition and management within the industry.

This shift is driven by the unique challenges that private equity firms face in their hiring processes. Unlike traditional corporate environments, where roles and responsibilities may remain static, PE/VC firms operate in a world that demands agility and quick adaptation. The dynamic nature of their business requires not just speed in filling roles but also precision in identifying candidates who can thrive in the ever-changing landscape of PE-backed companies, according to multiple reports. As a result, relationships with search firms have deepened, fostering a mutual understanding that goes well beyond transactional exchanges.

“One of the most consistent themes in conversations with private equity firms about portfolio company talent is the need for leaders who are agile, fast-moving, and hands-on,” said Mark Oppenheimer, CEO of Modern Executive Solutions. “While there’s often interest in individuals from top-tier brands or academy companies, there’s less appetite for lifers who have spent their entire careers within those environments. Leaders in private equity must excel at driving outcomes with tighter budgets and leaner resources.”

“They can’t depend on established processes or operating models to get things done—they need to build and create these frameworks themselves, often with smaller teams,” Mr. Oppenheimer said. “Moreover, across all functional areas—whether it’s a CTO, CMO, CRO, or CFO—leaders must have a sharp focus on the financials, ensuring that every decision ties back to the business’s bottom line.”

“Private equity and venture capital firms seek candidates who can directly address and solve their operational challenges,” said Simon Wan, CEO of Cornerstone International Group. “Once a deal is finalized, time is of the essence—each day impacts their path to exit, making operational expertise critical. Our experience at Cornerstone shows that top PE/VC firms value the agility and precision a search firm can offer, and they’re willing to invest in search services that deliver faster, higher-quality results.”

“As the PE/VC landscape has grown and matured, many firms have adopted elements of a corporate model, with larger firms organizing functional expertise across separate operational and investment teams and often engaging an internal talent partner to coordinate with trusted search firms,” said Mr. Wan.

“For the past 12-18 months, companies at Series A through Series E have been advised by their investors to stay lean and cut back on hiring in general, only hiring when there is a mission-critical need within the business,” said Norm Volsky, managing partner and digital health practice leader at Direct Recruiters, Inc. “Areas hit the hardest over the past year and a half are customer success/ account management, marketing, product, strategy and middle management sales leadership. Since there is less hiring, functional leaders within companies are not moving as often, so fewer leadership roles are available outside of replacing an executive who is underperforming. Seed stage companies are doing a greater percentage of the hiring in this environment which is nice for entrepreneurial people and leaders but many C-level leaders are expected to roll up their sleeves and do the day to day operational work that the business requires as opposed to sitting in an ivory tower setting strategy for their teams to execute on.”

The main thing investors are looking for in this environment is doers, executives who roll up their sleeves and personally do the selling, strategic partnership with channel resellers, marketing, customer relationship management, and product roadmap builds, according to Mr. Volsky. “These investors are looking for people who have effectively scaled seed or Series A companies all the way through an exit (IPO, merger, acquisition),” he said. “Investors want to see quantifiable impact that executive level candidates have had in their previous career stops.”

Mr. Volsky also notes that the most shrewd investors are giving candidates the good, the bad, and the ugly that pertain to their portfolio companies. “The worst mistake I have seen in the past two-plus years is CEOs and their investors selling their company with rose colored glasses and misaligning expectations of just how hard it will be to perform upper quartile returns in a market with cautious buyers and under-resourced teams,” he said. “The companies and investors that are obviously selling the advantages of the company and why they are so bullish, but also being realistic on where the business is now and the challenges that the executive is sure to encounter are the ones that are getting the most results and having the best retention rates.”

Networking is essential for candidates to not only have access to the best career opportunities but also to have the best shot at landing the most desirable jobs, Mr. Volsky explains. “In this new digital world, it is hard to decipher fiction from reality,” he said. “Referrals from former executives or peers are probably the most important factor in a decision-making process for executive level hires. If there is a candidate who applied on their own and didn’t ask their network to advocate for them with the hiring team, they are putting themselves at a major disadvantage. Word of mouth referrals are worth their weight in gold when it comes to the end of a hiring process.”

Diversity and Inclusion

When it comes to how private equity and venture capital firms approach diversity and inclusion in their executive hiring practices, Mr. Volsky said that some firms are great at it while others are still stuck in the 20th century. “The ones who do it well realize that diversity of thought can be a secret weapon for their portfolio companies,” he said. “Of course, industry experience and contacts can be very helpful and if someone has previously worked for a direct competitor can certainly shorten the candidate’s learning curve, but having a homogenous team who all worked for the same company previously can result in the dreaded group think that stunts innovation. Forward thinking investors are understanding that there are a wealth of candidates who have transferable skillsets from tangential industries that can bring diverse thoughts and ideas to move their future employers forward.”

“The recruitment landscape for PE/VC talent has been evolving, shaped by economic shifts, technological advancements, and changing market dynamics,” said Kevin Barry, managing partner at SPMB. “In 2023 and 2024, deal activity slowed which had a meaningful impact on hiring trends—most notably the grow at all costs era has given way to a more disciplined approach to value creation. This shift is particularly evident in VC recruiting, where firms are increasingly prioritizing candidates with strong financial acumen and operational discipline—often actively seeking those with PE backgrounds who bring proven experience in detailed financial analysis and capital-efficient growth strategies.”

“Perhaps not surprisingly, under-performing business or those fighting hard to meet minimum financial objectives—both in VC and PE—are choosing to forego backfilling senior officer departures; instead asking existing ELT members to take on a broader remit beyond their given function or making due with second-level leaders running a function instead of backfilling the top job,” said Jon Landau, partner at SPMB. “While this stop gap measure may save cost in the short term, it also layers on added pressure to an already stressed organization, often hastening the departure of other key executives on the team. While we’ve seen a dip in overall search volume this year and last (in line with broader industry patterns), certain roles—like CEO/president/GM, CFO, product management, sales, and post sales leadership—are experiencing increased demand as portfolio companies are focusing on strong manage- ment, customer growth and retention, and product improvements, especially in the B2B space.”

In today’s market, hiring for C-level talent is all about proof points of success, according to Mr. Barry. “CEOs are looking for execs who have a proven track record of driving growth and profitability, especially in fast-paced, results-driven environments,” he explains. “If a candidate has led a successful turnaround, scaled a business, significantly expanded market share, or has personally been part of a successful exit, it’s a distinct advantage in the interviewing process – if not a must.

“Speed of execution in today’s economic climate is paramount,” Mr. Landau said. “If a senior officer can jump into a new role and hit the ground running they bring exponentially more value than the exec who needs 6 months to ramp up on a given industry or problem set. Candidates who play to their strengths and focus on sectors and roles that are in their wheelhouse beat out the untested candidates every time.

Cultural Fit

“Private equity firms place a strong emphasis on cultural fit during the executive recruiting process, understanding that misalignment in this area can undermine even the most qualified candidates,” Mr. Barry said. “To assess cultural fit, PE firms focus on whether the executive’s leadership style aligns with the company’s values and operational philosophy. This involves evaluating how well a candidate can integrate into a high-pressure, results-oriented environment, which is typical in PE-backed companies. Firms often use in-depth behavioral interviews, third party assessment tools and thorough reference checks to understand how candidates have managed past business situations and teams, particularly in environments requiring rapid growth, restructuring, or strategic pivots. Additionally, many PE firms engage in CEO market mapping and extensive networking within their portfolio to identify candidates who share similar philosophies on growth, leadership, and operational excellence.”

“PE firms are not just looking for candidates who can execute their vision but for those who can foster collaboration, create a positive workplace culture, and drive long-term success,” Mr. Landau said. “Cultural fit is seen as integral to achieving transformational change within portfolio companies, where leadership alignment is crucial for seamless decision-making and driving business growth.”

“Networking plays an important role in executive recruiting for venture capital firms, as much of the process is relationship-driven,” Mr. Landau added. “VCs often leverage personal referrals, industry connections, and trusted networks to identify and evaluate top executive talent. For candidates, effectively leveraging these connections is key to standing out in a crowded and competitive space. Leveraging existing connections for warm introductions can significantly increase a candidate’s visibility among VC firms and their portfolio companies.”

“To build or enhance your network, candidates should have a visible presence—both at relevant industry events and on professional platforms like LinkedIn—by sharing insights, thought leadership, and success stories that can help candidates establish credibility and attract the attention of recruiters and talent leaders,” Mr. Barry suggests. “In an industry where connections are vital, being proactive, visible, and strategic in networking can open doors to compelling opportunities.”

The climate for recruiting mid and senior-level investment professional talent in PE/VC is currently shaped by a challenging deal environment and strained fundraising landscape, complicating deal execution, according to Adam Kahn, managing partner at Odyssey Search Partners. “Some PE/VC firms face difficulties raising capital or have raised smaller funds,” he said. “Additionally, pressure on returns is scaring PE firms from overpaying on deals, and firms are focusing on portfolio company work and preparing for exits to meet the demands to return capital. This capital constraint can be particularly frustrating for candidates, as career progression in PE is inherently tied to sourcing and closing deals.”

Ability to Close Deals

“As a result, candidates who haven’t been able to close deals are considering opportunities at firms where they can actively deploy capital,” Mr. Kahn said. “Simultaneously, for professionals with carried interest, the value of their carry may be less than they anticipated, reducing the financial barriers to switching firms and making it easier for senior professionals to consider other opportunities. Furthermore, some investment professionals at traditional buyout or minority growth equity firms are gravitating toward funds with flexible investment mandates as they grow frustrated by the limitations imposed by their stricter investment parameters.”

At the junior level, Mr. Kahn explains that the war for top talent remains fierce and is shaped by PE/VC firms’ desire to secure the best candidates. “Private equity firms are accelerating their recruitment timelines for junior talent,” he said. “For over a decade, on-cycle recruiting for private equity associate roles has inched earlier and earlier relative to the beginning of investment banking Analyst programs. This year, it took place in June 2024, before most bankers had begun training. As on-cycle recruiting has evolved to begin earlier each year, it’s becoming more of a strategic approach to secure top-tier talent ahead of competitors. It has become just one of several channels for sourcing junior candidates, alongside campus recruiting, on-cycle 2.0 later in the year, and off-cycle recruiting.”

Mr. Kahn notes that this multi-channel recruiting strategy ensures that firms don’t miss out on securing top-tier bankers who are ready to recruit early, while also allowing flexibility to bring in candidates who want more time to sharpen their technical skills and refine their career goals before committing to a private equity role that would start two years down the line.

Private equity firms are becoming more selective in their investment professional hiring, placing greater emphasis on securing long- term hires through thoughtful recruiting processes, according to Mr. Kahn. “When evaluating candidates for investing roles, these firms prioritize factors including financial expertise, operational experience, leadership ability, alignment with the firm’s strategic direction, and cultural fit,” he notes. For experienced investment roles, strong financial acumen and a proven track record in leading transactions are essential. Candidates who can drive value creation through successful deal execution, particularly with M&A experience or notable exits, are highly sought after. This is particularly true for mid and senior-level roles, where candidates must have acted as deal captains, demonstrating success in leading processes and delivering strong outcomes.”

Beyond technical skills, Mr. Kahn said that relationship-building is crucial in PE/VC. Firms prioritize candidates who can maintain and grow relationships with key stakeholders such as founders, investors, and strategic partners. “These connections are vital for effective deal sourcing and fostering future partnerships,” he said. “Equally important is talent management, particularly for mid and senior-level hires, where firms seek leaders capable of developing and overseeing high-performing investment teams. Candidates are assessed on their leadership potential, and a strong executive presence is also highly valued, as it inspires confidence and fosters trust—critical factors in advancing deals and ensuring long-term success as an investor.”

With this in mind, Mr. Kahn explains that firms conduct in-depth interviews that go beyond technical competencies to explore a candidate’s values, leadership philosophy, and core beliefs about business operations. This approach ensures that the candidate’s vision for value creation, whether focused on cost optimization and operational efficiency or growth and market expansion, aligns with the firm’s strategic goals.

“Firms are increasingly focused on evaluating cultural fit, especially now that remote interviews are common in the early stages of the hiring process,” Mr. Kahn said. “To assess cultural alignment, firms often invite candidates to informal settings, such as dinners or meetings outside the office, with senior management. These interactions allow senior leaders to gauge how well candidates engage with core partnerships, assess their interpersonal skills, and determine their alignment with the firm’s values.”

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media

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