Executive search:
Private equity
With market conditions causing a slowdown in dealmaking and lengthened hold periods, private equity funds are sharply focusing on driving investment returns through operational initiatives inside their businesses. This is triggering an acceleration in the buildout of strong operating partner teams. Matthew Harvey, senior partner for private equity at InX, highlights the trends to look out for in 2024.
Here are the key areas leaders need to prepare for this year:
Competitive hiring market – choosing hiring partners who understand funds.
Building resilient teams – the importance of strong operating teams.
DEI – three steps to building diverse PE teams.
As a result of heightened PE hiring activity and market noise, waves of professionals are becoming excited by PE as a career route, many often unaware of fund and role nuances. Meanwhile, each fund is looking for professionals who closely match their investment culture and governance model. The result is an unprecedentedly long line of professionals eager to break into the industry.
The effective approach to securing the right executive in this fiercely competitive market is selecting search partners who understand fund culture and your in-house operating models.
Even though the macro environment has slowed PE dealmaking, it remains the busiest period our PE search team has seen. Investors are sharply focusing on the value-creation journeys within their portfolio companies to counteract global volatility. With hold periods becoming longer, funds are looking to increase the value of their portfolio companies ahead of future exits. With many management teams suffering fatigue during this process, investors need to strengthen functions up and down the chain to maintain the strongest possible operating teams.
The PE industry must continue to proactively improve DEI internally and across their portfolio companies. The demand for candidates with proven PE experience is far outpacing supply, and when it comes to diverse candidates, this problem is even more acute.
Clients are actively asking how to improve diversity in their hiring policies and workforce. Here are three key things InX do to build diverse shortlists for PE clients:
1 Measure and transparently report back on the diversity ratios within the target talent pools.
2 Ignite a constructive dialogue at the outset if there is underrepresentation for a certain skill set.
3 Tap into markets and industries beyond the obvious with thorough and creative talent research, mapping and networking.
With DEI picking up pace into 2024 and beyond, hiring quality and diverse teams remains vital.
PE has proven very resilient in comparison to public markets during recessionary environments – historically, it has always achieved the best returns during or shortly after these market conditions.
Valuations have dipped to much more investor-friendly levels in comparison to recent years, and funds are sat on portfolio stockpiles, so for investors with strong operational experience, now is the time to explore new opportunities. With PE’s longer-term investment horizon shielding investors from the panic selling you see in public markets, management teams can focus on the long-term vision away from the pressure of quarterly earnings calls.
A resilient PE hiring market looks set to continue into 2024 with a renewed focus on building strong, diverse teams able to drive the sector forward in challenging times.
