We’ve outlined a few key points of interest from the front lines, let me know if you find them useful or if we missed anything.

We are happy to announce that we were, once again, named by Hunt Scanlon as one of the Top Search Firms In The PE Sector.

Below you’ll find:

  1. Key points from a recent A&M survey of the Portfolio Ops function
  2. A few insights from a recent discussion about “Avoiding Bad C-Suite Hires in Your Portcos”
  3. A few recent Market Moves

A recent Hunt Scanlon stated: “Recruiting the right people to put in senior role at PE portcos and developing exec leadership teams to drive growth is hotter than ever”.

Dealmaking has slowed but most PE talent search teams are as busy as ever. Investors are focused on value creation in their portcos as they navigate economic headwinds, drawn out hold periods and fatigued management teams. PE firms are aggressively hiring Portfolio Ops professionals and portco leadership; financial expertise and strategic initiatives are sought after skill sets along with Go-To-Market and Sales/Marketing Leadership.

Other areas of operating expertise where demand is growing include cybersecurity, ESG and DEI. We also see a continued interest in human capital expertise both around strategy, org. structure and leadership, but with a heavy focus on talent acquisition.

We’ve been busiest with Financial (CFO/Dir of Finance/Control/FP&A) and Transformation (Strategic Initiatives/M&A Integrations/Strategy) leadership. We’re starting to see a shift to hiring more junior/mid-level professionals into these functions; efforts to build a “base to the pyramid” indicate an interest in adding hands-on “doers” that can execute to the traditional senior exec teams providing strategic advisory.

Key Insights A&M Port Ops Survey

Some interesting insights from a recent Alvarez & Marsal study that ring true with what we see.

  • Over the last decade, in-house operating functions have become standard within PE funds; Alvarez & Marshall estimate about 5000 professionals in operating functions in PE with an average group size of 20.
  • There has been no one-size-fits-all model that has evolved over the last decades; size, composition, focus and background vary significantly by fund. A&M noted a clear trend toward operating teams being involved in both pre- and post- acquisition needs.
  • Operating functions in PE are poised to accelerate over the next few years; most indicate an intention to grow their operating groups, with more than half expecting to grow by at least 50%.
  • Experience counts; while extremely diverse in terms of function and industry focus, all operating groups prefer experience professional, most operating professionals have at least 20 years of experience.
  • Managing growth is still a major focus area; more than half of PE Ops efforts is expected to be around growth, whether organic or inorganic (shifting toward organic growth most recently).

I attended a discussion with Talent Executives from Providence Partners and WCA&S on “How to Avoid Bad C-Suite Hires in PE PortCo’s” where some interesting points were made:

  • Data shows that executive turnover spikes roughly 6 months after deal closures spike; this demand in that market drove a 16% increase in OTE comp packages from 2018 to 2022. In 2021 there was a spike in “Got-To-Market” exec demand causing comp in that function to outpace CEO comp, that trend has since flipped with CEO comp taking the top spot again.
  • Hiring continues to become more sophisticated and there is more competition than ever for top talent; PE investors know that the impact of an A-player in a portco is so significant that some feel compensation should be a non-factor.
  • “Step up” candidates, top talent that has outperformed at a level down from the CEO, is experiencing growing demand as firms look farther for talent that can transition into the CEO role; this has become more commonplace in a tight market and has proven to be a successful strategy for filling CEO roles with A player talent.
  • Hogan and other behavioral assessments continue to be a vital part of the assessment process;
  • Diversity Hiring continues to grow in importance for PE’s and their portcos, as we noted in our last update we are seeing this trickle down to smaller firms as well.

Notable Market Moves

  • Varsity Healthcare Partners appoints Douglas Costa as Operating Partner. He previously was the Enterprise Chief Financial Officer at Cancer Treatment Centers of America.
  • Partners appoints Gary Gysin as Operating Partner. He comes from Wisk where he served as President & Chief Executive Officer.
  • Mars Shah joins Gridiron Capital LLC as Operating Partner and Chief Executive Officer in Residence. He previously was President at Driven Brands Inc.
  • The Riverside Company appoints Tom Barrett as Operating Partner. He comes from 7SIGNAL where he was the President & Chief Executive Officer.
  • Paul Kozlowski was promoted to Senior Operating Partner at Cleveland Avenue.
  • Vance Street Capital appoints Andrew Kirkpatrick as Operating Partner. He previously was the Chief Operating Officer at Sonendo, Inc.
  • Neil Shah joins Bregal Sagemount as Operating Partner, M&A. He comes from Ziff Davis where he was the Director, M&A and Investments.
  • Francisco Partners appoints Josh Horstmann as Operating Partner. He previously was a Senior Partner at SBI.
  • Hg appoints Paul Zuber as Operating Partner, N.A. Lead. He previously was the Operating Partner, Head of Tech Group at Thoma Bravo.
  • Tilia Holdings appoints Margaret M. Mueller as Operating Partner.
  • NewRoad Capital Partners appoints Matt Waller as Operating Partner. Matt is a Professor and the Dean of University of Arkansasa – Sam M. Walton College of Business.
  • Advent International hires John Prince as Operating Partner. He comes from UnitedHealth Group (Hospitals and Health Care) where he was the President & Chief Operating Officer.
  • Eric Valle joins Next Legacy Partners as Operating Partner. He previously was the General Partner at Next Play Capital.
  • Northpond Ventures appoints Ingo Chakravarty as Operating Partner. He comes from Thermo Fisher Scientific where he served as the President & Chief Executive Officer.
  • White Wolf Capital LLC appoints Sean Lafferty as Operating Partner. He comes from Consolidated Machine & Tool where he served as the Chief Executive Officer.