Where are the Executive Jobs in Private Equity?

Executive search partners at ON weigh in on private equity leadership demand moving into 2022

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With valuations higher than ever and competition for deals intense, bringing the right executive to the team to unlock a brand’s potential has never been more critical, especially as the demand for leadership talent increases moving into 2022.

According to financial data and research company Pitchbook, “Through the first half of the year, PE firms have closed on 3,708 deals, worth a combined $456.6 billion—nearly two-thirds the deal value we recorded in all of 2020. Q2 2021 registered the second-highest deal activity in a decade after Q4 2020. While it may be too early to predict with certainty, deal-making and exits are easily on pace for a record-setting year, while fundraising is tracking close to 2019’s elevated levels.”

Notes ON partner Baillie Parker, “The current climate is unprecedented. There is so much acquisition activity despite the high valuations.”

Here, ON Partners consultants offer observations and insights on the executive jobs in demand, the types of leaders that can help PE-backed companies win, and a look ahead at 2022. And, for more insights into the PE talent market, view ON’s recent contribution to the Hunt Scanlon Global Private Equity Talent Leadership Report here.

Hot Executive Jobs

With growth and PE firms deploying capital at record-setting rates, the need for key executives to lead these companies is vital. The sharp growth in market demand has made it exceptionally difficult to acquire top talent, and the companies that are successfully bringing on top-tier executives are those moving swiftly and decisively, often exceeding compensation expectations.

“Product and digital leader roles are at the top of the list right now,” according to ON partner Lynda Robey. “Many businesses are broadening the scope of responsibility for these leaders to improve agility and responsiveness in this rapidly changing environment.”

ON’s Jeff Hocking echoed that comment, noting, “CEO and CFO are always in demand for PE backed companies, but we are seeing a big increase in chief product officer searches.”

In addition, as organizations plan business operations going into the new year, the CHRO role continues to remain a critical one, with questions around office space, hybrid workforces, and maintaining company culture all top of mind. Organizations that did not adequately invest in HR leaders before the pandemic are currently facing challenges in hiring top talent in this area.

With PE firms flush with cash and competing with SPACs for a limited number of deals, the operating partner role has arguably never been more important – and demanding. While the OP role is typically a step before retirement given the level of experience needed, operating partners are telling ON consultants they’re working harder now than ever before, balancing the role of coach with being deep in the weeds of three or four companies in a hyper-competitive environment. With the pressure to maximize current portfolio companies/valuations, the OP role is even more in demand.

According to partner Tindall Sewell, “It’s not just about your network of CEOs who can step into the OP role, it’s asking, ‘What’s your network as you’re tapping into new industries? Things are moving so fast with PE firms acquiring companies, it’s critical to have people lined up who are highly qualified and can immediately jump in.”

Type of Leaders in Demand

The pandemic has exposed weak leaders across the c-suite and companywide, and many organizations are now focused on replacing those weak links. Leaders who are poised for success in the current environment can run toward a fire not away from it and can face ambiguity with energy, optimism, and inspiration.

Hocking points out that in the past, financial skills and CEO leadership/advisory experience were sought after. “These are still in demand, but many PE firms are increasingly hiring specialists such as sales leaders, sales ops leaders and CTOs to 1) further differentiate themselves and 2) many PE firms are focusing even more on the operational aspects of running their portfolio companies.”

Sewell says that knowing how to deliver results is also not to be underestimated. “Growth equity PE investments have become more rampant than turnaround firms. The PE firm talent must have a fast-paced mindset, understand the Rule of 40 and drive growth in a profitable way.”

Adds Robey, “Leaders with a successful track record of leading exponential growth are in high demand now. PE firms value the ability to execute day-to-day in what can be frenetic growth environments while also building systems to support future growth.”

Parker notes that he’s “seeing a lot of buy-and-build plays. In those cases, we’re looking for CEOs and CFOs with deep M&A experience.”

Moving into 2022, Robey sees “continued portfolio expansion as competition for deals remains high – potentially stretching some PE firms outside of their knowledge zones or familiar playbooks. This will amplify the importance of building executive leadership teams with the right experience to ensure success.”

Hocking adds that “Valuations are higher than ever and the competition for deals is very intense.  PE firms will need to balance overbidding on companies and returning investments to LPs.”

“Private equity firms have dry powder to put to work, but valuations are high, notes Parker. “It will be interesting to see if their latest funds through this boom are relatively successful compared to others or if we hit a tough market and realize in retrospect they were buying at the peak of the market.”

For more insights into the PE talent market, view ON’s recent contribution to the Hunt Scanlon Global Private Equity Talent Leadership Report here.

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