Private Equity firms are under a high level of pressure to deliver returns for their investors.
Their strategies often rely on acquiring businesses where they can bring in the leadership expertise to deliver transformational change and steer them towards sustainable success and profitability.
However, finding the right executive talent to guide these portfolio businesses post-acquisition can be a challenge.
With experience of working closely with private equity firms to help attract and appoint the best talent, we explore three key benefits of using an executive search firm.
- The Importance of Appointing the Right Leadership
Leadership is crucial for any business but with newly acquired businesses facing a variety of challenges and opportunities, it is especially critical for companies in transition.
Those responsible for leading a newly acquired company should have the skills, experience and gravitas to drive the transformational change required to achieve targets in a post-acquisition environment.
Finding the right leader with a deep understanding of both the acquired business and the goals of the private equity firm is essential.
Top executive search firms can specialise in both identifying a candidate’s track record and also ensure the candidate’s aspirations match those of the private equity firm.
Cultural alignment is so important for both sides.
A detailed and comprehensive executive search process will ensure that new appointments are tailor-made for the business, resulting in a much quicker and more successful transformation process.
- Reducing the Risk of Making a Hasty Leadership Appointment
Private equity firms frequently acquire underperforming businesses that require a complete and swift turnaround.
But without the right leadership in place, it can be challenging to achieve the result at the speed that both PE and investors desire.
The risks of making hasty leadership appointments during or post private equity acquisition can be high.
Making a snap hiring decision to bring in the ‘wrong’ leader will have a negative impact on operational success, profitability, and productivity.
Ultimately, underperforming businesses with misaligned leadership can lead to a negative return on investment (ROI) for the private equity firm.
Using an executive search business with the network and industry experience to find the best talent significantly mitigates these risks.
Their understanding of the market in which businesses operate, combined with their experience in candidate assessment, will deliver candidates who are far more likely to fully understand the challenges ahead and have the right experience to navigate them successfully.
This reduces the negative impact of hasty and poorly made leadership appointments, turning around underperforming businesses and unlocking value for all sides much quicker.
- Enhancing Business Value Quickly
Central to a private equity firm’s goal is to unlock the value potential of a business through improved performance as quickly as possible.
This improvement requires a strong, strategic vision, and effective leadership to deliver it.
On top of that, it requires leaders who have an extensive understanding of the business, current market challenges and opportunities, the competition and the wider industry in which it operates.
Applying an executive search methodology is the best option, to not only identify the level of talent required, but also to secure their services.
By carrying out a comprehensive mapping of the entire talent market, an executive search firm can find top executives and those passive candidates who aren’t actively looking for a new role.
The types of leaders’ private equity firms seek, are likely to be happy in their current role but may be open to a new opportunity and challenge, if it’s presented to them in the right way.
Without the input and talent pool knowledge of an executive search partner, it is highly unlikely that these leaders would be within reach of a private equity firm on their own.
Conclusion
Using an executive search partner is crucial a part of enabling private equity firms to realise the full potential of their newly acquired businesses.
Executive search will ensure the best leadership talent can be both identified and acquired to bring about transformational change and achieve the best chance of a successful ROI.
By mitigating the risks of making hasty leadership appointments and leveraging executive search consultants’ expertise in accessing and attracting passive candidates will significantly increase the chance of quickly enhancing business value for a private equity player on a long-term basis.
Have you heard our latest podcast? Have a listen here.
Or follow us on LinkedIn, Twitter or Instagram
Insurance Executive Search Specialists USA, London and Bermuda