On the face of it, recruitment of a senior private equity professional follows a similar pattern to a junior hire: choose a search firm; set the criteria; draw up a shortlist; select your preferred candidate; negotiate a package and fix a start date. If only it was that simple.
Firstly, let’s consider why the need exists. At junior levels, the recruitment is often triggered by the need for more execution resource. In the case of senior hires, the need is usually to add something new: a sector capability; geographic coverage; greater exposure to strategic relationships or enhance the team ahead of a fundraising. And it can’t be filled by the preferred route of promotion from within which rewards performance, builds loyalty and re-enforces the firm’s culture or DNA.
The perceived risks of bringing someone in at senior level are high. Senior appointments come in over the heads of mid level colleagues, risking frustration and resentment. The harshest judges of your new partner will often be those below them in the hierarchy. Making clear what the deliverables are for the new hire can help – but don’t set them up to fail.
What can you do in the search process to get it as right as possible?
Finding the person with the right experience who will fit in is a subtle and complicated process. It is worth investing time with your search partner to identify the core need that you are aiming to meet. Ask yourself the question – what should our new partner have delivered in their first twelve months and then in the first two years for us to know we made the right choice? This will identify the skills and experiences you want to bring into your business.
Then overlay the key cultural criteria that will give the best chance of fit into the team. This will force you to think through and articulate your own culture and values and your search partner can help you with the best tools to test for these intangible qualities.
Timing and package come next on the list of considerations. Many experienced candidates are established in funds, locked in with contracts and incentives and not actively looking for a new position. What cost are you prepared to bear and how long are you prepared to wait for your new partner to come on board?
Gaining access to the best people requires your search partner to have strong relationships, a trusted market reputation and discretion. Your search partner can promote the opportunity with you effectively to the best people in the market.
A further complexity to the search process is the small and interconnected network from which your senior hire will be found. And the higher the stakes for that individual if the news leaks. Conventional contact may not be appropriate when even a casual coffee in public can start the wrong rumours working overtime. So an intelligent, discreet and comprehensive methodology is essential to gain a positive response from the right people.
Trust is essential.
The process is necessarily two way with both sides soft selling from the outset. It’s more of a courtship than a recruitment, with opening meetings testing skills, looking for common ground and opening the door for more detailed discussions to follow. Later meetings should include rigorous analysis of track record, contacts and extensive third party references. These may include your limited partners as it’s advantageous to have them on board with the decision.
With regard to fit, your search partner can supplement your subjective ‘feel’ with more disciplined profiling and values assessment.
And how long will all this take? Be prepared for the search to take six months and then notice periods on top of that. You might want to start a year ahead of your need!
To summarise – what should you be thinking about when hiring an experienced investor?
- Choose a search partner who is trusted in the market, can map the talent pool and connect you to the right people
- Be as specific as possible about what you are looking to add to your business – ‘a good investor and an all round good guy’ may not deliver the best result.
- Articulate the team culture and ‘fit’ criteria as best as you can
- Articulate the key selling points of your firm, in terms of responsibility, development, profile, remuneration and market positioning
- Consider timing – when do you want this person on board? How long are you prepared to wait – for example is there a deadline in respect of the fundraising cycle.
- And finally, be alert to the complexities such as long notice periods, non-compete arrangements, rival bidders (the best candidates often have fans across the market) and the element of game-play as people position themselves delicately to be available without being openly ‘in play’ perhaps to save face if they don’t receive an offer or avoid any technical or moral breaches of contract with current funds.
This may be one of the most complex but ultimately most rewarding investments you will make – get this right and the future value of your fund could be enhanced considerably.
