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If You Thought Private Equity Only Cares About Money – Think Again

April 26, 2019 by Kurt Wilkin

My faith in humanity has been restored! Okay, maybe that’s a bit dramatic, but bear with me. We often hear that private equity is all about the art of the deal and that all they care about is making a buck – “winning” at the negotiating table or their latest fund’s Return on Investment, or ROI. While it IS a money business, it is not a universal fact that money is ALL they care about.

Why do I believe this? For one thing, I’ve witnessed it first-hand. Additionally, I know a lot of people smarter than me – and I’m smart enough to ask them often. To that end, last week I hosted dinners in Austin and Houston with a select group of private equity Principals and CEOs of private equity-backed companies to talk about talent. We invited leaders who we knew would be open and honest about their situation and who would ask challenging questions of other executives in the room.

How Important Are People

While it’s important for private equity firms to ensure the numbers all add up, at the end of the day it’s the people who make that happen. As a result, attracting and retaining the right people, putting them in the right seats, and having an organizational structure that makes sense are as important as ROI. In fact, getting those things right leads to a higher ROI.

You’ve all heard that your people are your greatest asset – but it’s easy to believe that private equity firms don’t espouse this. If two amazing evenings with two small groups of middle-market leaders are any indication, then we’re doing okay. The truth is, however, that the people side of private equity isn’t as straight forward as the numbers are!

You should know that I am passionate about the importance of talent in the success (or lack thereof) of high-growth, middle-market companies. You should also know that I believe most middle-market companies struggle in the area of Strategic Talent Planning and the recruiting industry that serves them is broken.  The more we work with private equity firms and their portfolio companies, the more these themes play out.

The Dinners

We’re on a mission to continue highlighting the importance of talent to your success. Talent can get you there faster, it can help you avoid costly mistakes, and it can significantly improve your bottom line.  Surprisingly, not every CEO or private equity executive realizes this. That’s why we’ve been asking small groups of CEOs and private equity executives to join us for quarterly dinners in each of our markets.

These intimate dinners offer a format for authentic leaders to network and share their successes and challenges in a confidential setting. Through these dinners, we’re connecting smart people and taking steps toward solving the most pressing issues in the private equity arena. Real people, real problems, and real solutions.

Highlights

As you might expect, most of the challenges (and opportunities) described during these dinners were of the people variety. Here are some highlights from our most recent discussions:

    • Morals and ethics in private equity business: hands down this was the highlight. Good people want to work with good people and make money while doing good things.
    • The competitive candidate-driven labor market: it’s tough out there!
    • Bringing fresh ideas to your industry through diverse talent: throw away some of your preconceived notions about the industry candidates you think you need.
    • Knowing when to pull the plug on certain employees: many of you saw our April 1st fun with our “name change” and the very relevant FireBetter article that started it all.
    • Bad experiences with traditional recruiting firms: who hasn’t had bad experiences? I think most people (including me) hate recruiters!

As we discussed these issues, we unanimously agreed that the right people in the right seats with the right skill sets, experience, and moral compasses are key to the solution.

It truly is amazing to see these executives solving real world problems in real time. And to think that all it takes is getting smart people together, disconnected from today’s digital world if only for an hour or two. Of course, it didn’t hurt that we locked them in the room, filled them up with amazing (and free) food and wine!

This makes my heart proud because I’m a connector and I’m big on harnessing the collective wisdom of smart, authentic leaders. It was also important that we agreed to step away from our busy schedules, put away our phones and our computers, and engage face to face with other leaders. We deepened existing relationships, we made new ones, and we came together to begin tackling important issues.

Future Events

Our two most recent dinners were in Houston and Austin, Texas but we’ll soon be hosting in Dallas, Charlotte, Chicago, and Denver. If you’re interested in participating in a future roundtable, connect with me at Kurt@HireBetter.com and tell me a little about yourself and your business. We are always looking to meet interesting, authentic, and successful leaders.

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