Recruiting Top Talent to Counter Market Headwinds: New Report

As I’ve checked in with clients and colleagues across the industry over the past few months, an overriding theme has come through: Running to stand still.

We detail the numbers behind this sentiment in our just released 3Q edition of the Private Equity Talent Benchmark Report. Get your copy here.

The recent surge in interest rates has had a significant impact on corporate expense budgets, prompting companies to tighten their financial belts. As a result, corporations have been forced to prioritize their technology investments, distinguishing between those considered “nice to have” and those deemed “need to have” for their operations.

This approach has resulted in softened demand for software solutions, leading management teams to reevaluate and downwardly reforecast their revenue expectations. Consequently, private equity firms find themselves facing longer hold periods for their investments, as it will take more time to achieve the originally projected investment thesis in this challenging economic climate.

Tackling Turbulence

We’ve witnessed some interesting responses to the sector slowdown.

First, many firms are using this period to reassess talent and consider whether they have the right teams in place. 

Second, the pivot to capital-efficient growth has taken hold in a major way.

In years past, a “grow at all costs” mentality has been viable, with the notion that grabbing market share regardless of customer acquisition costs can set you up for greater profitability down the road.

Amidst the current challenging market conditions, our clients are seeking executives who possess the expertise to strategically position their companies, even in a down market.

These executives must excel in driving revenue growth, making it an indispensable priority, while also demonstrating an aptitude for optimizing internal spending to maximize ROI.

Moreover, they are expected to navigate their organizations toward capital-efficient growth, embracing lean operations and efficient customer acquisition strategies.

Key Findings: New Talent Report Edition

The mid-hold evaluation and upleveling of leadership teams is why the market remains very tight for key positions even though deal-flow has slowed significantly industry wide.

Proficiency in capital-efficient grow is the skillset in greatest demand. This means leaders who know how to grow revenue and profit at the same time are prized.

Turnover and elevated compensation packages in CEO and GTM roles are a direct result of the mid-hold upleveling. But the market for seasoned leaders with private equity experience remains relatively tight across the board.

We have expanded our analysis of Step-up candidates when compared to sitting candidates. If vetted properly, Step-up candidates are indeed viable options for widening the talent pool to counteract this market tightness.

A Step-up can be just as effective as a seasoned executive at achieving the desired exit for a company but can cost considerably less in terms of compensation over the hold period.

We also have expanded our analysis of leadership team composition. The C-suite in the average portfolio company reaches 69% occupancy across the roles we track when companies reach the $100 million revenue range.

Get your complimentary copy of the Private Equity Talent Benchmark Report. 

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.