Why investment jobs aren’t necessarily the best option in private equity

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Why investment jobs aren’t necessarily the best option in private equityPrivate equity firms are doing more hiring for non-investment roles than ever before, opening up opportunities for a wider range of candidates, both within the organizations themselves and at their portfolio companies.

PE firms are currently doing plenty of mid-level and senior hiring across the corporate function job family, including controllers, investor relations, finance, technology, data analytics and regulatory compliance.

Ten years ago, an operating partner that helped the investment team oversee [a portfolio company] wasn’t universal but it is today,” says Joe Healy, a senior client partner at Korn Ferry. “Operating executives who used to be COOs or CEOs of companies are now operating partners inside of PE firms.

“PE firms also want to hire capital-raising specialists and deal-origination professionals,” he says.

For example, KKR has 100-plus people in capital raising, which includes IR, consultant relations, product development and a few other roles, compared to ten or 15 people a decade ago.

There are people who are making enormous amounts of money who are not on the investment team,” Healy says.

PE firms can only make money by having a solid plan to run the company better after a leveraged buyout.

For those operating roles, the people PE firms need are those who already know how to run companies – CEOs, CFOs, COOs and board members coming from corporate environments,” Healy says. “Ideally senior candidates will have experience at some notable marquee companies, but left that environment and did something more entrepreneurial so they have an appreciation for how operating in a smaller environment with a greater cost of capital impacts your strategy.

From sales, marketing and operations to PE

David Hellier is a perfect example of these hiring trends. Before he became a partner at Bertram Capital, a PE firm that invests in lower-middle-market companies, he was a sales and marketing executive that seemed poised to climb the corporate ladder or perhaps co-found a startup. He’s proof that you don’t have to be a former investment banker to establish a successful PE career.

I have experience on the operating side, manufacturing, consumer products and software, which is directly applicable to my business development work for Bertram,” Hellier says.

While raising capital for a laboratory-grown diamond company, Hellier met Jeff Drazan, then a co-founder and managing director of Sierra Ventures, a Silicon Valley venture capital firm, who became the founder/managing partner of Bertram Capital. Drazan brought Hellier on board, and now the latter leads the PE firm’s business-development team and is the president of the Association for Corporate Growth (ACG) New York.

There are more paths into PE today than there were 15 or 20 years ago, when the only path into PE was to come out with an econ or finance degree and do two-to-three years as an investment banking analyst,” Hellier says. “Even though the PE industry is more competitive today, there are more roles such as operating partners, where having an operational background is an asset, and that has opened up opportunities for younger professionals coming out as a viable career path.

“There used to be only a handful of business-development professionals in the PE space, and at the deal professional level, there’s still a lot of focus on that technical training and background,” he says.

By Dan Butcher - This article first appeared on eFinancialCareers.