Working for a Private Equity-backed business can provide an enormous amount of financial reward if successful, and is the driving factor behind many executives’ decision to pursue senior PE opportunities. Taking a senior position in a PE-owned company is a decision that should not be taken lightly, however. Although an extremely lucrative sector, it is also highly pressured, competitive, and comes with its risks.
What is private equity?
Private equity is when pools of capital are raised from accredited investors for a non-publicly traded or listed company. The aim of the investors (also known as Private Equity Houses) is to grow the value of the company within a short period of time (usually 4-6 years) and sell their equity stake for a profit.
6 tips to consider before working for a PE-backed business
Leadership experience
If you’re aspiring to work in a senior position for a PE-backed company, focus on gaining as much leadership experience as possible, in which you’re held accountable for company strategy and growth.
Understand the investment type and end-goal
PE-backed companies come in all shapes and sizes, each presenting their own unique goals and challenges. Therefore, it is important you take the time to understand the nature of the project and the end-goal of the PE firm to discern if it is a realistic goal, and also if it is one that excites you. Their goal may be to transform and turn around a distressed business in a short period of time, or it may be a longer-term growth plan. Either way, this will determine the nature of the work ahead, and so it’s important you feel a strong desire to undertake the challenge at hand.
Expect change
Becoming a senior leader for a PE-backed company is going to be a turbulent journey, no matter how experienced you are. Working to such clear and time-specific goals, you will be expected to make impactful changes surrounding strategy, people, organisational design and processes. Private equity investors usually plan an exit between 4-6 years therefore, it is paramount you understand that speed is a key element, and you have been hired to quickly implement changes and achieve goals with Private Equity Houses who want the fastest route for gaining a profitable return on their investment.
There are no guarantees
It is no secret that the vast majority of PE-backed companies fall short of their endeavours. All begin with the same level of ambition and vision, yet in reality, very few actually work out as planned. Although the rewards can be great if successful, you must take into consideration that the end-goal is not guaranteed. Although you’ll have a significant level of influence over the success of the project, other factors, such as market changes or a failure to meet debt obligations, can terminate the venture.
The expectations are high
Although your level of success won’t be defined by quarterly results, your action, changes and strategy will determine how you’re received by the equity panel, and how much confidence they gain in you.
Collaboration is key
As an executive for a PE-backed company, you will need to build a collaborative relationship with the Private Equity House. They usually like to be heavily involved in the strategy, operation and key decision-making. A large part of your role will be balancing the various input and suggestions of the equity partners involved and ensuring that you provide a transparent view of any challenges or business shortcomings. You are expected to bring innovation and will have a great deal of autonomy over the role, yet at the same time being the bridge that aligns the vision of all parties involved.
The key to Private Equity backed opportunities
There is no doubt that obtaining an opportunity as a senior executive for a PE-backed company remains an extremely competitive sphere. Notwithstanding the risks associated with PE-backed companies, they offer a great deal of autonomy and one of the most financially rewarding career opportunities on the market. To succeed, you must be extremely resilient in nature, have strong business acumen to take visionary action, and must be akin to speed, pressure and change. Leading a PE-backed company is not for the faint-hearted but for the few who are able to do so successfully, they will experience great financial rewards and a fulfilling, albeit challenging, career.
For more information on this topic, or to discuss how we can support with your career move into private equity, please get in touch with a member of our executive team or email info@grgexecsearch.com