Private equity (PE) firms are different. They invest in companies with the intent of quickly improving their efficiency and profitability. They then either sell the company for a big profit or keep it for a period of time, enjoying the cash flows that are coming from it. When they recruit talent, they are very disciplined in requiring specific traits they know are critical to success. Recently a massive study was done across 32 private equity firms to isolate those traits. Here are the predominant characteristics which that study turned up:
1.) A Broad Set of Challenging Experiences Versus An Industry Specialist - PE officials generally believe that excessive amount of experience in the field into which they are placing the new hire may cause them to simply follow their beliefs as to what works in that industry. The key characteristic they look for is someone who has been placed into new situations, picked up the fundamentals very quickly and, after battling a few disappointments, ended up being quite successful.
2.) Team Building Skills are Paramount – They are looking for an individual who has the ability to assemble a truly high performing team. That means selecting talent that will get along well with one another but most importantly, have intense focus on accomplishing a lot in a short period. The study report goes out of its way to indicate they avoid candidates who use “I” too much when talking about accomplishments.
3.) Urgency Outranks Empathy – Generally, PE firms operate with fairly aggressive time tables which mean there is not a lot of time for excessive training and hand holding. They are looking for individuals who are highly self-sufficient in finding out about a particular industry and getting on with changes that will hopefully improve performance.
4.) Resilience is a Must – As the report states, PE firms want candidates that have faced setbacks, made errors, and have rebounded well. This attribute is particularly important in a turnaround situation where you won’t get everything right on your first try and you need to keep cycling back until you eventually get the efficiency and profitability where you want it.
5.) Authenticity, Translated as Candor, is Also Key – They want leaders who are objective and aggressive in pointing out when things aren’t going well and immediately get into a brainstorming mode of how improvement can be generated and then pushing on and trying things. An inwardly focused, extremely thorough individual is not going to work out well in this environment.
These five points are great reminders of what to look for in recruiting individuals who will dive in and generate success.