When the entire world went into lockdown in early 2020, M&A processes and PE-backed businesses temporarily froze as they scrambled to assess the landscape ahead. While many insiders expected hiring to be paused entirely as companies grappled with uncertainty – many of the top firms actually increased their searches for talent. As a result, at Lancor our C-suite placement business almost doubled in the past six months.
Here’s why: In the past, if P.E. firms were planning on selling a business in the short-term, they were fine with a “good enough” leadership team. Now that COVID has delayed the sale process for many businesses by at least a year or two, firms know they will not get the value they planned on if they sell today. What P.E. firms are looking for right now are nimble executives who are going to shore up the business, develop and increase growth initiatives and put the company back on track. We are also working with multiple PE backed companies to shake up their boards to provide strategic guidance.
THE SMART MANAGEMENT MINDSET NOW: You have to be more strategic about hiring than ever before. Forward-thinking firms know that replacing one executive with another with a similar skill set (or from the same industry) can be a limited approach. Instead, they are identifying the most productive two to three levers of value creation (engaging with specific customers, a SaaS transformation, etc.) and recruiting executives that have been through similar situations – even in different industries. This empirical evidence-driven strategy is an approach that we are known for. We believe it is an important game-changer when it comes to hiring.
HIRING NEEDS: 45% of our searches right now are for tactical CFOs as “you cannot fix what you cannot measure.” The rest of our placements are evenly split between CEO, Operating Partner and other direct reports to the CEO. This is across tech-enabled business services, along with consumer, healthcare, and industrial companies. Interestingly, the Operating Partner role has exploded over the past several years—particularly in 2020. Executives who possess operational experience are an incredibly crucial asset right now.
ADDITIONAL AREA OF CURRENT GROWTH: For PE-backed assets additional hiring is around the Independent Board member. Historically, most of the PE-backed portfolio companies have been filled with PE deal partners. However, this does not always provide a diversity of experience that is essential for business success across sectors, particularly in a difficult climate. For example, many companies need to embark on a digital transformation, but the specifics around cyber security, ERP implementation or building a business intelligence platform are difficult to execute. To help, some PE firms give up a board seat of their own to add an executive with specific skills in areas they need help.
THE KEY TO SUCCESS RIGHT NOW: 2020 has been unlike any other, but executives who have the skills to pivot, think creatively, and develop innovative value creation plans have an array of strong career opportunities. For businesses that understand that top talent is the key to riding out difficult times, reimagining and adding to their leadership teams is essential to navigating the next few years and driving differentiated alpha.