February 24, 2020

Private Equity News: Private equity firms change their hiring strategies for portfolio company executives

Firms in the US and UK are hiring groups of people in one joined-up round of recruiting.

Private equity firms are hiring between five to 15 executives on average in one go for their portfolio companies, moving away from individual recruitment strategies, according to global executive search firm TritonExec.

It is not unusual for private equity firms to replace people in senior management positions once they acquire companies. But now firms in the US and UK are hiring groups of people in one joined-up round of recruiting, in an effort to keep costs down and drive cultural alignment.

TritonExec said in the past 18 months, 67% of private equity portfolio companies shifted to the “multi-hire” style of recruitment, with the search period lasting approximately 12 weeks.

Companies usually don’t hire multiple individuals in executive positions in one go as it requires a bigger commitment from both the client and the recruiter. They also find it difficult to fund multiple executive salaries at once.

“With the continued growth of the private equity sector, it comes as no surprise that it’s adopted multi-hire senior level recruitment campaigns – not only for the cost per hire benefits – but because of the very nature of the industry which refreshes teams and repurposes businesses as scale,” said Georgina Pawley, partner at TritonExec. “Portfolio companies have been the biggest adopter of the multi-hire approach so far.”

She said that because appointments are often made after assessment events where the current leadership mixes with incoming executives, it creates a greater opportunity for teams to “forge chemistry early on”.

Companies in the consulting, logistics, fintech and broader technology sectors have been the main businesses adopting this approach, offering roles including client partners, solutions engineers, product development and VPs of sales, with typical salaries ranging from $150,000 to $400,000.

TritonExec found that after 24 months for multi-hire programmes, retention rates stand at 96% on average.

Clients of TritonExec include Transportation Insight, majority-owned by Gryphon Investors; Genpact part-owned by Bain Capital and OakNorth bank, backed by SoftBank’s Vision fund.

Originally published on Private Equity News here.