What are investors looking for? How are they reacting to markets and behaviours? What’s important to them right now?
These are questions we often think about. Our executive search experts look for people who can spearhead private equity ventures in a constantly evolving sector.
There are some emerging patterns that inform what we look for in roles within private equity backed businesses. Let’s take a look at the top three.
Sometimes it’s easier to steadily acquire parts than it is to hit all markers of success from the outset. In a consolidating market, buy-and-build deals are as popular as ever. More private equity groups are buying platform companies with particular, established business operations. They then make several other acquisitions to integrate them together.
The strategy will form around ‘filling in the gaps’. If you lack presence in a certain geography, for example, you buy something there and integrate it. Lacking know-how or tech, for instance? Buy it first. The cost savings are usually significant and the whole is generally greater than the sum of the parts.
As we highlighted in our piece on retail trends, there are definite challenges on the high street – some of which the leading names in the sector can’t face alone. Brands such as John Lewis are struggling, whilst Debenhams and House of Fraser are discussing a merger which would not have been considered at all 10 years ago.
Consolidation is happening on a huge scale. With so much drastic consumer change in the air, former competitors are looking to each other as a matter of survival. Retail management headhunters will need to up their game, securing those who are aware of complementary values in retail, even when two cultures are totally different. The best hires can stop two distinct businesses from clashing by nurturing an atmosphere of common values.
The playing field has been levelled – no longer are the big boys the only ones to be seen as an investment opportunity. Start-ups and modest chains are even outstripping them in some cases.
Technology is part of it, but another aspect is placing the focus where it should be. If a major pizza restaurant cuts into its profit because it pays too many people for too little influence – marketing managers, operational staff and the like – it will lose out to a smaller competitor because they’re more likely to deliver rapidly, and place amazing taste foremost on the agenda.
Investors are more likely to go for agile business models that don’t overcomplicate what they do. That’s how strong margins are maintained. Most searches we undertake for private equity fall back on these core principles.