The evolution of strategic private equity talent in 2023

Recruiting in the world of private equity can be a roller coaster, especially this year with the deal flow “hangover” from 2022 and macroeconomic uncertainty.

Our fund-level private equity recruiting team spends its time focused on one thing: placing current and former top-tier strategy consultants into our clients’ investing and operating roles, and we continue to see firms leverage these roles in new and exciting ways.

In this article, we reflect on four talent themes we saw emerge across our fund-level private equity practice during the last 12 months.

Related: The top private equity roles for strategy consultants

More lateral hiring into portfolio operations teams

Given the high deal flow we saw during 2021 and 2022, the core focus for private equity clients in 2023 was ensuring that portfolios were firing on all cylinders. Historically, we’ve seen firms shy away from lateral hiring into portfolio operations teams for several reasons, including the possibility of having to “re-train” any potential bad habits or new ways of thinking from a candidate’s prior roles. But, this year, we saw private equity leaders open up to the idea of hiring from other firms.

We think this shift is occurring because it’s more critical than ever for new hires to hit the ground running. Experience in a similar private equity environment instills a true understanding of how these teams operate and what success looks like, which can help with getting up the curve to drive value.

Fund-level strategy and transformation roles

Historically, some private equity firms have diversified their portfolio by adding new asset classes and investment vehicles. Given the market volatility of the past year, we saw firms act on this principle by hiring an influx of internal fund-level strategy and transformation roles.

Typically, these roles report to the executive committee or potentially roll under the broader portfolio operations team. These roles have also varied by level, from associate to chief of staff to principal, as well by focus areas, from new investment vehicles to ownership/governance structure to ESG strategy, etc.

The rise of the commercial specialist

Earlier this year, we shared a podcast detailing our experience seeing an increase in functional specialist searches with a focus on finance and accounting; engineering, operations and supply chain; human capital; and transformation. A new spike we saw emerge since releasing that podcast is a focus on commercial / go-to-market, which includes pricing, sales and marketing.

This is a classic space that many top consulting firms focus on and where we see a lot of individuals spend time post consulting. We’re eager to see how this trend continues to evolve in 2024.

Talent as a critical value-creation lever

As private equity firms grow more complex investment platforms and portfolio company operations, we’ve seen an increased focus on human capital management, resulting in formal human capital leadership roles at the fund level designed to align top talent with the firm’s investment thesis.

These leaders are tasked with standardizing talent functions across portfolio companies, from recruiting and compensation to culture and inclusion. As top talent continues to be in high demand, attracting and motivating teams across portfolio companies is essential for general partners to consistently deliver returns across market cycles. Elevating human capital strategy plays a role in this, and we’ve seen that candidates with backgrounds at top consulting firms who possess strong operating model; people and organizational design; and recruiting / talent strategy capabilities are a natural fit for private equity human capital leadership roles.

The takeaway:

As the private equity talent landscape continues to evolve, we saw four talent themes emerge in 2023. These include increased lateral hiring into portfolio operations teams, a rise in fund-level strategy and transformation roles, a focus on commercial specialists in areas such as pricing and marketing and the growing importance of human capital leadership roles at the fund level.

Analysts say 2024 will be a steady year for private equity as firms adjust to the “new normal,” and we predict that an increase in activity / deal-flow will push the continued emphasis on hitting value-creation targets and the need for talent that is poised to deliver on that mandate.

To learn more about fund-level private equity leadership, contact Ashlee Wagner at ashlee.wagner@charlesaris.com or (336) 217-9142.