The good, the bad and the ugly of working for a Private Equity backed business
Private Equity (PE) backed firms offer exciting and fast paced careers. They offer top executives more exposure, autonomy and control of the business which means that you control more of your own destiny and growth of the business. The reward is usually higher, however, with this comes the risk of poor performance, frequent change management and working in a financial result predominant environment.
Let’s start with the negatives:
Lack of career advancement:
One of the potential downfalls for smaller companies is the ability to offer significant promotional opportunities to their employees. Although they have and do offer more advancement to grow the division and business, if you do want to progress fast, SME businesses can be more challenging. Larger organisations have the advantage of multiple vacancies on offer, most likely at another location or a new untapped region or market. SME companies, however, only have so many tiers of management and are usually flat structured and pretty lean. If you are in a senior position, you most likely report into the senior leader in the business, who in turn reports to the PE backed firm itself.Smaller PE owned firms offer a lot of authority and freedom as opposed to a larger organisation, but they may offer a slower career path from a title and potential responsibility perspective.
Constant people changes:
The majority of companies that are acquired by PE backed firms are in need of investment, growth and to begin with, change. The CEO’s change more regularly and so do their senior management team. This is because senior leaders in PE backed organisations are mainly appraised on revenue and profit and therefore those who do not perform, do not last. However, on the quandary, many PE backed firms keep the senior leadership teams far too long and this seriously damages business. This is usually the case as CEO’s are well paid and expensive to exit as a new appointment is likely to bring in their own team. Right at the start of the process you need to invest time, resources and money in making sure the best candidate is hired to help grow the business.
You are always for sale:
There are negatives to working for any business in any industry and an ownership exit plan could and should be the case in any company, but it is more likely in a PE held firm. This is because they are predominately in the running to turn companies around and make money.Many of the companies that PE backed firms acquire can be in a multitude of states, but almost all are in need of a turnaround and a new lease of life. The sometimes-unfortunate part is that changes in ownership may mean changes in strategy and senior personnel, which let’s face it, can be a good and a bad thing.
Now on to the positives:
Your ability to make a bigger impact
This is usually the case from top to bottom in PE backed firms that each and every person can make an impact and feel like they are somebody, not just a number. With the fewer layers of senior leadership and the usual lean structure that means that every person tends to get more exposure and responsibility, leading to more impact and usually happier employees. The great news is that you have ownership and the chance to impact, but it also means if results are bad there is no hiding. The ability to make your own decision, lead the strategy and development of the business, will mean a significant acceleration of your personal and business skills and mean you can offer more to an organisation in comparison with your blue-chip counterpart.
More autonomy and less bureaucracy
A huge attraction to be SME businesses and in particular, PE backed firms is freedom and autonomy. The ability to take control of the decision-making activities and control the business as you see fit. With this freedom usually brings faster decision making, not only because PE backed firms tend to act quickly in order to grow but usually the long chain of decision makers like in blue chips just don’t exist. Private Equity is a very lean and flat structure.
Financialrewards
A subject that talks to most people, but most PE firms offer better compensation to their senior management. Not always reflected in the basic salary but mostly in the overall package, with a more attractive bonus, carry and overall benefits, which usually is set to attract the better talent. With business success comes big benefits, with the right common goal and a business setup for growth, achieving your numbers will mean you will reap the rewards.
Summary
The broad career depth and breadth that a PE owned firm can offer on your resume has significant advantages, including what it can do to your bank balance and retirement fund. However, it is no ride in the park, you don’t turn up and it just falls into place, this is as close as you will get to running your own business. Those who make it work well, benefit greatly not only financially but from a skills perspective which reflects well on your resume and with your next step.
If you have the right mind set, drive and determination to be working in a PE backed firm contact the team at Raw Selection.
For more information on working at a PE backed company or if you would like to identify and find the right motivated, driven and skilled talent for your business, please contact:
Alex Rawlings:Alex.R@rawselection.co.uk - 0044 7860 803558
Raw Selection specialise in the recruitment of professionals within the Private Equity & Venture Capital sector, working for the firms and the portfolio businesses globally.
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