It’s mid-day on December 31st and I’m spending some time looking in the rearview mirror. In 2019, it’s safe to say that one distinct recruiting trend that held momentum revolved around the importance of Go-to-Market expertise inside Private Equity Portfolio Operations teams. As I check my Twitter feed and see a post from CNBC exclaiming that the S&P 500 and NASDAQ had their best years since 2013, I can’t help but believe that continued excellence on the commercial side of the business in the portfolio companies of Private Equity firms will be critical.
In 2019 we recruited more Go-to-Market leaders than in all of the prior years combined. This became perhaps the hottest box on the organization chart inside Portfolio Operations teams. We saw the demand at bulge bracket generalist firms as well as at growth investors focused on narrow niches of the technology market. I can’t help but think that there is a causal connection between high multiples for assets and this emphasis on Go-to-Market.
One client related an interesting anecdote for why this expertise was particularly sought after. He mentioned that their portfolio at times had a tendency to underperform from a revenue standpoint in the 12 months following a company’s acquisition. Maybe this was due to a highly motivated management team over performing in the run up to the sale. Maybe it was due to the PE firm’s willingness to accept projections for the future at face value. Maybe the outside pressure to win the deal caused some exuberance in the decision-making process. (I’m certain that many of you have seen all of these conditions to varying degrees in your career.) Nonetheless when the newly acquired company showed under performance it essentially put the entire investment thesis in an immediate ditch, and crisis ensued.
There are multiple strategies to solve for this if there is conviction at the PE shop to pay attention. Obviously, there is always going to be good consulting talent in the market who can come in and serve as a spot resource deal by deal. But the fact that I’m even writing the post leads one to believe that the best consulting talent is either locked up or has gone in house.
So, if the decision is to add to the internal team, there are likely two types of profiles to consider: (1) the “been there, done that” sales exec who is situationally relevant for the size and stage of companies that you acquire; and (2) the expert Sales Operations/Enablement leader. There are pros and cons to each profile, but what’s most important is deciding which repeated issues you typically need to solve for. Do you have an absence of, or plethora of, data on which to make decisions? Do you need someone who’ll roll up the sleeves over and over again to integrate new companies/teams into your version of best practices? Are you continually missing the mark with assessing the talent level of the sales leadership in a company and/or the field? Has the market opportunity been accurately assessed? Do we need new channels to address? What about channel conflict? Is the comp model scalable and does it incent the right behaviors? Do we aspire to a playbook type of experience for our portfolio, or will we leave some room for innovation in how we solve problems?
There are plenty of ambitious candidates in the market who are excited to take a call on a role like this. The idea of getting into PE is still highly alluring to many of them. For those with some consulting chops, the notion of not needing to develop business to stay afloat sounds great. And as is the case for any Operating Partner role, the diversity and variability of the day to day experience is attractive for the right individual. And lastly, as an important side note, we’ve found that the landscape of highly qualified talent for these roles has a disproportionately strong share of women. Unlike other functions on the Portfolio Ops team, you shouldn’t struggle considering a very balanced slate.
Happy New Year to you all! Here’s hoping that 2020 brings health and fulfillment in all ways.