Many of my executive clients retain my services to prepare them for a search for their next big role in a public company. And while that is certainly one option to explore, the reality is that the higher you are in seniority, the fewer the options for those plum C-level roles. Additionally, these clients generally skew towards age 55 and above and may face age bias as decision makers question if they are up for the role over the long haul.
Private equity roles present an alternative or additional search path for executive job seekers. A private equity firm is a type of investment firm that takes a majority stake in a portfolio of privately held businesses with the goal of increasing their value and then selling them at a profit. There are more than five times as many PE-backed companies than public companies in the United States, which means there are more opportunities to fill a leadership role. And PE firms generally are not as concerned with the age of candidates because the goal of a PE firm is to build value, scale quickly, and position for sale, generally within a few years.
In order to be considered a suitable candidate for PE, it is critical that you communicate your knowledge and skills in terms that are relevant to PE decision makers. The competencies honed in a public company role that will be most valuable to PE firms include:
M&A Due Diligence & Integrations
Business Turnarounds
Business Exits & Divestitures
Operational or Technology Transformation
Talent Upskilling
Product Development
Taking a Company Public
Capital Raising
Additionally, you should familiarize yourself with the terminology used in PE to communicate your impact in their familiar terms. Some of the most common terms are:
EBITDA. Earnings before interest, taxes depreciation, and amortization.
MOIC. Multiple on invested capital.
Cash-in-Cash. Ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage. It is often used to evaluate the cash flow of income producing assets.
IRR. Internal Rate of Return. The rate at which the net present value of all cash flows from an investment will equal zero.
Exit. When an investor sells its equity in a portfolio company.
Once you have identified your relevant competencies and gained an understanding of the PE lingo, try creating some talking points that communicate your successes in a meaningful way to a PE leader. For example:
Built the team and process to support rapid customer and product expansion, fueling 14-fold increase in IRR in just 2 years.
Facilitated joint venture and ultimate sale between patient safety and quality of care reporting system and XYZ Healthcare.
Turned around treasury function and positioned company to sell for 4x MOIC.
Created $2M EBITDA shared service function scaled to service entire portfolio.
Oversaw entire process and closed $1B 8x oversubscribed IPO.
Directed sourcing, due diligence, and integrations to expand brand footprint that contributed to tripling of revenues in 7 years.
Led Series A raise outreach to 70+ investors and pharmaceutical/medical device companies.
PE represents a viable career path for many executives who have built successful careers in public companies. Their wealth of functional and/or industry knowledge, coupled with their experience in organizations with professional rigor and structure can be an enormous asset to a PE firm looking to professionalize and scale a private company and position for growth and eventual exit.