Few questions are debated as intensely in private equity and direct investment as how to increase the value of portfolio companies operationally. One question comes up again and again: are leaders in private equity so special that they differ fundamentally from “normal” leaders? The answer is yes and no. No, because nobody, not even in PE, can work miracles. The basic techniques of value creation are nothing specific to PE. The culture of collaboration and the expectations, however, are different.
In value creation, consulting experience helps. But only up to a point, because slide battles in the style of a corporate board meeting are frowned upon. Ops team members usually aren’t in the driving seat themselves. Pure doers who want to take the wheel themselves are often frustrated or overstretched. And yet ops team members have to think like someone with operational responsibility, or step in on an interim basis. Having held P&L responsibility in the past is often a must. Not necessarily as CEO, but at C-level, even if only for one division or function.
The requirements can be summed up like this:
Consulting skills
Industry knowledge (especially industrials, services, software, healthcare)
Functional knowledge (manufacturing, pricing, digital, ESG and so on)
Seniority, generally more than ten years for director-level roles and above
“Soft” skills
Career progression in previous roles
P&L experience (including sectoral or regional)
PE experience
Mid-market experience
Strong delivery and a hands-on mentality
When it comes to entrepreneurial competence, candidates often misjudge themselves. Almost everyone claims to have more of it than average. The rule for candidates: entrepreneurial drive isn’t something to claim for yourself; leave that judgement to others. Having founded a company (it’s fine if it didn’t work out), having your own money in the business or a private stake in a company does a great deal for your credibility.
Increasingly less important:
Dual qualifications, doctorates
International experience (more of a special case)
The prestige of the university (with a few exceptions such as Harvard, ETH or Oxford, and even they guarantee nothing)
Multiple languages (English and German dominate in the DACH region and are enough)
Formal employer references (completely out of fashion)
TALENTspy is a high-quality niche specialist focused on private equity, consulting and financial services. We solve performance problems. If you have thoughts, additions or comments, we’d love to hear them.
