Trend by Mary Kier, Chief Executive Officer, Executive Search
In the most recent article in our "Do You Have Private Equity In Your DNA?" series we looked at the Top 20 characteristics required to be considered for leadership roles in private equity firms and their portfolio companies. Possession of these characteristics suggests you may indeed have private equity in your DNA, but what do you do when you get the call for an interview? How do you prepare? Beyond that, what should you expect once you land the job?
First of all, some honest self-reflection is in order. What are your intrinsic leadership skills and your preferred work style? If you are comfortable with a consultative and collaborative environment then you should seek a "hands on" PE firm. If, on the other hand, you are more strategic and charismatic then you should seek more of a "hands off" PE firm.
Next, spend some time on your ability to "talk the talk" of the PE world. Can you comment comfortably and intelligently about, for instance, investment theses … EBITDA … burn rate … LBOs … terms sheets? Both your resume and your interview answers should be peppered with financial terms, highlighting such achievements as what the annual revenue and EBITDA were at your previous companies when you arrived and when you left, and how you contributed to the enterprise value of the business.
Specifically, private equity firms look for a range of core elements among their pool of potential hires. With such firms there is a zealous focus on performance and results. You will need to be able to elaborate – clearly and concisely – on how you have driven growth at previous companies and on how you have performed in a range of business environments. The same is true regarding your dexterity to move between tactical and strategic activities, as well as your ability to make prudent decisions.
Beyond those core elements you should also consider your comfort level with managing risk at both the personal and corporate level. What kind of leader are you? Do you have the edge to make controversial decisions? Have you been able to attract and retain "A" players to support you? Be prepared to cite specific examples.
It is also worth noting here that "big names" still matter. If you have executed against a great business model at a top-tier company, or survived a tough screening process at a top-tier school, by all means talk up these accomplishments.
Once you have been lucky enough to score an interview with a private equity company, you have some additional preparation to do. After all, you will want to be able to speak their language and ask robust questions about the company and the opportunities the new leadership role entails.
During your interview, some questions you will want to consider include:
What type of private equity firm is it?
Think about the firm’s goals, mission, vision, timeframe, expectations, investment strategies, and incentives. How does the firm think about the cultural aspects of integrating businesses?
What is the environment?
Consider if the culture and personalities of the management team fit your work style.
What are the return expectations?
You should expect a maniacal and relentless focus on results, with intense scrutiny of business objectives and how you manage cash flow. Remember, it is all about the numbers in the PE world and, typically, the past six months will guide the next six. When did the portfolio company get acquired and how long does the PE firm plan to hold it? Is this a typical timeframe?
What are the operational expectations?
For instance, ask for the top three items to measure – sometimes these are not obvious. Be prepared to focus yourself on analytical rigor and accountability.
What is the investment thesis?
What is the proposition and the execution needed?
As the interview process begins, let yourself be mentored and guided. The best relationships develop when you are open to the PE firm’s input. Listen to what the search committee and the board of directors have to say and, by all means, do not assume you know more than they do. Be aware that a "club mentality" may exist among them. Culturally you may be a fit or you may not, but you will do better if you try to use their lingo and appreciate the subtle nuances of internal communications.
Finally, be sure to check your ego at the door when you arrive for your interview. The PE world is filled with big egos and, as a newcomer, this is not a contest you are likely to win!
Once you land the job
Once you are on board with the company, immerse yourself in its culture. Understand the mission and ask yourself, "What am I being asked to do?" Are you there to grow the company? Right-size it? Prepare it for a quick sale or an IPO? It is likely there will be no hand holding and no honeymoon period … this is the big leagues.
Remember that every activity – at all levels – must drive toward value. You and your team should prioritize every activity according to the potential dollar impact. Measure everything and set objectives and goals on a 30-60-90 day basis. You will have already agreed to key performance metrics for the company so watch cash flow and returns closely.
Demand integrity of your financials, ensuring all budgets, forecasts and accounting records are on time, up to date and, above all, accurate.
Cut anything that is not making you money, including people who are not contributing. This is business, after all. You will need driven risk takers who can help you maintain a high level of intensity and demonstrate value quickly.
With that in mind, we emphasize gaining the trust of your people as quickly as you can. You will be on the same sort of tight timeframe to accomplish this as with the performance metrics. Listen and communicate with employees at all levels, including and especially your board of directors. Develop a sense of unity and teamwork, while insisting on inscrutable ethics. Empower people to step up to new challenges.
Be creative and innovative, doing more with less. Simplify everything you can in terms of processes, reporting and decision making. Recognize that in this role you are not just an operator, you are also a seller – or, in some cases, a buyer. If you are a seller, clean up what you must to make the company ready for sale and know how to pitch the business. If you are also a buyer, hone your skills at business analysis.
Above all, however: have fun. Remember that it is likely you are really working to get yourself unemployed (through no fault of your own, of course) and you will be working harder than you ever have while you are at it. So you might as well be having fun, too, right?
This is the second of three articles in our "Do You Have Private Equity In Your DNA?" series. Be sure to check out the other articles at www.cookassociates.com/media-center/executive-search-thought-leadership.