EMPOWERING GROWTH WITHIN GLOBAL PRIVATE EQUITY
Executive Search & Advisory for Investment, M&A and Finance Leadership Current Mandates
Executive Search & Advisory for Investment, M&A and Finance Leadership Current Mandates
Altus Partners has deep rooted relationships with an enviable range of Private Equity General and Limited Partners. We focus on searches for both Investment and Investor Relations professionals, from analyst through to Director Level...
Altus Partners dedicated Portfolio practice was created in response to numerous specific requests from our buy-side clients, who also wanted our continued high standard of service to support their portfolio companies. We have now built an...
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The private equity (PE) sector stands on the brink of a significant transformation, a shift underscored by the predictions of industry luminaries such as David Layton, CEO of Partners Group. These forecasts anticipate a dramatic consolidation within the sector, potentially reducing the number of private market fund managers to a mere 100 'next-generation' firms. Such a profound restructuring is driven by a myriad of factors, including escalating interest rates, the hurdles of fundraising, and the burgeoning costs of regulatory compliance. This evolution compels a critical reassessment of talent strategy across the PE landscape.The momentum toward consolidation has been markedly visible through a surge in acquisition activity within the PE sector throughout 2023 and into 2024. Notable transactions include Target Capital’s intent to buy Grafton Ventures, Investorps 50% acquisition of Corsair’s Infrastructure Business, General Atlantic’s acquisition of Actis, CVC’s acquisition of DIF, Bridgepoint acquisition of ECP, andSearchlight’s acquisition of Gresham House. Although the prevailing theme among these acquisitions has focused on infrastructure managers, the trend is expected to extend to a wider range of strategies.As of 2024, the landscape has been dominated by the industry's heavyweights. According to Preqin, assets held in illiquid private market strategies amounted to $12 trillion at the close of December 2023. Impressively, the top 25 largest competitors have seized more than a third of the $506 billion of new capital allocated to PE so far this year. Altus Partners has identified the emergence of two distinct groups within the industry: those capable of swiftly raising capital, often diversifying their strategies to include continuation or impact funds in addition to their core strategy fundraises, and those facing challenges, potentially leading their funds into runoff. This dichotomy has not gone unnoticed by individuals within these funds, triggering a wave of activity in the market as they navigate this evolving landscape.Adapting to Change: Skills for the Next-Generation PE ProfessionalThe anticipated wave of consolidation in the private equity (PE) sector is set to give rise to larger, more globally diversified firms, necessitating a broader and more sophisticated skill set from PE professionals. In this evolving landscape, proficiency in digital transformation, data analytics, and Environmental, Social, and Governance (ESG) investing will become paramount. Professionals in the field will be expected to navigate increasingly complex markets, which will require a profound understanding of varied regulatory frameworks and cultural intricacies.Moreover, as PE firms broaden their portfolios across diverse asset classes, there is an expected surge in demand for individuals possessing specialised knowledge in sectors such as infrastructure, secondaries (particularly for continuation fund offerings), technology, private debt, and impact investments. While these areas represent the core specialisations, the industry is poised for a more detailed segmentation of strategy and sector-specific skill sets in response to emerging demands.A significant trend is the rapid pace at which the industry is adapting to meet the demands of Limited Partners (LPs), placing considerable pressure on the already limited talent pool. This scenario is particularly challenging when seeking candidates from diverse backgrounds, those with in-depth technological expertise, or individuals proficient in impact investing—a strategy that has garnered widespread interest across funds in various capacities. This dynamic underscores the critical need for PE firms to cultivate a workforce that is not only technically skilled but also versatile and adaptable to the shifting paradigms of the investment world.Opportunities and Challenges in Talent ManagementFor PE firms, attracting and retaining top talent will become both a challenge and a priority. In an industry, which, by its own omission is great at running other people’s companies, but not as good as managing their own, there are likely to be significant changes to the future of how talent is managed. There will likely be a greater transparency to retention and succession planning, with this often cited a major reason for (particularly senior talent), individuals being poached. The industry's consolidation will intensify competition for skilled professionals, pushing firms to revisit their value propositions. This means not only offering competitive compensation but also focusing on company culture, and impact initiatives to attract the next generation of talent.A number of these funds are turning to the BCorp accreditation to help in paving a way for a better internal structures, with the likes of Palatine, ECi, Bridges Fund Management achieving BCorp status and larger mainstream funds such as TowerBrook, joining them. Additionally, the transition period may see a surge in demand for professionals skilled in integration and change management, as firms navigate mergers and acquisitions. This presents a unique opportunity for talent with experience in managing transitions, aligning cultures, and integrating systems and processes.ConclusionThe future of talent in the consolidating PE market is both challenging and exciting. As the industry undergoes this significant transformation, the demand for a new breed of PE professionalswill rise. For those willing to adapt and grow, the consolidating PE landscape offers a wealth of opportunities for career development and advancement.Altus Partners Altus Partners is an LCap Group company, a Group renowned for its expertise in Leadership Insights, Consulting, and Executive Search tailored for high-growth companies and investors. For detailed insights and guidance on human capital strategy for funds, we invite you to reach out via info@altus-partners.com.
The Evolution of Executive SearchExecutive search, once a function of management consulting, has evolved to earn its independent consultancy model across the globe. This evolution, which began in the 1960s, was driven by the overwhelming demand for experienced executives that surpassed in-house capabilities of companies, leading to the outsourcing of talent expertise. Fast forward to 2021, and the global executive search industry is booming, with annual revenues of around £24 billion - more than double that of 2015. This remarkable growth parallels significant technological advances and a shift in global markets, leading to a dynamic change in talent demands. The Private Equity (PE) industry faced its own set of challenges in 2023 such as heightened investor demands and economic uncertainties, which emphasised the need for differentiated talent acquisition strategies. According to Hunt Scanlon Media's PE Survey, a staggering 92% of deal makers believe that top talent is crucial for achieving growth targets, highlighting the pivotal role of evolved executive search in aligning with the changing landscape of the PE industry.From Generalist to SpecialistKaren Greenbaum, CEO of AESC, and Mathew Cuthbertson, Partner of LCap Group, reflect on how the executive search industry, traditionally more generalist, has become increasingly specialised over the past 20 years. Assessments for PE roles previously centred around functional and industry expertise, currently demand a more advanced selection process, especially for senior roles. Modern executive search firms set themselves apart through specialised knowledge, experience, and proprietary tools, moving away from the 20th-century model of relying on word-of-mouth and recommendations. Today, these firms provide comprehensive services, including structured interviews to avoid bias, inclusive recruitment processes,and industry validated leadership training. This strategic approach helps clients meet growth objectives and improve employee retention rates, through a risk measured recruitment and selection process.The Changing Dynamics in Private Equity Talent AcquisitionThe emergence of new technologies has encouraged forward-thinking executive search firms to integrate innovative tools like personality-focused assessments into their processes. These tools, favoured by giants like McKinsey, Deloitte, and J.P. Morgan, offer a deeper understanding of a candidate's aptitude, interests, and personality, providing insights beyond what is discernible from traditional interviews and case studies.While many of these tools are designed to be widely applicable, they lack industry-specificity when discerning traits related to PE investment professionals. The adoption of these generalist tools in meeting the nuanced requirements of the PE industry is questionable, especially given the lack of significant evolution in PE hiring strategies over the past five years. The PE industry's hiring approach needs to be not only sophisticated but also agile, recognising the critical role of talent in driving growth and adapting to the unique demands of the current market. These conditions call for a change: a highly sophisticated executive hiring strategy which is tailored to the current PE industry, and acknowledges right talent is the most important factor in driving growth. A New Paradigm in Talent EvaluationThe conventional search methodology often falls short in pinpointing traits linked to value creation in PE contexts. Altus Partners CEO Ed Chamberlain advocates for a shift in focus away from generalist personality assessments to rather the assessment of investor behaviours as the industry continues to evolve. Using their bespoke PACE assessment tool, Altus Partners has pioneered an approach centred on business behaviours crucial to value creation in PE executives. Grounded in comprehensive empirical research, this method evaluates candidates on various dimensions, including perception, behaviours, thinking styles, and execution principles. This approach not only assesses the suitability of a candidate but also ensures their alignment with a firm's unique culture and strategic objectives. Such precision in evaluation aids in effective onboarding, team development, and ultimately leads to higher employee engagement and lower turnover rates.Aligning The Candidate and The FirmIn the current landscape, executive search extends well beyond the realm of recruitment. Firms are now equipped to provide strategic insights into clients' team dynamics, succession planning, and leadership evaluation. This enhanced function of executive search transcends traditional interviewing techniques, requiring firms to evolve in tandem with the changing talent needs of the PE market. By marrying deep industry expertise with the latest technology and human insights, executive search firms are now positioned to offer enduring, well-suited, and high-performing talent solutions. This comprehensive approach aligns not only with the immediate hiring needs but also with the strategic long-term objectives of clients, setting new benchmarks in the executive search industry and ensuring success in an increasingly competitive talent market.BibliographyBain. (2021). A Left-Brained Approach to Portfolio Company Talent Decisions. [online] Available at: https://www.bain.com/insights/talent-decisions-global-private-equity-report-2021/ [Accessed 5 Feb. 2024].Cherry Bekaert. (n.d.). Private Equity 2023 Year-in-Review and 2024 Outlook: Clearer Skies Emerge for Private Equity Amidst Challenges. [online] Available at: https://www.cbh.com/guide/reports/private-equity-industry-report-2023-trends-and-2024-outlook/ [Accessed 5 Feb. 2024].Executive Search Review. (2023). Opportunities and Challenges in Private Equity Recruiting. [online] Available at: https://huntscanlon.com/wp-content/uploads/2023/07/HSM-Private-Equity-ESR-2023-4.pdf [Accessed 15 Jan. 2024].S.C.D.M. up-to-Date D.T.R. in the (n.d.). Topic: Executive search worldwide. [online] Statista. Available at: https://www.statista.com/topics/6023/executive-search-worldwide/#topicOverview.www.firstresearch.com. (n.d.). Executive Search Services Industry Profile from First Research. [online] Available at: https://www.firstresearch.com/industry-research/Executive-Search-Services.html#:~:text=The%20global%20executive%20search%20services [Accessed 15 Jan. 2024].www.mckinsey.com. (n.d.). Private market predictions for 2024 | McKinsey. [online] Available at: https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/ten-considerations-for-private-markets-in-2024.
2023 was a year to forget for large-cap M&A, as mismatched valuations meant many IMs were abandoned. Global M&A volume was down 20% on 2022 according to Bain & Co, rising to 35% amongst private equity-backed deals. That meant many larger assets stopped building their M&A functions completely, instead switching their focus to PMI/Operational activities, and therefore reducing what is an expensive headcount area when not required.While this wasn’t the case for all large cap assets, the current climate has sparked a shift in creative deal-making, with new priorities and targets emerging for those looking to deploy capital. Large-cap investors have become more creative in seeking out public-to-private deals (P2P), taking advantage of stock market declines to snap up turnaround opportunities at discount prices. Meanwhile, mid-market M&A has become attractive as a more risk-averse option, enabling investors to add value to their existing portfolios.With both these trends in motion during 2023, Altus Partners saw a significant uptick in private equity funds looking to build M&A functions from scratch. Around 40% of our M&A and Corporate Development mandates last year were for organisations looking to make their first hire, spanning P2P deals and mid-market assets. Interestingly, over half of these were following unsuccessful attempts to fill the role directly or through other search partners, demonstrating the need for a considered approach.Whilst there are never any guarantees when making any hire, we noticed a few key mistakes that companies consistently make when bringing in their first M&A specialist. In turn, these give firms some important pointers on ensuring they get it right.Hiring at the wrong levelThere is no one-size-fits-all profile for a first M&A hire, and we frequently see companies rush the process and hire somebody who is either too senior or too junior for their requirements.In many cases, the first instinct is to opt for a ‘Head of M&A’ candidate; somebody who has a track record of running and completing numerous successful deal processes. But this kind of experience comes at a cost and is potentially surplus to requirements in a business where M&A will be opportunistic and tactical, at least to begin with. The result is a mismatch and frustration for both parties.To avoid a disappointing outcome, companies should invest time in gauging what their M&A requirement is, what part of the cycle the individual will be involved in - origination, execution, strategy, or a bit of everything – and how much support they will have, internally, or externally from investors. If you’re looking to scale up quickly and carry out large-scale M&A on an international basis then a ‘Head of M&A’ might be what you need. But, if you’re looking for an all-rounder who is happy to get stuck into day-to-day deal-making, it may be better to hire somebody who is a level down from this.Thinking advisory is the answerAnother common approach is to opt for a candidate with a pure advisory or investment banking pedigree, rather than prioritise in-house business experience. There are of course exceptions, but the advisory route should be approached with caution as it often doesn’t translate well into corporate M&A. Working as a consultant within a team under a senior partner is very different to operating on the front line of M&A within a business, making your case to a range of internal stakeholders. It is nearly always preferable to ensure a candidate has proven themselves within a frontline business environment, whether that is within private equity, or through a combination of direct advisory, investment, and corporate work.Leaving it too lateIf M&A is an important strategy for your business in 2024, then moving quickly is vital for two reasons. Firstly, mid-market M&A is very active right now and the competition is increasing all the time. Finding the right person and bringing them up to speed doesn’t happen overnight, so getting started now will ensure you can start originating and executing deals as soon as possibleSecondly, bear in mind the importance of an M&A function when it comes to exit valuation. While the vast majority of private equity-backed C-suites/senior management teams have M&A within their skillset, potential buyers still prioritise those businesses with dedicated capability in-house. Large-cap private equity buyers want to see an established M&A team and a track record over the prior 18 to 24 months. Without this, the valuation multiple and eventual deal success could be at risk. M&A strategy is one thing, but a proven track record of autonomous execution is another.Failing to deliver on equity assurancesTalent shortages mean good M&A professionals are at a premium and if one business can’t deliver, another won’t hesitate to step up. For private equity-backed senior management and management roles, equity is an integral part of building a successful strategy through M&A and while there may be legal barriers to giving equity immediately, if it is promised then that must be honoured within a reasonable timescale. The alternative is valuable onboarding time wasted, and a costly vacuum in the M&A function, as a new hire goes elsewhere.Not consulting specialist expertiseM&A is a highly specialist area, with many nuances around skillset, experience, and behaviours, that can impact the success of a new hire. Running a successful hiring process demands a methodical approach, from mapping out the need and current structure to scanning the available talent pool, reviewing what has worked elsewhere, and finally assessing potential candidates against your criteria. Putting the time in at the outset, and consulting specialist expertise is more than worth it to ensure a successful hire and faster ROI for your business.Here at Altus Partners, we specialise in placing M&A professionals of all levels within private equity-backed businesses and we have the network, capabilities, and experience to get it right, first time.To discuss any of the any of the topics in this article further then please reach out to Philip.hodson@altus-partners.com
Within a Private Equity asset, The CFO plays a pivotal and multifaceted role in driving growth and achieving the milestones in the value creation plan. The changes in the CFO role and transition from traditional finance leader to strategic partner, instigator, and value driver are well documented. However, the value a CFO can create during a holding period is underpinned by the strength and makeup of the finance team. Due to the demands and complexities faced by a finance function within a Private Equity asset, it is vital to have functional specialists who can execute their respective roles to an optimal standard. This article will explore whether, on top of a strong functional skillset, it is more beneficial to have a domain or situational experience and if, indeed, that applies to specific roles within the function. It will also discuss how embracing the data capability as a core finance asset is becoming increasingly valuable within a Private Equity context.Situational v domain experience at C-1 level within a portfolio finance teamThe 2023 LCap Leadership Capital Report, which analysed 246 Private Equity exits across the 2022/23 period, found an increasing appetite among upper-quartile businesses to find C-suite leaders with situational expertise and knowledge of the value creation journey over those with specific industry experience. Clearly, it is an interesting trend, but just how does that translate to leadership structuring beneath a CFO within the finance function?We are often asked about the importance of Private Equity experience in C-1/2 finance roles within a portfolio organisation. Whilst it is still a point of contention for many, and each firm will have different views, the highest-performing assets realise that they need a mix of both.Domain-specific experience can be highly important in its own right, especially if the portfolio company operates in a complex or specialised industry. It provides a deep understanding of the sector's unique challenges, trends, and dynamics.We can see examples of when industry grounding is particularly relevant in more outward-facing analytical roles such as FP&A, where there is a demand for analysis on market conditions, scenario planning, cost benchmarking and industry-specific metrics. Having in-depth knowledge or prior exposure to the specific industry allows for more nuanced analysis and benchmarking and is a bonus when making more informed strategic decisions.This can also be true on the opposite end of the spectrum regarding Group Accounting and Controllership roles, focused on regulatory compliance and corporate governance. Certain industries, such as healthcare or Insurance, have complex regulatory environments and naturally differ geographically. Of course, there are always accessible regulatory guidelines that provide a framework for navigation. However, finance professionals with prior industry exposure in these instances will better understand potential regulatory pitfalls and how to identify and correct the course quickly. Naturally, Private Equity situational experience is always highly valuable, especially when hiring a CFO, as funds seek an extra layer of comfort and credibility when appointing one of the key value drivers of their asset. However, is exposure to the value creation journey necessarily a prerequisite at the C-1 and 2 level? Typically, we find that PE exposure peaks from the top down within a classic finance function. It makes sense to have the most prevalent private equity exposure among the most senior finance leaders due to the proximity to investors and ability to drive the required standards within the rigour and pace of MI, analysis and reporting, for example. Clearly, there are highly relevant positions within the function, such as M&A specialists and deal execution roles, where it can be innately beneficial to have Private equity exposure. These professionals must understand the nuances of structuring deals, assessing investment theses, and conducting due diligence specific to PE transactions.In many cases, a combination of both industry-specific and situational experience is the most advantageous. Finance professionals who have worked in the same domain as the portfolio company may have insights into market dynamics and growth opportunities. When they possess private equity situational experience, they can apply that industry knowledge to PE investment strategies, market entry, deal execution, and value creation.Ultimately, the specific importance of each type of experience may vary based on the specific role within the finance function and the strategic objectives of the PE asset. However, finance professionals who can bridge both areas of expertise—industry knowledge and private equity situational expertise—often become invaluable assets to the finance team and the overall success of the PE investment.At Altus Partners, our data-driven approach, underpinned by Leadership Dynamics and PACE, allows us to assess the balance of domain and situational experience within the finance function and the wider complementarity of the team. Chartered against data from upper-quartile management teams, we are able to ensure optimal structuring within an asset, allowing the finance function to deliver maximum impact.Utilising the data function as a core finance assetIn many Private Equity assets, it is common for data capabilities to be closely aligned with the finance team or even report directly to the finance function. Whether data capabilities should be integrated into the finance team often depends on various factors, including the organisation's size, structure, and strategic goals. We’ve seen an increasing appetite from portfolio CFOS and Private Equity firms alike to incorporate an asset's data capability into the finance function's remit. This has been evidenced within multiple assets, with the creation of a hybrid Financial Planning & Insights (FP&I) vertical becoming more popular – a step away from one reflective analysis and to data-driven actionable insight. There are multiple pros of Integrating Data Capabilities into the Finance Team:Alignment with Financial Strategy: Placing data capabilities within the finance team ensures a direct alignment with the financial strategy of the PE asset. A transparent and streamlined data suite allows Investors to easily view, digest and quantify information, making for better-aligned discussions with the CFO. It also fosters a culture of data-driven decision-making.Streamlined Reporting: When data capabilities are within the finance function, there is often greater efficiency in generating and disseminating financial reports. Data can be seamlessly incorporated into financial reporting processes and underpin the business's automation.Cross-Functional Collaboration: Data capabilities within the finance team facilitate collaboration with other departments, such as M&A, Operations and Strategy departments. This can lead to more effective cross-functional communication and strategy execution.In summary:Throughout this piece, we've explored the ongoing debate surrounding the importance of Private Equity experience versus industry-specific knowledge within finance leadership roles. The verdict? At C-1/2 level, It's not a matter of choosing one over the other; the highest-performing assets recognise the value in a blend of both experiences. Industry-specific insight is invaluable for understanding complex sectors and regulatory nuances, while Private Equity situational expertise is crucial for strategic decision-making within the unique PE context.Additionally, we've spotlighted the integration of data capabilities into the finance function, a trend gaining momentum in Private Equity. Placing data at the core of finance operations aligns with the asset's financial strategy, streamlines reporting processes, and fosters cross-functional collaboration, all crucial elements in today's data-driven decision-making landscape.By leveraging a combination of industry knowledge and PE situational expertise, finance professionals can rise to become indispensable partners in driving success throughout the investment cycle.When the finance function is optimised and strategically aligned, CFOs can unlock their full potential as value drivers, instigators of positive change, and strategic partners within the Private Equity arena.
The recent CFO Survey from Private Funds CFO, themed "How LP Scrutiny is Increasing - Insights 2024," offers a treasure trove of insights into the evolving landscape of private equity fund administration. As we delve into the findings, it's clear that the industry stands at a crossroads, grappling with external pressures, technological transformation, and internal strategic shifts.Outsourcing: A Strategic Imperative One of the standout trends is the shift towards outsourcing fund administration. This mirrors my observation of the industry’s response to escalating regulatory demands and the pursuit of operational efficiency. Outsourcing is not just a cost-cutting measure; it's a strategic realignment, allowing firms to concentrate on their core competencies of capital deployment and product creation. This trend underscores a crucial realisation: agility and focus are paramount in today’s dynamic market environment.Fundraising in a Challenging Climate The survey highlights the increasing difficulty in fundraising, a sentiment I share. Economic uncertainties and liquidity constraints among LPs necessitate a more nuanced approach to fundraising. Firms must adapt, whether through extended timelines or adjusted fund sizes. This flexibility is vital for navigating the uncertain waters of global finance and underscores the need for robust and adaptable fundraising strategies.Intensifying LP Due Diligence The intensified due diligence by LPs, especially regarding back-office functions, reflects a larger trend towards transparency and accountability. This increased scrutiny is beneficial for the industry, fostering a culture of diligence and compliance. However, it also places a greater burden on fund managers to ensure their operations withstand this heightened examination.Regulatory Challenges: A Call for Clarity The survey's insights on the impact of new SEC marketing rules resonate with my views on regulatory compliance. The challenges in interpreting and implementing these rules highlight a critical gap in regulatory guidance. Clarity and consistency in regulatory frameworks are essential for effective compliance and operational harmony.AI and Technology: The New Frontier The emergence of AI in deal sourcing and portfolio monitoring is a game-changer. However, as the survey suggests, the industry is still at the nascent stages of leveraging AI's full potential. This aligns with my perspective on technological adoption in finance – it’s a journey, not a destination. Firms must continue to explore and invest in AI and other technologies while balancing the hype with practical, value-driven applications.Fund Finance Market in Flux The regional banking crisis's impact on the fund finance market is a crucial concern. The tightening of subscription lending and shifts in borrowing strategies underscore the need for a diversified and strategic approach to fund finance. This situation reinforces my belief in the importance of robust financial planning and risk management.Increased Reporting Demands and LP Scrutiny The surge in detailed LP requests, particularly around ESG disclosures, mirrors a broader industry trend towards sustainable and responsible investing. This increased demand for transparency and ESG alignment is not just a compliance issue but an opportunity for firms to differentiate themselves and attract ESG-focused investors.The Evolving Role of CFOs The expanding role of CFOs, as highlighted in the survey, resonates with my view of the CFO as a strategic partner. Today's CFOs need to navigate beyond traditional financial management, embracing roles in technology implementation, regulatory navigation, and investor communication. This evolution reflects the broader shift in business leadership towards a more integrated and strategic approach.Conclusion: Embracing Change with Prudence and Vision The Private Funds CFO Survey 2024 offers a clear view of an industry in transition, marked by heightened scrutiny, regulatory challenges, and technological advancements. As we navigate these changes, the key will be to embrace them with prudence and vision, ensuring that our strategies are aligned not just with current demands but also with future opportunities. The road ahead is complex, but with adaptability and strategic foresight, the private equity industry can continue to thrive in an ever-evolving landscape.
In our attempts to support the global strides being taken to address the unbalanced diversity scales in the workforce, AltusPartners were pleased to partner with 10,000 Black Interns in our first-ever internship program in support of young black talent in the corporate world.Purpose-driven approach To be candid, diversity initiatives will only bear significance if planned and executed with sincerity. In this case, this means, firstly acknowledging that there is an imbalance of minority ethnic groups in the workplace. Is it a challenge? – absolutely! But the better question remains - to what extent are we disabled by this? We have an incredible opportunity to influence tremendous change for black talent wishing to enter the working world. This emphasises the need to give less attention to the weight of the issue at hand and adopt a forward-thinking and collaborative approach in addressing one of the world’s greatest concerns – inequality. This is the simplicity of our purpose. What do we need to achieve diversity?Diversity will carry varying meanings per organisation, but its value is always praiseworthy. Therefore, there should never be a need to conform to collective approaches to diversity. It is important to critically evaluate your workforce by qualitative and quantitative metrics, and through a gap analysis, understand what can be introduced to achieve diversity. Designing diversity policies is the next step, but the real test is the implementation – can we attest to diversity being achieved at an employee, customer, and stakeholder level?So, to make this a reality, a #Forbes study suggested four simple steps:1. Clearly identify what you are trying to achieve – there need not be an array of diversity goals. Simple achievable milestones will be more encouraging and effective versus elaborate goals which may need constant refining and lengthier timescales.2. Avoid “copy and paste” – appreciate and embrace the authenticity of your organization and that diversity can carry its own meaning versus your peers. 3. Implementation supersedes good design – whilst the strategy is important, the implementation needs to be well-thought-out including mitigation plans and any realignment. A diversity plan will not succeed if people lack the tools, skills, and motivation. 4. Win “hearts and minds” – individuals who fail to truly acknowledge the value of diversity will cripple any chances of success so it is important to sensitively encourage others and realise that this really calls for a shift in perspective – which can take time. Value of supporting diversity programs There is undoubtedly the opportunity to meaningfully impact the life of someone, and hopefully create a domino effect, be this amongst communities of up-and-coming black talent or how organisations start rethinking their DE&I strategies. For us, it was both – we were fortunate to be reminded of the importance of inclusivity and how we need to adopt and encourage more equitable opportunities at all stages of the employment lifecycle, in order to create and sustain diversity.We were also left with encouraging feedback from our intern, Isaac Olubiyi, which motivates us to continue with such initiatives. “My experience at Altus Partners was an enjoyable and rewarding one, to say the least. The skills I learnt during my time there are skills I can utilise for a lifetime due to the ease of transferability of the skills e.g., how to be efficient with your time when working towards a deadline yet still yielding high-quality work. I also understood the importance of building rapport with clients as well as going the extra mile for them to meet their requirements. Being at the office was also a pleasurable experience, I have nothing but good things to say regarding my colleagues and I wish them all the best in the future.”By having Isaac as a part of our business, we welcomed new perspectives, deeper social cohesion, and creativity.About 10KBI Led by some of the most powerful advocates for empowering young black talent, 10KBI quickly grew from an initial commitment of 100 interns to now 10,000. They are the fastest growing black talent pipeline in the U.K. alone and sincerely committed to not only affording this minority ethnic group credible opportunities but to address the apparent ethnic imbalances which need immediate and ongoing attention in most workforces. Should you wish to learn more about our personal experience, feel free to reach out to Gizelle Moodley who is best placed to guide you on the opportunities and value of such an initiative, as well as key learnings which we found as critical to a successful experience for interns. #10KBI are hosting a series of weekly information sessions, until the end of September, which will cover the timelines, recruitment requirements, and expectations and a Q/A session at the end. You are welcome to register via the following link - Webinar Registration - ZoomIf you are already committed and prepared to hire an intern, you are welcome to pledge your interest via the following link - pinpoint-10kbi.com/programmes/1/company_submissions/new
Unlike conventional interviews, Private Equity interviews are uniquely designed to assess your potential for excelling in a challenging role that demands a distinct set of skills and behaviours. To distinguish yourself, you must skillfully navigate three pivotal stages: the initial interview, the modelling test, and the coveted case study.As you step into the first stage of the Private Equity interview process, the focus is on you, probing and delving into your potential suitability for Private Equity. This critical juncture first step serves as a canvas for you to showcase your background and experiences, unveiling how they can uniquely contribute substantial value to the esteemed role of a private market investor.Gone are the days of merely listing accomplishments; instead, the interviewers seek a tapestry of insights, interweaving your past endeavours with the specific expectations and challenges of the Private Equity domain. Demonstrating a profound understanding of how your previous experiences align with the intricacies of Private Equity investment is significant At this pivotal moment, your ability to exhibit commercial acumen takes centre stage, showcasing your grasp of market trends, industry dynamics, and the delicate balance between risk and reward. Moreover, the interviewers anticipate your display of strategic thinking, appreciating your foresight in identifying potential investment opportunities and your vision for navigating technical, commercial, and stakeholder complexities. In this realm of high-stakes decisions, your knack for recognising lucrative investment prospects becomes instrumental in setting you apart from the competition. Demonstrating an astute understanding of the factors that influence successful investments, such as sound financial analysis, robust due diligence, and an ability to foresee potential growth drivers, solidifies your position as a promising candidate.Analyse the fund’s portfolio companies, track record and associated news. Prepare intelligent questions!To comprehensively analyse the fund's portfolio companies, track record, and associated news, you must delve into each aspect meticulously to gain valuable insights. With a well-rounded understanding, you can prepare thoughtful questions demonstrating your thoroughness and strategic thinking during interviews or investment discussions.Portfolio Companies Analysis:Business Model and Market Positioning: Assess the portfolio company's business/ investment model, understanding its unique value proposition and how it differentiates itself in the market. Financial Performance: Analyse accessible financial statements of the portfolio companies, focusing on revenue growth, profitability, and key financial ratios. Ask about any significant fluctuations or trends that have impacted their financial performance.Management Team: Learn about the expertise and track record of the management team driving each portfolio company. Inquire about their vision and strategies for future growth.Risk Mitigation Strategies: Explore how the fund mitigates risks associated with the portfolio companies. Ask about the due diligence process and measures taken to ensure long-term sustainability.Fund Track Record Evaluation:Investment Returns: Analyse the fund's historical investment returns, focusing on the performance of previous investments. Inquire about any standout successes or lessons learned from past deals.Exit Strategies: Understand the fund's approach to exiting investments. Ask about the methods used to achieve successful exits and the average holding periods for portfolio companies.Sector and Geographical Focus: Gain insights into the fund's focus on specific sectors and regions. Ask about the rationale behind these choices and how they align with the fund's overall strategy.Investment strategies: Explore the funds’ investment strategies, i.e. Co-investments/ FoF/ Direct – minority or majority, and how these collaborations have contributed to the fund's track record.Associated News Analysis:Market Trends Impact: Investigate recent market trends and industry developments that might impact the fund's portfolio companies. Ask about strategies in place to adapt to changing market conditions.Regulatory Environment: Understand any regulatory changes that could affect the fund's investments and how they are addressed to ensure compliance.ESG and Sustainability Practices: Assess the fund's commitment to Environmental, Social, and Governance (ESG) principles and sustainability practices. Ask about initiatives to incorporate responsible investing strategies at the investment evaluation stage and across portfolio companies.By meticulously analysing the fund's portfolio companies, track record, and associated news, you can develop well-crafted questions demonstrating your in-depth understanding of the investment landscape. These questions will showcase your keen analytical skills, genuine interest in the fund's performance, and commitment to responsible investing practices.Develop a well-thought-out view of intriguing sectors or industries and articulate their investment appealDistinguishing yourself as a standout candidate entails cultivating well-informed opinions on sectors or industries that capture your interest and align with the fund's investment focus. Dedicate time to thoroughly researching and analysing these areas, drawing on market insights, macroeconomic trends, and projections of future growth prospects.During the interview, demonstrate your deep understanding of these sectors or industries by articulating compelling reasons behind your interest in them. Back up your opinions with data-driven evidence and concrete examples to reinforce your credibility as a thoughtful and strategic thinker.By presenting your perspectives with clarity and conviction, you will skillfully showcase your ability to think critically and strategically within the context of Private Equity investments. Highlight how your well-reasoned opinions align with the fund's investment strategy and how they can contribute to identifying and capitalising on lucrative opportunities.Moreover, offer an in-depth analysis of the challenges and opportunities in these sectors or industries, indicating your capacity to navigate complex investment landscapes and anticipate potential risks and rewards. Discuss emerging trends, disruptive technologies, and regulatory shifts that might impact the investment landscape.Demonstrating a comprehensive understanding of the nuances of these sectors will not only impress the interviewers but also solidify your position as a valuable asset to the fund. Showcase your ability to synthesise information, make data-driven decisions, and identify unique value propositions within the target sectors.In summary, cultivating informed opinions on intriguing sectors or industries goes beyond a superficial interest; it is essential to present yourself as a well-prepared and strategic candidate. Embrace the opportunity to showcase your expertise, and let your thoughtful insights shine as you articulate the investment appeal of these sectors in the realm of private equity.Research and demonstrate a list of investment-worthy companies and one or two more leftfield options!To set yourself apart as an exceptional candidate, carefully create a list of companies that smartly align with the investment thesis of the Private Equity firm. This thoughtful selection process demands a keen eye for identifying enterprises with promising growth potential, solid financial foundations, and sustainable competitive advantages that can weather market fluctuations.Demonstrate your astute judgment by conducting thorough research and due diligence on each potential investment opportunity. Scrutinise their revenue streams, profit margins, debt levels, and overall financial health to ensure they meet the stringent criteria for Private Equity investments.Moreover, delve into the qualitative aspects of these companies, such as their leadership teams. Highlighting these integral components will illustrate your ability to think strategically and make informed investment decisions.Equally crucial is your ability to identify mispriced opportunities in the market—those hidden gems overlooked by mainstream investors. Unearthing undervalued assets with the potential for significant yield underscores your perceptive nature and distinct ability to identify opportunities which are often overlooked. Imagine analysing market trends, industry disruptions, and other factors contributing to market mispricing. By showcasing your ability to spot these opportunities, you illustrate your value in capitalising on untapped potential and unlocking hidden value within the portfolio.During the interview, confidently articulate your rationale behind each company's inclusion in your list. Emphasise how their unique attributes align with the firm's investment strategy and complement the broader vision of the Private Equity fund.Gain In-Depth Insight into the Factors That Make a Market Appealing to Private Equity InvestorsTo thrive in Private Equity, it is imperative to delve into the multifaceted elements that entice investors to specific markets. Embark on a comprehensive investigation to comprehend the critical attributes of Private Equity investment strategies. With this knowledge, you will showcase your ability to strategically discern and assess lucrative investment opportunities.Favourable Regulatory Environments: Investigate the regulatory landscape of target markets, discerning the extent to which favourable policies encourage and support Private Equity investments. Look for jurisdictions that offer business-friendly regulations, tax incentives, and investor protections, as these elements foster a conducive investment climate.Robust Growth Potential: Analyse the growth prospects of potential markets, seeking industries and sectors with promising upward trajectories. Markets exhibiting consistent expansion and flourishing demand particularly appeal to Private Equity investors as they offer substantial opportunities for value creation and capital appreciation.Strong Industry Tailwinds: Identify markets with industries experiencing strong tailwinds driven by technological advancements, changing consumer preferences, or disruptive innovations. Such industries are more likely to offer high-growth potential and attractive investment prospects.Conducive Exit Options: Evaluate the exit options available in a market, as the ability to realise returns on investments is a crucial aspect of Private Equity strategy. Markets with vibrant IPO (Initial Public Offering) and M&A (Mergers and Acquisitions) landscapes provide desirable exit avenues, enabling investors to monetise their investments successfully.Macro-Economic Factors: Consider broader macroeconomic trends, including GDP growth, inflation rates, and currency stability, as they can significantly influence the overall investment climate of a market. Markets with stable economic fundamentals tend to attract more Private Equity interest.During the interview, demonstrate your acute awareness of these factors that attract Private Equity investors. Articulate how you assess potential investment opportunities based on these attributes, showcasing your ability to identify markets more likely to deliver robust investment returns.Furthermore, emphasise your capacity to navigate the complexities of various markets and pinpoint the optimal investment destinations. This ability reflects your strategic thinking and ensures that the fund's resources are channelled towards markets that offer the most promising risk-reward profiles.Prepare for Spot Questions: Brain Teasers and Math-Based ChallengesDuring initial interviews, it is essential to be ready for spot questions that may include brain teasers or math-based challenges. These questions are commonly encountered in interview processes for consulting companies like Bain or McKinsey. Remember, the purpose of these questions is not solely to test your knowledge but to assess your thought process and how you approach problem-solving with a structured and thoughtful mindset.When confronted with brain teasers, take your time to comprehend the question thoroughly. Avoid rushing into an answer and focus on breaking down the problem step-by-step. Articulate your thought process aloud, demonstrating your ability to approach the question methodically and logically. Refrain from disheartening if your initial answer is incorrect; these questions are intentionally designed to challenge you. If you make a mistake, take it as an opportunity to showcase your resilience and adaptability. The interviewer may provide feedback, observe how you handle it, and use it to improve your subsequent responses.Likewise, be prepared for "rough and ready" math-based questions, such as calculating the Internal Rate of Return (IRR) or fundamental arithmetic problems. The goal is to test your mathematical skills and observe how you react under pressure. If you need a moment to gather your thoughts, don't hesitate to pause and gather your bearings. Demonstrating composure under pressure and showing your ability to think through the problem systematically will be appreciated by the interviewer.Maintain Unwavering Focus and Engagement Throughout the Interview ProcessA thriving investor embodies a delicate balance of commercial acumen, intelligence, foresight, and interpersonal traits. As you embark on the journey to become a successful investor, remember that your ability to influence positively plays a pivotal role in your success. Throughout the interview process, especially in the crucial first stage, being fully engaged, motivated, and upbeat is paramount.The role of a private market investor demands not only astute financial judgment but also the capacity to forge strong connections with the management teams of investable companies. As you vie for investment opportunities, often against fierce competition, your ability to articulate your vision, build rapport, and convey your value as a strategic partner will set you apart.Furthermore, engaging effectively with the portfolio company's C-suite is indispensable once investments are made. You must collaborate with them, aligning interests and fostering a growth-oriented environment that drives success. Effective communication, a positive outlook, and a solution-oriented approach will be instrumental in achieving these goals.Apart from the investable companies and portfolio C-suite, the successful investor interacts with a network of advisors, ranging from expert networks to lawyers and investment banks. Engagement and motivation throughout the interview will demonstrate your ability to forge meaningful relationships with these essential players, ensuring a well-rounded and successful investment journey.In the first stage of the interview, making a lasting impression depends on your unwavering focus and genuine enthusiasm for the opportunity. Clearly articulate your investment philosophy, showcase your ability to navigate challenges, and demonstrate a passion for driving growth and value creation. Your upbeat demeanour and positive attitude will instil confidence in the interviewers and emphasise your potential as a valuable addition to the investment team.ConclusionIn conclusion, the advice provided here offers a comprehensive array of considerations, although it's worth noting that not all interviews will delve into every aspect mentioned. This guidance stems from a wealth of input from candidates and interviewers spanning numerous interviews. Navigating the intricacies of the Private Equity interview process is a journey that demands a multifaceted approach and unwavering dedication.As you advance through the initial rounds, keep in mind that Private Equity interviews deviate from the conventional. They are designed to gauge your potential for excelling in a dynamic, fast-paced role. Embrace the chance to spotlight your abilities and allow your professional passion for Private Equity, along with your adeptness in strategic thinking, to shine through. By diligent preparation, a display of your expertise, and a consistent conveyance of genuine enthusiasm, you will undoubtedly stand out as an exceptional contender in the competitive realm of Private Equity.Remember, every interaction serves as an occasion to leave an indelible mark and embark on a gratifying journey as a prosperous investor in the private market. Your journey towards success in the Private Equity landscape starts here, and your potential is boundless.For more insights and advice, contact Altus Partners:
Private Equity investors require unique skills to navigate the complex and fast-paced industry. That's where the PACE assessment tool comes in. Designed exclusively for the Private Equity sector, PACE has delivered several thousand assessments to date, helping identify and develop the key competencies needed for success. Following the recent acquisition of Altus Partners by The LCap Group, Ed Chamberlain, CEO of Altus, and Sam Roberts, Chief Strategy Officer at LCap Group, took a deeper dive into PACE and how the innovative technology can deliver substantial value to the clients of Altus Partners.- Altus Partners was acquired by LCap Group in June 2023 - LCap Group has a strong portfolio that includes Drax Executive Search, Rowan Group, and Leadership Dynamics - Integration with these brands promises an expansive shared network and knowledge base - PACE, an assessment tool, designed by LCap exclusively for the Private Equity sector, has delivered several thousand assessments - PACE will now be offered exclusively to Altus Partners Private Equity clientele for enhancing their funds and portfolio companiesEC: Sam, we are delighted to be an LCap company and excited to be able to offer the proven technology – PACE, to our clients. Can you provide an overview of the PACE Evaluation and its role within the platform?SR: Thanks, Ed, and welcome to the Group! The PACE Evaluation is a comprehensive evaluation developed by LCap that assesses the behavioural traits and potential of leadership teams and individuals within leadership positions. It plays a central role within the LCap platform by providing valuable insights into leadership capabilities, strengths, and development areas. The assessment is designed to help our clients identify and nurture leadership talent, improve decision-making in leadership appointments, and enhance leadership effectiveness. We can now offer Altus Partners clients the ability to use this technology to make more informed decisions. EC: How was the PACE Model of Development developed, and what were the key factors considered during its creation?SR: The PACE Model of Development was developed, over several years, through rigorous research and collaboration with leading occupational psychologists and academic experts and is the result of the largest study of its kind globally. The key factors considered during its creation included the review of existing research. This is where the development team extensively reviewed existing research on leadership traits, behaviours, and the factors influencing leadership success. We also carried out a Private Equity Leadership Study, collecting data from hundreds of leaders across roles and industries to ensure the model's applicability and relevance across various contexts. And finally, a Psychometric Analysis. This is where the assessment underwent psychometric analysis to ensure its reliability and validity. The model was validated through longitudinal studies and feedback from real-world leadership experiences. EC: What distinguishes the PACE framework from other leadership assessment tools in the market?SR: The PACE framework stands out from other leadership assessment tools in the market due to its Value Creation Centric Approach. The PACE evaluation comprehensively assesses various behavioural traits, potential, and development needs of individuals in leadership positions on a value-creation journey. We unapologetically focus on the business success, not the harmony in the team.Further to this, its one of a kind Private Equity-Specific focus. The PACE framework is specifically tailored for the private equity industry, making it highly effective for clients in this sector. It is also research-backed, with the model being based on extensive research and collaboration with experts, ensuring its accuracy and reliability. And finally, the model takes a longitudinal Perspective. This means the assessment considers the long-term development of individuals, providing insights into potential growth and sustained leadership effectiveness. EC: Can you explain the relationship between behavioural traits and successful value creation by senior leadership teams, as demonstrated by the PACE Model?SR: The PACE Model demonstrates that specific behavioural traits and competencies in senior leadership teams strongly correlate with successful value creation. Traits like growth mindset, curiosity, internal locus of control, self-monitoring, resilience, and the ability to foster collaboration and intuition are key drivers of value creation within private equity-backed businesses. By understanding and developing these traits in leaders, organisations can enhance their ability to make informed decisions, drive growth, and navigate challenges effectively, ultimately leading to increased value creation.EC: What research methodologies were employed to validate the effectiveness of the PACE assessment?SR: Great question, and this is core to the strength of the offering. The effectiveness of the PACE assessment was validated through three main research methodologies: face validity, concurrent validity, and predictive validity.Face validity refers to the degree to which an assessment appears to measure what it intends to measure on the surface. In the case of the PACE assessment, during its development phase, experts, occupational psychologists, and relevant stakeholders reviewed the assessment items and components to assess whether they appeared to be relevant and appropriate in evaluating leadership behaviours within the private equity industry. Their feedback and input helped ensure that the PACE assessment's content was aligned with the specific traits and competencies desired in successful leaders operating in the private equity sector.Concurrent validity assesses the degree of agreement between the results of a new assessment tool (in this case, the PACE assessment) and an already established and validated measure of the same construct. To establish concurrent validity for the PACE assessment, LCap, in partnership with Birkbeck College, administered the assessment to a sample of individuals in leadership positions within private equity-backed businesses. Simultaneously, they collected data from an existing, widely recognised and validated leadership assessment tool.By comparing the scores obtained from the PACE assessment with the scores from the established leadership assessment tool, the researchers could determine whether the PACE assessment shows a strong correlation and agreement with the existing measure. A high level of agreement would support the concurrent validity of the PACE assessment, indicating that it effectively measures similar leadership traits and competencies as the established tool.And Predictive validity assesses the ability of an assessment to predict future outcomes or performance based on its results. To establish predictive validity for the PACE assessment, LCap used the information of those who underwent the assessment and their business performance.By analysing the correlation between the PACE assessment scores and the leadership outcomes, we can determine that the assessment effectively predicts successful leadership performance within the private equity industry. Strong positive correlations between PACE scores and demonstrated leadership success indicate high predictive validity. Our research around behavioural concentrations – or groupthink – in this space is particularly significant.By employing face validity, concurrent validity, and predictive validity research methodologies, Leadership Dynamics could comprehensively validate the effectiveness of the PACE assessment as a robust tool for evaluating leadership traits in the private equity industry. EC: How did collaboration with leading occupational psychologists and academic experts contribute to developing and validating the PACE framework?SR: Collaboration with leading occupational psychologists and academic experts was instrumental in developing and validating the PACE framework in several ways. Their leadership research and assessment expertise provided valuable guidance in designing a comprehensive and reliable evaluation tool. Input from experts ensured the PACE model was based on the latest research and best practices in leadership assessment. Collaborators contributed to the validation process by conducting independent reviews and analyses of the assessment's effectiveness. And their work on applying non-psychological data to produce behavioural projections enabled us to produce accurate, arms length behavioural evaluations. EC: Could you give me some insight into the feedback received from private equity investment directors, executives, and non-executives regarding the PACE framework's application and relevance to their circumstances?SR: Feedback from private equity investment directors, executives, and non-executives regarding the PACE framework's application and relevance has been highly positive. Clients have reported that the assessment provided valuable insights into leadership potential, strengths, and developmental areas. The industry-specific focus of the PACE framework was particularly appreciated, as it allowed for tailored leadership development strategies in the unique context of the private equity sector. Clients also mentioned that the assessment contributed to more informed decision-making in leadership appointments and helped improve overall leadership effectiveness within their organisations. EC: How does the PACE assessment support clients in understanding why some individuals thrive in the private equity environment while others struggle?SR: The PACE assessment supports clients by providing in-depth insights into their behavioural traits and growth potential. The assessment identifies specific competencies and traits that align with success in the private equity industry, such as adaptability, resilience, divergent thinking, and the ability to manage ambiguity. By understanding individuals' unique characteristics and development needs, clients can tailor leadership development programs, coaching, and mentoring to maximize their effectiveness in the demanding and dynamic private equity environment. EC: Can you share any success stories or real-world examples where the PACE assessment has significantly improved leadership effectiveness and value creation within private equity-backed businesses?SR: Certainly, we’ve used PACE across LCap’s work with 142 PE funds and their portfolio companies in 2022. Broadly, there are four areas where PACE has had an impact.The PACE assessment helped identify high-potential leaders who might have otherwise been overlooked, allowing organisations to invest in their development and nurture future leadership talent. The assessment results also led to targeted development plans for senior leaders, addressing specific behavioural traits and competencies critical for value creation in the private equity context. And the PACE evaluation contributed to more informed decision-making in leadership appointments, resulting in leaders better suited to drive growth and success within private equity-backed businesses.Finally, by understanding the behavioural traits of their team members through PACE, senior leadership teams improved collaboration, communication, and decision-making, leading to more effective value creation. EC: Thank you, Sam, for those incredibly informative insights. Last question, how can our clients access more information on PACE?SR: Contact any Altus Partners Consultant, or email us at info@altus-partners.com, and we will set up a meeting with our expert team, who will walk you through how the tool may work for you.
The private markets experienced a whirlwind of events in 2022, with fundraising activities navigating through contrasting trends. Despite formidable challenges like high inflation, interest rate hikes, geopolitical uncertainties, and the denominator effect, fundraising managed to achieve a commendable milestone, reaching $1.2 trillion, a figure on par with pre-pandemic levels. However, this marked an 11.4 percent decline from the previous year's record-breaking total of $1.4 trillion. As we embark on the journey of 2023, the private capital fundraising environment remains challenging, with early data suggesting that new records may be unlikely.Challenges Confronting Emerging Managers:Emerging managers, typically defined as asset managers raising three or fewer funds firmwide, have felt the brunt of the fundraising slowdown. Historically, these managers accounted for around 30.5% of total assets raised, but their share has now diminished to approximately 16.9% over the last five quarters. Emerging funds in private equity and real assets have slipped below the 50% mark, while emerging VC has managed to maintain a slightly higher position. The plight of emerging managers is further exacerbated by their lack of prior fund performance to bolster their pitches, making it challenging to secure commitments from cautious investors.Time to Close Funds:The timeline for funds to reach final closings has generally shown stability over the years, with a median of 12 to 13 months. However, a concerning trend is a widening gap between the fastest and slowest fund closures, indicating a more intricate fundraising environment. In 2023, top quartile funds took a staggering 19.8 months to close, while bottom quartile funds only required 4.6 months, resulting in a significant 15.2-month disparity. This disparity suggests that limited partners (LPs) are becoming increasingly discerning and prudent in their investment decisions, leading to extended fundraising periods for some managers.Years Between Final Closings:The median duration between final closings in a fund family has exhibited a flat to declining trajectory over the years, with recent data pointing to an average of 2.2 years. Notably, this figure is lower than the 2011-2014 period, during which it exceeded three years. While recent fundraising challenges may be cause for concern, the data suggests that it could be a return to a more typical long-term trend rather than a problematic industry-wide issue. It is important to note that struggling funds may not even make it into the data, creating a downward bias in the statistic for funds that successfully close.Regional Trends:Asia's share of global capital raised has experienced a significant decline, plummeting from 31.3% in 2018 to a mere 8.2% in 2023. This sharp decline may be attributed to geopolitical tensions and economic impacts from events such as the war in Ukraine. Similarly, Europe's share has also diminished, with only 17.5% of global capital raised in 2023. In contrast, North America has managed to maintain its share of global capital raised, reaching an impressive 76.4% in 2022. This resilience in North America may be attributed to institutional investors seeking a haven from the volatility of public markets.Impact of Larger Funds:In recent years, funds larger than $1 billion have garnered a larger share of capital commitments, reaching approximately 65% since 2013. The definition of mega PE funds has evolved from $1 billion-plus to $5 billion-plus, reflecting the need for larger funds capable of handling more substantial deals. However, this trend may also be leading to the completion of larger deals, necessitating even more massive funds to write these substantial checks. It is essential for fund managers to carefully assess the potential implications of such developments on deal sizes and market dynamics.Challenges and Opportunities Ahead:The private capital fundraising landscape poses formidable challenges that demand agility and innovation from fund managers. Successfully navigating through changing market conditions and comprehending regional dynamics will be pivotal for fundraising success. Establishing trust and credibility with investors through transparent and responsible investment practices will be paramount. Fund managers that adeptly navigate these complexities and embrace innovation, such as tokenized funds and structured vehicles, will be positioned to thrive in the evolving world of private markets.Conclusion:While 2023's private capital fundraising environment may not break records, it presents challenges and opportunities for fund managers. By adopting a strategic and adaptive approach, understanding regional trends, and cultivating robust investor relationships, fund managers can surmount obstacles and achieve sustained growth and success for themselves and their investors. Embracing technological advancements and staying attuned to market dynamics will be vital to thriving in the ever-evolving landscape of private markets in 2023 and beyond. As the landscape shifts, fund managers who embrace change and seize opportunities will pave the way for a resilient and thriving private capital ecosystem.Discover Your Perfect Investor Relations Team with Altus Partners:At Altus Partners, we take pride in our specialisation in Investor Relations and Distribution search. Whether you are a global fund or an emerging manager in Europe, we are here to support your journey to success. If you are seeking to build an exceptional Investor Relations team or searching for your ideal role in this dynamic field, look no further. Our dedicated team of experts is ready to assist you every step of the way.Contact Altus Partners today and let us help you unlock the full potential of your private capital fundraising endeavours. Contact us at:Let's pave the way for your future in private markets together. Contributions: McKinsey Private Equity Report 2023. Pitchbook Private Markets Fundraising Report Q1 2023
Altus Partners is pleased to announce the launch of its Data & Analytics Practice. The new practice will connect private equity firms and their portfolio businesses with highly skilled professionals in data engineering, data science, machine learning, business intelligence and commercial analysis.In today's data-driven business landscape, organisations recognise the immense value of reliable and actionable data insights. The demand for talented data and analytics professionals has surged as companies strive to leverage their data effectively to make informed and critical business decisions. Altus Partners aims to bridge this talent gap by providing comprehensive Executive Search services tailored to the data and analytics sector.The Data & Analytics practice at Altus Partners will primarily support private equity firms and private equity-backed businesses in fulfilling crucial roles such as Chief Technology Officer (CTO), Chief Data Officer (CDO), Data Director, and Data Vice President (Data VP). By assisting in these critical appointments, Altus Partners enables firms to harness the power of data and analytics to inform decision-making processes throughout the investment lifecycle, including pre-deal due diligence and the hold phase."Data-driven decision-making has become a pivotal factor in determining the success of organisations across industries," said Ed Chamberlain, CEO at Altus Partners. "Private equity firms recognise the potential of data and analytics to drive growth, maximise performance, and unlock hidden value within their portfolio companies. Our Data & Analytics Executive Search Practice will provide a specialised and comprehensive approach to identifying top talent in this rapidly evolving field."Altus Partners understands that a data-centric approach not only accelerates execution and fosters accountability but also uncovers new growth opportunities while ensuring sustainable value creation over the investment horizon. With the ability to track progress and identify areas of improvement, data-driven insights play a vital role in optimising performance and enhancing decision-making strategies."At Altus Partners, we believe that rigorous data and analytics capabilities are essential for companies to maintain their competitive edge," stated Roddy Coltart, Head of the Data & Analytics Practice. "Our team has an in-depth understanding of the industry's evolving needs and the skill sets required to navigate complex data landscapes. We are dedicated to helping private equity firms build robust data and analytics functions by connecting them with the best talent available."In an era where big data and analytics present a continuous challenge in processing and interpreting vast datasets, professionals specialising in data engineering are crucial. These experts are uniquely qualified to transform complex raw data into valuable insights and leverage data visualisation techniques to present findings clearly and comprehensively. Proficiency in tools like SQL, data mining, data management, data warehousing, data modelling, data architecture, data governance, and data quality is paramount for success in this field.The launch of Altus Partners' Data & Analytics Practice marks a significant milestone in the firm's commitment to providing comprehensive recruitment solutions tailored to the evolving needs of the financial industry. By connecting private equity firms with top talent in data and analytics, Altus Partners aims to empower organisations to leverage data as a strategic asset and drive sustainable growth.For more information about Altus Partners and their new Data & Analytics Executive Search Practice, please visit www.altus-partners.com or contact Roddy Coltart Roddy@altus-partners.com.
The private equity (PE) sector stands on the brink of a significant transformation, a shift underscored by the predictions of industry luminaries such as David Layton, CEO of Partners Group. These forecasts anticipate a dramatic consolidation within the sector, potentially reducing the number of private market fund managers to a mere 100 'next-generation' firms. Such a profound restructuring is driven by a myriad of factors, including escalating interest rates, the hurdles of fundraising, and the burgeoning costs of regulatory compliance. This evolution compels a critical reassessment of talent strategy across the PE landscape.The momentum toward consolidation has been markedly visible through a surge in acquisition activity within the PE sector throughout 2023 and into 2024. Notable transactions include Target Capital’s intent to buy Grafton Ventures, Investorps 50% acquisition of Corsair’s Infrastructure Business, General Atlantic’s acquisition of Actis, CVC’s acquisition of DIF, Bridgepoint acquisition of ECP, andSearchlight’s acquisition of Gresham House. Although the prevailing theme among these acquisitions has focused on infrastructure managers, the trend is expected to extend to a wider range of strategies.As of 2024, the landscape has been dominated by the industry's heavyweights. According to Preqin, assets held in illiquid private market strategies amounted to $12 trillion at the close of December 2023. Impressively, the top 25 largest competitors have seized more than a third of the $506 billion of new capital allocated to PE so far this year. Altus Partners has identified the emergence of two distinct groups within the industry: those capable of swiftly raising capital, often diversifying their strategies to include continuation or impact funds in addition to their core strategy fundraises, and those facing challenges, potentially leading their funds into runoff. This dichotomy has not gone unnoticed by individuals within these funds, triggering a wave of activity in the market as they navigate this evolving landscape.Adapting to Change: Skills for the Next-Generation PE ProfessionalThe anticipated wave of consolidation in the private equity (PE) sector is set to give rise to larger, more globally diversified firms, necessitating a broader and more sophisticated skill set from PE professionals. In this evolving landscape, proficiency in digital transformation, data analytics, and Environmental, Social, and Governance (ESG) investing will become paramount. Professionals in the field will be expected to navigate increasingly complex markets, which will require a profound understanding of varied regulatory frameworks and cultural intricacies.Moreover, as PE firms broaden their portfolios across diverse asset classes, there is an expected surge in demand for individuals possessing specialised knowledge in sectors such as infrastructure, secondaries (particularly for continuation fund offerings), technology, private debt, and impact investments. While these areas represent the core specialisations, the industry is poised for a more detailed segmentation of strategy and sector-specific skill sets in response to emerging demands.A significant trend is the rapid pace at which the industry is adapting to meet the demands of Limited Partners (LPs), placing considerable pressure on the already limited talent pool. This scenario is particularly challenging when seeking candidates from diverse backgrounds, those with in-depth technological expertise, or individuals proficient in impact investing—a strategy that has garnered widespread interest across funds in various capacities. This dynamic underscores the critical need for PE firms to cultivate a workforce that is not only technically skilled but also versatile and adaptable to the shifting paradigms of the investment world.Opportunities and Challenges in Talent ManagementFor PE firms, attracting and retaining top talent will become both a challenge and a priority. In an industry, which, by its own omission is great at running other people’s companies, but not as good as managing their own, there are likely to be significant changes to the future of how talent is managed. There will likely be a greater transparency to retention and succession planning, with this often cited a major reason for (particularly senior talent), individuals being poached. The industry's consolidation will intensify competition for skilled professionals, pushing firms to revisit their value propositions. This means not only offering competitive compensation but also focusing on company culture, and impact initiatives to attract the next generation of talent.A number of these funds are turning to the BCorp accreditation to help in paving a way for a better internal structures, with the likes of Palatine, ECi, Bridges Fund Management achieving BCorp status and larger mainstream funds such as TowerBrook, joining them. Additionally, the transition period may see a surge in demand for professionals skilled in integration and change management, as firms navigate mergers and acquisitions. This presents a unique opportunity for talent with experience in managing transitions, aligning cultures, and integrating systems and processes.ConclusionThe future of talent in the consolidating PE market is both challenging and exciting. As the industry undergoes this significant transformation, the demand for a new breed of PE professionalswill rise. For those willing to adapt and grow, the consolidating PE landscape offers a wealth of opportunities for career development and advancement.Altus Partners Altus Partners is an LCap Group company, a Group renowned for its expertise in Leadership Insights, Consulting, and Executive Search tailored for high-growth companies and investors. For detailed insights and guidance on human capital strategy for funds, we invite you to reach out via info@altus-partners.com.
The Evolution of Executive SearchExecutive search, once a function of management consulting, has evolved to earn its independent consultancy model across the globe. This evolution, which began in the 1960s, was driven by the overwhelming demand for experienced executives that surpassed in-house capabilities of companies, leading to the outsourcing of talent expertise. Fast forward to 2021, and the global executive search industry is booming, with annual revenues of around £24 billion - more than double that of 2015. This remarkable growth parallels significant technological advances and a shift in global markets, leading to a dynamic change in talent demands. The Private Equity (PE) industry faced its own set of challenges in 2023 such as heightened investor demands and economic uncertainties, which emphasised the need for differentiated talent acquisition strategies. According to Hunt Scanlon Media's PE Survey, a staggering 92% of deal makers believe that top talent is crucial for achieving growth targets, highlighting the pivotal role of evolved executive search in aligning with the changing landscape of the PE industry.From Generalist to SpecialistKaren Greenbaum, CEO of AESC, and Mathew Cuthbertson, Partner of LCap Group, reflect on how the executive search industry, traditionally more generalist, has become increasingly specialised over the past 20 years. Assessments for PE roles previously centred around functional and industry expertise, currently demand a more advanced selection process, especially for senior roles. Modern executive search firms set themselves apart through specialised knowledge, experience, and proprietary tools, moving away from the 20th-century model of relying on word-of-mouth and recommendations. Today, these firms provide comprehensive services, including structured interviews to avoid bias, inclusive recruitment processes,and industry validated leadership training. This strategic approach helps clients meet growth objectives and improve employee retention rates, through a risk measured recruitment and selection process.The Changing Dynamics in Private Equity Talent AcquisitionThe emergence of new technologies has encouraged forward-thinking executive search firms to integrate innovative tools like personality-focused assessments into their processes. These tools, favoured by giants like McKinsey, Deloitte, and J.P. Morgan, offer a deeper understanding of a candidate's aptitude, interests, and personality, providing insights beyond what is discernible from traditional interviews and case studies.While many of these tools are designed to be widely applicable, they lack industry-specificity when discerning traits related to PE investment professionals. The adoption of these generalist tools in meeting the nuanced requirements of the PE industry is questionable, especially given the lack of significant evolution in PE hiring strategies over the past five years. The PE industry's hiring approach needs to be not only sophisticated but also agile, recognising the critical role of talent in driving growth and adapting to the unique demands of the current market. These conditions call for a change: a highly sophisticated executive hiring strategy which is tailored to the current PE industry, and acknowledges right talent is the most important factor in driving growth. A New Paradigm in Talent EvaluationThe conventional search methodology often falls short in pinpointing traits linked to value creation in PE contexts. Altus Partners CEO Ed Chamberlain advocates for a shift in focus away from generalist personality assessments to rather the assessment of investor behaviours as the industry continues to evolve. Using their bespoke PACE assessment tool, Altus Partners has pioneered an approach centred on business behaviours crucial to value creation in PE executives. Grounded in comprehensive empirical research, this method evaluates candidates on various dimensions, including perception, behaviours, thinking styles, and execution principles. This approach not only assesses the suitability of a candidate but also ensures their alignment with a firm's unique culture and strategic objectives. Such precision in evaluation aids in effective onboarding, team development, and ultimately leads to higher employee engagement and lower turnover rates.Aligning The Candidate and The FirmIn the current landscape, executive search extends well beyond the realm of recruitment. Firms are now equipped to provide strategic insights into clients' team dynamics, succession planning, and leadership evaluation. This enhanced function of executive search transcends traditional interviewing techniques, requiring firms to evolve in tandem with the changing talent needs of the PE market. By marrying deep industry expertise with the latest technology and human insights, executive search firms are now positioned to offer enduring, well-suited, and high-performing talent solutions. This comprehensive approach aligns not only with the immediate hiring needs but also with the strategic long-term objectives of clients, setting new benchmarks in the executive search industry and ensuring success in an increasingly competitive talent market.BibliographyBain. (2021). A Left-Brained Approach to Portfolio Company Talent Decisions. [online] Available at: https://www.bain.com/insights/talent-decisions-global-private-equity-report-2021/ [Accessed 5 Feb. 2024].Cherry Bekaert. (n.d.). Private Equity 2023 Year-in-Review and 2024 Outlook: Clearer Skies Emerge for Private Equity Amidst Challenges. [online] Available at: https://www.cbh.com/guide/reports/private-equity-industry-report-2023-trends-and-2024-outlook/ [Accessed 5 Feb. 2024].Executive Search Review. (2023). Opportunities and Challenges in Private Equity Recruiting. [online] Available at: https://huntscanlon.com/wp-content/uploads/2023/07/HSM-Private-Equity-ESR-2023-4.pdf [Accessed 15 Jan. 2024].S.C.D.M. up-to-Date D.T.R. in the (n.d.). Topic: Executive search worldwide. [online] Statista. Available at: https://www.statista.com/topics/6023/executive-search-worldwide/#topicOverview.www.firstresearch.com. (n.d.). Executive Search Services Industry Profile from First Research. [online] Available at: https://www.firstresearch.com/industry-research/Executive-Search-Services.html#:~:text=The%20global%20executive%20search%20services [Accessed 15 Jan. 2024].www.mckinsey.com. (n.d.). Private market predictions for 2024 | McKinsey. [online] Available at: https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/ten-considerations-for-private-markets-in-2024.
2023 was a year to forget for large-cap M&A, as mismatched valuations meant many IMs were abandoned. Global M&A volume was down 20% on 2022 according to Bain & Co, rising to 35% amongst private equity-backed deals. That meant many larger assets stopped building their M&A functions completely, instead switching their focus to PMI/Operational activities, and therefore reducing what is an expensive headcount area when not required.While this wasn’t the case for all large cap assets, the current climate has sparked a shift in creative deal-making, with new priorities and targets emerging for those looking to deploy capital. Large-cap investors have become more creative in seeking out public-to-private deals (P2P), taking advantage of stock market declines to snap up turnaround opportunities at discount prices. Meanwhile, mid-market M&A has become attractive as a more risk-averse option, enabling investors to add value to their existing portfolios.With both these trends in motion during 2023, Altus Partners saw a significant uptick in private equity funds looking to build M&A functions from scratch. Around 40% of our M&A and Corporate Development mandates last year were for organisations looking to make their first hire, spanning P2P deals and mid-market assets. Interestingly, over half of these were following unsuccessful attempts to fill the role directly or through other search partners, demonstrating the need for a considered approach.Whilst there are never any guarantees when making any hire, we noticed a few key mistakes that companies consistently make when bringing in their first M&A specialist. In turn, these give firms some important pointers on ensuring they get it right.Hiring at the wrong levelThere is no one-size-fits-all profile for a first M&A hire, and we frequently see companies rush the process and hire somebody who is either too senior or too junior for their requirements.In many cases, the first instinct is to opt for a ‘Head of M&A’ candidate; somebody who has a track record of running and completing numerous successful deal processes. But this kind of experience comes at a cost and is potentially surplus to requirements in a business where M&A will be opportunistic and tactical, at least to begin with. The result is a mismatch and frustration for both parties.To avoid a disappointing outcome, companies should invest time in gauging what their M&A requirement is, what part of the cycle the individual will be involved in - origination, execution, strategy, or a bit of everything – and how much support they will have, internally, or externally from investors. If you’re looking to scale up quickly and carry out large-scale M&A on an international basis then a ‘Head of M&A’ might be what you need. But, if you’re looking for an all-rounder who is happy to get stuck into day-to-day deal-making, it may be better to hire somebody who is a level down from this.Thinking advisory is the answerAnother common approach is to opt for a candidate with a pure advisory or investment banking pedigree, rather than prioritise in-house business experience. There are of course exceptions, but the advisory route should be approached with caution as it often doesn’t translate well into corporate M&A. Working as a consultant within a team under a senior partner is very different to operating on the front line of M&A within a business, making your case to a range of internal stakeholders. It is nearly always preferable to ensure a candidate has proven themselves within a frontline business environment, whether that is within private equity, or through a combination of direct advisory, investment, and corporate work.Leaving it too lateIf M&A is an important strategy for your business in 2024, then moving quickly is vital for two reasons. Firstly, mid-market M&A is very active right now and the competition is increasing all the time. Finding the right person and bringing them up to speed doesn’t happen overnight, so getting started now will ensure you can start originating and executing deals as soon as possibleSecondly, bear in mind the importance of an M&A function when it comes to exit valuation. While the vast majority of private equity-backed C-suites/senior management teams have M&A within their skillset, potential buyers still prioritise those businesses with dedicated capability in-house. Large-cap private equity buyers want to see an established M&A team and a track record over the prior 18 to 24 months. Without this, the valuation multiple and eventual deal success could be at risk. M&A strategy is one thing, but a proven track record of autonomous execution is another.Failing to deliver on equity assurancesTalent shortages mean good M&A professionals are at a premium and if one business can’t deliver, another won’t hesitate to step up. For private equity-backed senior management and management roles, equity is an integral part of building a successful strategy through M&A and while there may be legal barriers to giving equity immediately, if it is promised then that must be honoured within a reasonable timescale. The alternative is valuable onboarding time wasted, and a costly vacuum in the M&A function, as a new hire goes elsewhere.Not consulting specialist expertiseM&A is a highly specialist area, with many nuances around skillset, experience, and behaviours, that can impact the success of a new hire. Running a successful hiring process demands a methodical approach, from mapping out the need and current structure to scanning the available talent pool, reviewing what has worked elsewhere, and finally assessing potential candidates against your criteria. Putting the time in at the outset, and consulting specialist expertise is more than worth it to ensure a successful hire and faster ROI for your business.Here at Altus Partners, we specialise in placing M&A professionals of all levels within private equity-backed businesses and we have the network, capabilities, and experience to get it right, first time.To discuss any of the any of the topics in this article further then please reach out to Philip.hodson@altus-partners.com
Within a Private Equity asset, The CFO plays a pivotal and multifaceted role in driving growth and achieving the milestones in the value creation plan. The changes in the CFO role and transition from traditional finance leader to strategic partner, instigator, and value driver are well documented. However, the value a CFO can create during a holding period is underpinned by the strength and makeup of the finance team. Due to the demands and complexities faced by a finance function within a Private Equity asset, it is vital to have functional specialists who can execute their respective roles to an optimal standard. This article will explore whether, on top of a strong functional skillset, it is more beneficial to have a domain or situational experience and if, indeed, that applies to specific roles within the function. It will also discuss how embracing the data capability as a core finance asset is becoming increasingly valuable within a Private Equity context.Situational v domain experience at C-1 level within a portfolio finance teamThe 2023 LCap Leadership Capital Report, which analysed 246 Private Equity exits across the 2022/23 period, found an increasing appetite among upper-quartile businesses to find C-suite leaders with situational expertise and knowledge of the value creation journey over those with specific industry experience. Clearly, it is an interesting trend, but just how does that translate to leadership structuring beneath a CFO within the finance function?We are often asked about the importance of Private Equity experience in C-1/2 finance roles within a portfolio organisation. Whilst it is still a point of contention for many, and each firm will have different views, the highest-performing assets realise that they need a mix of both.Domain-specific experience can be highly important in its own right, especially if the portfolio company operates in a complex or specialised industry. It provides a deep understanding of the sector's unique challenges, trends, and dynamics.We can see examples of when industry grounding is particularly relevant in more outward-facing analytical roles such as FP&A, where there is a demand for analysis on market conditions, scenario planning, cost benchmarking and industry-specific metrics. Having in-depth knowledge or prior exposure to the specific industry allows for more nuanced analysis and benchmarking and is a bonus when making more informed strategic decisions.This can also be true on the opposite end of the spectrum regarding Group Accounting and Controllership roles, focused on regulatory compliance and corporate governance. Certain industries, such as healthcare or Insurance, have complex regulatory environments and naturally differ geographically. Of course, there are always accessible regulatory guidelines that provide a framework for navigation. However, finance professionals with prior industry exposure in these instances will better understand potential regulatory pitfalls and how to identify and correct the course quickly. Naturally, Private Equity situational experience is always highly valuable, especially when hiring a CFO, as funds seek an extra layer of comfort and credibility when appointing one of the key value drivers of their asset. However, is exposure to the value creation journey necessarily a prerequisite at the C-1 and 2 level? Typically, we find that PE exposure peaks from the top down within a classic finance function. It makes sense to have the most prevalent private equity exposure among the most senior finance leaders due to the proximity to investors and ability to drive the required standards within the rigour and pace of MI, analysis and reporting, for example. Clearly, there are highly relevant positions within the function, such as M&A specialists and deal execution roles, where it can be innately beneficial to have Private equity exposure. These professionals must understand the nuances of structuring deals, assessing investment theses, and conducting due diligence specific to PE transactions.In many cases, a combination of both industry-specific and situational experience is the most advantageous. Finance professionals who have worked in the same domain as the portfolio company may have insights into market dynamics and growth opportunities. When they possess private equity situational experience, they can apply that industry knowledge to PE investment strategies, market entry, deal execution, and value creation.Ultimately, the specific importance of each type of experience may vary based on the specific role within the finance function and the strategic objectives of the PE asset. However, finance professionals who can bridge both areas of expertise—industry knowledge and private equity situational expertise—often become invaluable assets to the finance team and the overall success of the PE investment.At Altus Partners, our data-driven approach, underpinned by Leadership Dynamics and PACE, allows us to assess the balance of domain and situational experience within the finance function and the wider complementarity of the team. Chartered against data from upper-quartile management teams, we are able to ensure optimal structuring within an asset, allowing the finance function to deliver maximum impact.Utilising the data function as a core finance assetIn many Private Equity assets, it is common for data capabilities to be closely aligned with the finance team or even report directly to the finance function. Whether data capabilities should be integrated into the finance team often depends on various factors, including the organisation's size, structure, and strategic goals. We’ve seen an increasing appetite from portfolio CFOS and Private Equity firms alike to incorporate an asset's data capability into the finance function's remit. This has been evidenced within multiple assets, with the creation of a hybrid Financial Planning & Insights (FP&I) vertical becoming more popular – a step away from one reflective analysis and to data-driven actionable insight. There are multiple pros of Integrating Data Capabilities into the Finance Team:Alignment with Financial Strategy: Placing data capabilities within the finance team ensures a direct alignment with the financial strategy of the PE asset. A transparent and streamlined data suite allows Investors to easily view, digest and quantify information, making for better-aligned discussions with the CFO. It also fosters a culture of data-driven decision-making.Streamlined Reporting: When data capabilities are within the finance function, there is often greater efficiency in generating and disseminating financial reports. Data can be seamlessly incorporated into financial reporting processes and underpin the business's automation.Cross-Functional Collaboration: Data capabilities within the finance team facilitate collaboration with other departments, such as M&A, Operations and Strategy departments. This can lead to more effective cross-functional communication and strategy execution.In summary:Throughout this piece, we've explored the ongoing debate surrounding the importance of Private Equity experience versus industry-specific knowledge within finance leadership roles. The verdict? At C-1/2 level, It's not a matter of choosing one over the other; the highest-performing assets recognise the value in a blend of both experiences. Industry-specific insight is invaluable for understanding complex sectors and regulatory nuances, while Private Equity situational expertise is crucial for strategic decision-making within the unique PE context.Additionally, we've spotlighted the integration of data capabilities into the finance function, a trend gaining momentum in Private Equity. Placing data at the core of finance operations aligns with the asset's financial strategy, streamlines reporting processes, and fosters cross-functional collaboration, all crucial elements in today's data-driven decision-making landscape.By leveraging a combination of industry knowledge and PE situational expertise, finance professionals can rise to become indispensable partners in driving success throughout the investment cycle.When the finance function is optimised and strategically aligned, CFOs can unlock their full potential as value drivers, instigators of positive change, and strategic partners within the Private Equity arena.
The recent CFO Survey from Private Funds CFO, themed "How LP Scrutiny is Increasing - Insights 2024," offers a treasure trove of insights into the evolving landscape of private equity fund administration. As we delve into the findings, it's clear that the industry stands at a crossroads, grappling with external pressures, technological transformation, and internal strategic shifts.Outsourcing: A Strategic Imperative One of the standout trends is the shift towards outsourcing fund administration. This mirrors my observation of the industry’s response to escalating regulatory demands and the pursuit of operational efficiency. Outsourcing is not just a cost-cutting measure; it's a strategic realignment, allowing firms to concentrate on their core competencies of capital deployment and product creation. This trend underscores a crucial realisation: agility and focus are paramount in today’s dynamic market environment.Fundraising in a Challenging Climate The survey highlights the increasing difficulty in fundraising, a sentiment I share. Economic uncertainties and liquidity constraints among LPs necessitate a more nuanced approach to fundraising. Firms must adapt, whether through extended timelines or adjusted fund sizes. This flexibility is vital for navigating the uncertain waters of global finance and underscores the need for robust and adaptable fundraising strategies.Intensifying LP Due Diligence The intensified due diligence by LPs, especially regarding back-office functions, reflects a larger trend towards transparency and accountability. This increased scrutiny is beneficial for the industry, fostering a culture of diligence and compliance. However, it also places a greater burden on fund managers to ensure their operations withstand this heightened examination.Regulatory Challenges: A Call for Clarity The survey's insights on the impact of new SEC marketing rules resonate with my views on regulatory compliance. The challenges in interpreting and implementing these rules highlight a critical gap in regulatory guidance. Clarity and consistency in regulatory frameworks are essential for effective compliance and operational harmony.AI and Technology: The New Frontier The emergence of AI in deal sourcing and portfolio monitoring is a game-changer. However, as the survey suggests, the industry is still at the nascent stages of leveraging AI's full potential. This aligns with my perspective on technological adoption in finance – it’s a journey, not a destination. Firms must continue to explore and invest in AI and other technologies while balancing the hype with practical, value-driven applications.Fund Finance Market in Flux The regional banking crisis's impact on the fund finance market is a crucial concern. The tightening of subscription lending and shifts in borrowing strategies underscore the need for a diversified and strategic approach to fund finance. This situation reinforces my belief in the importance of robust financial planning and risk management.Increased Reporting Demands and LP Scrutiny The surge in detailed LP requests, particularly around ESG disclosures, mirrors a broader industry trend towards sustainable and responsible investing. This increased demand for transparency and ESG alignment is not just a compliance issue but an opportunity for firms to differentiate themselves and attract ESG-focused investors.The Evolving Role of CFOs The expanding role of CFOs, as highlighted in the survey, resonates with my view of the CFO as a strategic partner. Today's CFOs need to navigate beyond traditional financial management, embracing roles in technology implementation, regulatory navigation, and investor communication. This evolution reflects the broader shift in business leadership towards a more integrated and strategic approach.Conclusion: Embracing Change with Prudence and Vision The Private Funds CFO Survey 2024 offers a clear view of an industry in transition, marked by heightened scrutiny, regulatory challenges, and technological advancements. As we navigate these changes, the key will be to embrace them with prudence and vision, ensuring that our strategies are aligned not just with current demands but also with future opportunities. The road ahead is complex, but with adaptability and strategic foresight, the private equity industry can continue to thrive in an ever-evolving landscape.
In our attempts to support the global strides being taken to address the unbalanced diversity scales in the workforce, AltusPartners were pleased to partner with 10,000 Black Interns in our first-ever internship program in support of young black talent in the corporate world.Purpose-driven approach To be candid, diversity initiatives will only bear significance if planned and executed with sincerity. In this case, this means, firstly acknowledging that there is an imbalance of minority ethnic groups in the workplace. Is it a challenge? – absolutely! But the better question remains - to what extent are we disabled by this? We have an incredible opportunity to influence tremendous change for black talent wishing to enter the working world. This emphasises the need to give less attention to the weight of the issue at hand and adopt a forward-thinking and collaborative approach in addressing one of the world’s greatest concerns – inequality. This is the simplicity of our purpose. What do we need to achieve diversity?Diversity will carry varying meanings per organisation, but its value is always praiseworthy. Therefore, there should never be a need to conform to collective approaches to diversity. It is important to critically evaluate your workforce by qualitative and quantitative metrics, and through a gap analysis, understand what can be introduced to achieve diversity. Designing diversity policies is the next step, but the real test is the implementation – can we attest to diversity being achieved at an employee, customer, and stakeholder level?So, to make this a reality, a #Forbes study suggested four simple steps:1. Clearly identify what you are trying to achieve – there need not be an array of diversity goals. Simple achievable milestones will be more encouraging and effective versus elaborate goals which may need constant refining and lengthier timescales.2. Avoid “copy and paste” – appreciate and embrace the authenticity of your organization and that diversity can carry its own meaning versus your peers. 3. Implementation supersedes good design – whilst the strategy is important, the implementation needs to be well-thought-out including mitigation plans and any realignment. A diversity plan will not succeed if people lack the tools, skills, and motivation. 4. Win “hearts and minds” – individuals who fail to truly acknowledge the value of diversity will cripple any chances of success so it is important to sensitively encourage others and realise that this really calls for a shift in perspective – which can take time. Value of supporting diversity programs There is undoubtedly the opportunity to meaningfully impact the life of someone, and hopefully create a domino effect, be this amongst communities of up-and-coming black talent or how organisations start rethinking their DE&I strategies. For us, it was both – we were fortunate to be reminded of the importance of inclusivity and how we need to adopt and encourage more equitable opportunities at all stages of the employment lifecycle, in order to create and sustain diversity.We were also left with encouraging feedback from our intern, Isaac Olubiyi, which motivates us to continue with such initiatives. “My experience at Altus Partners was an enjoyable and rewarding one, to say the least. The skills I learnt during my time there are skills I can utilise for a lifetime due to the ease of transferability of the skills e.g., how to be efficient with your time when working towards a deadline yet still yielding high-quality work. I also understood the importance of building rapport with clients as well as going the extra mile for them to meet their requirements. Being at the office was also a pleasurable experience, I have nothing but good things to say regarding my colleagues and I wish them all the best in the future.”By having Isaac as a part of our business, we welcomed new perspectives, deeper social cohesion, and creativity.About 10KBI Led by some of the most powerful advocates for empowering young black talent, 10KBI quickly grew from an initial commitment of 100 interns to now 10,000. They are the fastest growing black talent pipeline in the U.K. alone and sincerely committed to not only affording this minority ethnic group credible opportunities but to address the apparent ethnic imbalances which need immediate and ongoing attention in most workforces. Should you wish to learn more about our personal experience, feel free to reach out to Gizelle Moodley who is best placed to guide you on the opportunities and value of such an initiative, as well as key learnings which we found as critical to a successful experience for interns. #10KBI are hosting a series of weekly information sessions, until the end of September, which will cover the timelines, recruitment requirements, and expectations and a Q/A session at the end. You are welcome to register via the following link - Webinar Registration - ZoomIf you are already committed and prepared to hire an intern, you are welcome to pledge your interest via the following link - pinpoint-10kbi.com/programmes/1/company_submissions/new
Unlike conventional interviews, Private Equity interviews are uniquely designed to assess your potential for excelling in a challenging role that demands a distinct set of skills and behaviours. To distinguish yourself, you must skillfully navigate three pivotal stages: the initial interview, the modelling test, and the coveted case study.As you step into the first stage of the Private Equity interview process, the focus is on you, probing and delving into your potential suitability for Private Equity. This critical juncture first step serves as a canvas for you to showcase your background and experiences, unveiling how they can uniquely contribute substantial value to the esteemed role of a private market investor.Gone are the days of merely listing accomplishments; instead, the interviewers seek a tapestry of insights, interweaving your past endeavours with the specific expectations and challenges of the Private Equity domain. Demonstrating a profound understanding of how your previous experiences align with the intricacies of Private Equity investment is significant At this pivotal moment, your ability to exhibit commercial acumen takes centre stage, showcasing your grasp of market trends, industry dynamics, and the delicate balance between risk and reward. Moreover, the interviewers anticipate your display of strategic thinking, appreciating your foresight in identifying potential investment opportunities and your vision for navigating technical, commercial, and stakeholder complexities. In this realm of high-stakes decisions, your knack for recognising lucrative investment prospects becomes instrumental in setting you apart from the competition. Demonstrating an astute understanding of the factors that influence successful investments, such as sound financial analysis, robust due diligence, and an ability to foresee potential growth drivers, solidifies your position as a promising candidate.Analyse the fund’s portfolio companies, track record and associated news. Prepare intelligent questions!To comprehensively analyse the fund's portfolio companies, track record, and associated news, you must delve into each aspect meticulously to gain valuable insights. With a well-rounded understanding, you can prepare thoughtful questions demonstrating your thoroughness and strategic thinking during interviews or investment discussions.Portfolio Companies Analysis:Business Model and Market Positioning: Assess the portfolio company's business/ investment model, understanding its unique value proposition and how it differentiates itself in the market. Financial Performance: Analyse accessible financial statements of the portfolio companies, focusing on revenue growth, profitability, and key financial ratios. Ask about any significant fluctuations or trends that have impacted their financial performance.Management Team: Learn about the expertise and track record of the management team driving each portfolio company. Inquire about their vision and strategies for future growth.Risk Mitigation Strategies: Explore how the fund mitigates risks associated with the portfolio companies. Ask about the due diligence process and measures taken to ensure long-term sustainability.Fund Track Record Evaluation:Investment Returns: Analyse the fund's historical investment returns, focusing on the performance of previous investments. Inquire about any standout successes or lessons learned from past deals.Exit Strategies: Understand the fund's approach to exiting investments. Ask about the methods used to achieve successful exits and the average holding periods for portfolio companies.Sector and Geographical Focus: Gain insights into the fund's focus on specific sectors and regions. Ask about the rationale behind these choices and how they align with the fund's overall strategy.Investment strategies: Explore the funds’ investment strategies, i.e. Co-investments/ FoF/ Direct – minority or majority, and how these collaborations have contributed to the fund's track record.Associated News Analysis:Market Trends Impact: Investigate recent market trends and industry developments that might impact the fund's portfolio companies. Ask about strategies in place to adapt to changing market conditions.Regulatory Environment: Understand any regulatory changes that could affect the fund's investments and how they are addressed to ensure compliance.ESG and Sustainability Practices: Assess the fund's commitment to Environmental, Social, and Governance (ESG) principles and sustainability practices. Ask about initiatives to incorporate responsible investing strategies at the investment evaluation stage and across portfolio companies.By meticulously analysing the fund's portfolio companies, track record, and associated news, you can develop well-crafted questions demonstrating your in-depth understanding of the investment landscape. These questions will showcase your keen analytical skills, genuine interest in the fund's performance, and commitment to responsible investing practices.Develop a well-thought-out view of intriguing sectors or industries and articulate their investment appealDistinguishing yourself as a standout candidate entails cultivating well-informed opinions on sectors or industries that capture your interest and align with the fund's investment focus. Dedicate time to thoroughly researching and analysing these areas, drawing on market insights, macroeconomic trends, and projections of future growth prospects.During the interview, demonstrate your deep understanding of these sectors or industries by articulating compelling reasons behind your interest in them. Back up your opinions with data-driven evidence and concrete examples to reinforce your credibility as a thoughtful and strategic thinker.By presenting your perspectives with clarity and conviction, you will skillfully showcase your ability to think critically and strategically within the context of Private Equity investments. Highlight how your well-reasoned opinions align with the fund's investment strategy and how they can contribute to identifying and capitalising on lucrative opportunities.Moreover, offer an in-depth analysis of the challenges and opportunities in these sectors or industries, indicating your capacity to navigate complex investment landscapes and anticipate potential risks and rewards. Discuss emerging trends, disruptive technologies, and regulatory shifts that might impact the investment landscape.Demonstrating a comprehensive understanding of the nuances of these sectors will not only impress the interviewers but also solidify your position as a valuable asset to the fund. Showcase your ability to synthesise information, make data-driven decisions, and identify unique value propositions within the target sectors.In summary, cultivating informed opinions on intriguing sectors or industries goes beyond a superficial interest; it is essential to present yourself as a well-prepared and strategic candidate. Embrace the opportunity to showcase your expertise, and let your thoughtful insights shine as you articulate the investment appeal of these sectors in the realm of private equity.Research and demonstrate a list of investment-worthy companies and one or two more leftfield options!To set yourself apart as an exceptional candidate, carefully create a list of companies that smartly align with the investment thesis of the Private Equity firm. This thoughtful selection process demands a keen eye for identifying enterprises with promising growth potential, solid financial foundations, and sustainable competitive advantages that can weather market fluctuations.Demonstrate your astute judgment by conducting thorough research and due diligence on each potential investment opportunity. Scrutinise their revenue streams, profit margins, debt levels, and overall financial health to ensure they meet the stringent criteria for Private Equity investments.Moreover, delve into the qualitative aspects of these companies, such as their leadership teams. Highlighting these integral components will illustrate your ability to think strategically and make informed investment decisions.Equally crucial is your ability to identify mispriced opportunities in the market—those hidden gems overlooked by mainstream investors. Unearthing undervalued assets with the potential for significant yield underscores your perceptive nature and distinct ability to identify opportunities which are often overlooked. Imagine analysing market trends, industry disruptions, and other factors contributing to market mispricing. By showcasing your ability to spot these opportunities, you illustrate your value in capitalising on untapped potential and unlocking hidden value within the portfolio.During the interview, confidently articulate your rationale behind each company's inclusion in your list. Emphasise how their unique attributes align with the firm's investment strategy and complement the broader vision of the Private Equity fund.Gain In-Depth Insight into the Factors That Make a Market Appealing to Private Equity InvestorsTo thrive in Private Equity, it is imperative to delve into the multifaceted elements that entice investors to specific markets. Embark on a comprehensive investigation to comprehend the critical attributes of Private Equity investment strategies. With this knowledge, you will showcase your ability to strategically discern and assess lucrative investment opportunities.Favourable Regulatory Environments: Investigate the regulatory landscape of target markets, discerning the extent to which favourable policies encourage and support Private Equity investments. Look for jurisdictions that offer business-friendly regulations, tax incentives, and investor protections, as these elements foster a conducive investment climate.Robust Growth Potential: Analyse the growth prospects of potential markets, seeking industries and sectors with promising upward trajectories. Markets exhibiting consistent expansion and flourishing demand particularly appeal to Private Equity investors as they offer substantial opportunities for value creation and capital appreciation.Strong Industry Tailwinds: Identify markets with industries experiencing strong tailwinds driven by technological advancements, changing consumer preferences, or disruptive innovations. Such industries are more likely to offer high-growth potential and attractive investment prospects.Conducive Exit Options: Evaluate the exit options available in a market, as the ability to realise returns on investments is a crucial aspect of Private Equity strategy. Markets with vibrant IPO (Initial Public Offering) and M&A (Mergers and Acquisitions) landscapes provide desirable exit avenues, enabling investors to monetise their investments successfully.Macro-Economic Factors: Consider broader macroeconomic trends, including GDP growth, inflation rates, and currency stability, as they can significantly influence the overall investment climate of a market. Markets with stable economic fundamentals tend to attract more Private Equity interest.During the interview, demonstrate your acute awareness of these factors that attract Private Equity investors. Articulate how you assess potential investment opportunities based on these attributes, showcasing your ability to identify markets more likely to deliver robust investment returns.Furthermore, emphasise your capacity to navigate the complexities of various markets and pinpoint the optimal investment destinations. This ability reflects your strategic thinking and ensures that the fund's resources are channelled towards markets that offer the most promising risk-reward profiles.Prepare for Spot Questions: Brain Teasers and Math-Based ChallengesDuring initial interviews, it is essential to be ready for spot questions that may include brain teasers or math-based challenges. These questions are commonly encountered in interview processes for consulting companies like Bain or McKinsey. Remember, the purpose of these questions is not solely to test your knowledge but to assess your thought process and how you approach problem-solving with a structured and thoughtful mindset.When confronted with brain teasers, take your time to comprehend the question thoroughly. Avoid rushing into an answer and focus on breaking down the problem step-by-step. Articulate your thought process aloud, demonstrating your ability to approach the question methodically and logically. Refrain from disheartening if your initial answer is incorrect; these questions are intentionally designed to challenge you. If you make a mistake, take it as an opportunity to showcase your resilience and adaptability. The interviewer may provide feedback, observe how you handle it, and use it to improve your subsequent responses.Likewise, be prepared for "rough and ready" math-based questions, such as calculating the Internal Rate of Return (IRR) or fundamental arithmetic problems. The goal is to test your mathematical skills and observe how you react under pressure. If you need a moment to gather your thoughts, don't hesitate to pause and gather your bearings. Demonstrating composure under pressure and showing your ability to think through the problem systematically will be appreciated by the interviewer.Maintain Unwavering Focus and Engagement Throughout the Interview ProcessA thriving investor embodies a delicate balance of commercial acumen, intelligence, foresight, and interpersonal traits. As you embark on the journey to become a successful investor, remember that your ability to influence positively plays a pivotal role in your success. Throughout the interview process, especially in the crucial first stage, being fully engaged, motivated, and upbeat is paramount.The role of a private market investor demands not only astute financial judgment but also the capacity to forge strong connections with the management teams of investable companies. As you vie for investment opportunities, often against fierce competition, your ability to articulate your vision, build rapport, and convey your value as a strategic partner will set you apart.Furthermore, engaging effectively with the portfolio company's C-suite is indispensable once investments are made. You must collaborate with them, aligning interests and fostering a growth-oriented environment that drives success. Effective communication, a positive outlook, and a solution-oriented approach will be instrumental in achieving these goals.Apart from the investable companies and portfolio C-suite, the successful investor interacts with a network of advisors, ranging from expert networks to lawyers and investment banks. Engagement and motivation throughout the interview will demonstrate your ability to forge meaningful relationships with these essential players, ensuring a well-rounded and successful investment journey.In the first stage of the interview, making a lasting impression depends on your unwavering focus and genuine enthusiasm for the opportunity. Clearly articulate your investment philosophy, showcase your ability to navigate challenges, and demonstrate a passion for driving growth and value creation. Your upbeat demeanour and positive attitude will instil confidence in the interviewers and emphasise your potential as a valuable addition to the investment team.ConclusionIn conclusion, the advice provided here offers a comprehensive array of considerations, although it's worth noting that not all interviews will delve into every aspect mentioned. This guidance stems from a wealth of input from candidates and interviewers spanning numerous interviews. Navigating the intricacies of the Private Equity interview process is a journey that demands a multifaceted approach and unwavering dedication.As you advance through the initial rounds, keep in mind that Private Equity interviews deviate from the conventional. They are designed to gauge your potential for excelling in a dynamic, fast-paced role. Embrace the chance to spotlight your abilities and allow your professional passion for Private Equity, along with your adeptness in strategic thinking, to shine through. By diligent preparation, a display of your expertise, and a consistent conveyance of genuine enthusiasm, you will undoubtedly stand out as an exceptional contender in the competitive realm of Private Equity.Remember, every interaction serves as an occasion to leave an indelible mark and embark on a gratifying journey as a prosperous investor in the private market. Your journey towards success in the Private Equity landscape starts here, and your potential is boundless.For more insights and advice, contact Altus Partners:
Private Equity investors require unique skills to navigate the complex and fast-paced industry. That's where the PACE assessment tool comes in. Designed exclusively for the Private Equity sector, PACE has delivered several thousand assessments to date, helping identify and develop the key competencies needed for success. Following the recent acquisition of Altus Partners by The LCap Group, Ed Chamberlain, CEO of Altus, and Sam Roberts, Chief Strategy Officer at LCap Group, took a deeper dive into PACE and how the innovative technology can deliver substantial value to the clients of Altus Partners.- Altus Partners was acquired by LCap Group in June 2023 - LCap Group has a strong portfolio that includes Drax Executive Search, Rowan Group, and Leadership Dynamics - Integration with these brands promises an expansive shared network and knowledge base - PACE, an assessment tool, designed by LCap exclusively for the Private Equity sector, has delivered several thousand assessments - PACE will now be offered exclusively to Altus Partners Private Equity clientele for enhancing their funds and portfolio companiesEC: Sam, we are delighted to be an LCap company and excited to be able to offer the proven technology – PACE, to our clients. Can you provide an overview of the PACE Evaluation and its role within the platform?SR: Thanks, Ed, and welcome to the Group! The PACE Evaluation is a comprehensive evaluation developed by LCap that assesses the behavioural traits and potential of leadership teams and individuals within leadership positions. It plays a central role within the LCap platform by providing valuable insights into leadership capabilities, strengths, and development areas. The assessment is designed to help our clients identify and nurture leadership talent, improve decision-making in leadership appointments, and enhance leadership effectiveness. We can now offer Altus Partners clients the ability to use this technology to make more informed decisions. EC: How was the PACE Model of Development developed, and what were the key factors considered during its creation?SR: The PACE Model of Development was developed, over several years, through rigorous research and collaboration with leading occupational psychologists and academic experts and is the result of the largest study of its kind globally. The key factors considered during its creation included the review of existing research. This is where the development team extensively reviewed existing research on leadership traits, behaviours, and the factors influencing leadership success. We also carried out a Private Equity Leadership Study, collecting data from hundreds of leaders across roles and industries to ensure the model's applicability and relevance across various contexts. And finally, a Psychometric Analysis. This is where the assessment underwent psychometric analysis to ensure its reliability and validity. The model was validated through longitudinal studies and feedback from real-world leadership experiences. EC: What distinguishes the PACE framework from other leadership assessment tools in the market?SR: The PACE framework stands out from other leadership assessment tools in the market due to its Value Creation Centric Approach. The PACE evaluation comprehensively assesses various behavioural traits, potential, and development needs of individuals in leadership positions on a value-creation journey. We unapologetically focus on the business success, not the harmony in the team.Further to this, its one of a kind Private Equity-Specific focus. The PACE framework is specifically tailored for the private equity industry, making it highly effective for clients in this sector. It is also research-backed, with the model being based on extensive research and collaboration with experts, ensuring its accuracy and reliability. And finally, the model takes a longitudinal Perspective. This means the assessment considers the long-term development of individuals, providing insights into potential growth and sustained leadership effectiveness. EC: Can you explain the relationship between behavioural traits and successful value creation by senior leadership teams, as demonstrated by the PACE Model?SR: The PACE Model demonstrates that specific behavioural traits and competencies in senior leadership teams strongly correlate with successful value creation. Traits like growth mindset, curiosity, internal locus of control, self-monitoring, resilience, and the ability to foster collaboration and intuition are key drivers of value creation within private equity-backed businesses. By understanding and developing these traits in leaders, organisations can enhance their ability to make informed decisions, drive growth, and navigate challenges effectively, ultimately leading to increased value creation.EC: What research methodologies were employed to validate the effectiveness of the PACE assessment?SR: Great question, and this is core to the strength of the offering. The effectiveness of the PACE assessment was validated through three main research methodologies: face validity, concurrent validity, and predictive validity.Face validity refers to the degree to which an assessment appears to measure what it intends to measure on the surface. In the case of the PACE assessment, during its development phase, experts, occupational psychologists, and relevant stakeholders reviewed the assessment items and components to assess whether they appeared to be relevant and appropriate in evaluating leadership behaviours within the private equity industry. Their feedback and input helped ensure that the PACE assessment's content was aligned with the specific traits and competencies desired in successful leaders operating in the private equity sector.Concurrent validity assesses the degree of agreement between the results of a new assessment tool (in this case, the PACE assessment) and an already established and validated measure of the same construct. To establish concurrent validity for the PACE assessment, LCap, in partnership with Birkbeck College, administered the assessment to a sample of individuals in leadership positions within private equity-backed businesses. Simultaneously, they collected data from an existing, widely recognised and validated leadership assessment tool.By comparing the scores obtained from the PACE assessment with the scores from the established leadership assessment tool, the researchers could determine whether the PACE assessment shows a strong correlation and agreement with the existing measure. A high level of agreement would support the concurrent validity of the PACE assessment, indicating that it effectively measures similar leadership traits and competencies as the established tool.And Predictive validity assesses the ability of an assessment to predict future outcomes or performance based on its results. To establish predictive validity for the PACE assessment, LCap used the information of those who underwent the assessment and their business performance.By analysing the correlation between the PACE assessment scores and the leadership outcomes, we can determine that the assessment effectively predicts successful leadership performance within the private equity industry. Strong positive correlations between PACE scores and demonstrated leadership success indicate high predictive validity. Our research around behavioural concentrations – or groupthink – in this space is particularly significant.By employing face validity, concurrent validity, and predictive validity research methodologies, Leadership Dynamics could comprehensively validate the effectiveness of the PACE assessment as a robust tool for evaluating leadership traits in the private equity industry. EC: How did collaboration with leading occupational psychologists and academic experts contribute to developing and validating the PACE framework?SR: Collaboration with leading occupational psychologists and academic experts was instrumental in developing and validating the PACE framework in several ways. Their leadership research and assessment expertise provided valuable guidance in designing a comprehensive and reliable evaluation tool. Input from experts ensured the PACE model was based on the latest research and best practices in leadership assessment. Collaborators contributed to the validation process by conducting independent reviews and analyses of the assessment's effectiveness. And their work on applying non-psychological data to produce behavioural projections enabled us to produce accurate, arms length behavioural evaluations. EC: Could you give me some insight into the feedback received from private equity investment directors, executives, and non-executives regarding the PACE framework's application and relevance to their circumstances?SR: Feedback from private equity investment directors, executives, and non-executives regarding the PACE framework's application and relevance has been highly positive. Clients have reported that the assessment provided valuable insights into leadership potential, strengths, and developmental areas. The industry-specific focus of the PACE framework was particularly appreciated, as it allowed for tailored leadership development strategies in the unique context of the private equity sector. Clients also mentioned that the assessment contributed to more informed decision-making in leadership appointments and helped improve overall leadership effectiveness within their organisations. EC: How does the PACE assessment support clients in understanding why some individuals thrive in the private equity environment while others struggle?SR: The PACE assessment supports clients by providing in-depth insights into their behavioural traits and growth potential. The assessment identifies specific competencies and traits that align with success in the private equity industry, such as adaptability, resilience, divergent thinking, and the ability to manage ambiguity. By understanding individuals' unique characteristics and development needs, clients can tailor leadership development programs, coaching, and mentoring to maximize their effectiveness in the demanding and dynamic private equity environment. EC: Can you share any success stories or real-world examples where the PACE assessment has significantly improved leadership effectiveness and value creation within private equity-backed businesses?SR: Certainly, we’ve used PACE across LCap’s work with 142 PE funds and their portfolio companies in 2022. Broadly, there are four areas where PACE has had an impact.The PACE assessment helped identify high-potential leaders who might have otherwise been overlooked, allowing organisations to invest in their development and nurture future leadership talent. The assessment results also led to targeted development plans for senior leaders, addressing specific behavioural traits and competencies critical for value creation in the private equity context. And the PACE evaluation contributed to more informed decision-making in leadership appointments, resulting in leaders better suited to drive growth and success within private equity-backed businesses.Finally, by understanding the behavioural traits of their team members through PACE, senior leadership teams improved collaboration, communication, and decision-making, leading to more effective value creation. EC: Thank you, Sam, for those incredibly informative insights. Last question, how can our clients access more information on PACE?SR: Contact any Altus Partners Consultant, or email us at info@altus-partners.com, and we will set up a meeting with our expert team, who will walk you through how the tool may work for you.
The private markets experienced a whirlwind of events in 2022, with fundraising activities navigating through contrasting trends. Despite formidable challenges like high inflation, interest rate hikes, geopolitical uncertainties, and the denominator effect, fundraising managed to achieve a commendable milestone, reaching $1.2 trillion, a figure on par with pre-pandemic levels. However, this marked an 11.4 percent decline from the previous year's record-breaking total of $1.4 trillion. As we embark on the journey of 2023, the private capital fundraising environment remains challenging, with early data suggesting that new records may be unlikely.Challenges Confronting Emerging Managers:Emerging managers, typically defined as asset managers raising three or fewer funds firmwide, have felt the brunt of the fundraising slowdown. Historically, these managers accounted for around 30.5% of total assets raised, but their share has now diminished to approximately 16.9% over the last five quarters. Emerging funds in private equity and real assets have slipped below the 50% mark, while emerging VC has managed to maintain a slightly higher position. The plight of emerging managers is further exacerbated by their lack of prior fund performance to bolster their pitches, making it challenging to secure commitments from cautious investors.Time to Close Funds:The timeline for funds to reach final closings has generally shown stability over the years, with a median of 12 to 13 months. However, a concerning trend is a widening gap between the fastest and slowest fund closures, indicating a more intricate fundraising environment. In 2023, top quartile funds took a staggering 19.8 months to close, while bottom quartile funds only required 4.6 months, resulting in a significant 15.2-month disparity. This disparity suggests that limited partners (LPs) are becoming increasingly discerning and prudent in their investment decisions, leading to extended fundraising periods for some managers.Years Between Final Closings:The median duration between final closings in a fund family has exhibited a flat to declining trajectory over the years, with recent data pointing to an average of 2.2 years. Notably, this figure is lower than the 2011-2014 period, during which it exceeded three years. While recent fundraising challenges may be cause for concern, the data suggests that it could be a return to a more typical long-term trend rather than a problematic industry-wide issue. It is important to note that struggling funds may not even make it into the data, creating a downward bias in the statistic for funds that successfully close.Regional Trends:Asia's share of global capital raised has experienced a significant decline, plummeting from 31.3% in 2018 to a mere 8.2% in 2023. This sharp decline may be attributed to geopolitical tensions and economic impacts from events such as the war in Ukraine. Similarly, Europe's share has also diminished, with only 17.5% of global capital raised in 2023. In contrast, North America has managed to maintain its share of global capital raised, reaching an impressive 76.4% in 2022. This resilience in North America may be attributed to institutional investors seeking a haven from the volatility of public markets.Impact of Larger Funds:In recent years, funds larger than $1 billion have garnered a larger share of capital commitments, reaching approximately 65% since 2013. The definition of mega PE funds has evolved from $1 billion-plus to $5 billion-plus, reflecting the need for larger funds capable of handling more substantial deals. However, this trend may also be leading to the completion of larger deals, necessitating even more massive funds to write these substantial checks. It is essential for fund managers to carefully assess the potential implications of such developments on deal sizes and market dynamics.Challenges and Opportunities Ahead:The private capital fundraising landscape poses formidable challenges that demand agility and innovation from fund managers. Successfully navigating through changing market conditions and comprehending regional dynamics will be pivotal for fundraising success. Establishing trust and credibility with investors through transparent and responsible investment practices will be paramount. Fund managers that adeptly navigate these complexities and embrace innovation, such as tokenized funds and structured vehicles, will be positioned to thrive in the evolving world of private markets.Conclusion:While 2023's private capital fundraising environment may not break records, it presents challenges and opportunities for fund managers. By adopting a strategic and adaptive approach, understanding regional trends, and cultivating robust investor relationships, fund managers can surmount obstacles and achieve sustained growth and success for themselves and their investors. Embracing technological advancements and staying attuned to market dynamics will be vital to thriving in the ever-evolving landscape of private markets in 2023 and beyond. As the landscape shifts, fund managers who embrace change and seize opportunities will pave the way for a resilient and thriving private capital ecosystem.Discover Your Perfect Investor Relations Team with Altus Partners:At Altus Partners, we take pride in our specialisation in Investor Relations and Distribution search. Whether you are a global fund or an emerging manager in Europe, we are here to support your journey to success. If you are seeking to build an exceptional Investor Relations team or searching for your ideal role in this dynamic field, look no further. Our dedicated team of experts is ready to assist you every step of the way.Contact Altus Partners today and let us help you unlock the full potential of your private capital fundraising endeavours. Contact us at:Let's pave the way for your future in private markets together. Contributions: McKinsey Private Equity Report 2023. Pitchbook Private Markets Fundraising Report Q1 2023
Altus Partners is pleased to announce the launch of its Data & Analytics Practice. The new practice will connect private equity firms and their portfolio businesses with highly skilled professionals in data engineering, data science, machine learning, business intelligence and commercial analysis.In today's data-driven business landscape, organisations recognise the immense value of reliable and actionable data insights. The demand for talented data and analytics professionals has surged as companies strive to leverage their data effectively to make informed and critical business decisions. Altus Partners aims to bridge this talent gap by providing comprehensive Executive Search services tailored to the data and analytics sector.The Data & Analytics practice at Altus Partners will primarily support private equity firms and private equity-backed businesses in fulfilling crucial roles such as Chief Technology Officer (CTO), Chief Data Officer (CDO), Data Director, and Data Vice President (Data VP). By assisting in these critical appointments, Altus Partners enables firms to harness the power of data and analytics to inform decision-making processes throughout the investment lifecycle, including pre-deal due diligence and the hold phase."Data-driven decision-making has become a pivotal factor in determining the success of organisations across industries," said Ed Chamberlain, CEO at Altus Partners. "Private equity firms recognise the potential of data and analytics to drive growth, maximise performance, and unlock hidden value within their portfolio companies. Our Data & Analytics Executive Search Practice will provide a specialised and comprehensive approach to identifying top talent in this rapidly evolving field."Altus Partners understands that a data-centric approach not only accelerates execution and fosters accountability but also uncovers new growth opportunities while ensuring sustainable value creation over the investment horizon. With the ability to track progress and identify areas of improvement, data-driven insights play a vital role in optimising performance and enhancing decision-making strategies."At Altus Partners, we believe that rigorous data and analytics capabilities are essential for companies to maintain their competitive edge," stated Roddy Coltart, Head of the Data & Analytics Practice. "Our team has an in-depth understanding of the industry's evolving needs and the skill sets required to navigate complex data landscapes. We are dedicated to helping private equity firms build robust data and analytics functions by connecting them with the best talent available."In an era where big data and analytics present a continuous challenge in processing and interpreting vast datasets, professionals specialising in data engineering are crucial. These experts are uniquely qualified to transform complex raw data into valuable insights and leverage data visualisation techniques to present findings clearly and comprehensively. Proficiency in tools like SQL, data mining, data management, data warehousing, data modelling, data architecture, data governance, and data quality is paramount for success in this field.The launch of Altus Partners' Data & Analytics Practice marks a significant milestone in the firm's commitment to providing comprehensive recruitment solutions tailored to the evolving needs of the financial industry. By connecting private equity firms with top talent in data and analytics, Altus Partners aims to empower organisations to leverage data as a strategic asset and drive sustainable growth.For more information about Altus Partners and their new Data & Analytics Executive Search Practice, please visit www.altus-partners.com or contact Roddy Coltart Roddy@altus-partners.com.
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