Private equity recruitment follows a very specific hiring criteria. The people hired by the private equity firms need to have a lot of niche experience and expertise to do their jobs successfully— so think about roles such as chief technology, chief information officers, managing directors, and the leadership teams of those companies.
Most private equity companies don’t have the time nor the internal resources (personnel) to find, attract, assess, interview, and place those candidates in their company. That’s why most of them hire a private equity recruitment partner— they want search experts with relevant industry experience to conduct searches and place the best possible candidates into the open roles.
Private equity recruitment companies help the client with the capacity, capability, and confidentiality when it comes to the hiring process.
This article will help you understand how to partner with a great private equity recruitment firm, what the dynamic between the executive search firm and the company should look like, and what role trust and transparency play in the executive recruitment process.
And last but not least, we’ll provide insights to help you choose the right private equity recruitment partner.
What is private equity recruitment?
Private equity recruitment is the process by which private equity companies find, source, assess, interview, and hire candidates for their company.
Private equity is a highly specialized field that requires individuals to have specific skills and a lot of experience. This can be quite a problem for the private equity firms since they usually don’t have the necessary expertise in their HR departments (nor the time) to find those highly-qualified candidates.
That’s why most private equity companies decide not to hire the candidates using their internal resources, but by partnering with an executive search company.
The executive search company helps the private equity company source, assess, interview, and place an A-list candidate into the firm.
When hiring an executive search firm, you will come across two different types of recruitment companies: contingent and retained search.
What is retained executive search?
A retained executive search firm works on a retainer, charging a fee up-front in order to complete a successful search. With this type of search, you’re engaging in an exclusive contract where you’re partnering with the executive search company in order to find, assess, and place the best possible candidate into the role.
The private equity recruitment partner will research the market for candidates, sourcing the best possible ones, assessing them, and then providing the shortlist of the candidates to the client.
This is quite a robust and exhaustive process that includes, but it’s not limited to:
- Client (account) management. A great private equity recruiter will assess your most pressing needs and they will commit to finding the best possible solution for your need. They won’t stop until they find A-list candidates that will be a perfect match for your organization.
- Resume verification and assessment. When you hire an executive search company, they will proactively verify the candidates to find the A-list players. They will use candidate databases, search the market extensively, and use an omnichannel approach to proactively identify and recruit passive candidates. Then, they will approach the candidates, court them, figure out what their motivations are, and then evaluate their core competencies to see if there’s a match with your organizational needs.
- Interviewing. A private equity recruitment partner will select the top candidates and qualify them for you. They will pre-screen and analyze their core competencies, evaluate their soft skills, and analyze if they’re the right culture and value fit for the role in your company. They will do some of this throughout the relationship and they will also conduct an interview to see if the candidate is a good match to be shortlisted and presented to the client.
- Candidate management. The private equity recruitment partner will communicate with candidates throughout the entirety of the recruitment process. They will be the link between the organization and the candidate, making sure both sides' needs are being fulfilled. The private equity recruitment partner will ensure that the company is satisfied with the clients that they’re getting (shortlist) and that the candidate is satisfied with the offer received. They will relay feedback information and job offers from the company to the candidate and they will work with candidates to set the right expectations so that everyone’s on the same page.
On top of that, they will help the client conduct the interview and be a mediator in the salary negotiation process. The retained model divides payments into three rates:
- A third when the company starts the project
- A third when the candidates have been shortlisted and presented to the company
- A third when the candidate has been placed in the company
This model works well when you need to find a highly qualified candidate with a unique set of skills, such as in the private equity industry. The retained companies have search experts who are experienced and who can find the candidates that would fit your open role.
What is contingent search?
There’s also contingent search which is a “no win, no fee” model. The companies that conduct this kind of search only get paid when the candidate is placed, and they’re usually paid in a lump sum when that happens.
There’s no exclusivity with this search and it lacks the commitment from the search company’s side since they can easily quit the project if they deem it too difficult to implement successfully.
The companies doing the contingent search usually don’t have functional experts, but are more generalists when it comes to recruitment. So that’s why this type of recruitment is great if you need to place a lot of junior-level candidates in your company quickly.
Choosing a private equity recruitment partner
Choosing a private equity recruitment partner means considering multiple variables that make a significant difference when it comes to ensuring a successful search. Everything from the communication style, transparency of the process, to the speed of delivery all comes into play.
So when choosing a private equity recruitment partner, you should consider the following:
Executive search companies should have full transparency when it comes to their search processes. Press & Associates has a six-step process that we use to find the A-list candidates for your company.
- Kick-off meeting. When starting out, we meet with all the stakeholders to define the parameters of the search. We go over everything, such as role profile, functional and behavioral competencies, and even define your Employee Value Proposition (EVP)
- Identifying the best talent. After that, we'll start our search, mapping out all of the target companies that operate in the desired industry(es). Then, we will identify every candidate who has the capabilities and experience to fill this role.
- Systematic engagement. Approaching high-quality candidates isn’t an easy task, but we use a systematic engagement process to ensure that we do it intelligently and discreetly, using best practices from headhunting to ensure engagement from the candidates.
- Shortlisting. When we have a long list of candidates, we screen them using a competency-based assessment. Afterward, we shortlist the candidates for an interview, present the shortlist to the client, and wait for their confirmation of the list during the briefing session.
- Interviewing. When it’s time to interview the candidates, we provide full support to our clients. We do so through regular feedback and ensuring that both the candidates and the client are fully informed at every stage of the process.
- Offer and acceptance. Once the client makes their offer, we present it to the candidate and offer our support during the negotiation phase, ensuring that both parties become satisfied with the final arrangements. On top of that, we stay in contact with both the client and the candidate until the candidate starts their employment.
The best executive search firms ensure that this process goes as smoothly as possible. Ideally, they will share results with the client on a weekly basis to keep them fully informed and brief them about our progress.
When interviewing potential executive search firms, we recommend asking them about how they make this information transparent and accessible for their clients. The companies have a cloud-based platform to help encourage collaboration, communication, and transparency between the client and search team. That platform should have unique logins that the client can use to access a unique view of their executive search, and provide feedback and questions about how the search is going.
On top of transparency, there are other elements you should take into consideration when choosing a private equity recruitment partner such as the fill rate, payment milestones, expertise, and timeline.
Fill rate refers to the number of jobs you have filled over a certain period of time, compared to the number of open job roles. This number needs to be high for an executive search firm because that shows that they successfully finished the project and that they presented great candidates to the client.
The five big executive recruitment companies called SHREK (more on that a little later) have a two in three fail rate, meaning they fail to deliver on a third of all searches they engage on. Ideally, you’ll want to find a private equity search company that has a proven fill rate of at least 50%. We recommend that you ask the search firm directly for their fill rate on private equity searches, where possible.
When hiring an executive search firm, you also need to look into their payment milestones. Some executive search firms charge by time-lapsed (usually in 30-day increments) while some charge by successfully completing certain milestones.
Try to find executive search companies that charge their fees once certain milestones have been hit, such as presenting a shortlisted list of candidates or on placement. This way their interests align with your objectives.
Experience and expertise – especially as it relates to private equity recruitment – is critically important for any search company that you employ. When you’re hiring an executive search company, you need to make sure that you hire the one that has experience not only in your industry, but also with the functions and positions you want to hire for.
A private equity company looking for a recruitment partner should check if the recruitment partner has already hired people in the private equity industry and if they hired people for one of the following roles:
- The leadership team of the private equity company (the C- level)
- Portfolio optimization / operations team
- Portfolio Company’s Executive Leadership Team
- Functional expertise - for example when engaging in leadership recruitment for positions such as an operating partner, chief information officer, chief digital officer, chief technology officer, and managing director
We also recommend that you do your due diligence when meeting with prospective private equity recruitment firms to confirm that their experience and process match your requirements and expectations. Case studies, testimonials, and references will all help you to ensure you make a well-informed decision.
Time is of the essence when it comes to private equity recruitment. You want to get a shortlist of the best possible candidates and you want to get it as soon as possible. Because every day that you don’t fill the open role opportunities, and therefore returns, are lost. But you certainly don’t want to compromise on quality—you want the best possible candidate and you want them as soon as possible.
The industry standard for the executive search timeline is 8-12 weeks, even though some companies do it in a shorter time frame such as 6-8 weeks.
Keys to a successful process
Even the best laid plans can go awry without the right execution. In private equity recruitment, there are three key elements that you will need to keep in mind to ensure success:
- Kick-off meeting. A kick-off meeting is there to ensure clarity between the search firm and client. All relevant stakeholders should be present at the meeting to make sure that everyone’s on the same page and that there’s agreement on the objectives of the search.
- Transparency and communication. It’s essential for the executive recruitment company to have a transparent process and to communicate effectively with the client. When you choose a great executive search company, they will provide you with the option to login to a cloud-based platform so that you can track the entire search process, share feedback about it, and collaborate on the platform.
- Ability to pivot. Once a week, the executive search company should do a steering meeting to brief the client about the current status of the project. This serves as a checkpoint where both sides can see how the project is going. In case there are any changes in the project, these meetings allow for pivoting to ensure a successful search outcome.
Of course, most high-quality private equity recruitment firms will have these steps built into their processes. This is where doing your research and due diligence will pay off. To help make our case, we’ve put together a quick primer on why Press & Associates might be a good choice for your next private equity executive search.
Press & Associates as your private equity recruitment partner
When choosing a private equity recruitment partner, you should pick the one that will fulfill your recruitment needs. And here’s why Press & Associates is the right private equity recruitment partner for you:
- Completion rate. We have a completion rate that's 1.4X higher than competing executive search firms that conduct searches in the same industries and functions. That’s why you can have confidence that we will achieve the best possible results for your investment.
- Candidates. We don’t recycle candidates nor move them around to present them to other companies. We always do a new search to fill your exact needs so that you get the best possible return on your investment.
- Researchers. The same people who will talk with you about the project will be the ones working on the project. So you will get the most experienced in our company working on filling your organizational needs.
- Speed. We have a faster process of finding, screening, analyzing, and presenting the shortlisted candidates to you than competing executive search firms.
- Transparency. We’re completely transparent in our executive search process and we share our progress with you on a weekly basis (steering meetings). This way, you can always give feedback or adapt to the project if elements of it change.
- Invoice requirements. Most competing executive search companies send fees on time rather than completed milestones. With us, you will only receive an invoice once we hit a certain milestone.
- Agile. We’re an agile search firm and we want to reach a commercial arrangement that benefits both parties involved.
- Every client matters. For us, every client matters and we want to provide you with the best possible candidate so when you choose to partner with us, you choose to partner with a company that cares for your success.
- We don’t fail. We care about your company’s success and that's why we always commit to working with you until we reach a positive result.
We talked about the differences between the contingent and retained search, the main elements you need to take into consideration when choosing a private equity recruitment partner, and what the possible pitfalls can be.
On top of that, we shared the data when it comes to the success rates of multiple executive search companies and why you should choose Press & Associates as your private equity recruitment partner.
If you’re still on the fence when it comes to choosing a private equity recruitment partner, we suggest you subscribe to our newsletter and receive additional information on choosing the right recruitment partner.