How Private Equity Firms Hire CEOs

03.27.2017

J.P Flaum and the Green Peak Partners worked together with Jeffery Cohen (DHR International) to understand how top private equity firms make their hiring decisions and how the process has changed over recent years. Together they “surveyed and interviewed the managing partners of 32 private equity firms.” From their research they drew five important conclusions.

Experience is overrated

Focusing on hiring someone with prior CEO history not only limits the contender pool, but can also set the candidate up for failure. For someone who is very familiar with the industry it can be too easy to recycle strategies from their previous position. Unfortunately, those strategies may not be what is best for their new company.

Team-building skills are paramount

Being able to put together a high performing team is a highly ranked attribute among the PE firm executives. To find the candidate who can build a successful team, executives are eliminating interviewees with arrogant qualities such as the overuse of “I”. Often, this can signal that they do not have the knack for hiring top talent.

Urgency outranks empathy

Strong leaders must be able to move swiftly and not overanalyze their decisions. While empathy is not discounted, it is important to be able to make tough decisions without regrets.

Resilience is a must

Being able to bounce back from setbacks is another important quality. Often business plans are unpredictable and can move out of control with the best of intentions. How a CEO adapts and overcomes these obstacles is more telling than facing a stream of constant successes.

Authenticity is key

Candor is essential in today’s world of business and it is something that executives will be looking for. These firms are searching for potential CEO’s who have the confidence to give bad news quickly and honestly.

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