US private equity firms look for staff

The private equity sector in New York is slowly returning to life after two or three quiet years and firms are beginning to hire once again, headhunters say.

That is not necessarily translating into much more business for recruitment firms though, said Simon Lewis, director of banking and financial services at Michael Page.

He said: 'A lot of private equity firms tend to recruit through their own networks, rather than through recruiters.' In the slow recovery from the market slump, firms have a large field to choose from.

Lewis said: 'It's definitely a buyer's market. When a client is looking for someone, they will give us five tick boxes; if the person ticks four, they may interview him but wait for a better candidate to come along. Our private equity clients are very precise about what they want.'

Personality and a good cultural match are top priorities for private equity firms, recruiters said.

Bob Damon, president, North America, for Korn/Ferry International, said: 'All these private equity firms are very tight-knit. These guys are essentially married to one another, so the culture, personality, and overall fit of a candidate are very important.

"These days there is a heightened awareness that the most common reason a person doesn't work out in a company is not because of his or her technical qualifications, but because of a bad fit. The interviewing process is fairly straightforward to screen somone from a technical perspective, but the fit is harder.'

Korn/Ferry has an assessment tool to augment the standard interviewing process. Damon said no candidate has objected to it, because they are just as leery of a mismatch as the hiring company is: "Candidates don't want to make a move that would be a mistake for them.'

At Michael Page, Lewis agreed on the importance of matching the candidate's personality to the firm's. Because the firms tend to be small, they often allow an objection from any member of it to end consideration of a candidate.

Lewis said: "That can be very frustrating from a recruiter's standpoint. We tend to get a lot of interviews but not a lot of offers.'

That is partly because the firms know they will be living with a new hire for several years. Unlike investment banking, where people move frequently, in private equity the employees have an interest in funds whose payout may not come for three to five years.

Base salaries are good, bonuses tend to be lower than they are for investment bankers, and the real rewards come only after several years of investment and operational improvement when the fund sells the company it has invested in.

A private equity deal could consist of buying a division from a large public corporation, acquiring a private company, or taking a public company private to restructure it. The business requires both deal makers and operations experts, said Damon.

Firms need people who are good at identifying opportunities and making the deals. Then, once they have made the acquisition, they need operational experts who can improve the company's balance sheet and set it up for eventual sale.

Lewis said: 'It's a highly attractive area to work in. People in private equity firms enjoy working with a company because it is very satisfying to see an acquired company grow and expand. In investment banking, you work a deal, take your fee and move on.

"But in this environment it is in your interest to make the company work, so you gain a lot of skills in terms of running businesses. The successful people tend to be very entrepreneurial.'