Private equity is about more than deal-making. Ultimately, it's about running the companies PE firms acquire. And that's leading to the hiring of people who know how to run businesses.
The firms need such talent to identify and research potential deals, advise PE managers and recruit other executives into the fold, and sometimes run acquired companies so that can generate real returns, writes The Wall Street Journal. For example, Chrysler Corp.'s new owners, Cerberus Capital Management, employs several auto-industry executives.
For executives, the attractions of PE work are many: They get to work beyond the focus of regulators and stock-market investors and are well-compensated for their efforts. The Journal says executives running a company for a PE firm can own up to a 10-percent equity stake, and reap handsome rewards if the business is sold or goes public.
Recruitment firm Spencer Stuart told the Journal its searches for these executives have increased 25 percent for the past three years, and some PE firms are paying it an annual retainer.
Private-equity owners don't have a "proprietary manual they own that no one else has about how to finance deals," says David A. Brandon, CEO of Domino's Pizza Inc., who joined when the restaurant operator was majority owned by Bain Capital. He stayed on as CEO when Domino's went public in 2004. "What these guys bring to the party that really creates value is getting the management right and fixing whatever's broken in the business model."