Comments on: Sure, let’s get married, we’ve known each other at least 60 minutes

By: Toning it down for the team | A Private Equity Blog

Toning it down for the team | A Private Equity Blog — Mon, 15 Feb 2010 02:40:27 +0000

[...] are married to your team; you aren’t selling them a set of encyclopedias; so, even though you may have superior [...]

By: The 4 life stages of a private equity fund | A Private Equity Blog

The 4 life stages of a private equity fund | A Private Equity Blog — Wed, 11 Nov 2009 22:25:20 +0000

[...] the team to invest in and manage the portfolio businesses. This is a defining moment because the lifespan of a private equity fund is longer than many marriages and hence, the fund’s success firmly relies on the people chosen at this point (and [...]

By: Analyst

Analyst — Sat, 05 Sep 2009 08:56:16 +0000

Shibumi: I entirely agree. The way I currently got my job (in a small mid-market PE fund) was by proposing a 3 month ‘fixed contract’ to try me out – because we both knew the fit might not exist.

A month in, I’m making sure to prove myself indispensable to the team, they’ve already ordered me a BB and laptop and they send me on my own to deal with some of the portfolio firm management.

So all in all, a successful integration – but I am not looking forwards to the difficult salary negotiation in under 2 month’s time – because I certainly expect more than I got in for!

—
The Private Equiteer: I think hiring the initial management on those sort of terms is quite hard, however I’ve observed a number of ways to get around that in the longer-term:

+ Hiring some guys in as consultants/advisors, as you suggested – but they don’t sit at the C-level. The PE fund kinda evaluates them along a separate channel, and a few months later, promotes them to C-suite. This seems to be particularly useful for ongoing porfolio firms where you aren’t happy with management – or succession plans – but want to make it a smooth changeover (without the target noticing).

+ Keeping in touch with the best guys. Sure, every initial hiring is basically a punt, but once in a while you find a star – and you keep using them for new portfolio firms…etc. We’ve got 2-3 turnaround experts like that: they get sent in the first 3-9 months after an acquisition. Though their salaries are paid by the portfolio firms, they are really employees of the PE fund…

By: Shibumi

Shibumi — Sat, 05 Sep 2009 06:09:17 +0000

Another analogy is that this recession has also been like a marriage, except worse, since not only do you lose half your assets but you get to keep your wife….

By: Shibumi

Shibumi — Sat, 05 Sep 2009 06:07:12 +0000

I have used this device twice in my career to “get in the door”. After a trial period (wherein I demonstrated outstanding commercial adroitness and a certain boyish charm…:)) I remained in place for extended periods of time.
The difficult part is negotiating a good rem package after 3 months, since, for instance, if their view is pay median and your view is that your a rockstar who should be at the 99th percentile – then this divergence should be settled sooner rather than later.

By: The Private Equiteer

The Private Equiteer — Sat, 05 Sep 2009 05:16:26 +0000

Thanks for the note Glenn. And you bring up a good point about the interviewee needing to do their own DD.

I think that especially when you have options (as the interviewee), you need to consider the soft value aspects of each potential role. The company with the biggest profile may be a real bore to work at. Anyway, food for thought.

By: Glenn

Glenn — Fri, 04 Sep 2009 15:55:24 +0000

I recently interviewed with a firm that does this. It is a small (10 person) consulting shop. It makes total sense to me, especially given the size of his firm. He told me that he looks for people who, in addition to having the right degree and relevant experience, are currently unemployed and living in the area. This way, he can staff them on a project (typically 4-6 weeks) and both parties can decide whether there is a fit. As long as there is fair compensation that considers your time as well as the opportunity cost of not being able to look for a job during the project, I think this is a great method of hiring for employer and employee.

By: The Private Equiteer

The Private Equiteer — Fri, 04 Sep 2009 00:52:33 +0000

Good point, especially if you’re looking to hire someone in existing employment.

Maybe there’s a happy medium; maybe they can contract for you on weekends. Although, that could be seen as deceitful to the existing employer.

I’m sure someone has a solution, but either way, I still think it’s crazy to hire key staff after a couple of short interviews that they’ve practised for ad nauseam.

By: Lauren

Lauren — Thu, 03 Sep 2009 23:42:07 +0000

Sure, but most likely they will be going to other job interviews, where the prospective employer will give them a proper title, who will give them the comfort of a full-time gig and pay etc etc.

When it comes down to it, only few people take that risk of 1 month employment than full-time. But these are probably the people you’re after in the first place… Still you may lose a few good ones to the competition as everyone works harder when they’re rewarded.