PEI Operating Partners Human Capital Forum – Panel Recap

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 I had the pleasure of hosting a panel discussion for the New York PEI Operating Partners Human Capital conference on March 29, 2023. With an audience of private equity talent professionals, I convened a panel with Principal Ting Gu of Welsh Carson, Managing Director Brian Michaud of Littlejohn & Co., and Investment Partner Church Moore of Kelso & Company to give their perspectives on how they see talent in the PE sector and what a successful deal and talent team collaboration looks like.

Below are three takeaways from our discussion.

Talent is continuing to show its critical value in PE

 Panelists spoke about what their firms see as the shift over the last five to ten years in how PE views human capital. It was conclusive across the board that talent assessment is increasingly necessary during the diligence phase if possible, with the development of a roadmap for post-close talent management and organizational design being key for adding value once the rush of the deal fades.

Quick hits:

  • Identifying issues upfront and then addressing them quickly is becoming a best practice – further emphasizing the value of assessments and taking a larger view at the management team.
  • The first two years are vital to the investment’s return; if problems aren’t identified and addressed early, it may be challenging to right-size depending on when firms are looking to sell.
  • Having a talent operating partner in place to assess C-Suite executives and create a systematic approach to talent has created the greatest value to deal teams – often making them the most involved operating partner during the deal process.

Having a dedicated talent operating partner creates more value for the internal deal team in addition to the actual investment value and potential

The panelists’ experience in private equity has shown how to best collaborate internally between the deal and talent teams. When one person can be viewed as the go-to advisor, teams can work more nimbly to conduct pre-and post-close work, versus having several people within the firm who have lighter experience on the talent side.

Quick hits:

  • When a deal team has a talent partner or officer in place, there’s a greater understanding of how to approach talent in deals and streamline processes internally to be more efficient and effective.
  • Many deal teams view talent as a key part of the earliest due diligence stage when addressing value potential. Having talent evaluated and with plans in place for the 100 days between signing and closing saves time and can be a catalyst for value creation from day one (literally.)
  • When potential issues are raised in diligence, the deal teams look to the talent team for a trusted evaluation and recommended next step. Having the human capital partner throughout the lifestyle of an investment brings operational excellence to the company as it scales and navigates leadership and/or organizational design obstacles.

Human Capital Operating Partners should find every opportunity to think and act like an investor.

While speaking to a room of executives who see the incredible value in prioritizing human capital, our panelists offered advice for how to succeed in PE as a talent expert. Their advice included:

Quick hits:

  • Be open to meeting with associates to learn more about the firm’s investments and financial space. A set of basic understanding is needed to help do stronger due diligence and better portfolio monitoring, increasing the value for the entire firm as a talent specialist.
  • Talent professionals must know that they bring value to the company that others in the firm can’t, such as constructing the right team and bettering the investor. Showing your expertise through things like enhancing the interview process and, developing talent scorecards and post-close plans can help instill a growth mindset.
  • Timing doesn’t always allow for talent or organization design assessments pre-close. Set expectations with the C-Suite executives that assessments will follow the close of a deal due to the overwhelming value creation human capital offers PE.

A huge thanks again to our panelists for participating in such a productive discussion during the PEI  Operating Partners Human Capital Forum. At Summit Leadership Partners, we know and practice the importance of high-quality talent assessments, coaching, and management during the due diligence phase and beyond. Our organization solutions practice has grown as post-close board assessments evolve structure and design. We know that these are significant discussions within PE firms and their portfolio companies – we’re having them every day.