Private Equity Firms Targeting Industry Specialists To Maximize Returns


Large private equity firms are hiring industry specialists to help manage their portfolios and increase returns.

Large private equity firms are hiring former CEOs and other executives to help maximize returns and manage their portfolios, according to Business Insider.

The new hires include executives from tech giants Google and Amazon. Private equity firms are currently holding around $2.5 trillion in unused investor money. Bidding for companies has increased as companies look for the next Facebook or Amazon.

"Operating partners are being viewed as equals to investment professionals, which was not the case in the past," said Jonathan Goldstein, a recruiter at Heidrick & Struggles. "The investment professional as the dominant driver of value in a private equity firm is diminishing."

The newly hired operating partners are intended to figure out the creation of new products and cut costs, not close or find deals. Private equity firms are starting to increase the salaries of these operating partners.

"As of today, I'd say it's roughly 2:1 — two private equity professionals per one [operations] professional globally," said Christopher Russell, a managing director at Partners Group. "The goal is to get it closer to even, with one for each."

Private equity firms are hiring former executives more frequently in an attempt to maximize returns from startups.

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Economics, Finance and Investing