• Record investment in portfolio companies and an inelastic talent pool have conspired to create a shortage of top-tier executive talent.
  • C-suite roles have become more complex since the turn of the century, which makes finding flexible, adaptive executives more challenging
  • Falcon has several proven tactics that can help sponsors better compete for top-decile talent

Private equity sponsors are facing an increasingly difficult challenge hiring top talent for their portfolio company management teams. The current climate finds sponsors facing a confluence of recruitment challenges that are making talent acquisitions more difficult than ever before. In this article, Falcon suggests several new approaches to executive recruiting that are helping sponsors become more competitive in top-decile talent acquisition.

Three Factors Have Produced a Tight Labor Market

There are three key factors conspiring to amplify today’s executive recruitment challenges: 

  1. Supply and demand
  2. Increasing role expectations, and 
  3. Value creation factors 

Supply and Demand

According to Preqin, global fundraising totals from 2016 to 2020 more than doubled compared to the previous five years, and private equity firms have used that dry powder to invest in new businesses. Consequently, the rise in the number of portfolio companies is greatly outpacing the relatively modest growth of the broader executive pool. Unfortunately for the private equity sponsors, there are significantly more C-level opportunities today than there are qualified candidates. 

A recent Forbes article dives into the disruption the COVID-19 pandemic and shut-down had on the retention and retirement patterns of executives across industries. In the world of private equity, the result has magnified the shortage of truly exceptional executives.