August 8th
Raw Selection
De-risking executive search for your Private Equity firm and Portfolio Companies
What is going on in the Private Equity world this week...
Top Story
Incentives Are Being Used by Private Equity Firms to Bribe and Attract Hesitant Investors
Private equity firms are enticing reluctant investors with incentives amid a challenging fundraising landscape. Prominent firms like CVC Capital Partners, Ardian, TPG, and Cinven have recently extended discounts on management fees and co-investment opportunities to potential investors. Some are even sharing a portion of the usually retained management fee with major backers such as pension plans and sovereign wealth funds.
The industry's favorable offers are a response to heightened competition in fundraising. The lack of new deals and limited exits due to market conditions have led to a significant decline in capital raised globally. As a result, investors, particularly major ones like pension plans, are gaining the upper hand and securing improved terms from private equity firms.
These efforts are concentrated on significant investors, offering them the chance to reduce overall fees for access to top-performing funds. Strategies range from fee discounts to co-investment opportunities. While the inducements provide a boost to investor returns, they also reflect concerns about private equity's performance in comparison to alternative investments.
Despite these concessions, the traditional fee structure in private equity remains largely intact. While there are subtle adjustments like fee-free co-investment, overall fee structures have seen limited change. This reflects the industry's aim to safeguard a fee system that has endured for decades amidst evolving market conditions.
Recent Headlines:
Revelstoke raises $1.7bn for third fund, surpassing $1bn target
Revelstoke Capital Partners ("Revelstoke"), a Denver-based private equity firm with $5.8bn of assets under management, has raised a total of $1.7bn in capital commitments for Revelstoke Capital Partners Fund III.
Kimmeridge raises over $1bn for sixth E&P-focused fund
Kimmeridge, an alternative asset manager focused on investments in the energy sector, has held the final closing of Kimmeridge Fund VI and related vehicles (Fund VI), with more than $1bn in new capital commitments.
Private market returns positive in Q1 after three-quarters of negative performance
Private market returns stabilized above zero at 1.1% in the first quarter of 2023 after three consecutive quarters of negative performance beginning in Q1 2022, according to the latest eFront Insight Quarterly Performance Benchmark report.
Top 10 secondary firms revealed...
Smaller firms dominate the top spots, with the leading four raising under $1 billion each. Focusing on venture capital (VC) secondaries has paid off for firms like Greenspring Associates, Top Tier Capital Partners, and Industry Ventures due to VC's strong performance during this period.
Notably, European firms—Bex, Compass Partners International, and Glendower Capital—secure top 10 positions in this US-dominated ranking. Greenspring Associates, despite being acquired by StepStone in 2021, maintains its top rank. HarbourVest Partners, a larger, more traditional firm, also performs well.
The methodology evaluates aggregate performance, factoring both relative and absolute returns across funds managed by each firm. A projected increase in secondary market deal volumes, driven by available capital and pricing stability, sets the stage for the industry's growth.
Rank, Firm, Score, Fund count, Country base
1. Greenspring Associates, 4.46, 3, US
2. Compass Partners International, 1.3, 2,UK
3. Top Tier Capital Partners, 0.95, 2, US
4. BEX Capital, 0.83, 2, France
5. Industry Ventures, 0.36, 6, US
6. Commonfund, 0.25, 2, US
7. HarbourVest Partners, 0.23, 6, US
8. Pomona Capital, 0.16, 2, US
9. Glouston Capital Partners, 0.12, 3, US
10. Glendower Capital, 0.11, 3, UK
The Private Equity channel and Podcast houses our podcast recordings, PE and Portfolio advice, plus recent case studies conducted on new talent and their firm
We keep you updated on our latest podcast stars and the hot topics of Private Equity. You can watch our podcast recordings over on our YouTube channel or tune in on Spotify, Apple Podcasts, and Google podcasts.
Keep informed about what we are doing through our LinkedIn page or change your thinking and gain some knowledge by getting stuck into an advice episode on the Private Equity channel, hosted by Alex Rawlings.
In this episode, we welcome David Sopp who discusses his transition from PE investor to Operator and getting more attractive multiples
What You Will Learn:
- Perspectives from Being an Investor and an Operator
- Acquiring Businesses at Attractive Multiples
- The Attributes of Top Performing Investors
We also have a bonus episode! Our Playbook Series...
We welcome Jay Goldman who chats about how to create a repeatable playbook for value creation at portfolio companies
What You Will Learn:
- Sources of Value Creation in Private Equity
- What it Means to Create Value in a Portfolio Company
- How to Create Structure in Your Processes
Catch up on the links below to tune in...
We are always looking for people in the Private Equity space who have great conversations, can provide an interesting perspective, and are on top of their game.
If this sounds like you, give Alex Rawlings our podcast host, a message either on LinkedIn or drop him an email at alex.rawlings@raw-selection.com
THE TALENT ATTRACTION MISTAKE MOST PRIVATE EQUITY PROFESSIONALS MAKE AND THE REASON CANDIDATES TURN DOWN YOUR OFFERS
Private Equity firms and their portfolio companies operate in a highly competitive landscape, where success hinges on the ability to attract and retain top talent. In their pursuit of finding the right candidates for the Private Equity firm or portfolio, many PE professionals commit a critical error…
Interviewing instead of selling.
Most firms and companies overlook the importance of selling the position and opportunity. Instead, they rely solely on firing questions at the interviewee, assessing them, and seeing it as a selection process rather than promoting the opportunity.
The Power of Selling the Position
Traditional hiring processes typically revolve around evaluating candidates based on their qualifications, experience, and cultural fit. While these factors are undoubtedly important, failing to effectively sell the position can lead to missed opportunities and suboptimal hiring decisions. Selling the position involves actively promoting the unique aspects of the role, the company’s vision and culture, growth prospects, and the potential for personal and professional development. Before you start a search create a list of the key attraction points on this role and the business.
Craft a Clear Value Proposition
Clearly articulate the unique selling points of the position, highlighting the opportunities for growth, leadership, and impact. Emphasize the alignment of the role with the candidate’s career goals and aspirations.
Demonstrate the Firm’s Value
Showcase the firm’s track record, successful investments, and the value it brings to portfolio companies. Highlight the resources, network, and industry expertise available to support the candidate’s professional development.
Communicate the Culture
Provide insights into the company’s culture, values, and mission. Illustrate how the candidate’s contributions will contribute to the organization’s success and how their individual values align with the firm’s ethos.
Engage in Two-Way Conversations
Instead of conducting one-way interviews, foster an interactive dialogue. Encourage candidates to ask questions and address their concerns, which demonstrates a commitment to their needs and creates a more collaborative and engaging hiring process.
Discuss the challenges
Discussing the challenges seems counter-intuitive but there is nothing A-players love more than the opportunity to be the hero and solve the problem, discussing the challenges in the business and engaging with the interviewee on their initial suggestions to solve it and their past experiences with these challenges
Attracting Top Talent
Highly skilled professionals often have multiple options available to them. By effectively selling the position, PE professionals can differentiate their opportunity from others and entice talented individuals to consider their firm or portfolio companies. If your private equity competitor is upselling the opportunity and you are in military-style interrogation mode, no guesses need on who wins.
Increasing Candidate Engagement
Selling the position creates a compelling narrative that engages candidates on an emotional level. It helps them envision themselves in the role and understand how their skills and aspirations align with the organization’s goals. This heightened engagement increases the likelihood of attracting motivated and committed individuals.
Competitive Advantage
In a competitive talent market, PE professionals must understand that candidates are evaluating them just as much as they are evaluating the candidates. By actively selling the position, firms can gain a competitive advantage by positioning themselves as desirable employers, which can lead to higher acceptance rates from top-tier candidates.
Private Equity professionals often make the mistake of neglecting the power of selling the position when hiring for their firms or portfolio companies. By failing to effectively promote the role, they miss out on attracting top talent and maximizing their chances of success. Recognizing the importance of selling the position and implementing strategies to engage and entice candidates can lead to improved hiring outcomes and a competitive advantage in the ever-competitive talent market. Remember, the best candidates are not just looking for a job; they are seeking an opportunity to grow, contribute, and be part of a compelling vision.
The Private Equity Hub... Our new home for our Podcast, Channel, News, and Network all in one place
We have recently launched the Operating Partner's network which has been a great success!
We have created an open, but secure, space for Operating Partners to discuss trending topics and pose questions and queries to other members.
To join, or if you are a C-Suite Executive, Principal, or higher; then follow the link below to sign up for our other networking groups that will be launching very soon!
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We specialize in executive search, working exclusively with lower and middle-market Private Equity firms and their Portfolio Companies across Europe and North America.
We support Private Equity firms to secure talent for their investment and operations teams and to identify proven senior executives for their Portfolio Companies.
When it comes to recruiting senior executive talent for your business, our approach is one of meticulous search and due diligence.
So much so, we de-risk recruitment for all our retained clients. We are so confident in our approach that we are prepared to offer a money-back guarantee on our services.
Interested? Get in contact here.