In transforming the restaurant industry, private equity has become a huge consumer of executive search. Today, private equity firms easily represent a majority of The Elliot Group searches, and this percentage has gone up each year.
The degree of their involvement in searches ranges from letting the operating company run the search process, while retaining final approval or veto power, to actually managing the search themselves. Sometimes they insist upon a “been there, done that” candidate but private equity has also led the way in importing talent from outside the restaurant industry. They are especially drawn to consumer packaged goods (CPG) companies who are known for their training and for building consumer and strategic acumen, financial rigor and general management capabilities in their rising leadership. PepsiCo is arguably the gold standard of “academy” consumer companies and select specialty retailers and particularly in recent years, hotel companies, are also viewed as talent sources. Paul Brown, a Hilton alum who has successfully transformed/turned around Arby’s, has raised the stock of all hotel industry candidates.
At the same time, private equity investors “know what they don’t know” and one thing they don’t know are operations. While they do look for candlepower and well developed analytical muscles, they by no means discount operational know-how and in our President and CEO searches will shy away from candidates who come straight from a narrow functional role without demonstrated operational groundings and ideally, a successful record of store leadership. This becomes a particularly important developmental check-off for the marketing or finance executive who aspires to broader executive leadership.
Private equity firms buy companies based on an investment thesis. Sometimes they are hiring leadership to formulate the strategy, other times there is a strategy in place that must be refined. In every situation, the “air support” that the investors and board provides, ensures that there is strong management team alignment and requires every key executive to operate with a sense of urgency towards accelerating needed change. Demonstrating high energy and urgency, along with intellectual flexibility, within the interview process, is a requirement in a private equity search.
Today’s interviews are less about past experiences and more like real time case studies on the specific business challenges at hand. It is important for a candidate interviewing with private equity to thoroughly research the company and be ready to put forward a specific point of view, with some level of original thinking. Often, the best way to do this is by creating “high gain” questions, meaning questions that make the other person think about the situation in a new way – as opposed to informational questions such as org charts, etc. Ideally, the candidate can follow-up on the interviewer’s answer with their own perspective and even a relevant professional experience, which creates a robust dialogue, almost a “dance”, or some would say “intellectual jousting”, that is the hallmark of a successful interview.
An ability to succinctly package a strategic point of view – meaning a high level approach to a business challenge/opportunity – and then toggle from 30,000 feet to sea level with supporting, real-world tactical detail, is another winning interview approach and particularly appreciated by private equity. We won’t present a candidate until they have had a first-hand, in-store experience with our client’s product or service.
The great Tolstoy began his novel Anna Karenina with the line “Happy families are all alike; every unhappy family is unhappy in its own way”. Each portfolio company is in its own unique life-stage with singular challenges and opportunities. At The Elliot Group, we have “prep calls” with every candidate for every client interaction. We build our specialized industry and client knowledge into these conversations, to set up our candidates and clients for success.