NEW YORK--(BUSINESS WIRE)--Entromy, TalentScape Partners, and BluWave, today released the annual report, Private Equity and the Talent Function, analyzing key trends in the talent function in private equity.
In the era of the Great Resignation and Quiet Quitting, finding and retaining talent is a universal priority for businesses worldwide. With added pressure to deliver value to investors especially in a slow deal market, private equity is increasingly investing in human capital, which according to BluWave, has more than doubled from 17% of private equity projects at the start of 2018 to 45% by the end of 2022.
As advisers to leading PE firms and individuals in the talent partner role, the three firms worked collaboratively to gather data on the approaches firms can take to maximize alpha generation while responding, predicting and adapting to the evolving demands of the role as the market shifts in 2023.
The survey of talent partners at PE firms spanning small and mid sized firms ($100-300M AUM) to mega firms ($5B+ AUM), reveals strong consensus on the value being brought by human capital professionals in PE during a volatile market:
Nine out of ten survey respondents agreed with the following:
- Their firm leads or accelerates recruitment and selection of key executives for portfolio companies.
- Their talent group possesses critical business and domain knowledge required to be a credible resource for investment professionals (eg, diversity and inclusion, outsourced HR, compensation, org design, etc).
- Their firm facilitates critical talent discussions and decisions within each portfolio company (eg, terminating an employee, facilitating the deal/management 100-day plan discussions, org structure, etc).
Notwithstanding the progress being made by human capital professionals in PE, the role is nascent and has significant room for growth and development.
Other survey findings included:
- Less than half of talent partners say their firms collect and analyze HR data across the portfolio to assess and predict risks.
- Many do not maintain momentum and discipline around human capital throughout the investment lifecycle - half don’t have post-close playbooks and standardized processes to utilize the talent group’s skills and services from diligence to exit.
- Only 40% say they have an effective dashboard view on the state of talent topics across portfolio companies that they update semi-annually.
“Human capital is the number one trend in private equity,” said Sean Mooney, CEO and founder of BluWave. “It is crucial in today’s uncertain economic climate for talent leaders to not just move the industry forward, but to create more value for their firms and portfolio companies,” Mooney said.
The Private Equity and the Talent Function report acknowledges that the talent function within PE is relatively new as compared to other functional areas and makes recommendations for best practices to strengthen human capital teams. The report identifies three approaches that are being taken by firms to enact their human capital strategies including: Acquirers, Assessors and Advisors.
“Talent is an undeniable determinant of success - with exponentially amplified impact in an uncertain business environment,” said Jan Jamrich, CEO and founder of Entromy. “As such, talent partners play a critical role in helping PE firms generate alpha.”
“Talent partners have become a true differentiator for many of the leading PE firms.” said Rodgers Palmer, Lead Partner at TalentScape Partners. “But given the myriad opportunities that exist to add value, the challenge has been how to do it in a way that fits with their own skills and the needs of the PE firm. We think the data from this work can provide guidance to current practitioners and firms looking to hire people into the role.” Palmer said.
Entromy and BluWave will share more as sponsors of Private Equity International’s Operating Partners Human Capital Forum, taking place in New York City March 29 - March 30.
To access your copy of the full report, request access here.
About the survey
The survey analyzed responses from ~70 PE talent professionals and deal partners and combined both quantitative and 20 in-depth interviews from professionals in-role, all from various levels of experience. Participants’ PE firms spanned fund sizes from large buyouts with $5B+ AUM to venture and lower middle market and growth firms with $200M AUM.
About Entromy
Entromy empowers PE leaders to weather volatility and achieve key value drivers by providing real time strategy and organizational insights. Entromy’s machine learning and natural language processing capabilities supply critical insights previously only accessible after days of lengthy interviews, expensive consulting engagements and time-consuming, manual effort. Reach out at info@entromy.com.
About TalentScape Partners
TalentScape Partners listens more intently and understands more about what makes people and organizations tick. We work with talent leaders and investors across a range of PE firms to help them make more informed choices on talent selection, create a human capital road map for their investments, and improve the quality of their people decisions, both inside the firm and within the entire portfolio. Learn more at talentscape.partners or email info@talentscape.partners to start a conversation.
About BluWave
BluWave is the business builders’ network for private equity grade service provider needs. The company’s platform combines concierge-like consultative support with technology, data, and AI to expertly connect businesses with proven providers across due diligence, value creation, and prep for sale. The BluWave Vetted™ network is an invite-only ecosystem of top tier individuals and service providing groups. Based in Nashville, Tennessee, BluWave ranks as one of America’s fastest growing companies and today serves more than 500 leading private equity firms and thousands of proactive businesses. Visit BluWave.net to learn more and access its ecosystem of PE-grade third party resources for top business builders. Learn more at BluWave.net.
