Finance Leadership Market Trends: CFOs Laying the Groundwork for Growth

by Matt Sommi, Adam Boone | Jun 20, 2024 | Blog

Finance Leadership Market Trends: CFOs Laying the Groundwork for Growth

Authored By Adam Boone, Matt Sommi

As the private equity landscape continues to evolve, the demand for exceptional CFOs is reaching new heights.

At Bespoke Partners, we’ve analyzed the latest market trends to understand what kind of CFOs are in demand and the skills they bring to the table.

Katelyn Quaresma, Partner at Bespoke and head of our finance executive search practice shared,

“It continues to be a very tight market for good talent out there. The CFO has tremendous influence over the business, and I think a good CFO makes the difference, the make or break, on an investment thesis that really makes the difference for the outcome of the asset.”

Our latest report, Private Equity Talent Report: CFO Leadership Trends, considers the cautiously optimistic view of the recovery of SaaS businesses, suggesting that now is the time for CFOs to lay the groundwork for growth.

Download the full report here: www.bespokepartners.com/private-equity-talent-report-cfo-trends.

Finance Leadership Practice Track Record

Download Full Report

2H2024 Deal Flow & M&A Acceleration?

Many industry observers and our sources are predicting a pickup in deal-flow and M&A transactions in the latter half of 2024. This expectation is bolstered by:

Increased Hiring for Finance Roles:

There has been a substantial increase in searches for VP of Finance and Controller roles, indicating that CFOs are preparing their teams for an influx of deals and M&A.

Stable Finance Teams:

The stability at the top of finance teams is encouraging for firms looking to grow through M&A, as a robust finance department is essential for successful transactions and inorganic growth.

EBITDA is Still King

When it comes to valuing firms, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) remains the metric of choice. This financial measure is prized for its ability to provide a clear picture of a company’s performance and growth potential.

CFOs who can develop strategies to optimize EBITDA are in high demand because they can significantly enhance a company’s valuation and ensure efficient capital use.

In-Office Work is In-Demand for Finance Professionals

The role of the CFO has shifted back toward in-office work to enhance communication and effectiveness. Our experience shows that many finance executives prefer working in-office for several reasons:

Enhanced Communication:

Being in the office improves communication with the C-suite and other key stakeholders.

Operational Efficiency:

In-person collaboration is seen as more effective for managing the day-to-day operations and strategic initiatives.

CFO Compensation Trends

Our data from 332 public and private software and SaaS companies reveals significant insights into CFO compensation.

As company revenues increase, so do CFO compensation packages, ranging from $380,000 average On-Target Earnings (OTE) at the sub-$50 million revenue level, to more than $1.1 million in OTE for companies over $1 billion in revenue.

CFOs are among the highest compensated professionals in the C-suite, second only to CEOs and, in some cases, GTM (Go-to-Market) executives. This compensation reflects their critical role in driving financial performance and supporting the firm’s investment thesis.

Equity Incentives and Turnover Stability

Equity incentives remain a powerful tool in CFO compensation, aligning their goals with the company’s strategic objectives.

Finance executives receive equity packages that are typically 13 times their OTE, highlighting the value they bring to their organizations.

Additionally, our Executive Turnover Index shows that finance leadership roles are among the most stable, with minimal turnover. This stability suggests that firms are confident in their finance leaders and are focusing on building strong teams to support future growth.

High Demand Skill Sets for CFOs

The current market demands CFOs who excel in resource management, capital allocation, and operational discipline.

CFOs with a background in Financial Planning and Analysis are particularly valuable in today’s economic climate, which emphasizes capital-efficient growth.

Operational CFOs, who have a proven track record of building high-performing finance teams and systems, are especially sought after. These professionals can effectively lead and operate finance departments to achieve the firm’s investment goals.

Looking to hire an exceptional CFO?

Find additional information on Bespoke’s CFO practice here: High-Impact Finance Executives – Bespoke Partners

Strategic Dealmakers in Demand

As the market prepares for a resurgence in M&A activity, there is growing interest in CFOs with strategic backgrounds who can identify and execute deals. These CFOs are crucial for capturing value and driving growth during the recovery phase.

Contact Bespoke Partners today to get your complimentary copies of our other Private Equity Talent Reports: https://www.bespokepartners.com/private-equity-talent-report/.

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

top 49 search firms 2 years in a row - bespoke partners

Author:
Adam Boone
Chief Marketing Officer

Boone has led marketing, demand generation, branding, product management, services marketing, or alliances marketing programs for numerous successful companies including Avaya-acquisition Sipera, Sequoia start-up Syndesis, Subex, CoManage, and others. He has driven joint marketing programs and go-to-market initiatives with iconic industry leaders including Microsoft, IBM, GE, AT&T, Oracle, Comcast, Cisco, Ciena and Samsung.

Boone holds an MBA in Business Strategy from the WP Carey School of Business at Arizona State University and completed the Competitive Marketing Strategy Program at the Wharton School at the University of Pennsylvania.

In his personal time, Boone enjoys travel, fine food and wine, mountain biking, playing and listening to music, and movies.

Author:
Matt Sommi
Senior Vice President

Based in Philadelphia, Matt helps lead Bespoke’s client engagement efforts across the firm’s suite of services.

Prior to joining Bespoke, Matt spent 8 years in research and business development at GLG, supporting private equity due diligence efforts and building relationships with GLG’s middle market private equity firms.

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Bucking the Trend: How Data-Driven, Tailored Search Drives Growth in Today’s Market

by Eric Walczykowski, Adam Boone | Jun 13, 2024 | Blog

Bucking the Trend: How Data-Driven, Tailored Search Drives Growth in Today’s Market

By Eric Walczykowski, Adam Boone

Executive search has entered a new phase of evolution.

While old-school search firms across the industry continue to ply the same old trade they always have, a new breed of search is producing outsized returns for clients.

At Bespoke Partners, we are at the forefront of this evolution.

We are leveraging data-driven, tailored search methods that not only buck the trend but also drive unprecedented growth for our clients.

Market headwinds persist across a wide range of industries. But unlike search firms that have been suffering from slowdowns in company hiring, our team achieved record commercial results in the first quarter of 2024. This is a testament to the effectiveness of our tailored, data-driven search process.

Because we specialize in executive search for private equity backed firms, we know better than any other firm which leaders will have the biggest impact on value creation.

Don’t miss our Tailored Talent vodcast next week about how technology and shifting markets are disrupting executive search. Ravi Sarin, co-founder of AEA Growth, will join us for the session and you can register here.

Private Equity Talent Focus

Last week, Bain & Company released a new report showing that annualized deal and exit rate for the private equity sector in 2024 is flat compared to 2023. The analysts say that this may indicate that deals and exits have found a bottom to the slowdown that started in 2022.

The analysts further reported that the number of portfolio companies held by private equity firms has doubled compared to 10 years ago, because of the slowdown in exits. The overweight condition of the portfolio severely strains resources of the firms to help portfolio teams execute most effectively on value creation.

This of course is why high quality management talent in the portfolio company has become of overriding importance.

“How effective are operating teams at working with management to drive performance?” the analysts wrote. “Do teams have the right resources and capabilities to succeed, and, if not, where will you get them?”

Breaking Records, Setting New Standards

The Bain report provides hard evidence that underscores the fact that talent is now the primary lever of value creation.

And, in fact, Bespoke’s numbers tell the same story. While others in the executive search space have been struggling, Bespoke is having a banner year because of the pressing need to optimize talent in private equity portfolios.

Our results so far:

31%

Growth Rate
Year-over-Year

500%

Increase in our Partners
Since 2021

4,200%

Candidate Network Growth Rate
Since 2021

100%

Headcount Growth
Since 2021

260%

Increase in Clients
Since 2020

These results stem from our team’s singular focus on delivering white-glove, finetuned service that precisely meets the strategic talent needs of our software and SaaS clients.

Here’s How We Do It:

Comprehensive Market Visibility:

We conduct ongoing, in-depth analysis of the market landscape, identifying key trends, talent availability, and opportunities specific to each client’s sector in software and SaaS. We use this knowledge to anticipate the talent needs for executing on value creation plans and the investment thesis. We also understand who will soon come on the market and will be looking for a new position, to give our clients a first-mover advantage on newly available talent.

Functional Focus:

Our team is organized by functional role focus. That’s why we have the most in-depth networks and best understanding of which executives are the best fit for which companies in each functional area. A traditional search firm that tries to do everything for everyone might get lucky and find you a good CFO. In our case, we know all the CFOs who can execute for you, which ones are open to new opportunities, and who is going to be the best fit for your company.

Data-Driven Search:

We maintain an evergreen talent knowledge platform that tracks hundreds of thousands of executives who have led teams in software and SaaS, supported by an analytics process that parses candidate backgrounds and cross-references against multiple sources for validation. The result? Unmatched talent market visibility that is second to none.

Introducing Our Alliances Program and Leader Community

Earlier this year, we launched two major initiatives designed to further enhance the value we provide to our clients: the Alliances Program and the Leader Community.

Alliances Program

This program creates strategic partnerships with industry experts and firms who have proven solutions for enhancing value creation plans in private equity portfolio companies. By leveraging these alliances, we can provide our clients with unparalleled insights and access to top-tier talent.

Leader Community

The Bespoke Leader Community is a peer network of high-caliber executives who have been through our rigorous vetting process or have been central to the success of our clients’ companies. The Leader Community is arranged by functional focus and provides members with curated access to best practice guides and advisors who boost execution and impact of these leaders. We formed the Leader Community because our commitment to client success does not end at executive placement. We do everything we can to ensure our placed leaders and the clients hiring them enjoyed outsized success.

Driving Value Creation

Our innovative approach to executive search is not just about filling positions; it’s about driving value creation for our clients. That means making sure our placed executives will be successful:

Accelerating Growth:

By placing leaders who are perfectly aligned with our clients’ strategic goals, we help accelerate their growth trajectories and actually shorten hold periods for private equity sponsors.

Enhancing Organizational Performance:

The right executive talent can transform an organization. Our placements lead to improved performance across key metrics, from financial results to employee engagement and customer satisfaction. In tune with today’s focus on lean growth objectives, our placed leaders are driving capital-efficient growth that maximizes company value.

Supporting Long-Term Success:

Our laser-like focus on functional roles and deep validation of candidate skillsets and backgrounds means that the leaders we place are equipped to drive long-term success with a higher likelihood of achieving the investment thesis.

Leading the Way

Today’s market may be challenging for some, but with the right strategies and the right partners, it’s possible to not just survive but thrive. At Bespoke Partners, we’re leading the way with our data-driven, tailored search methods, and we invite you to join us on this journey to success.

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Author:
Adam Boone
Chief Marketing Officer

In his personal time, Boone enjoys travel, fine food and wine, mountain biking, playing and listening to music, and movies.

Empowering HR with AI: Maximizing Benefits and Overcoming Biases

by Alex Bossetta, Eric Walczykowski | Jun 11, 2024 | Blog

Empowering HR with AI: Maximizing Benefits and Overcoming Biases

Authored By Alex Bossetta, Eric Walczykowski

Artificial Intelligence (AI) is increasingly becoming a game-changer in various sectors, and Human Resources (HR) is no exception. As technology advances, AI’s role in HR has grown exponentially, bringing about significant improvements in efficiency and productivity. AI comes with its own set of challenges and risks that organizations must navigate carefully.

AI’s introduction into HR operations has led to notable enhancements in efficiency of HR tasks. For instance, consultants using AI have completed 12% more tasks, demonstrating AI’s capability to boost productivity. Notably, AI tools have been especially beneficial for lower performers, leveling the playing field by providing them the support needed to enhance their output significantly. Over the past eight years, the adoption of AI in HR has surged by over 50%, a testament to its growing importance and the benefits it offers.

Addressing the Inherent Bias in AI

Despite the advantages, AI in HR is not without its pitfalls. One of the most significant concerns cited by HR professionals in surveys is the inherent bias found in the massive amounts of historical data and the algorithms themselves. AI systems learn from existing data, and if this data reflects past prejudices, the AI’s decisions will likely do the same. This unchecked bias can lead to discriminatory practices in hiring, promotions, and other critical HR functions.

A survey (Fabrizio Dell’Acqua et al, Harvard Business, Sep 2023) reveals that more than one-third of Chief Human Resources Officers (CHROs) are not confident that their algorithms are free from institutionalizing bias. This lack of confidence underscores the need for vigilant oversight and regular audits of AI tools to ensure they do not perpetuate or create unfair practices.

The Risks of Inadequate Monitoring

The potential for bias is not the only risk associated with the deployment of AI in HR. Lack of proper monitoring can lead to several other significant issues:

Regulatory Compliance:

HR departments must comply with various regulatory requirements governing employment practices. Failure to monitor AI applications can result in non-compliance with these laws, potentially exposing the organization to lawsuits, fines, and reputational damage.

Mistrust Among Employees:

If employees feel that AI-driven decisions are made without adequate human oversight, it can lead to mistrust and dissatisfaction. This is particularly damaging as it can affect employee morale and productivity.

Resource Constraints:

Many organizations lack the internal resources needed to monitor AI technologies effectively. This shortage can hinder the integration of AI systems with existing HR software and databases, leading to inefficiencies and errors in managing employee data applications can result in non-compliance with these laws, potentially exposing the organization to lawsuits, fines, and reputational damage.

The Challenge of Keeping AI Relevant

Another significant challenge is keeping AI-driven processes up to date. Without the capability to refine these systems continually, there’s a risk that AI applications might become outdated. This obsolescence can lead to inefficiencies and decisions that are out of step with current best practices or business needs.

The rapid evolution of AI technology means that continual investment in both technology and training is essential. Organizations need to ensure that their HR teams are not only equipped with the latest AI tools but are also proficient in using these tools effectively.

Moving Forward:
Best Practices for Integrating AI in HR

Given the mixed bag of tremendous benefits and significant risks, here are some best practices that organizations can adopt to make the most out of AI in HR, based on a range of steps advocated by HR and compliance organizations:

Continuous Monitoring and Auditing:
Regularly check AI systems to ensure they are free from bias and are operating as intended. This includes auditing the data used to train AI models and the decisions made by these models.

Enhanced Transparency:
Make the AI decision-making process transparent to the employees to build trust and acceptance. Understanding how decisions are made can also help in identifying any potential biases or errors in the process.

Investment in Training:
Equip HR professionals with the skills and knowledge to use AI tools effectively and ethically. This investment extends to training AI systems with up-to-date and unbiased data.

Regulatory Compliance:
Ensure that all AI tools comply with the latest HR laws and regulations to avoid legal issues.

Resource Allocation:
Allocate sufficient resources to integrate and monitor AI systems within HR processes. This includes technical resources to integrate systems and human resources to manage and oversee these systems.

Harnessing AI’s Power

As organizations continue to navigate the complexities of AI in HR, the focus should be on harnessing AI’s power to enhance HR functions while vigilantly mitigating its risks. This balanced approach will enable HR departments to leverage AI effectively, ensuring fairness and efficiency in their operations.

Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors.

Our dedicated HR and People practice has successfully completed over 100 placements in portfolio companies. Our placed HR and People leaders have created $4.8B in enterprise value created via their work.

Find out more about Bespoke Partners HR and People practice: People & Talent Leadership Practice – Bespoke Partners

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Alexandra Bossetta
Partner, Head of People & Talent Practice

As Partner, Alex is currently the practice lead for the firm’s HR, People and Talent practice; co-lead of the firm’s Go-To-Market practice and Head of the Austin office. She leads executive recruitment and assessment for high-growth, PE-backed and public software organizations, placing leaders in CEO, President/ COO, Sales and Marketing, and HR/ Talent leadership roles. During her tenure, she has successfully completed 80+ searches including multiple team builds.

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

The Promising Benefits of AI in HR (source: Source: Navigating the Jagged Technological Frontier (Fabrizio Dell’Acqua et al, Harvard Business, Sep 2023) and Source: Fairnow, AI in HR LinkedIn Webinar April 2024 )

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Introducing Our New Employee Value Proposition: Unlock Your Potential at Bespoke

by Julie Catalano | Jun 4, 2024 | Blog, EVP

Introducing Our New Employee Value Proposition: Unlock Your Potential at Bespoke

Authored By Julie Catalano

At Bespoke, we believe that the foundation of every successful company is its people. This belief drives our commitment to nurturing exceptional talent through a supportive and rewarding environment. Today, we are thrilled to unveil our new Employee Value Proposition (EVP):

“Unlock Your Potential at Bespoke: Where Your Career Thrives.”

Why an EVP is Essential for Your Company’s Success

An EVP is the cornerstone of a company’s identity and culture. It’s what sets you apart from competitors in attracting and retaining the best talent. For our clients, where innovation and speed are critical, having the right leaders in place can dramatically accelerate business growth and value creation.

Attracting the Right Talent

An effective EVP clearly communicates what a firm stands for and what it offers its employees beyond the paycheck. This is particularly crucial for our clients, where competition for top talent can be fierce. A well-crafted EVP helps potential employees see the unique benefits of working with your firm and aligns their aspirations with your company’s goals.

Building Your Brand

A strong EVP also enhances your company’s brand. It showcases your firm as a desirable place to work, which can increase client trust and satisfaction. Companies known for their positive culture and employee satisfaction often see higher loyalty and engagement rates, which translate into better customer experiences and business outcomes. But increasingly, a Chief Revenue Officer is assigned accountability for the entire chain of opportunity generation to closure. Chief Customer Success Officers are likewise increasingly common, with the responsibility for ensuring clients have superior experience consuming the company’s products or services and renew their subscriptions.

Driving Value Creation

For our clients in the private equity backed sector, talent is a key lever for value creation. The right C-suite leaders not only steer the company towards its strategic goals but also inspire innovation, efficiency, and growth. An EVP that resonates with high-caliber executives can make the difference between a company that performs well and one that exceeds all expectations.

Strategic Talent Development Drives Business Value

What’s New at Bespoke?

Our updated EVP centers on five key areas:

Total Rewards Beyond Compare: We offer competitive benefits, from health and welfare to performance incentives, designed to outperform industry benchmarks.

Resource Management Freedom:
We enable our leaders to focus on what they do best, unburdened by extraneous tasks.

Unmatched Support System:
From our Functional Pod model to personalized coaching, we provide support that empowers our team.

Commitment to Diversity and Inclusion: We foster an inclusive environment that values every voice and perspective.

Sustainability and Responsibility: Our operations are committed to ethical practices and positive societal impact.

Join Us

Unlock your potential with us and see where your career at Bespoke can take you. Visit our Careers Page to learn more about life at Bespoke and discover how you can craft your path to success.

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Julie Catalano
Chief People Officer

Julie brings more than 20 years of senior leadership in human resources, organizational culture, and business strategy. Prior to Bespoke, she served as Vice President, Global Human Resources at Vertex Inc. and has held multiple key leadership roles across the HR disciplines at Vanguard.

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GTM’s Shifting Role in the Org Chart: Navigating Organizational Development within Go-to-Market Teams

by Tess Fischer | May 28, 2024 | Blog

GTM’s Shifting Role in the Org Chart: Navigating Organizational Development within Go-to-Market Teams

Authored By Tess Fischer

When you look at the role each function plays in a Private Equity backed software and SaaS organization, Go-to-Market (GTM) isn’t just a part of the game—it’s central to how you win it.

As companies strive to align their sales, marketing, and product development strategies more closely, the role of GTM teams within the organizational structure has seen significant shifts. We see a strong uptick in clients seeking guidance on structuring their GTM functions to achieve optimal organizational design and performance. Here’s our playbook for redefining GTM roles and responsibilities to better drive value creation.

Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors. Our dedicated GTM practice has successfully completed over 290+ GTM placements in portfolio companies. Our placed leaders have been part of 23+ different company exits, with $43B in enterprise value created via their work. And we did all this while keeping our days to close a search sub 100 and a client NPS score of 9.65.

Pinning Down Scope and Responsibilities

One of the primary considerations in redefining the GTM function is clearly establishing its scope. We’re talking about pinpointing the exact functions GTM leaders will manage and what their management responsibilities will look like. Understanding the scope involves knowing which teams the GTM candidate will lead, the size of these teams, and what success looks like for each team. Getting this straight from the get-go is crucial to ensure that the selected candidate has a proven track record of leading similar teams successfully.
For example, a traditional approach is to have a marketing leader focused on top of funnel demand generation and a sales leader attending to advancing deals in the pipeline.

But increasingly, a Chief Revenue Officer is assigned accountability for the entire chain of opportunity generation to closure. Chief Customer Success Officers are likewise increasingly common, with the responsibility for ensuring clients have superior experience consuming the company’s products or services and renew their subscriptions.

Integration with Executive Leadership

Another critical area we are digging into is the makeup of the current Executive Leadership Team (ELT) and which existing GTM leaders are executing on which areas. If a new CRO is brought on board, it’s essential to determine the continued involvement of other GTM leaders like the head of marketing. Figuring this out prevents role overlap and sets the stage for smooth collaboration and increased efficiency at the top.

Daily Operations and Market Focus

Understanding the daily responsibilities and the operational environment of the GTM leader is vital. We zero in on the current sales velocity, vertical focus and sales motion of B2B or B2C. Additionally, articulating the firm’s overall investment thesis and value creation plan is also crucial for placing the best-fitting candidate for the role. These details help tailor the search to identify and place a leader who not only fits the role but is also capable of driving the company’s strategic objectives in its specific market context.

Ideal Candidate Profile

With the groundwork laid, we can direct the hiring committee towards the ideal candidate archetype. Depending on the company’s goals and the specifics of the role, this could be a CRO, Chief Sales Officer (CSO), or Chief Marketing Officer (CMO), or some combination. Each role comes with distinct responsibilities but requires a leader capable of integrating sales, marketing, and client retention strategies to drive business growth.

Examples of Modern GTM Hierarchies

From our experience with various clients, we’ve observed some innovative GTM hierarchies, such as:

Business Development:

Typically rolls up to the CSO or CMO, depending on the company’s focus on product-led versus market-led strategies.

Support and Success:

These functions are generally integrated into Customer Success to enhance customer retention and satisfaction.

Revenue Operations:

Often found under the CRO or CFO, this function ensures that revenue streams are optimized and that the company’s financial strategies align with its market activities.

Services and Account Management:

Usually reports to the CRO, focusing on maintaining and expanding client relationships and ensuring service delivery aligns with client expectations.

Planning for Growth

As companies continue to navigate the complexities of today’s markets, the role of GTM teams within the organizational chart is increasingly pivotal. By clearly defining roles, ensuring integration with leadership, focusing on operational specifics, and adapting to evolving market demands, companies can position their GTM teams as crucial drivers of growth and innovation. For those looking to rethink their GTM game, these insights are your ticket to building a team that’s ready to take on today’s challenges and tomorrow’s opportunities.

Want to learn more about Bespoke’s industry leading search services for GTM executive search?

Head to Growth Driving Go-to-Market Leaders – Bespoke Partners for more information and contact our Go to Market Practice team to find out how we can help navigate your next GTM hire.

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Tess Fischer
Partner
Head of Go-to-Market Practice

Tess brings over 18 years of experience building and managing networks, clients and teams in private equity executive recruiting and human capital management. She has worked in and around private equity her entire career and is driven by an interest in people, organizations and the desire to build relationships that deliver results.

Held senior roles at Morgan Samuels, Vista Consulting Group, Gerson Lehrman Group
170+ career placements resulting in 23+ exits worth over $23 billion in value

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Change Management: Key Factors for PE-Backed Executives as Deal Flow is on the Rise

by Eric Walczykowski | May 23, 2024 | Alliance, Blog

Change Management: Key Factors for PE-Backed Executives as Deal Flow is on the Rise

Authored By Eric Walczykowski

Signs are that the second half of the year may see an increase in deal volume for the private equity sector. If that takes place, the shift will mean a wide range of changes for companies with private equity sponsors.

Change management as a discipline can help the leaders of these companies and the private equity teams working with them to navigate these changes.

I sat down recently to discuss this with Leslie Beale, the CEO of Profusion Strategies, one of our key alliance partners in leadership development and executive coaching.

Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors.

You can see the full interview with Leslie in our Tailored Talent vodcast series, here: https://www.bespokepartners.com/tailored-talent-private-equity-talent-trends-interview-archives/

Here is a summarized Q&A of my conversation with Leslie about leadership strategies for Executives during the increasingly pressing push for exits.

Eric: Given your work with leaders in the private equity space, what trends do you see on the horizon as we see more deal activity and dry powder being put to work?

Leslie: Faster paced change. Organizations and leaders are already dealing with a pace of change they aren’t really equipped to handle. That is something that needs to be on the radar screen for key leaders in private equity as they’re moving towards more deal flow, more change for the organizations in their span of influence. Just know that your leaders are already a little bit stressed and dealing with more complexity than they’ve dealt with in the past.

Eric: When you think about the increase in the pace of change, what are some key things that leaders need to think about as that pace picks up?

Leslie: For a leader to show up and be an asset to their organization, to their team, they really need to be focused on their own self-care and their own self-awareness. So, one of the things that we know is when the level of complexity around us increases, we all start to respond from a place of insecurity and uncertainty. Leaders need to know themselves well enough to understand how they show up when the pressure’s on and some of the areas that they may need to soften. They also need to really tune into their own ability to be flexible, tap into their own stores for resilience and model those sorts of adaptability behaviors. We forget that people are looking to us as leaders. So, really showing up in that place of adaptability and resilience is crucially important.

Eric: Part of keeping the organization on task with the objective is ensuring that the people show up as their best self. I think the only way to do that effectively is to be present and calm, even though things may be crumbling or the obstacles in front of you are huge. Well, it seems like change management is a major theme for success, particularly in private equity. What is at risk in a sale or acquisition if change is not handled well?

Leslie: The first thing that’s at risk is that failed or poorly managed change can have a direct impact on valuation or the bottom line. There’s a real dollar and cents impact from failed change management. What we typically think of as the biggest impact from failed change is the people side of the house. And on that side, you’re looking at things like frustration, burnout, challenges with trust. To me, the biggest impact is that every time we fail to execute change well, we’re teaching ourselves and the organization “we can’t do change” so we adopt that mindset and that identity. And that means that the next time you need to make an important shift within the business, we’re less resilient. That sort of learned incompetence is the biggest pitfall that goes unnoticed. I’ll see organizations, five to seven years later saying they’re just not very good at change. And if we trace it back, there’s been a big, missed opportunity to execute change well, somewhere in their past.

Eric: As we talk about acquisitions in general, private equity firms are under significant pressure to exit some of their portfolio companies. When you think about the stress that an acquisition puts on the leadership team and the entire organization, I think it’s important, to lean into an outside resource, an executive coach, someone steeped in leadership development that can help you remain calm in the stress of an acquisition. Wouldn’t you agree?

Leslie:

It is important for everybody to have an escape hatch, a place where they can go. As leaders, one of the things we don’t get is an opportunity to say, I’m stressed. I need to tap out. I’m not showing up as my best. When you’re in that space as a leader, that has a cascading effect on everybody around you. And so, being able to take those emotions, needs and perspectives outside of the organization and have that same sounding board is important. And it keeps the stress from spilling over unnecessarily into the rest of the organization.

Eric: What skills do executive leaders need to focus on to be an asset to their organization during high pressure times like a sale or an acquisition?

Leslie:

We’ve talked about modeling adaptability, agility, and resilience. Managing your own stress levels, leaning into your own self-awareness so that you know when you don’t show up as your best self, which alone is an asset. The thing we haven’t touched on is communication skills. Executives tend to have a blind spot in that they are often in meetings and having conversations that employees aren’t privy to, so there’s a tendency as leaders to get worn out with an idea, and not communicate it to our teams fully enough.

I was meeting with a CEO the other day and she said, “When I’m worn out and think I’m communicating too much, I know I’m just starting to communicate enough.” And I think that’s well said because we spend a lot of time planning communication, but our employees don’t hear all that planning. We need to over communicate and lean into listening. For change to be effective, for people to show up around you in the best way possible, it takes trust, which is established through listening.

Eric: At Bespoke Partners, our executive leadership team have all done a Hogan assessment. So, we know our strengths, but also know how we show up under stress. And as the CEO of the organization, I recognize when my team members show up under stress and can manage through that.

For communication it is that realization of, we may be planning for this communication, but we are taking for granted the fact that we’ve been involved in every step. What most leaders haven’t really looked at is how these plans are going to be communicated and how the message might be received. So, I think that’s very valuable advice, particularly as we think about turbulent times in the market and this heightened awareness in 2024 around acquisitions.

About Profusion Strategies

The mission of Profusion Strategies is to equip leaders and teams with actionable skills that will put points on the board today while ensuring blue-chip success tomorrow.

Connect with Profusion Strategies to learn more:

About Bespoke Partners

Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.

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Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Featuring:
Leslie Beale, PCC, JD
CEO, Profusion Strategies

About Leslie

Rich background in leadership development & executive coaching
Expertise in navigating the challenges of rapid organizational change and fostering resilience and adaptability among leaders

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