How to Stand Out in the War for Capital with Talent Development

On this episode of the Private Equity Value Creation Podcast, Shiv Narayanan interviews Daniel Pianko , Managing Director at Achieve Partners and host of the Better Money Better World podcast.

Daniel and Shiv discuss how Achieve Partners is using talent development to maximize portfolio company growth, unlock revenue potential, and make positive change for employees and their communities. Learn how Achieve Partners' alternative approach is helping set them apart from other firms and connect them with passionate investors and founders.

Why Impact Investing Can Help You Win the War For Capital

Impact investing has emerged as one of the fastest-growing segments of the financial market, driven by a fundamental shift in how capital is being allocated. For LPs and investors, it's no longer just about generating financial returns—it's also about making investments that align with personal values and create a positive impact on society. This evolution in mindset is transforming the private equity landscape as firms that adopt an impact-driven approach gain a significant competitive edge.

Two primary forces are driving the rise of impact investing among LPs:

1. Value Alignment: More LPs are seeking investments that reflect their values and contribute to a better world, whether by addressing climate change, promoting social equity, or supporting sustainable business practices.
2. Profit Potential: Many LPs are realizing that investing with a purpose can actually enhance profitability.

In today's market, there's a "war for capital," with investors having more options than ever before. There's also a heightened awareness that the way individuals choose to spend their money—whether through the products they buy or the funds they invest in—has a direct impact on shaping society.

Private equity firms that can clearly articulate an impact-driven approach stand out in this competitive landscape. They provide LPs with an opportunity to participate in investments that not only generate strong returns but also contribute to a broader mission of social and environmental betterment. This positions impact-focused firms as attractive partners for LPs looking to make a difference.

How Using Talent Development as a Growth Lever Impacts Your TAM

Being selective about your investments may limit your TAM, but selectivity can actually open doors to sectors where value creation is most attainable. For example, by targeting areas of the economy that lack trained professionals or specialized expertise, private equity firms can uncover untapped potential and realize outsized returns.

For example, consider how certain sectors face a shortage of skilled talent or require specialized training that is difficult to acquire. When a private equity firm positions itself as an expert in nurturing and developing this kind of human capital, its market opportunities expand significantly. This approach allows firms to focus on niches where they can provide significant value and achieve rapid growth.

By prioritizing building businesses that are well-equipped for growth and success in their respective fields, firms can refine their TAM, making room for targeted, high-impact investments that drive both immediate and long-term value.

Standing Out to LPs: The Value of Deep Industry Expertise

The traditional private equity model often involves casting a wide net: evaluating thousands of potential deals, signing numerous NDAs, and ultimately closing a few that seem to fit. However, some firms take a different route, opting to focus deeply on select industries, cultivating expertise, and building meaningful relationships with founders. This alternative strategy can be highly compelling to LPs, especially in a market environment that increasingly rewards specialization and strategic partnerships.

When pitching to LPs, the message is simple: investing with experts who possess a deep understanding of specific sectors is a more reliable path to driving value. By focusing on areas where the firm can make a tangible difference, the investment approach becomes more than just capital allocation—it becomes a process of value creation.

Rather than relying on the classic "deal funnel"—reviewing thousands of teasers and sifting through hundreds of NDAs—the relationship-centric model involves building deep connections with industry experts and passionate founders. By doing so, the firm gains a more nuanced understanding of the market and potential investment opportunities, allowing for more informed decisions and a greater chance of success.

This relationship-driven approach is about much more than simply identifying companies to invest in. It's about working alongside founders who are equally passionate about the issues that matter most, and fostering a collaborative environment that facilitates organic growth. Such partnerships often lead to more opportunities than a traditional, transactional deal flow model.

An Under Leveraged Way to Increase Your Gross Margin

One of the key factors driving profitability in service firms is the difference between the rate charged to clients and the cost of delivering that service—essentially, the firm's effective hourly rate. Junior employees play a crucial role here, as their compensation is typically lower than that of senior professionals, allowing companies to generate a higher margin on the services they provide. In many cases, junior employees are among the most profitable resources within a service firm.

When a company staffs projects with a mix of junior and senior employees, the overall cost structure becomes more efficient. While junior team members handle tasks that don’t require years of experience, senior team members can focus their time on projects that demand more expertise, and the firm can maintain or even increase the billing rate to clients, thereby expanding its margins.

By implementing a structured training program and nurturing the growth of less experienced employees, companies can see both a short term increase in gross margins and longer term revenue growth by building a team of individuals with deep expertise in their niche.

Check out the full conversation with Daniel ??

Private Equity Value Creation is a podcast about the innovative approaches leading investors, operators, advisors and bankers employ to?drive sustainable growth?and create enterprise value. Hosted by Shiv Narayanan.

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