The Invaluable Role of Non-Executives and Chairs: Navigating the Talent Battle in PE

In the realm of private equity, where resource constraints and scrutiny of the bottom line often go hand in hand, the position of Chief Financial Officers within portfolio companies can be a demanding one. These experienced professionals, boasting impressive CVs filled with years of senior management (often with experience at multi-billion-pound public companies), suddenly find themselves in a different landscape. One where the need for qualified talent is pressing, yet the pressure to limit additional spending is ever-present due to the demands of private equity owners, facing debt obligations in a high-interest-rate environment.

This dilemma is far from isolated.

A recent survey conducted by advisory firm BDO UK LLP underscores the prevalence of this challenge. Almost half (47%) of CFOs in portfolio companies reported being understaffed in critical roles, while a parallel 49% of fund managers and operating partners shared similar concerns about understaffing.

The question arises: How can these portfolio companies bridge the talent gap in a resource-constrained environment? For me, the answer lies in the growing significance of board advisors, non-executive directors, and chairs. These individuals, often praised for their extensive networks and industry insights, are poised to play a pivotal role in alleviating the talent crunch. Here's why:

1. Access to Off-Market Expertise: Board advisors and chairs bring with them a wealth of off-market expertise, acquired through their years of executive experience. They have collaborated with industry leaders, top executives, and subject matter experts who might not be readily available through traditional recruitment channels. This access to a hidden pool of talent can be a game-changer for portfolio companies seeking specialized skills.

2. Enhanced Due Diligence: When board advisors introduce potential candidates, they do so with a superior level of due diligence. Unlike candidates sourced through job boards or recruitment agencies, these recommendations come with a stamp of credibility. Board advisors have firsthand knowledge of their connections' capabilities, work ethic, and cultural fit, reducing the risk associated with new hires.

3. Cost Efficiency: Perhaps one of the most compelling aspects of leveraging board advisors is the absence of exorbitant recruitment fees. Traditional hiring methods often come with substantial costs, eating into a company's budget. In contrast, the introductions facilitated by board advisors are typically free from these financial burdens, making them a cost-effective talent acquisition strategy.

As the battle for talent intensifies, and private equity firms face mounting pressures to optimize their portfolio companies, the role of board advisors becomes increasingly pivotal. Their ability to bridge the talent gap, offer access to hidden expertise, provide rigorous due diligence, and do so without significant financial overhead makes them a valuable asset in today's competitive business landscape.

In the coming years, expect to see a surge in demand for these exceptionally well-connected individuals who serve as the key to unlocking off-market talent and propelling portfolio companies towards success. In the quest for exceptional talent, board advisors are the compass guiding the way, ensuring that companies can secure the expertise they need to thrive in a resource-constrained world.

ABOUT THE AUTHOR

Ian Wright is the CEO and Founder of VirtualNonExecs.com and it's interface for the Private Equity fraternity, the VNXD Operator Network