Buyout Shops Nab Military Talent

  • Blackstone taps Wesley Clark as adviser
  • KKR forms think tank with David Petraeus
  • Blackstone seeks to hire 50,000 veterans

Hiring employees with military training also could benefit deal-makers and their portfolio companies further down the ranks, the experts told Buyouts after former NATO Supreme Allied Commander Wesley Clark has joined The Blackstone Group LP as a senior adviser.

That appointment came just weeks after Kohlberg Kravis Roberts & Co announced the appointment of another storied military commander, former CIA Director David Petraeus as chairman of a newly formed think tank.

“People who rise to the top in meritocracies like the U.S. military, especially top roles like Clark and Petraeus, are very skilled at broad thinking, answering questions like why something makes sense,” said Pete Metzger, a vice chairman of CTPartners, a Washington, D.C.-based executive recruiting firm. “They have made billion-dollar decisions in other areas with great consequences.”

Clark, a four-star general who retired from the U.S. Army in 2000, joined Blackstone as a senior adviser on energy investments, sister news service Reuters reported. He will advise Blackstone’s $2.5 billion energy-dedicated buyout fund and its $16.7 billion diversified private equity fund on opportunities in the energy sector, the New York-based firm said. Clark also will sit on the board of Fisterra Energy, a Blackstone company formed this year to develop power projects in Latin America, Europe and the Middle East.

Petraeus, for his part, will serve as chairman of the newly created KKR Global Institute, which will study the investment implications of global macroeconomic, social and geopolitical issues.

Clearly, part of the attraction of marquee military leaders is simply the name recognition that they can bring to the often shadowy world of buyouts. In addition, the recruiters said, a globe-spanning career can bring such executives an extensive knowledge of companies and conflicts at home and abroad, the kind of Rolodex that could be quite attractive to big buyout shops hunting for a competitive edge in doing deals.

But more important is the ability to analyze difficult situations and make crucial decisions, which are abilities that transcend the battlefield or the boardroom, said Geoff Smart, the chairman and CEO of ghSMART & Company Inc., an executive personnel consulting firm based in Denver. “If a leader fits a situation and has a relevant skill set, then it’s a good hiring decision.”

Technical expertise is often less important than broader analytical skills, Smart said. His firm recently surveyed 145 private equity investors, quizzing them about the relative importance of 30 different skill sets. At the bottom of the list, Smart said, the least important skills were financial and accounting expertise.

At the top of the list: Listening skills, recruiting, qualitative analysis and advisory skills. Laying aside the question of industry knowledge, the ability to grasp a broad-scale scenario and to develop strategies for addressing it can be key, Smart said. “These guys are master strategists.”

Both of these newly minted buyout executives have had long and varied military careers, each with their own bumps. Clark came to prominence when he led NATO’s operations during the Kosovo war in the late 1990s, Reuters reported. After he retired, he tried, but failed, to win the Democratic nomination for the 2004 presidential election. And Clark has held a number of corporate board positions, including at biomass energy producer Rentech Inc and oil and gas exploration and production company BNK Petroleum Inc.

Petraeus was credited with helping pull Iraq from the brink of an all-out civil war as commander there and President Barack Obama turned to him to lead U.S. forces in Afghanistan before moving to him to the CIA in 2011. But Petraeus was forced out as head of the CIA in November, after he admitted he had engaged in an extramarital affair, involving his biographer Paula Broadwell, an Army reserve intelligence officer who was also married.

To be sure, other former military men have found second careers in private equity, dating back at least as far as 1989, when Frank Carlucci, a former secretary of defense, took a position at The Carlyle Group. He retired in 2005 as chairman emeritus. Likewise, former President George H.W. Bush spent five years at Carlyle, as a senior advisor on Asian matters, while his vice president, Dan Quayle, found a place beyond politics at Cerberus Capital Management.

And at the intersection of the military, politics and government, perhaps the most prominent recent example was Gabriel Gomez, a former Navy SEAL who took a post at the Boston buyout shop Advent International, where he spent some nine years before resigning in March to run for the U.S. Senate seat vacated when Sen. John Kerry became secretary of state. (Gomez lost that special election in June to U.S. Rep. Edward Markey.)

But it is not only at the top where military experience can prove appealing to buyout shops. The Blackstone Group announced in April that it was “Joining Forces” in a national initiative to encourage private sector hiring of America’s veterans. Blackstone said it plans to hire 50,000 veterans across its portfolio of companies over the next five years.

“Veterans embody many of the skills, talents and personal attributes we look for in employees. They have high integrity; they are collaborative, hardworking and they are able to adapt to dynamic situations,” said Steve Schwarzman, Blackstone’s chairman, CEO and co-founder, in a statement announcing the firm’s participation in that Obama administration initiative. “Veterans are reliable, motivated and trustworthy employees — the type of people that will help Blackstone’s portfolio companies succeed and grow.”

Steve Gelsi and Reuters News contributed to this report.