First they take their money; now they take their people. Recruiting investment bankers appears to be the new strategy for the private equity industry as it continues in its relentless efforts to evolve in this new environment.
One strand of the new recruitment drive involves hiring leveraged finance bankers. As debt becomes harder to come by and, more importantly, as many large private equity firms continue to diversify into other asset classes such as debt acquisition, the hiring of ex-leveraged finance bankers is presumably, and ironically, intended to help the firms buy back the loans that the bankers originally arranged for them.
In other instances, the recruitment drive by buyout houses is to help spearhead moves into new investment territories as the hunt for lucrative deals widens.
All this, of course, adds insult to injury as the investment banking community continues to shed thousands of city jobs while an inability to syndicate the back-log of private equity leveraged loans continues to undermine activity.
The list of movement is long – last week it was reported that Claus Peter, head of leverage finance at Societe Generale in Germany, is set to join Germany’s
In the last issue of IFR Buyouts, it was reported that Lorne Somerville, joint global head of telecoms and head of European communications at UBS, was to join
In addition, David Hudson, previously president and chief executive officer of wholesale banking at ING, is to join
All this must be a bitter pill for the investment banking community, but it is not where private equity recruitment ends. According to recruitment consultants, portfolio companies are also being boosted by new hires as private equity backers become increasingly focused on the recruitment process to ensure their businesses survive the economic gloom.
Adrian Hitchenor, CEO of
“Private equity firms are increasingly reviewing the management teams they have backed. In many cases, they are adding additional management to their companies, or in some cases replacing people or changing roles and responsibilities within the existing management team,” he says.
“With such large sums at stake, it makes commercial sense for them to take a proactive position during the recruitment process as it is these appointments that will generate their return on investment,” Hitchenor adds.
“There is a real need for private equity firms to ensure the company they are investing in employing a strong management team. Track record is increasingly important and executive teams who have performed successful exits are in high demand and can command significant packages,” he says.
All this proving that private equity can, as it claims, thrive in any environment.