How on-demand talent acquisition empowers PE firms to drive portfolio company alpha

How on-demand talent acquisition empowers PE firms to drive portfolio company alpha

The private equity industry, once fueled by favorable economic conditions, now finds itself navigating through challenging headwinds. Rising interest rates, inflation, and a slumbering IPO market have triggered a slowdown in private equity deal volume.

The first quarter of 2023 marked a new low for private equity M&A activity since 2020, with overall dealmaking reaching a decade-low. Uncertainty has been looming large, forcing dealmakers to proceed with greater caution.

To navigate these rough economic conditions, proactive PE firms are focusing on driving operational improvements and cost savings across their portfolio companies. 

Acquiring top-tier talent to fuel strategic growth – while controlling costs and mitigating risk – has emerged as a priority for PE firms. 

On-demand talent acquisition offers PE firms a solution to this challenge. It allows them to rapidly source, recruit, and onboard the right talent for their portfolio companies – at a fraction of the cost of traditional recruitment models.

Driving Operational Excellence: Maximizing Value and Reducing Costs

67% of PE investors anticipate talent recruitment to be their primary hurdle in the upcoming year. To address this challenge, PE firms often turn to consulting firms to bridge talent gaps and help their portcos achieve their business goals. 

However, these engagements typically involve hefty fees and inflexible contract terms, which can strain the portco’s budgets and limit its ability to respond quickly to rapidly evolving business needs, especially in times of uncertainty. 

On-demand talent platforms offer a cost-effective, flexible alternative by:

  • Allowing you to access former MBB, Big 4, and Fortune 500 talent the without the brand name consulting firm prices
  • Enabling you to assess and onboard one or multiple independent experts to address specific skill gaps. In short, no bloated project teams
  • Offering flexible contract terms that ensure you only pay for the work delivered, driving efficient resource allocation and cost reduction.

Swift Talent Access: Accelerating Growth Through Timely Decisions

Private equity firms operate in a fast-paced environment where timely talent decisions directly impact the value of their portfolio companies.

And in this race against time, delays can carry dire consequences. According to a recent survey, a staggering 92% of respondents acknowledged that waiting too long to address talent issues led to underperformance in portfolio companies over the past five years. In fact, nearly 70% of respondents admitted that this happened in at least half of their deals.

This translates to lost revenue, value leakage across the portfolio, and a potential stain in the firm’s performance.

Given these stakes, speedy talent access is critical to driving better outcomes. 

On-demand talent platforms allow you to build a pipeline of highly-skilled independent experts across critical business functions and quickly help you solve the toughest business problems at your portfolio companies.

The result? Increased agility, faster time-to-value, and more accurate talent decisions -- all of which help PE firms drive greater value across their portfolio companies.

Unlocking Specialized Expertise: Fueling Success with Targeted Skills

Over half (54%) of PE funds and portfolio company leaders anticipate difficulties in achieving business goals and identified access to skilled individuals in crucial areas as a top challenge. 

These findings highlight the broader problem private equity funds and their portfolio companies face — a struggle to find professionals with advanced financial and leadership skillsets necessary to execute their value creation plans effectively.

On-demand talent acquisition presents a compelling answer to this challenge by granting PE firms direct access to a vast network of pre-vetted professionals with the required backgrounds, skill sets, and credentials. Specifically, these platforms provide:

  • An opportunity to source more-specialized skills such as M&A and post-merger integration consulting, transaction advisory services, regulatory compliance, and IPO readiness.
  • Exposure to a comprehensive pool of fast-track financial talent, from project managers and analysts to controllers and CFOs.
  • An efficient way to secure executive-level professionals with the experience to drive operations and transformation in portfolio companies.

Whether bringing in a seasoned interim CFO to ensure business continuity and optimize financial operations or securing a visionary leader to spearhead growth strategies, on-demand talent solutions enable PE Funds to quickly source the precise expertise they need to hit key performance milestones.

Final Thoughts

On-demand talent acquisition provides PE firms with a powerful triple-win opportunity—the ability to accelerate time-to-value, secure specialized expertise, and reduce cost savings. 

By leveraging on-demand talent, PE firms can swiftly identify and onboard the right professionals at critical stages of the investment lifecycle, driving accelerated growth and maximizing returns.

Explore a real-world example of how a PE firm utilized on-demand talent acquisition model to drive value creation at their portfolio companies.

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