PE’s Hiring Advice for Merrill: Avoid the Chronically Unlucky
Posted by Tennille Tracy
Was Merrill Lynch looking for a professional CEO finder when it appointed Alberto Cribiore to temporarily fill the shoes of the ousted Stan O’Neal?
As a private-equity veteran – he is founder of Brera Capital Partners and once was co-president of Clayton Dubilier & Rice – Cribiore has probably conducted dozens of searches for executives to run the companies he buys. He now appears to be reprising that role at Merrill.
So then, what do private-equity pros look for in a CEO? That was the first question we put to Jonathan Goldstein, one of the founding partners of Sextant Search Partners, a New York headhunter that regularly recruits executives for PE firms. Here’s our interview with him:
Deal Journal: What qualities do PE fund managers tend to look for in CEOs?Jonathan Goldstein: They look for people who have expertise in the industry and people who can add value quickly. They look for people who can think clearly and act quickly and report information in a concise way. …
We find it is also very important that the person comes not just from a company within the same industry but a company that is of a similar size. That’s because the resources of a $5 billion firm are different from a $500 million firm. For a smaller firm, the CEO has to be hands-on. For a bigger firm, the person has to be good at delegating. So for Merrill Lynch, this has to be somebody very skilled at delegating and be a good leader. Merrill’s investors are going to want to see that.”
DJ: Is there one quality that PE fund managers do not like to see in a CEO?JG: A PE professional once said to me that they don’t like to hire people that are chronically unlucky. They want to see people that have been successful in their lives.”
DJ: Do they prefer to hire executives from within the companies they buy? Or hire outsiders?JG: Sometimes they’ll promote executives from within, absolutely, or move them around. Every possible scenario can be imagined. But by the time they get to us, they have decided that nobody from the inside works. I think private equity firms look to people that they know already - the managers that they’ve worked with before.
DJ: How do PE fund managers differ from other people looking to hire top executives?JG: I think that maybe the most important thing a PE investor is looking for is that the operating manager - the CEO to be - appreciates the time frame that a PE firm works in – the need to move quickly and produce results. It’s a different time frame and a different mentality than CEOs of firms are typically used to.
