Next move?

The past year has been a challenging one. After the drying out of debt and the subsequent decrease in buyout activity at the top end of the value chain, the core small- and mid-market began to feel the impact of the credit crunch in a more pronounced manner towards the end of last year. With deal-doers doing very little, a spate of lay-offs unsurprisingly ensued.

The candidate pool has increased dramatically in recent months. "In the first quarter of this year, we received three times the interest in our services than we had over the previous three months - although most originate from the banking sector," says Gail McManus, managing director at London-based PE Recruit.

However, it would be incorrect to assume that a larger pool of candidates makes matching people to jobs easier. It is, in fact, the other way round. "Regardless of the candidate pool, when a private equity or venture capital firm is on the look out for talent they have specific skills in mind," McManus comments. With more potential candidates in the market, finding the "perfect diamond" is extremely difficult.

Open game

It is not just about what skills employers want, but also about what they can offer in exchange. Even in the current market, candidates with the right skills often tend to have several suitors and therefore have the luxury of deciding for whom to work. What factors do they consider when making their decision?

Giovanni Terranova recently joined The Foresight Group as investment director for its Solar Fund, which reached an interim close on EUR40m in November last year. He came from beleaguered Dutch-Belgian bank Fortis, where he worked on project finance for renewable energy projects. "I was looking to move to a more active environment, gain exposure to a wider geography and ultimately be a deal-maker," says Terranova.

To move from a troubled banking institution to an upwardly mobile and expanding venture firm clearly makes sense for someone with a desire to transact deals, but what drew him to Foresight? "The main factors that I considered were the track record - 25 years beats any newcomer; the fact that the fundraising had been completed; and the idea of working on a solar-dedicated fund," Terranova explains.

Kingside castling

Recruitment may increase if a much-hoped-for rise in activity begins to slowly materialise this autumn. Deal originators currently looking after portfolio companies may find themselves back in their original roles. Someone will need to step in to manage the portfolio.

For some private equity houses that will still be facing a tough couple of years ahead, this may not be good news. There is the danger that if they do not ensure that their talent is happy, it will be tempted elsewhere. "When the carry is underwater and other incentives are equally diminished or absent, talent will most certainly jump ship," warns McManus.

Indeed, while the number of potential candidates is larger, the pool of the most sought-after targets has not really changed, and does not necessarily solely comprise those that are currently unemployed. Private equity houses would therefore do well to spend more time looking after their incumbent talent, lest their ranks become diminished.

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