The narrative for attracting top executives is shifting. Many now see PE-backed companies as a "safe harbor." They offer a higher probability of a successful (though smaller) financial exit in a defined timeframe, which is increasingly appealing compared to the "shoot the moon" lottery ticket of a venture-backed company.
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Contrary to conventional wisdom, KP's most successful portfolio companies (like Rippling and Glean) overwhelmingly hire for potential, not past titles. 38 of the top 40 executive roles are filled by individuals reporting to the CEO for the first time, emphasizing adaptability and growth over a long resume.
Mid-market private equity funds build internal value creation teams to support portfolio companies with critical functions like hiring. These teams leverage established processes and headhunter networks, enabling a new CEO to build an executive team far faster than they could alone.
The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.
Rather than competing in crowded auctions, elite private equity firms pursue a differentiated "executive new build" strategy. They partner with proven operators to build new companies from scratch to address a market need, creating proprietary deals that other firms cannot access.
The best private equity talent often leaves large firms encumbered by non-competes, forcing them to operate as independent, deal-by-deal sponsors. LPs who engage at this stage gain access to proven investors years before they have a marketable track record.
Over 80% of TA's investments are proprietary deals with founders who aren't actively selling. Their strategy focuses on convincing profitable, growing businesses to partner to accelerate growth, framing the decision as "partner with us" versus "do nothing." This requires a long-term, relationship-based sourcing model.
The era of generating returns through leverage and multiple expansion is over. Future success in PE will come from driving revenue growth, entering at lower multiples, and adding operational expertise, particularly in the fragmented middle market where these opportunities are more prevalent.
The career arcs of venture and buyout investors differ starkly. VCs rely on networks relevant to young founders, leading some to retire by 45 as connections become stale. In contrast, buyout investing is an apprenticeship business where age and experience are increasingly valued.
The number of founders taking secondary liquidity after their seed round is twice as high as the 2021 peak. While this de-risks the journey for founders, there is almost no parallel liquidity offered to early employees, creating a growing divide in early-stage risk and reward.
Alpine's "People-First" strategy inverts the typical PE model by building a bench of pre-vetted CEOs-in-Residence. This allows them to acquire businesses that lack incumbent management teams, positioning the firm as being in the "talent business" more than the "deals business."