How to Get Poached for Private Equity Procurement

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Spend Matters welcomes this guest post from Nick Lazzara and Naseem Malik, of MRA Global Sourcing.

Among the many industries that see an increased value in the procurement function, the private equity world is undeniably at the forefront. This trend hardly comes as a surprise. PE and procurement acutallly make a suitable pair, when you think about it.

Generally speaking, private equity firms buy companies and look to rapidly improve their performance by making them lean, efficient and cost-effective before selling. No group does these things better than modern procurement teams. As a result, one of the first orders of business following the acquisition of a new portfolio company is ensuring the procurement function is staffed with “A players.” And there are specific profiles that best suit these newly formed or revamped groups, PE industry leaders have told us.

At a recent ISM Conference, several PE operating leaders presented their thoughts on how and why they work so closely with procurement. The panel offered useful insights into how these PE firms seek leaders from a wide array of backgrounds and how they position them for success in their portfolio companies.

The Ideal Candidate

The two most popular questions posed to the panel were, “How do you get hired by PE?”, and, “How do you succeed in this dynamic and high pressure environment?" One of the PE executives from The Blackstone Group recounted how during his decade at GE, he was instrumental in providing the training and exposure that made him an attractive candidate for a portfolio company, and how he applied those skills to rise through the ranks and become an operating partner for the firm. Leaders who hail from companies with strong processes and continuous education/training programs tend to have an easier transition into this world.

Another PE executive was quick to point out that candidates looking for a fast payout should consider applying elsewhere. Since PE firms are not public companies with shareholders to please, they can be more patient in realizing positive results. They can also emphasize sustainable, best-in-class sourcing practices, rather than the oft-repeated myth that PE only cares about quick savings.

In fact, PE firms want to attract and hire top-notch practitioners who are committed to not only their long-term interest but of their companies, too. They seek individuals who are not afraid to make rapid-fire decisions and take calculated risks to keep things moving forward. Sourcing process expertise and exceptional collaboration skills across various functions were mentioned as must-haves, as leadership regularly navigates wide-scale transformation. Another valuable attribute that will endear a candidate to the PE world is an affinity for staying abreast of sourcing tools and technology. PE firms are fond of using e-auctions and advanced spend analytics to help drive smart decisions.

The Lure of PE

Why should a talented, high-energy sourcing leader consider a career with private equity companies? PE companies are consistent in their response that the opportunities to make an immediate and long lasting impact, sans the red-tape of larger public companies, make them a desirable place to come advance procurement careers.

PE executives point out that they are readily hiring top talent and setting new employees up to succeed by surrounding them with “A players” and the tools they need, which isn’t always the case with other companies. Top PE firms also usually have the advantage of leveraged purchasing programs across their portfolio companies, as well as memberships with external GPOs like CoreTrust (Blackstone, KKR, TPG and Bain are members) at their fingertips to maximize economies of scale with suppliers.

In terms of career pathing, a successful stint in one portfolio company will raise a practitioner’s visibility throughout the operating companies and allow him to grow by potentially moving into other organizations. For the top performers, this could also mean opportunities within the PE firm itself, which involve much more ownership in the acquisition and integration process, and can offer wildly lucrative investment opportunities at the executive level. From our viewpoint, if you can cut it in PE, you’re able to write your ticket to positions with most other blue chip companies down the road.

The PE-Portfolio Dance

Another factor to consider about employment at a portfolio company is the “dance” that takes place between pleasing the PE firm and the portfolio company's leadership. This balancing act requires finesse and a keen understanding of internal politicking, which as we know is unique to each situation.

Earlier this year, we placed a head of sourcing for a newly created group at a recently acquired large PE-backed retailer. Since this took place early into the integration, the individual heard conflicting messaging about the role throughout the hiring process from the company’s leadership and PE about the makeup of the future procurement organization and its goals. While this kind of disconnect is common, it’s crucial to note that the ultimate direction of the program is dictated by private equity leadership (whether you like it or not). That’s not to say it’s an authoritarianism relationship, but it takes a skilled professional who can diplomatically push back when needed and provide feedback on points of contention. Once respect is earned through strong performance, you’re rewarded with fierce loyalty and autonomy from the firm’s partners.

As the procurement and private equity love affair continues to blossom, there will be a growing number of opportunities for talented professionals to migrate to PE-backed companies. The experience gained in this space can pay dividends throughout one’s career, and in our opinion, it’s rocket fuel worth adding to the resume.

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