HBR IdeaCast Why Private Equity Needs to Invest More in Talent Development
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Nov 21, 2023 Ted Bililies, managing director at AlixPartners and private equity expert, shares insights on the pressing need for private equity firms to pivot toward talent development. He discusses the obstacles posed by rising interest rates and fewer investment opportunities, emphasizing that financial engineering alone won't suffice for strong returns. Instead, Bililies advocates for integrating human capital into strategy. He also highlights the importance of culture, engagement, and modern talent management to attract and retain top performers in today's workforce.
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PE Industry Headwinds
- Rising interest rates significantly impact private equity returns by increasing the cost of capital.
- Increased competition and fewer available deals add further challenges to the industry.
Evolving PE Strategies
- The number of companies suitable for traditional PE buyouts has decreased, leading to longer holding periods.
- Private equity firms now pursue platform deals and roll-ups to consolidate multiple smaller companies.
Invest in Talent
- Private equity firms should prioritize talent investment in their portfolio companies for value creation.
- Focus on building coherent cultures, especially in platform deals with multiple companies.