Tough Times Yield New Role: Private Equity Partner

In the good old days of private equity, firms would make an acquisition, take care of a few little things like management, market, product and brand, and sell the company at a profit. The credit crunch being what it is, however, most private equity firms are holding on to their properties longer than they had originally intended. Forced to drive out a whole new layer of costs, firms are spending more time evaluating and improving the IT infrastructure of their companies.

The smartest among these firms are hiring a new kind of partner to manage IT for their acquisitions. With a healthy mix of technology knowledge, business strategy, financial acumen and consulting experience, these former CIOs are playing a critical role in value creation. They are replacing expensive IT consultants, running companies on an interim basis, developing competitive IT strategies and providing a consistent standard of operational excellence across all the properties in a firm's portfolio.

This is a killer job. It provides the variety of a consulting role without the imperative to hustle for business, it exposes the CIO to a wide range of executives and business models, and it allows him or her to have a positive impact on a range of companies.

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In the good old days of private equity, firms would make an acquisition, take care of a few little things like management, market, product and brand, and sell the company at a profit. The credit crunch being what it is, however, most private equity firms are holding on to their properties longer than they had originally intended. Forced to drive out a whole new layer of costs, firms are spending more time evaluating and improving the IT infrastructure of their companies.

The smartest among these firms are hiring a new kind of partner to manage IT for their acquisitions. With a healthy mix of technology knowledge, business strategy, financial acumen and consulting experience, these former CIOs are playing a critical role in value creation. They are replacing expensive IT consultants, running companies on an interim basis, developing competitive IT strategies and providing a consistent standard of operational excellence across all the properties in a firm's portfolio.

This is a killer job. It provides the variety of a consulting role without the imperative to hustle for business, it exposes the CIO to a wide range of executives and business models, and it allows him or her to have a positive impact on a range of companies.

But as with most wonderful things, it is not that easy to obtain. Many firms continue to rely on IT consultants and have not yet considered hiring a full-time IT executive. To learn more about this new role and what it takes to obtain it, I spoke with three CIOs-turned-private-equity-partners.

Getting in the Door

After significant experience as an IT executive at major financial services firms, Albert Eng was referred by a contact to Cerberus Capital Management, which hired him as a senior IT due diligence and portfolio operations advisor. Eng's job was to assess the quality of an investment from an IT perspective and advise on post-acquisition turnaround strategies.

Eng now works as an industry expert for private equity advisory and post-acquisition turnarounds. He notes that getting in the door with a private equity manager can be the hardest part of the process for a CIO. As often happens, it's all about who you know.

"Your entry into a private equity firm will most likely be through referrals," he says. "You'll need to establish relationships with private equity firms or with their portfolio companies. A CIO role in a portfolio company can have a track back to the private equity firm."

In other words, don't wait for recruiters to come calling. You need to leverage yourself.

While referrals may get you in the door, you'll also need the right resume to seal the deal. "Private equity firms with a specific industry investment model will look for a depth of experience in that industry. Generalist firms will look for candidates with multi-industry exposure," says Eng. "Global delivery experience is also very important, as is operational experience on both the sell and buy sides of IT."

Yet even with the right resume and referral, the role of private equity IT partner is new enough that interested CIOs may have to sell the value of the position along with their own qualifications.