The Brain Drain — to Private Equity

It hasn’t been trumpeted as much here in the U.S., but it’s only a matter of time. The subject? The supposed brain drain from corporate executive to private equity. In the U.K. there has recently been a series of high-profile folks making the jump, and it has had people fretting that something is afoot, as a piece in today’s FT tries to refute:

Recent high-profile appointments by venture capital firms of executives from listed companies have convinced some that publicly owned businesses are losing the battle to retain key talent. A lack of public scrutiny and large potential rewards in private equity are cited as the main draws for City chiefs.

There are some fun quotes in the piece, along with typically irritating “We’re smarter than everyone else” nattering from a few private equity sorts, like the following:

“It is self-serving for CFOs and CEOs to say they will go off to private equity and everyone goes along with it. Private equity firms have a name for CEOs and CFOs. They call them FDH – fat, dumb and happy.”

More entertaining is the following snippet, however:

Many commentators argue that executives working in private equity, either as deal makers or operators of private equity owned companies, can face tough operational targets

An acerbic headhunter sums it up: “Yes, you might make more money, but you also might lose the will to live.”

Nicely put. And more seriously, private equity is merely the financial flavor of the moment, like venture capital has been recently, like investment banking was in the 1990s, and like bond trading was in the Liar’s Poker late-1980s. While private equity pays well, it is also excruciatingly irritating in its own way, with, among other things, a deal-centric mindset that will make many newcomers feel like they’re running a high-gloss used-car operation.

Related posts:

  1. LPs Offer Private Equity Pecking Order
  2. Jack Welch, Scary Private Equity Guy
  3. Private Schools, & The Tuition-Grade Correlation
  4. Performance Persistence at Venture Funds
  5. Contrarian Thinking on Buyouts and VC

Comments

  1. Jeff Clavier says:

    You mean high-gloss used car operation (and not user car operation) ?

  2. Guillaume says:

    The last sentence of your post is also worth a good laugh and qualifies as a great “entertaining snippet”.

  3. Andrew says:

    At least no-one has called private equity “Investing 2.0″ – have they?

  4. Paul K. says:

    Thanks Guillaume! I do my best to inform and entertain ;-)