Dive Brief:
- Growing ownership of a food and beverage companies by private equity investors is creating a market for executives to jump from typical ownership structures to one that offers more financial reward, but also with the potential to fail more quickly. The Wall Street Journal talked to experts to help executives determine the pros and cons of working and reporting to private equity investors.
- The demands of private equity firms are high, particularly around areas of personal accountability, scrutiny, and accelerated decision. So high are the standards that executives should only take these top jobs at private equity-owned companies if they are certain they can achieve the goals of the investor owners, Ralph de la Torre, CEO of PE-owned Steward Health Care System LLC, told The Wall Street Journal.
- One key factor, the article pointed out, is the possibility for leading change, but when goals are not met, executives can find themselves quickly out of work.
Dive Insight:
The total for U.S. private equity investments hit $632 billion last year, an increase over $358 billion in 2010 but relatively flat compared to 2014, according to the American Investment Council. More private equity spending means an increased demand for executives of portfolio companies, Brooke B. Coburn, a managing director for private equity firm Carlyle Group LP, told The Wall Street Journal.
That makes landing these top jobs more competitive. In some cases, such as CFOs, securing that talent for portfolio companies can be difficult, Russell Reynolds Associates Inc. told The Wall Street Journal.
Robert J. "Bob" Gamgort will face these challenges as CEO of Keurig, as JAB Holding closed its purchase of the company earlier this year, taking it private in the process. The industry veteran's decision-making will be an important guidepost for food and beverage exectuives in how the modern private equity-CEO relationship works.