The Lure of PE Firms

7 06 2008

If you have had a fast-track career and reached the corporate summit at a young age.For various reasons, you find yourself unable to continue further as a CEO. What do you do ?    

 

In a growing trend, we see that a large number of fast-track professionals after a stint at the corner office are joining the Private Equity firms. This trend cuts across industry and functions.

 

First of this movement was when Pradip Shah of CRISIL joined a George Soros promoted PE fund. Akhil Gupta of Reliance is the MD of Blackstone India. Vivek Paul, after a successful stint as the Vice Chairman of Wipro Technologies, joined TechPacific a US based PE firm.

 

Among the recent movements are Rajeev Bakshi, the former CEO of Cadbury’s and later Pepsi, as the Jt MD of ICICI Venture. Sid Khanna, the India head of Accenture has also joined the Private equity industry.

 

Now we hear, Arun Sarin, the high-profile CEO of Vodafone is also joining a PE firm.

 

An excellent understanding of the external environment, a helicopter view of organisations and a strong network is what these professionals bring to the table in the PE industry. Big money, satisfaction in mentoring entreprenuers and a relatively unhurried life, is what attracts these pros to join the PE industry.

 

As PE firms grow and CEO tenures get shorter, I expect this trend to accelerate further. 

 

– G.Mohan  

 

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3 responses

10 06 2008
Venkat Subramaniam

The CEO of a company is expected to have a long term vision with respect to his organisation’s growth, without losing the short term perspective of quarter-on-quarter growth and profits. Since the stock market performance of a company is dependent more on the short term growth, the CEOs have to live and grapple with this paradox of long term versus short term perspectives.

Hence, moving over to the Private Equity firms must be a welcome change for some CEO’s as these Private Equity firms are independent of stock markets.

10 06 2008
sanjay nayak

One common theme cross the CEOs who have joined PE firms is that they all have been successful CEOs and also they have timed their move when they are on a high. As the name indicates, Private Equity firms gives them a more private space.

In days ahead, we may see PE firms not only investing or helping in incubating new ideas or funding expansion, but also taking over firms in trouble and then puttting together strategy on M&A etc. Therefore, CEOs can play a big role as they have seen it and done it before.

10 06 2008
G.Mohan

Interesting observation. PE firms also give the former CEOs, opportunity for some back-seat driving. They are able to fulfil their own entrepreneurial ambitions, albeit surrogately.
With all the profits earned by the oil barons in Middle East and Russia, I expect a lot of money to flow into PE.

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