Tough Times Yield New Role: Private Equity Partner
Three CIOs who made the switch explain how to leverage your skills to become a private equity partner
CIO — 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."
