Dealmaking momentum is expected to continue in the new year after a banner 2021 for private equity. In our outlook for 2022, we see several themes that are expected to play a significant role in PE investments: workforce management, infrastructure, ESG, home healthcare, business travel and new technologies, like cryptocurrency. We also predict that supply chain disruptions will continue to provide PE with opportunities. See below for a sector deep-dive on workforce management.

Two workforce management trends are pushing middle-market private equity firms to adapt: hybrid office-and-home work arrangements and a favorable labor market for jobseekers.

A regular staffing schedule of working in the office on certain days and working from home or remotely on others has become the norm for many PE firms, and inflexible firms face a recruiting disadvantage.

Melissa Dickerson, Chief Financial Officer; Managing Director, Operations Genstar Capital

Case in point: Genstar Capital of San Francisco implemented a hybrid office-and-home work schedule earlier this year, and soon afterward Genstar CFO Melissa Dickerson started fielding a flurry of resumes from employees of companies that were implementing full in-office-only work schedules.

While Genstar’s investment team was accustomed to working hybrid schedules even before the pandemic, moving to a hybrid arrangement was a revolutionary change for the operations employees, Dickerson says, and it boosted morale and brought them closer together as a team. “They love the flexibility,” she says.
To keep team members connected, especially with new employees, Dickerson says she schedules once-a-month “touch point” meetings with individual operations staff to give them the opportunity to discuss any concerns. As a group, the team holds informal Zoom meetings for trivia team competitions and other non-work topics to keep them engaged with each other.

Alice Mann, Operating Partner, Blue Wolf Capital Partners

Keeping some in-office days in the work schedule is necessary for building work relationships, says Alice Mann, operating partner at Blue Wolf Capital Partners in New York, which moved to a three-days-in-office/two-days-from-home schedule in July.

“There’s body language and a lot of other information you get from seeing what’s happening in the room, and then a lot of relationship building that happens from the face-to-face dinners and the conversations on the side,” Mann says. “But I don’t think you need to do that every day to maintain those relationships.”

In addition to scheduling regular work-from-home days to retain and attract talent, PE firms and their portfolio companies are searching for new ways to stand out from the competition.

“There’s definitely been a balance of power shift between the workforce and corporations, and that shift is favoring workers, whether they’re white-collar or blue-collar,” says Venita Fields, partner at Pelham S2K Managers in Evanston, Illinois. Companies are offering blanket pay increases and—for the first time for some blue-collar workers–training and development incentives to retain employees.

Venita Fields, Partner, Pelham S2K Managers

“I haven’t seen that in my 30-plus years of work. And I think it’s long overdue,” she says.

With some portfolio companies, another factor to consider is the growing labor union movement. “As a private equity professional or owner, if you want to stave off those discussions, you’ve got to elevate your wage structure and your flexibility,” Fields says.
Mann, who recruits executives for Blue Wolf’s portfolio companies, says because of the tight talent market more companies are open to hiring the best “athlete”—or most talented person overall—instead of only hiring someone with a proven track record of experience in a similar position. They’re also focusing on the job-seeker’s point of view. “In some of our companies where we’re seeing staffing challenges, we’re really trying to understand the candidate’s experience and what they’re looking for,” she says.

Kristina Heinze, Partner, ParkerGale

Another way PE firms can stand out in the recruiting and retention battle: Offer fun. In 2021, ParkerGale Capital sent its employees to a “non-work, team-building, have-fun-together” offsite meeting for three days in Nashville, highlighted by songwriting and recording sessions where the employees were joined by professional musicians, says Kristina Heinze, co-founder of the Chicago firm.

“We’re always talking about how we can differentiate ourselves,” Heinze says. ParkerGale also offers more traditional incentives, such as career development services that include monthly individual sessions with a career coach.

Offsite meetings dedicated to fun aren’t new for ParkerGale—the firm has done it for years. “But now it’s even more important because of the competitiveness,” she says.

For more in Mergers & Acquisitions’ M&A Outlook 2022 series read: