fast-paced, non-political, transparent, hands-on, exciting environment. These employment circumstances apply to you, your boss, the PEG Managing Partner and your direct and indirect subordinates. If management all has skin in the game there is a general camaraderie, a “you watch my back, I’ll watch yours” environment. Plus your equity could multiply by five or seven, and your payoff for helping the company grow could be sensational.
CHAPTER 2
PREPARING FOR YOUR SKIN IN THE GAME JOB SEARCH
This book has good advice for any job seeker or PEG hiring authority. However it was written for skin in the game Chief Officer (C-Level) executives to help them become hired by PEGs for one of their middle market portfolio companies. That’s my expertise. I have no retained search experience handling skin in the game C-Level assignments for any Venture Capitalists (VCs).
If you are entrepreneurial, a risk taker, and have a C-Level background in technology, visit NVCA.org and click on “About NVCA” then on “Members” and open up their list of over 400 mostly VC and some Leveraged Buyout (LBO) firms. Click on a VC’s website and click on “Portfolio”. See if any of their invested companies are a match with your credentials, experience, and industry background. If so, click on “Team” and then locate the person to email, such as the Partner in Charge or Managing Partner, General Partner, or Partner. Let them know you are a C-Level executive (give specific title sought) and attach your resume. Would they be interested in discussing you putting some skin in the game in the right VC company in exchange for some equity? What would the next step be? Take it from there and do plenty of sound due diligence. Consult an attorney and tax accountant about any eventual agreements involving money, stock acquisition terms, and written job offers.
THE DIFFERENCE BETWEEN PEGS AND VCS
PEGs raise funds from Limited Partners, accredited investors, endowments, insurance companies and the firm’s Partners. Such funds are not open to the public. Lower middle market PEGs often use LBOs to acquire existing companies in the $10M-$50M sales range. Middle market PEGs acquire private companies typically in the $50M-$250M sales range. Companies come from all industries. They will provide growth capital, as required, to increase the return on funds. PEGs typically hold their equity investments in companies for four to five years. Then they successfully sell their holdings to either a strategic buyer or financial buyer and share the equity profits according to each investor’s stock holdings. This is called the “exit” or liquidity event. Most of my C-Level hires have multiplied their initial skin in the game investments in my client PEG’s portfolio companies for lucrative payouts.
VCs pursue riskier startup ventures and will loan capital at 20%-30% interest rates. Companies who default on their exit loan payments are obligated to exchange VC loans for company equity. VCs also invest capital in equity, focusing on technology companies promising big potential returns. They usually invest their risk capital taking minority equity positions below 50%. VCs may each invest small amounts in a dozen pre-revenue and early stage companies. VCs experience much higher failure rates than PEGs. VCs’ successes can often make up for their more frequent failures.
Ask yourself, “Can I work and thrive in a private equity owned portfolio company after putting some of my own skin in the game?” Do you have the temperament to risk some of your own money in the equity of your next employer?
In one scenario, I was asked to fill a SITG CEO position that had two previous CEOs in sixteen months. It can be a “take no prisoners, all or nothing” environment, depending on what your due diligence turns up in certain PEG investor C-Level job opportunities. However, working for the right PEG can have growth challenges, growth opportunities, and spectacular financial results. In the mid-1990s, I filled a search for a SITG CEO with a New Hampshire manufacturer owned by a prestigious, profit-oriented, successful PEG. My candidate, Al S., invested $100K in equity, performed well, received additional equity bonus shares, and earned more than $11M at the company’s liquidity event five years later. I have been involved with dozens of successful SITG C-Level hires. They have put up to $100K in skin in the game for company equity, amassed additional stock options, and earned millions for helping increase PEG companies’ targeted EBITDA growth levels at the time of their liquidity event.
That is why I have written this book. During your networking efforts to meet PEGs through mutual contacts, try to be in contact with SITG C-Level executives about their own PEG employment experiences. Ask for PEG referrals.
In tight lower middle job market cycles, like the 2008-2014 era, highly qualified competition for C-Level job opportunities have been the norm in a number of industries. If you have an undergraduate degree and an MBA from one of the branded schools, and have been in the top 10% of your classes, your resume will attract immediate attention with certain PEGs and their headhunters.
If your employment record demonstrates you have moved up the promotional ladder with branded companies, again, you will generate instant interest from a number of PEGs and their headhunters, especially if you are still employed. You may have influential branded contacts. If so, they will positively impact your chances of being interviewed by a PEG. Congratulations, you are off and running. Hopefully you can duplicate this winning formula until you make a match with the right PEG to secure a SITG C-Level job. In my experience, such top branded job candidates do not typically undergo deeply probing interviews or comprehensive reference checks by the PEGs. PEGs will typically leave most or all of a branded candidate’s references to be checked by their search firm.
The following is a good example of the tough competition in the current job market if you are a non-branded (though highly qualified) C-Level job applicant/candidate vying for similar jobs. A job competitor might submit a more impressive resume than yours, claiming many accomplishments, or have their MBA or MS degree from a prestigious university. Your competition may be well positioned in that they are fully employed with sterling resumes without breaks in their employment dates nor frequent job changes. You may also be a lot older than most SITG job competitors.
Such challenges for job openings face non-branded but qualified candidates. This also applies to typical retained search firms flush with resumes of qualified, interested, and branded job candidates. These candidates are often surfaced by the big branded search firms’ research departments.
Ask yourself: do you think your well-prepared resume alone is likely to secure you an imminent phone or face-to-face interview if it’s screened by a headhunter for a PEG’s C-Level job, or by the PEG itself?
If you follow my advice and prepare yourself properly for the skin in the game job search campaign, you will become a formidable contender for the right job opportunity. I suggest you follow the chapters sequentially so you understand my overall strategy, and then execute my instructions. My advice requires effort on your part with no short cuts and will help you overcome your lack of top school branded education or and having worked for unbranded companies. Furthermore, these chapters help overcome any unfortunate short tenured employment periods and will alleviate your “old age” concerns. Expect keen competition for any potential job for which you may be considered. You’ll be ready to deal with the competition after you have finished this book.
I will prepare you for the PEG interview, if it’s a job you really want and for which you are qualified. I will help you gain confidence with referral sources, even those you do not know well, who will in turn recommend you to PEGs.
After forty years of retained searches predominantly for Fortune 500 clients, privately held companies, and lower middle market PEGs, an alarming number of interviewers do a poor job of screening candidates. Too many interviewers are ill-prepared, relying only on the candidate’s resume,
