Talentworks Career Guide 2008

Back From Private Equity

The Downfall of the 'Deal Economy' Doesn't Appear to Be Exacting the Sort of Career Toll on Marketers That the Dot-Com Bubble Burst Did

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Marketing's most recent talent gold rush -- private equity -- is largely over. But the return journey looks to be neither so sudden, massive nor painful as that experienced earlier in the decade by survivors of the dot-com bust.
Bridgette Heller, global president-baby care at Johnson & Johnson
Bridgette Heller, global president-baby care at Johnson & Johnson

Chaos in financial markets during the past year has dried up financing for many highly leveraged private-equity buyouts. And some marketers who chased private-equity dreams have found that the glitter didn't turn out to be gold. Yet the downfall of the "deal economy" doesn't appear to be exacting the sort of career toll that the bursting of the dot-com bubble did.

First, while capital for new deals has dried up, it hasn't totally disappeared, particularly for consumer-product companies. Unilever's pending sale of its U.S. laundry-detergent business to private-equity firm Vestar Capital Partners, though it may have taken longer and fetched less than some expected, is one example that shows such deals still can be done.

And unlike dot-coms early in the decade, the companies behind the wave of private-equity deals in recent years aren't going belly up, so recruiters aren't seeing a flood of marketers from those companies looking to make their way back to big, traditional corporate marketers -- at least not yet.

Short of expectations
But disillusionment has set in for many who have jumped to dot-com ventures, says Tom Seclow, San Francisco-based leader of Spencer Stuart's marketing-officer practice.

"I talk to a lot [of marketers] in private-equity situations who would welcome coming back out, because the reasons they signed up for it aren't what they see as the marketplace conditions today," he says. "I have seen where an executive joins a private-equity-backed company thinking it's going to produce some huge riches, and it doesn't."

In some cases, private-equity firms have cashed out sooner and for less than marketers who signed on had hoped, he says. In other cases, private-equity firms have to hold on to companies longer than they'd hoped, with the potential for payout at the end looking less lucrative.

"I think some people, when they join private-equity situations, are led to believe they may be rolled to another portfolio company within that group," Mr. Seclow says. "And that happens, but not as often as one might think. The timing has to be right, and there has to be an available position."

Yet the return of marketing executives from private equity to more-traditional, publicly held marketers has been more like a trickle than a flood.

One is David Stern, who became VP-global chief marketing officer of Kao Brands in April after three-year stints as CEO two of private-equity-backed marketers: private-label fragrance marketer Endeavors and beauty direct marketer Succendo. Another is Bill Pearce, a former chief marketing officer of Taco Bell who became CMO of Del Monte Foods earlier this year after more than a year as CEO of Foresight Medical Technologies, which makes a device that transmits patients' vital signs from an ambulance to a hospital. Mr. Stern and Mr. Pearce declined to comment for this article.

The return from private equity to a more-conventional corporate marketer isn't always a result of the deal not panning out or paying out as expected. Sometimes it's just because marketers find they don't like the world of private equity as much as they thought they would. Such was the case with Bridgette Heller, who became global president-baby care at Johnson & Johnson after serving as CEO of private-equity-backed frozen-food company Chung's Gourmet. The Kraft Foods veteran made the move to J&J in 2005 well before the financial crisis made private equity a tougher place to live.

"I did like doing something entrepreneurial," Ms. Heller says. "But I also liked having the resources of a larger organization to really grow a business for the long term. I really love brands and equities and building businesses for long term, and ... private equity's not so geared to that. It's really more about short-term growth plays, and resourcing is often very, very tight, without a lot of ... runway to consider what's best for the long term."

Indeed, several executives cite the relative lack of resources as a reason they want to return to conventional marketers from private-equity-backed ones, says Dave Gallagher, the Atlanta-based president of Boyden, an executive-search firm. Views differ, however, on how easy it will be for private-equity executives to return. One recruiter, who hasn't seen a huge movement back from private equity yet, says executives will have a hard time coming back, though not as hard as the previous generation of dot-com returnees.

Michael Carrillo, president of CPG Jobs, which operates the website CPGjoblist, likewise expects returnees to the consumer-package-goods industry to have trouble. "Our industry is an insular industry," Mr. Carrillo says. "They help one another. They help their own. When people jump ship and go other places, they become second fiddle. If you want to come back, you've got to jump through hoops. You've got to be really good and well-known."

But there are some big differences between refugees of the dot-com bust and potential returnees from the private-equity gold rush, Mr. Gallagher says. Dot-com refugees were dreaming of becoming billionaires. Private-equity executives at least went in with more-realistic seven- and eight-figure goals.

The difference in the believability of the business plans was of a similar magnitude, he says. Dot-com executives often spent a few years burning through huge venture-capital-backed marketing budgets on businesses that had little or no revenue, he says, while private-equity executives have been expected to do far more with much less.

"Most of the people I have known who've made the transition into the private-equity world have found it to be a tremendous learning experience," Mr. Gallagher says. "They have learned more during their time in the private-equity world than they have learned in all of the time in the traditional corporate world. It's a faster-paced environment. It's a leaner environment. You normally have a lot more responsibility than in the corporate world."

In the end, Mr. Seclow says, the ease of re-entry to conventional corporate marketing will depend on the realism of the dreams that lured people away from it.

"You look at the executive's judgment and what was the promise that they were attracted to," he says. "If it made a lot of sense and had good people and backing and didn't work out for some other reason ... I don't think it's as damning."
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