Private Equity Practice Consumer Experience

I N T E R N A T I O N A L

Copyright © 2016 DHR International, Inc. All Rights Reserved. 1

1 Letter from our Leader: Keith Giarman

1 Private Equity Practice Group Members

2 Consumer Talent War Games

4 DHR International & Beats Music

5 Recent Searches

Private Equity Practice Group MembersKeith Giarman

Managing Partner,

Private Equity Practice

(San Francisco, CA; New York, NY)

Martin Pocs

Vice Chairman

(Denver, CO)

Craig Randall

Partner

(Chicago, IL)

Steve Godwin

Partner

(Atlanta, GA)

Christine DeYoung

Partner

(Chicago, IL)

Craig Sigovich

Partner

(Stamford, CT)

Lars Noble

Partner

(New York, NY)

Diane Coletti

Partner

(Boston, MA)

Paul Stefunek

Partner

(Cleveland, OH)

David Madden

Partner

(San Francisco, CA)


NewsletterPRIVATE EQUITY REPORT

Letter from our Leader: Keith Giarman

In our last edition, we highlighted our firm’s significant

expertise in executive search for companies in the

industrial, manufacturing and aerospace arenas. In

this edition, we are pleased to highlight our expert

consultants who focus on consumer segments broadly.

Importantly, DHR has hundreds of consultants around

the US and around the world who all offer different

industry and/or functional expertise to our private

equity and other clients. We are dedicated to ensuring

that our PE clients ALWAYS benefit from a team of

consultants pertinent to their functional and industry

needs and pledge to exercise a thoughtful, personalized

and collaborative approach as we execute assignments.

Keith Giarman

Global Leader, Private Equity



Carlos Cata, Managing Partner | Chicago, IL

In a world of growth and value

creation, the game is shifting. What

was once a cost reduction and

efficiency play for PE firms and their

portfolio companies is now being

balanced with an increased focus

on driving demand and creating

organic top-line growth. In today’s

robust market we are seeing a shift

from “aspirin” searches for pain relief

to “vitamin” searches for muscle

mass. So where is the muscle mass

being built? Technology innovation

has been at the center of this shift,

driving the digital transformation

and the analytics boom. This boom

has in turn spawned a fundamental

re-shift of how companies (especially

consumer companies) are looking

at the role of marketing, digital

and analytics.

Our PE partners are increasingly

investing in talent in the areas of

advanced analytics, predictive

modeling, social media, mobility,

digital acquisition and user-centered

design. The consumer landscape

is fundamentally shifting. The

manner in which key segments

are consuming information across

multiple channels and making buying

decisions has moved from the direct/

mass market world to an increasingly

complex interconnected world.

The questions facing many firms is

finding the talent that can manage

this increased level of complexity.

Leaders that can distill the relevant

value drivers and execute with the

right tools in a cost effective manner

are the ones being sought after.

These are the precise challenges

we embrace and the type of

engagements we work closely with

clients to build.

Consumer Talent War Games

Extracting and Deploying Executives Who Truly Drive Value Creation

All companies are in a war for talent

right now, but certain industries are

at a fundamental inflection point that

require even more thoughtful and

purposeful thinking as companies

chart the organizational structure

to win in a changing market.

Companies with consumer products

are experiencing revolutionary

trends; an unprecedented and

rapid transition to digital in terms

of customer acquisition and

commerce; investors like 3G Capital

streamlining operations and driving

down costs; and the more extensive

usage of analytics in optimizing

marketing spend and surgically

refining branding efforts.

The implications for these trends in

private equity sponsored consumer

companies is profound as investors

wrestle with ways to meet their

investment thresholds. What are

the risks and rewards associated

with hiring executives from large

blue-chip companies who may have

experience in these areas but have

never worked with private equity

let alone operated in a more hands-

on, fast-paced environment? And if

you only focus on executives with

PE experience, can you realistically

create a pool of talent big enough to

find an executive who fits in terms of

functional and leadership fit in less

than ideal geographies given specific

product expertise? How important

is it to emphasize proof points from

prior experience versus potential and

strategic intellect to determine the

appropriate vectors for growth?

We posed these questions to some

of our consumer experts inside

DHR who have experience working

with both large as well as smaller

and mid-market companies (public,

private and PE funded). Here is what

they had to say:



Consumer Talent War Games (continued)

Christine DeYoung, Managing Partner | Chicago, IL

There is no question that the

“bullseye” for a PE-backed or privately

owned consumer portfolio company

CEO or C-level executive is a leader

who has the rare combination of

successful PE business leadership

and blue-chip CPG company

training. They have done a similar

job in a portfolio consumer business

with at least one successful exit

and inspired many while making

significant returns for the investors.

The “bullseye” executive has

prior experience with a blue-chip

multinational consumer company

(Unilever, P&G, Pepsico, General

Mills, Clorox, etc.) where they

learned what great looks like and

the tools to get there. The executive

then knows how to modify them for

the size, scale, and investment thesis

of a given portfolio company.

This all said, we have found that

there are many more businesses in

need of this executive than there

are available. Therefore crafting the

most effective and experienced

approach in identifying, assessing,

and attracting this talent is more

important than ever to top PE

firms. They recognize the need for

experience and expertise in helping

to bring the talent to their business

versus counting on their own

network. There is too much at stake

to fish within the same pool of talent

over and over again.

Our specific and abundant

experiences within the blend of

private equity and top blue-chip

talent allows us to uniquely and

quickly identify the more rare talent

within large multi-nationals or larger

CPG companies that are willing,

able and ready to bring their skills to

a more nimble organization. Some

of the differences we find are that

they have a) worked within small

or the non-core parts of the larger

company, b) worked overseas for the

companies, and c) they have worked

on start-up or acquired businesses.

Each of these scenarios, although

difficult and often not sexy while at

these larger companies, are typically

much less resourced, much higher

growth, much more dependent

on building a team, rolling up your

sleeves, and cash flow. All of which

prepare one for the excitement and

addictive ride of running a private

equity/privately held business where

Wall Street’s opinion is less important

than the consumers’ opinion of

buying your product more often,

more quickly, and more loyally.



DHR International & Beats Music: A Sound Partnership“When we got the call from Beats, it

was initially pretty secretive,” noted

Keith Giarman, Managing Partner of

DHR’s Private Equity Practice. “I get

a lot of calls from investors in similar

situations where a company had been

fully capitalized and staying more

stealth but they rarely required or

wanted a CFO at such an early stage.”

It turned out that the radically

successful headphone company

started by Dr. Dre and Jimmy Iovine

had acquired an Internet music

delivery platform in San Francisco

and were planning to roll out their

own subscription music product

(Beats Music) to the market in

competition with companies like

Spotify and Rhapsody. They were

also in conversation with a proven

consumer- and music-oriented

executive to run the company.

That turned out to be Ian Rogers,

former VP & General Manager of

Yahoo Music!

But why did they feel compelled

to bring in a CFO at such an early

stage? “First of all,” noted Keith,

“this was a BIG capital raise, and the

company had plans to grow really

fast based on the partnerships they

were creating in the market. Thus,

what looked like a small fledgling

Internet company was in reality

something that would be very

big and quite complex very fast.

Ian needed a financially oriented

business partner by his side from the

beginning to think through a lot of

issues and make sure the appropriate

processes, systems, and controls

were in place in short order.”

The company was also entering

a space where it was notoriously

difficult to make money using a

freemium model. Sound, strategic

financial thinking that would inform

the appropriate business model for

the company was a requirement.

The CFO would be instrumental

in that thinking. The company

also had a large and sophisticated

set of shareholders, one of which

was Beats Electronics—its sister

company. This dynamic from a

Board level made the need for a

more seasoned CFO a requirement

earlier in the company’s life than

might be normal.

DHR successfully placed the CFO

at Beats Music and most know the

story that unfolded. Beats Music

was very successfully launched

and the entire company, including

Beats Electronics and Beats Music,

was acquired by Apple. “It’s fun to

be affiliated with these innovative

growth and liquidity stories in the

market,” said Keith. “At the end of

the day, that’s what we want to do

in the Private Equity Practice. We

want to work with management

and investors in a manner that

leads to true value creation in the

market where our candidates are

instrumental in the financial success

of the entity.”

This was a BIG capital raise, and the company had plans to grow really fast based on the partnerships they were creating in the market.


Copyright © 2016 DHR International, Inc. All Rights Reserved.

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