Everybody knows that the role of an Operating Executive can be full of navigating weekly travel, but how much is normal, how much is necessary, and how has it shifted in the past two years?
During long periods of heavy transformation, high-impact roles can expect to travel week after week, whether that be for bolt-on acquisition due diligence, negotiating new contracts / vendors, or one of the many other job functions of an agile Operator. Across all middle and lower middle market firms we work with, Operators expect to be on the road less than one-third of any given month. The majority of long-time Operators will be shocked and (expectedly) pleased to hear how this number has come down from 5-10 years ago, when executing a full growth transformation could leave you near-permanent on the road during stints of heavy expansion.
So, if the road warrior culture has shifted, how does it affect the portfolio company’s growth trajectory? Is the face time required to squeeze as much value out of the portfolio investment as possible, or is remote working a new, sustainable option?
While backing into numerical figures based on exit value and multiples versus an Operating Executive’s impact related to their travel / time commitment is a near-impossible feat due to the amount of macro and micro factors, coupled with the fact that Private Equity is always a few years delayed compared to public market economic cycles, we will have to go by ‘feel’, not only of the Operators themselves, the C-Suite of the portfolio companies, and the investment teams behind each of these.
What we have seen through experience in the industry, as well as daily conversations with all these personas is that there is no real material difference between putting in 25 days of face time traveling the country versus 10 days, and mixing in zoom meetings through the remainder. This tells us that the tides are changing for the better (in the operator’s view), and while it is possible to get that 10 days per month down to near zero by attempting to go nearly fully remote, there is diminishing returns - private equity and high growth operations are a people business at the end of the day.
Another aspect that needs consideration when investors are designing the hybrid models for “mercenary operators” (individuals hired by the investment firm that can step in and out of all their underlying portfolio companies at will / necessity), is what type of talent these changes will attract. Now that the working culture has shifted (at least slightly) to a ‘lifestyle’ centric way of living, firms must accept that there will be plenty of strong candidates that self-select out due to the fact that there is no hybrid option, or the travel is more than what was quoted at PE Firm XYZ down the street. Family and lifestyle are once again being prioritized, and while these roles will never be a 35 hour job with two months off in the summer type engagement, the optionality is high enough for the best Operators to have more of a say in how they want things structured.
So, how can a firm find the perfect fit for a functional expert Operator for their portfolio company, and how can an Operator find an investment firm that fits their career trajectory goals as well as their personal life equilibrium goals? Flywheel is an exclusive two-sided marketplace that connects the world's most deeply experienced functional experts with the highest quality investors within the Private Equity landscape, ensuring that portfolio companies grow as quickly, efficiently, and intelligently as possible, maximizing value on either side throughout its entirety. Chat with us today to see if there is a fit for you or your team within our Flywheel.