Why Don’t More Women Own Private Equity Firms?

by Gail R. Meneley, Co-Founder and Principal

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I am working with a number of exceptional women with successful careers in public and private companies, and are now focusing on private equity as their next stop.  They are targeting CEO roles in portfolio companies with revenues from $250M to $1B.  Each has held the title of President or General Manager with full P&L for businesses $1+B in the U.S. and abroad, has deep industry experience, and has lived and died by the same profitability sword as men in similar roles.

In fact, they can check all of the boxes related to experience and results that private equity partners look for with a single exception:  they have not held the title of CEO.

I get it.  The business of private equity is to minimize risk and maximize returns to investors, so it’s natural that partners would prefer candidates — both men and women — with a track record of success as a CEO. But is it the title that is important, or are the real keys to value creation a successful a track record, deep domain experience, long-standing industry relationships, and the ability to attract talent?

I have other questions, too.  Why are so many women active in angel investing but so few involved in PE?  And, why are there so few PE firms founded and controlled by women?

Is it that they have worked in businesses that didn’t allow them to accumulate necessary wealth?  Could be.  Do women have a lower risk tolerance than men?  The facts  don’t support it.  Do they have less access to capital? Maybe.  Do they have little interest in being a part of the “boy’s club” that makes up the majority of the industry? Could be.

We have worked with 1600 C-Suite executives over the last 20 years.  About a third of our clients are women, a reflection of the slow-to-change demographics at the top of Corporate America.  All clients go through an in-depth executive assessment when they work with us.  We can confirm that there is little difference between the competencies, leadership, motivators, experience  and track record of men and women at this level.  In fact, if you didn’t know gender, you wouldn’t be able to discern it from the data,

So back to my questions.  Would anyone dispute that hundreds of women are qualified — right now — to take on tough PE roles, either as managing partners or CEOs?  If women were managing these firms, would the number of women viewed as viable candidates to run portfolio companies increase? Would women be more likely to hire qualified women as portfolio company CEOs? Would today’s women be more likely to steer investment toward companies led by other women?

I have lots of questions, no answers, and lots of opinions.  I welcome your thoughts on the subject.

By the way.  I know some highly qualified women ready to turnaround and/or scale one of your portfolio companies.  I’d be happy to introduce  you.