In Her Own Words
February 21, 2020
We spoke with leading women executives from 2018 Top 50 PE Firms in the Middle Market to learn about their paths that led to successful PE careers.
Included in the interview:
Megan Horvath,
Partner, Resilience Capital Partners
Gretchen Perkins
Partner, Huron Capital Partners
Beth Rahn
Vice President, McNally Capital
Helen Steers
Partner, Pantheon
Here’s what they had to say:
There are more women in PE now than ever before, although the numbers are still low. What has changed that you’ve seen over the years for women in PE?
Helen: Although I think it is generally acknowledged that we have some way yet to go, the fact is that more women are working in financial services than there were when my cohort embarked on our careers. So, young women have more role models they can look to. There are many networks, support groups, and opportunities for young women to tap into these days, including Level 20 in the UK.
Clearly, the data shows that private equity has much progress to make still, so young women are going to have different experiences depending on which firm they work for. That’s inevitable. But the main thing I would single out that has changed is that there is recognition now that diversity and inclusion matter and that they make good business sense. If you look at the most recent McKinsey report, “Delivering through Diversity”, published in January this year, the statistics show this starkly. Factors that affect companies’ bottom line tend to gain the attention of Boards of Directors, so studies such as this one are contributing in an important way to progressing from recognition by firms that they need to improve, to actionable initiatives to achieve improvement. But you are right, private equity is on the right track – last year’s “Counting Every Woman” study by New Financial showed our industry had doubled female representation on executive committees between 2014 and 2016, albeit to a still unacceptably low 10% compared with 27% for the asset management industry more broadly.
Megan: Many things have changed for women since I joined Resilience Capital Partners in 2007. The number of women in the House of Representatives grew to 104 from 85; the number of female U.S. Senators increased to 22 from 16, and a major party nominated a woman as its presidential candidate. The number of women in private equity also has seen growth, with 12.6 percent of women holding senior jobs at private equity firms, according to a Preqin study from 2016. Women are still far from parity, but the trends have been positive. If these trends are going to remain positive, we – women and men in private equity – are going to have to make a commitment to expand opportunity. There are more ways to do so than ever; while the number of women in private equity may be relatively small, the activities and support for them are increasing rapidly, including the proliferation of women-focused networking groups and conferences for female professionals in private equity.
Women are still far from parity, but the trends have been positive. If these trends are going to remain positive, we – women and men in private equity – are going to have to make a commitment to expand opportunity. There are more ways to do so than ever; while the number of women in private equity may be relatively small, the activities and support for them are increasing rapidly, including the proliferation of women-focused networking groups and conferences for female professionals in private equity.
Among the more prominent groups are the Private Equity Women Investor Network, the Private Equity Women’s Initiative and the Women’s Association of Venture and Equity. Events gaining visibility include the Women’s Private Equity Summit and the Women in Private Equity Forum. I attended the Women of Leadership Summit in New York City in January, hosted by the Association for Corporate Growth’s New York chapter. It was a day full of roundtables, panels, and an inspiring keynote speaker, and I and every woman I know who attended came away motivated to increase the numbers of women in private equity.
Beth: Women in finance generally, and certainly in private equity, have built an incredibly strong community over the years, and the level of collegiality and collaboration amongst women in finance has grown significantly. Because historically, women have represented a lower proportion of the finance community, women have banded together to collaborate and support each other. We’re at a tipping point where the finance community and the private equity community are feeling increasingly less male-dominated, and women are increasingly moving into private equity and building long term careers in this industry. There’s also a generational trend at play in that people are getting married later than ever, people are having children later than ever, and that allows for greater flexibility to progress in more demanding career paths, like private equity. That’s a very relevant dynamic that will continue to support the increase of women in PE over the next several years, probably several decades.
“There is recognition now that diversity and inclusion matter, and that they make good business sense.”
Helen Steers
Gretchen: Our ranks are still low. I think our numbers are still about 10%. It was 10% when I started my career and I would guess it’s still about 10% now. Despite that static percentage, I think there are a couple of things that have changed over time for women in PE.
Women entering PE today can see women who hold senior positions in firms, which was quite rare for my generation. There are women they can look up to as examples of career progression and success; folks who can demonstrate that you can have a family and succeed in this industry. I think the perception that doing so is extremely difficult has been a pain point in our industry, and it has kept women from choosing our industry early in their careers or has caused them to drop out after having kids. I’m encouraged to see that there’s a number of us in senior management positions that younger women can see, speak with, network with and benchmark, hopefully making our industry seem more approachable for them. I think that’s different in a positive way.
Another thing keeping the numbers low in this industry, in my opinion, is quite simple. The intelligent, ambitious, aggressive young women that we seek to have many more options today. I believe there’s a much greater inclination to become entrepreneurs and create their own career path. So many things today enable that, from entrepreneurship and empowerment grants to crowdfunding, and social media enabling market access and customer engagement, just to name a few. In many cases, there are far fewer roadblocks to starting a business and creating your own destiny (and maybe sell to a private equity firm down the road!).
Megan: There are numerous formal and informal local groups that facilitate collaboration and idea-sharing. Women joining the industry today can tap into networks immediately and get up to speed quickly. Personally, I am very active in the Cleveland business community – I am on the board of the local chapter of the Association for Corporate Growth and a member of the executive committee of its Women in Transactions subsidiary. I have been more actively reaching out to my networks and encouraging women to consider new opportunities. These opportunities are available at firms of all sizes. The larger private equity firms have a significant number of jobs at entry, middle and senior levels. In addition, while small and mid-size firms such as mine have fewer opportunities available, they are great places for women to learn and expand their horizons because you get senior-level attention more easily and you can gain responsibility much sooner.
Gretchen: It is a difficult career path, no doubt. However, it is incredibly rewarding, because it’s challenging and you’re working with really motivated, energized, and intelligent people and everybody loves working in that sort of environment. The limited partner industry is helping create change by asking questions about diversity at your firm, diversity throughout the management of your portfolio companies and what sort of programs and policies you have in place to build diversity. When the LP’s, who are the source of funding for private equity firms, start asking those questions, private equity firms are paying more attention to it. To my knowledge, LP’s rarely, if ever, asked that question ten years ago. It typically came up as part of your ES&G criteria (Environmental, Social and Governance).
What is the ratio of women partners to men in your firm? And then we’re also going to explore within the industry as a whole. Are there any initiatives in place to drive change?
Megan: Resilience Capital Partners is a mid-sized firm, with $625 million in assets under management. We currently have 24 employees, one-quarter of whom are women. Currently, I am the only female at the level of principal or higher. However, we are ramping up our efforts to identify first-rate female candidates and encourage them to apply for jobs at all levels, including associate positions, internships, and other opportunities. These types of positions can serve as a gateway – one of our strongest interns is now pursuing her degree at Wharton, and we hope to continue to attract talented, high-performing young women through these channels.
Gretchen: At my firm, it’s the industry average, one in nine. Beth: A Crain’s Chicago article published in 2015 stated that “At the city’s 10 biggest private-equity firms, 69 of the 71 leadership positions, often known as managing directors, are held by men. The same profile is true at most of the 90 or so mid-sized and smaller companies in town. Women have climbed to secondary senior posts at a few firms, and a couple has founded small firms.”
“Women entering PE today can see women who hold senior positions in firms, which was quite rare for my generation.”
Gretchen Perkins
This dynamic exists across the private equity world, not just in Chicago. Crain’s also cited that, “Women hold 14.8 percent of senior roles in venture capital, up from 11.2 percent in 2013, versus 10.5 percent in private equity, up from 8.7 percent,” according to London-based data firm Preqin. The numbers are still low, but the presence of female leadership in private equity is growing.
Helen: At Pantheon, the ratio of female partners is 27% globally. I can’t speak on behalf of what the equivalent ratio is within the private equity industry more broadly, but a study by Preqin published in October 2017 found that senior women in private equity comprised 9% of the total. There are lots of different initiatives taking place across financial services, and I think in private equity we’re generally at a point where we can see which of those might transfer naturally to our industry, and focus on those.
First, it’s necessary to encourage women to join the private equity venture capital industry in the first place, and for that to happen we need to expand awareness of the industry across college campuses, we need to promote ourselves and be available to students when they are choosing their careers – we need to develop active outreach initiatives in order to be on their radar. Second, we need to do a better job of understanding that we need women to be represented at all levels and across all functions and to do a better job of communicating that no one function is superior to another.
Second, we need to do a better job of understanding that we need women to be represented at all levels and across all functions and to do a better job of communicating that no one function is superior to another.
Third, we need to encourage young women to make use of the networking and mentoring opportunities that exist today. At Level 20, which is a non-profit organization in the UK which I co-founded with 11 other senior women in private equity to encourage women to choose and build sustainable careers in private equity, we spent a lot of time analyzing different mentorship programs and then developing our own. There has been an enormous demand for it with 60 mentee/mentor pairs running in our current program.
Beth: Within McNally Capital, all three of our partners are men, and half of our Vice Presidents are women. I think that’s an important statistic that’s very indicative of how diverse our firm is and supports the idea that, while it will take time for women who have entered or are entering private equity to climb to partner level roles, there is an increasing number of women building careers in PE. With regard to driving change, from a macro perspective, there’s an increasing level of attention being paid to greater equality in the workplace, whether it’s with regard to gender or otherwise.
Most importantly from a macro standpoint, there’s been a big focus over the last several years on encouraging girls and women, whether it’s in high school, college or business school, to pursue careers in finance. I’ll go back to the point I made earlier - the support network of women in finance is a huge driver to the increasing number of women pursuing careers in private equity.
Are there initiatives within your firm to drive change? Are you aware of anything that’s happening?
Megan: Proactive policy changes are going to help accommodate the concerns of women. For instance, many private equity firms are following the lead of companies in other industries and adopting policies that provide greater workday flexibility.
“The support network of women in finance is a huge driver to the increasing number of women pursuing careers in private equity.”
Beth Rahn
Ours is a competitive and demanding business; women need to meet those job demands, but there is room for more flexible work schedules and greater work-life balance, especially for those women who have young children. My own firm has such policies in place, and it definitely is a differentiator. If I were to cite the top three things that private equity firms can do to increase gender diversity, they would be: (1) Get sustained commitment from senior leadership; (2) Develop a pipeline for hiring that includes internship and entry-level positions, not just midlevel and senior positions; and (3) Provide work-life support and flexibility for women who need it. We have those 3 things at Resilience and expect that they will pay dividends down the road.
Gretchen: For our board members and our management team members, we have an initiative which is part of my performance goals for this year (as it was last year) to build the number of diversity candidates, by ethnicity and gender, whenever we’re interviewing for a board member position or a management position at any of the portfolio companies. We are looking for that same diversity here at our firm, but frankly, there are just not a lot of women in the applicant pool. We currently have a female Vice President on our execution team, Danielle Lalli, and a female Principal on the Sourcing team, Heather Madland on the execution, the deal team. We look forward to further building our diversity here as we grow.
Megan: The private equity firm at which I work has a talented and experienced team that enables me to think of myself as a private equity investment professional first, and not only as a woman. I’m required to manage multiple complexities of deals, earn the trust of the management at our portfolio companies, collaborate and connect with our team and be accountable and take ownership of an entire platform. These are things that are required of a successful private equity investment professional, regardless of gender, and my firm empowers its people to take on responsibilities and make the most of themselves. In a smaller firm, such as Resilience, having fewer staff means that younger people are given greater responsibility – and gain more experience – early on. The sheer volume of work required means that you acquire knowledge and skills very quickly.
For instance, in 2016 we looked at the printing and communications space. By the time we closed the deal to acquire DG3, we immediately were able to launch a 100-day turnaround initiative. In the end, M&A Advisor named our acquisition of DG3 “Industrials Deal of the Year.” I’m proud to say that I now serve on DG3’s board, and we’re continuing to make real progress in the sector. That’s the kind of intensive experience you can gain at a smaller firm.
What are the advantages and/or disadvantages of being a woman in PE?
Beth: On the advantages side, women tend to bring a strong level of EQ to the table. In private equity, in particular, success is driven in large part by the ability to develop relationships and partnerships with CEOs, sellers of businesses, and investors. This dynamic within PE makes EQ particularly important.
Megan: Private equity is a fast-paced, competitive industry, and few people outside of it understand it very well. The biggest challenge I and many other young professionals face early on is learning to trust our own intuition and experience when developing and prioritizing new ideas for investments. One of the most effective ways of acquiring the experience you need actually comes through the investment sourcing and due diligence processes. When you are evaluating potential investments, you need to analyze large numbers of companies quickly and accurately.
For example, at Resilience, we reviewed 2,310 possible deals and closed eight in 2017. It’s a lot of work, and it’s also a great learning experience. Similarly, the due diligence process affords learning opportunities when you interview founders or principals at target companies. This is something that young professionals often are closely involved in alongside seniors, and it provides invaluable insights from people who really know their businesses.
Beth: I’ve spoken to a lot of female executives who have exceptional abilities to connect with CEOs, owners of businesses, and executives. They manage relationships in a different manner than a male colleague might, due to that EQ, and that dynamic can pay dividends.
Gretchen: I think it’s an advantage. It helps you stand out from the crowd. I don’t think it’s a disadvantage at all. A significant goal of any sizable private equity firm is branding. You need to brand the firm. What kind of firm are you? Who are you? Where in the market do you play? What is great about you? Do we even know about you? In the trusted advisor network to which we market (in addition to marketing directly to business owners), the answers to these questions are important for them to know before introducing us to their clients. Women stand out in the crowd because there just aren’t that many of us. It’s easier for them to remember us, thus remember our messaging/branding. It’s that simple. I think it’s a real advantage.
Beth: From the standpoint of disadvantages, call me an optimist, but I frankly don’t think there are many. There’s an increasing appreciation for the overall importance of having a balanced workplace. And so, there’s this increasing value attributed to having women in the finance and in the private equity communities. Currently, there are still far fewer women than men in private equity, so to some extent as a woman, you stand out in this industry whether you like it or not, which I would view as a good thing.
How many of your portfolio companies have women in management? We think that there are probably more women in consumer products, healthcare, food, lifestyle, cosmetics than in manufacturing and technology. Do you feel that is true?
Gretchen: If you go down to the add-on companies as well, we currently have fourteen women in leadership positions in our seventeen portfolio companies in a variety of capacities, from CFO to VP of Operations to VP of Design, to name a few. This is in addition to the many more we have had in similar positions in prior portfolio companies.
Megan: Currently, women are senior executives in our portfolio companies in relatively limited numbers. However, we have had a number of women in senior roles in the past. For example, Mary Petrovich served as chair and CEO of AxleTech International, which was one of our most successful investments. She’s now with The Carlyle Group, which acquired AxleTech, and once again is its chair. In great part, the number of women in senior roles in our portfolio companies reflects the industries in which we most frequently operate, such as manufacturing, mining, industrials and other sectors in which women historically have been under-represented. At Resilience, we look to hire women for senior positions, but to some extent, our progress is going to be determined by the numbers of women with significant operating experience in these industries.
Helen: It’s always going to be tough to generalize. Credit Suisse Research Institute produced a report in September 2016 which mapped 27,000 senior managers at over 3,000 largest companies globally. In terms of female CEOs and CFOs, the report suggested that women do indeed gravitate towards consumer discretionary and financials predominantly. But industrials and consumer staples were also strong. Technology and healthcare didn’t jump out as having notable representation. It doesn’t seem that surprising to also find in that study that certain sectors – chemicals, autos, metals and mining and tech hardware rated low for diversity. But, the Preqin study I referenced earlier, on the other hand, showed that across senior, mid-level and junior roles, venture capital (where tech innovation, of course, is generally to be found), female representation was actually higher than in private equity more broadly. So that’s encouraging, I think. There are campaigns at a political level now to bolster science, engineering, and coding as potential career choices for women.
“Many private equity firms are adopting policies that provide greater workday flexibility.”
Megan Horvath
Why did you choose private equity? What was your career path?
Beth: I’d say first and foremost, I believe in the value of private capital. At McNally Capital specifically, we focus on partnering with family office investors, and the value that direct family capital plays to support the growth of businesses over the long-term is immense. There’s a very pronounced strategic advantage in partnering with family offices to make investments in private businesses. Family offices offer a very acute level of industry and operational knowledge, given that most family offices created their wealth by owning, operating and building a private business themselves.
In addition, family offices offer a very flexible approach to making investments due to their ability to maintain a longer-term hold period with a private company. The philosophy that we at McNally Capital take to making investments and the ability that we have to drive growth within private businesses is incredibly valuable and is a key driver of my passion for this industry.
Finally, there are very few industries where you can be surrounded on a day to day basis with the level of talent you find in private equity, in terms of intelligence, problem-solving, focus on growing successful businesses, and focus on partnerships. The caliber of people in this industry is second to none, and there’s no other industry where I would be quite as challenged on a day to day basis. I joined McNally Capital after graduating from the Kellogg School of Management, where I earned my MBA. I had started my private equity career at Sterling Partners here in Chicago, where I held a fundraising role, and that was my introduction into private equity.
Helen: My route into investment was rather unusual. After completing an engineering apprenticeship with GEC-Marconi, and then graduating from the University of Cambridge with a degree in Engineering, I worked as a graduate engineer at Esso Petroleum in London but aspired to a more commercial role. Esso generously allowed me a sabbatical to pursue a master’s degree, and I was fortunate enough to win a Commonwealth Scholarship, which enabled me to study in Canada and obtain an MBA.
After graduating, I worked as an internal M&A specialist in Montreal before applying for a job with the Venture Capital Division of the Development Bank of Canada. After spending five years doing direct deals, I was hired by Canada’s Caisse de dépôt et placement du Quebec to run its European private equity program. When I joined CDPQ I was six months pregnant having taken a risk by telling my prospective employer about this during the interview. They offered me the position and were extremely supportive from the start.
At CDPQ and the Bank, I was lucky to have great mentors and sponsors, for which I have always been grateful. In 1999 I was approached by Russell Investments to move to Paris and lead its European PE program. After five years, Russell acquired Pantheon, and finally, in 2004, I moved back to the UK to lead Pantheon’s European Primary investment team.
The final episode of the story is that we completed a buyout of Pantheon in 2010 and are now completely independent. So, I suppose you could say that private equity chose me rather than the other way around, but I am so happy that happened, as I have been very lucky to develop an exceptionally rewarding career in an industry that is challenging, interesting and exciting.
Gretchen: I graduated from the University of Michigan. I wasn’t comfortable committing to an industry, so my plan was to go into commercial lending, so I could have exposure to different companies, different industries, and different business lines. Then, once I found an industry I liked, I figured I would go be a CFO at one of my borrowers one day. That was my thought as a 22-year-old entering the workforce. Well, +30 years later, I remain in an industry where I get exposure to a wide variety of businesses and industries, which I find fascinating and compelling.
I was in commercial lending for about 15 years, enjoying the variety of all the different companies/industries/management teams. Then, I was recruited by a private equity firm in Detroit – Long Point Capital. Ten years ago, Brian Demkowicz, the Managing Partner of my current firm, Huron Capital Partners, recruited me to lead a dedicated sourcing effort to help deploy its third fund, branding and generating deal flow.
Megan: Like many people, I acquired some of the qualities and personal traits early on that would direct my career. In my case, I spent my teenage years working for my mother, special events and wedding planner. I learned to manage multiple activities that progressed simultaneously but independently, and view them as an integrated whole. That’s exactly what you have to do during a deal-making process.
I also benefited from the direction of my grandparents. My grandfather was an engineer who always told me to “pay yourself first,” and my grandmother was an executive assistant for Mr. Ernst at Ernst & Ernst, which today is Ernst & Young. She helped nurture a lifelong interest in finance – which is what I majored in at the University of Notre Dame.
After college, I entered a two-year training program at KeyBanc Capital Markets. It was an intensive introduction to financial services, but what really caught my interest was an investment banking rotation I went through that had a strong M&A component. I did a lot of pitches, sell-side engagements and fairness opinions – the basic blocking and tackling of investment banking.
After completing the training program, I worked on M&A at KeyBanc for a couple more years as an investment banking analyst. I worked with private equity executives on transactions and found it attractive because it combined the excitement of dealmaking with the satisfaction of investing in companies and becoming a long-term partner with their leadership to generate value for your shareholders.
By the end of my fourth year at KeyBanc, I knew what I wanted to do: Source, develop and execute deals, and then help implement programs to generate value. Resilience was right in my hometown and that was their wheelhouse: Their investment strategy focused on special situations in a variety of deal contexts, and my background lined up with their focus on manufacturing and industrial companies. I joined them as their first female associate.
I have worked at Resilience for a decade. I’ve closed 18 deals in a variety of industries. I love the cadence of deal execution, from a deep dive on due diligence, to assembling a team of helpful outside professionals, to negotiating key points, to spearheading bank financing, all the while keeping multiple balls in the air at once and driving everything to come together on a set date.
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