Here's why PE firms are hiring more operating partners - Business Insider

Some of the most famous operating executives have included Jack Welch, the former CEO of General Electric hired by Clayton Dubilier & Rice in 2001.simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.

Firms are sitting on nearly $2.5 trillion in unused investor dollars, and bidding for companies at higher and higher prices to put that money to work. "Operating partners are being viewed as equals to investment professionals, which was not the case in the past," said Jonathan Goldstein, a recruiter at Heidrick & Struggles, noting that "the investment professional as the dominant driver of value in a private equity firm is diminishing."

Partners Group, with $91 billion in assets under management, didn't have a dedicated operating team in 2011. Now it has more than 40 people for private equity alone, not counting infrastructure or real estate, according to a firm spokeswoman. It's not stopping there, though, and is looking to bring its PE operating partner ranks closer to the size of its team of investment professionals.

Nowadays, investors want operating execs to be a key part of the PE deal team, Adamson said, with their roles encompassing broader responsibilities, from conducting due diligence to serving as board members, to exiting a company. At Blackstone, for instance, its operating team was once housed only in its private equity division.

But lately, PE firms have also been seeking to expand their rosters by hiring more junior staff, rather than picking just senior executives that make for splashy headlines, industry experts said. KKR said that it is continuing hiring in KKR Capstone, but on a highly selective basis, in areas deemed strategic to KKR.

Late cycle warning

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