PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
2024, another year of exploding activity in the professional services sector. Private equity firms are flocking to the industry, drawn by opportunities to consolidate fragmented markets and modernise businesses using technology. But behind it all lies a critical question: how do you build success on people?
Some examples highlighting this trend are:
Clayton, Dubilier & Rice (CD&R) acquired a majority stake in U.S.-based consultancy Ankura Consulting Group.
KKR invested in April, France's largest wholesale insurance broker, and Indian IT services firm, HCL Technologies.
EQT acquired U.S.-based digital consultancy Perficient.
And more recently, Cinven announced plans to acquire Grant Thornton UK
Unlike other industries, where tangible assets or intellectual property might take center stage, professional services is all about people. Therefore, ensuring alignment between employees and the broader business strategy is not just a priority—it’s a necessity. One of the most effective ways to achieve this is through a well-structured, broad-based employee equity plan.
Designing an Employee Equity Plan for Professional Services
A strong equity plan rewards, builds loyalty, and attracts top talent. However, designing such a plan requires forethought and careful execution. Here are five key principles to consider when implementing an employee equity plan in a professional services business:
1. Future Proof Your Plan
Employee equity plans should be scalable. As your business grows, so will the number of participants, especially with a buy-and-build strategy. Ensure that additional team members can join over time without significantly diluting the equity held by initial members. This foresight avoids potential friction and ensures long-term satisfaction among all stakeholders.
2. Standardisation is Key
Set up clear, standardised processes for handling joiners and leavers from the outset. Consistent documentation and valuation processes ensure fairness and transparency while reducing administrative burden. Standardisation also prepares your business for smoother audits or future exit.
3. Empower Your Management Team
The management team should have the tools and authority to decide on individual equity allocations and administer joiner and leaver processes. Empowering them ensures agility and builds trust, enabling decisions to reflect both individual contributions and broader business needs. This also helps the PE firms scale beyond the hours spent by their investment professionals.
4. Clear and Regular Communication
Transparency fosters trust. Communicate the details of the equity plan with employees regularly, whether that’s annually or tied to key milestones. Educate plan members on the relationship between business performance and the value of their equity. Understanding the "why" behind the numbers strengthens alignment and motivation.
5. Leverage Technology
Equity management softwares have evolved significantly. Make sure the platform aligns with your business’s specific needs and complies with legal requirements in your jurisdiction. For example, does your software generate the legal register? Does it deliver various signature types defined under eIDAS in Europe (including EU Advanced Electronic Signatures (AES) and EU Qualified Electronic Signatures (QES)) and that aligns to FDA 21 CFR part 11 in the US? Is it integrated with local registries like Companies House? Can it standardise your fund reporting? The right technology reduces administrative complexity, ensuring a seamless experience for both the company, its lead investor and its employees.
The Path Ahead
Private equity’s interest in professional services shows no signs of slowing down. The industry’s potential for growth, combined with its people-centric nature, makes it a prime candidate for thoughtful investments. However, success in this space hinges on recognising that people are not just employees—they’re partners in the journey.
Ready to take your equity plan to the next level? Let us show you how Centi can make the process easier and more effective.
PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
2024, another year of exploding activity in the professional services sector. Private equity firms are flocking to the industry, drawn by opportunities to consolidate fragmented markets and modernise businesses using technology. But behind it all lies a critical question: how do you build success on people?
Some examples highlighting this trend are:
Clayton, Dubilier & Rice (CD&R) acquired a majority stake in U.S.-based consultancy Ankura Consulting Group.
KKR invested in April, France's largest wholesale insurance broker, and Indian IT services firm, HCL Technologies.
EQT acquired U.S.-based digital consultancy Perficient.
And more recently, Cinven announced plans to acquire Grant Thornton UK
Unlike other industries, where tangible assets or intellectual property might take center stage, professional services is all about people. Therefore, ensuring alignment between employees and the broader business strategy is not just a priority—it’s a necessity. One of the most effective ways to achieve this is through a well-structured, broad-based employee equity plan.
Designing an Employee Equity Plan for Professional Services
A strong equity plan rewards, builds loyalty, and attracts top talent. However, designing such a plan requires forethought and careful execution. Here are five key principles to consider when implementing an employee equity plan in a professional services business:
1. Future Proof Your Plan
Employee equity plans should be scalable. As your business grows, so will the number of participants, especially with a buy-and-build strategy. Ensure that additional team members can join over time without significantly diluting the equity held by initial members. This foresight avoids potential friction and ensures long-term satisfaction among all stakeholders.
2. Standardisation is Key
Set up clear, standardised processes for handling joiners and leavers from the outset. Consistent documentation and valuation processes ensure fairness and transparency while reducing administrative burden. Standardisation also prepares your business for smoother audits or future exit.
3. Empower Your Management Team
The management team should have the tools and authority to decide on individual equity allocations and administer joiner and leaver processes. Empowering them ensures agility and builds trust, enabling decisions to reflect both individual contributions and broader business needs. This also helps the PE firms scale beyond the hours spent by their investment professionals.
4. Clear and Regular Communication
Transparency fosters trust. Communicate the details of the equity plan with employees regularly, whether that’s annually or tied to key milestones. Educate plan members on the relationship between business performance and the value of their equity. Understanding the "why" behind the numbers strengthens alignment and motivation.
5. Leverage Technology
Equity management softwares have evolved significantly. Make sure the platform aligns with your business’s specific needs and complies with legal requirements in your jurisdiction. For example, does your software generate the legal register? Does it deliver various signature types defined under eIDAS in Europe (including EU Advanced Electronic Signatures (AES) and EU Qualified Electronic Signatures (QES)) and that aligns to FDA 21 CFR part 11 in the US? Is it integrated with local registries like Companies House? Can it standardise your fund reporting? The right technology reduces administrative complexity, ensuring a seamless experience for both the company, its lead investor and its employees.
The Path Ahead
Private equity’s interest in professional services shows no signs of slowing down. The industry’s potential for growth, combined with its people-centric nature, makes it a prime candidate for thoughtful investments. However, success in this space hinges on recognising that people are not just employees—they’re partners in the journey.
Ready to take your equity plan to the next level? Let us show you how Centi can make the process easier and more effective.
PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
2024, another year of exploding activity in the professional services sector. Private equity firms are flocking to the industry, drawn by opportunities to consolidate fragmented markets and modernise businesses using technology. But behind it all lies a critical question: how do you build success on people?
Some examples highlighting this trend are:
Clayton, Dubilier & Rice (CD&R) acquired a majority stake in U.S.-based consultancy Ankura Consulting Group.
KKR invested in April, France's largest wholesale insurance broker, and Indian IT services firm, HCL Technologies.
EQT acquired U.S.-based digital consultancy Perficient.
And more recently, Cinven announced plans to acquire Grant Thornton UK
Unlike other industries, where tangible assets or intellectual property might take center stage, professional services is all about people. Therefore, ensuring alignment between employees and the broader business strategy is not just a priority—it’s a necessity. One of the most effective ways to achieve this is through a well-structured, broad-based employee equity plan.
Designing an Employee Equity Plan for Professional Services
A strong equity plan rewards, builds loyalty, and attracts top talent. However, designing such a plan requires forethought and careful execution. Here are five key principles to consider when implementing an employee equity plan in a professional services business:
1. Future Proof Your Plan
Employee equity plans should be scalable. As your business grows, so will the number of participants, especially with a buy-and-build strategy. Ensure that additional team members can join over time without significantly diluting the equity held by initial members. This foresight avoids potential friction and ensures long-term satisfaction among all stakeholders.
2. Standardisation is Key
Set up clear, standardised processes for handling joiners and leavers from the outset. Consistent documentation and valuation processes ensure fairness and transparency while reducing administrative burden. Standardisation also prepares your business for smoother audits or future exit.
3. Empower Your Management Team
The management team should have the tools and authority to decide on individual equity allocations and administer joiner and leaver processes. Empowering them ensures agility and builds trust, enabling decisions to reflect both individual contributions and broader business needs. This also helps the PE firms scale beyond the hours spent by their investment professionals.
4. Clear and Regular Communication
Transparency fosters trust. Communicate the details of the equity plan with employees regularly, whether that’s annually or tied to key milestones. Educate plan members on the relationship between business performance and the value of their equity. Understanding the "why" behind the numbers strengthens alignment and motivation.
5. Leverage Technology
Equity management softwares have evolved significantly. Make sure the platform aligns with your business’s specific needs and complies with legal requirements in your jurisdiction. For example, does your software generate the legal register? Does it deliver various signature types defined under eIDAS in Europe (including EU Advanced Electronic Signatures (AES) and EU Qualified Electronic Signatures (QES)) and that aligns to FDA 21 CFR part 11 in the US? Is it integrated with local registries like Companies House? Can it standardise your fund reporting? The right technology reduces administrative complexity, ensuring a seamless experience for both the company, its lead investor and its employees.
The Path Ahead
Private equity’s interest in professional services shows no signs of slowing down. The industry’s potential for growth, combined with its people-centric nature, makes it a prime candidate for thoughtful investments. However, success in this space hinges on recognising that people are not just employees—they’re partners in the journey.
Ready to take your equity plan to the next level? Let us show you how Centi can make the process easier and more effective.
PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
2024, another year of exploding activity in the professional services sector. Private equity firms are flocking to the industry, drawn by opportunities to consolidate fragmented markets and modernise businesses using technology. But behind it all lies a critical question: how do you build success on people?
Some examples highlighting this trend are:
Clayton, Dubilier & Rice (CD&R) acquired a majority stake in U.S.-based consultancy Ankura Consulting Group.
KKR invested in April, France's largest wholesale insurance broker, and Indian IT services firm, HCL Technologies.
EQT acquired U.S.-based digital consultancy Perficient.
And more recently, Cinven announced plans to acquire Grant Thornton UK
Unlike other industries, where tangible assets or intellectual property might take center stage, professional services is all about people. Therefore, ensuring alignment between employees and the broader business strategy is not just a priority—it’s a necessity. One of the most effective ways to achieve this is through a well-structured, broad-based employee equity plan.
Designing an Employee Equity Plan for Professional Services
A strong equity plan rewards, builds loyalty, and attracts top talent. However, designing such a plan requires forethought and careful execution. Here are five key principles to consider when implementing an employee equity plan in a professional services business:
1. Future Proof Your Plan
Employee equity plans should be scalable. As your business grows, so will the number of participants, especially with a buy-and-build strategy. Ensure that additional team members can join over time without significantly diluting the equity held by initial members. This foresight avoids potential friction and ensures long-term satisfaction among all stakeholders.
2. Standardisation is Key
Set up clear, standardised processes for handling joiners and leavers from the outset. Consistent documentation and valuation processes ensure fairness and transparency while reducing administrative burden. Standardisation also prepares your business for smoother audits or future exit.
3. Empower Your Management Team
The management team should have the tools and authority to decide on individual equity allocations and administer joiner and leaver processes. Empowering them ensures agility and builds trust, enabling decisions to reflect both individual contributions and broader business needs. This also helps the PE firms scale beyond the hours spent by their investment professionals.
4. Clear and Regular Communication
Transparency fosters trust. Communicate the details of the equity plan with employees regularly, whether that’s annually or tied to key milestones. Educate plan members on the relationship between business performance and the value of their equity. Understanding the "why" behind the numbers strengthens alignment and motivation.
5. Leverage Technology
Equity management softwares have evolved significantly. Make sure the platform aligns with your business’s specific needs and complies with legal requirements in your jurisdiction. For example, does your software generate the legal register? Does it deliver various signature types defined under eIDAS in Europe (including EU Advanced Electronic Signatures (AES) and EU Qualified Electronic Signatures (QES)) and that aligns to FDA 21 CFR part 11 in the US? Is it integrated with local registries like Companies House? Can it standardise your fund reporting? The right technology reduces administrative complexity, ensuring a seamless experience for both the company, its lead investor and its employees.
The Path Ahead
Private equity’s interest in professional services shows no signs of slowing down. The industry’s potential for growth, combined with its people-centric nature, makes it a prime candidate for thoughtful investments. However, success in this space hinges on recognising that people are not just employees—they’re partners in the journey.
Ready to take your equity plan to the next level? Let us show you how Centi can make the process easier and more effective.
PE’s Boom in Professional Services: Why Employee Equity Matters
Private equity firms are flocking to the industry. But how do you build success on people?
centi.
We are modernising the Equity management workflows in Private Equity - contact us for more info.
centi.
We are modernising the Equity management workflows in Private Equity - contact us for more info.
centi.
We are modernising the Equity management workflows in Private Equity - contact us for more info.
centi.
We are modernising the Equity management workflows in Private Equity - contact us for more info.