January Views from Banff
We hope your new year is off to a great start. With the overarching theme that up is down and down is up and no one is quite yet set at where the market is, there is still a great deal going on and we are excited to share what we are hearing. Let’s get right into it.
Boards and CEOs
Hiring activity remains consistent among Fortune 1000 CEOs. There were 119 CEO transitions in 2022 versus 113 in 2021. Gender diversity is up and racial diversity is down. External hires made up 34% of the total transitions, with a higher proportion of external hires being gender/ethnic diverse. Of external placements, one-third came from a different industry. Most notably, 59% of external hires were first time CEOs, and nearly 20% of those new hires were women. - Heidrick F1000 CEO Report
Does overboarding lead not just to capacity issues but also lack of opportunities and thus diversity in its broadest sense? “This is an important governance issue given value-adding Boards need real time to engage. I wonder how much of the over-subscription of go-to board members is because companies continue to select from an extremely narrow pool of people who are ‘already in their network’. If we think more broadly about the diversity of people and experiences that could contribute meaningfully to boards, it may solve multiple issues at once.” - Carolyn Dewar (McKinsey)
Our Reflections
After what had been a “wait-and-see” Q4 with high valuations, price of funding, and CEOs of distressed assets holding out hope for a quick rebound, private equity and activist investors are starting to shift toward action. We are seeing a great deal of requests for backable CEOs across sectors.
In the messy ecosystem of being an early-stage founder, some are wondering if this is the right time to lean in or the right time to step aside. Many are being encouraged to step aside, but it’s never easy, leaving scars on both sides of the negotiations and ultimate deal (founders and investors).
Getting an offer agreed to is as hard as it has ever been. Similar to what we saw in 2009-10, the market hasn’t fully reset for both sides (it has for employers, not for talent). For leaders coming into private companies, benchmarks on equity are nearly useless without a down-round. We are seeing new (greatly reduced) 409a’s through to bridge financing being requested to try to normalize equity packages. This leaves existing leaders in a tough (underwater) situation, with stars getting spot awards at new valuations.
Executive leaders not in full-time roles are finding their dance cards filled very quickly with advisory roles - from due diligence to day-to-day advising. And if you have a target idea and a team, there’s capital waiting for you.
DEI and Career Paths
According to AdAge, listings for DEI roles were down 19% last year — only software engineering and data science jobs saw larger declines, at 24% and 27%, respectively, indicating that tech company layoffs are acutely affecting DEI efforts, as the function creeps toward the top of the chopping block.
A nod to the Career Portfolio: A recent article by HBR shows that a linear career path is not as common as one might think. Just 27% of college grads have a job closely related to their major, and more than 53% of those who quit their job in 2021 changed their field or occupation. For those concerned that it’s too late or that they’re too old to make a change, a survey of people who attempted a career change after age 45 found that not only were 82% of career changes successful, but also that 87% were happy or very happy they had made the change.
What We Are Reading
What will happen in 2023? A calendar of the year - Richard Nelsson
Top Risks 2023 - Ian Bremmer and Cliff Kupchan
Paradise - Lizzie Johnson
One-on-One with Jennifer Morgan - Blackstone
LIFE in Some Pictures - Dr. Joerg Storm
A causal test of the strength of weak ties - Karthik Rajkumar et al.
A Fun Q&A
Do you have a question for the community? Ask it! We will source questions from the community and share them in our next newsletter.
As always, please don’t hesitate to reach out to us at any time.
- The Banff Team
