Why Executive Hiring Is the Linchpin in Private Equity’s Power Play on the Electrical Grid

Why Executive Hiring Is the Linchpin in Private Equity’s Power Play on the Electrical Grid

How transformational leadership drives value creation in utilities manufacturing M&A

In the high-stakes arena of private equity (PE), speed and precision often define success. But as capital continues to flood into the utilities manufacturing space—specifically the components critical to electrical grid modernization—many firms are discovering that financial engineering alone won’t carry the day. Instead, they’re beginning to see executive talent as the true differentiator among key players.

Consider this: the transformer shortage has evolved beyond a supply chain inconvenience into a systemic vulnerability threatening grid reliability, energy transition timelines, and national security. PE firms have recognized the opportunity, with investments in grid infrastructure manufacturers doubling in value over the last year alone. But identifying the right target is only half the battle. Integrating, scaling, and unlocking operational efficiency within these acquisitions requires a caliber of leadership that understands not just how to build a business, but how to transform it.

Let’s break down why executive hiring has become the cornerstone of private equity’s long game in this rapidly evolving industrial sector.

As Capital Flows to Manufacturing, Execution is More Important Than Ever

Between Q1 and Q3 of 2024, private equity deals in the U.S. power industry surged by over 45% in volume and reached $6.9 billion in total value. Mid-market manufacturers—many of them family-owned or founder-led—now sit at the center of aggressive roll-up strategies. The idea is simple: consolidate a fragmented market, create scale, and capitalize on secular tailwinds like electrification and data center expansion.

But what looks elegant on paper can unravel in execution. Operational integration, cultural misalignment, and a lack of scalable systems are the silent killers of post-acquisition value. Without the right leadership at the helm—one that can manage both the complexity of manufacturing operations and the strategic imperatives of private equity mandates—investors risk eroding returns and timelines.

The Blackstone–Power Grid Components Deal: Thesis in Action

Take Blackstone’s $600 million acquisition of Power Grid Components, Inc. (PGC) as a telling example. PGC wasn’t just another component supplier. It was a platform built through thoughtful consolidation under Shorehill Capital and seasoned grid veteran Rick McClure. The leadership team understood the nuances of high-voltage switchgear, insulators, and transformer manufacturing. More importantly, they had the operational chops to turn fragmented businesses into a unified, growth-ready enterprise.

Blackstone saw more than market share in PGC. More importantly, they saw a leadership team capable of absorbing capital and translating it into durable scale. In sectors where technological evolution is slow but regulatory complexity is high, executional confidence matters more than visionary risk.

Supply Chain Constraints Are Also Leadership Challenges

Much has been written about the global transformer shortage and supply chain disruptions in grid equipment. But beneath the headlines lies a deeper truth: the problems here cannot be boiled down to simple logistical or procurement issues. Ultimately, they must be understood as strategic leadership challenges by anyone who seriously strives to overcome them.

Effective CEOs and COOs in this space must do more than “manage risk.” They must proactively design supply networks for resilience, deepen relationships with second-tier suppliers, and anticipate geopolitical volatility across sourcing geographies. And they must do all this while meeting aggressive growth targets set by their PE sponsors.

That’s why we increasingly see firms prioritizing executive candidates with experience in high-mix, low-volume production, and deep operational benchmarking skills. These are the leaders who can align processes with PE expectations and still keep the factory floor humming.These are the executives who will be able to strategically navigate their allegiances to the myriad forces at play here.

Manufacturing Leadership Has Become a Strategic Asset

Historically, PE firms have tended to over-index on financial levers: cost-cutting, bolt-ons, and margin optimization. But in sectors tied to national infrastructure, regulatory frameworks, and technical specifications, the model changes. What investors need are leaders with manufacturing fluency and strategic clarity.

These executives need to understand the ripple effects of changing DOE guidelines or utility RFP requirements. They need to speak fluently with engineers, regulators, and investors alike. They are often the glue that holds post-deal integrations together.

In our work with both PE firms and manufacturing executives across utilities, energy, and industrial tech, we’ve found the most successful hires share three key traits:

• Systems Thinking: The ability to connect operational dots across procurement, compliance, and customer delivery.
• Private Equity Acumen: Understanding how decisions impact EBITDA and enterprise value, not just throughput.
• Change Management Leadership: A track record of transforming legacy operations without losing key institutional knowledge.

Talent is the Multiplier

Sometimes well-worn cliches are well-worn for a reason. As it turns out, in manufacturing, another one holds true: capital buys the tools, but talent builds the machine.

In a space where deal multiples are climbing and the margin for error is shrinking, private equity firms that underestimate the complexity of leadership transitions do so at their peril. Hiring transformational executives is now as much of an investment strategy as a human resources priority.

At Kersten Talent Capital, we help clients in PE and manufacturing to fill leadership gaps and rethink what leadership means in a time of industrial reinvention. Whether it’s guiding a roll-up through integration or finding a CEO who can scale production to meet data center demand, our focus is singular: to ensure your human capital matches the financial ambition.

In a market as complex—and as critical—as utilities manufacturing, the right executive isn’t a “nice-to-have;” they’re the linchpin. Without them, your grid goes down.

Interested in making the right executive hire for your portfolio company?

Kersten Talent Capital specializes in helping PE firms and industrial organizations align leadership with growth. Reach out to us via michael@kerstentalentcapital.com to set up a specialized consultation.