The war for talent; The trend is unmistakable: executives are opting for the world of private business.

• Author: Carey, Dennis
• Position: GUEST COLUMN - Column

ONE OF US helps prepare future managers for the executive suite, and the other helps place accomplished managers in the executive suite. Though at opposite ends of the career line, we are hearing the same refrain: Get us into private equity!

Private equity--that world of investment firms like Blackstone Group and Clayton, Dubilier & Rice (CD & R)--is still a small slice of corporate space. Assets managed by private equity firms--estimated at several hundred billion dollars--are still dwarfed by those held by public equity firms like Fidelity and Vanguard, estimated at several trillion dollars.

Still, an emergent trend is unmistakable: Blackstone Group began with $84 million under management in 1987; today it oversees $6.5 billion. Started in 1978, CD & R now presides over $3.5 billion. Today, more than 100 private equity firms each manage at least a billion dollars.

The private equity trend is equally evident in business schools. Though investment banking and management consulting remain the careers of choice for MBA students, the real buzz is now around private equity. "The interest level in private equity is off the charts," says the Wharton School's career director, Peter Degnan. In his survey of 800 incoming MBA students conducted last August, 150 placed private equity at the top of their career choice list, up from 110 just two years earlier.

The trend is also evident in executive search. From our experience, many more executive candidates would now opt for placement in a firm that is privately held--or, even better, a private equity investment firm--if the choice is placed in front of them.

And it is evident in post-executive choice. When Lou Gerstner retired as CEO of IBM in 2002, he opted to become chairman of a private equity firm, the Carlyle Group. When Jack Welch stepped down as CEO of GE in 2001, he chose to work with CD & R.

Private equity had been gathering steam for a decade, but the Enron and WorldCom bankruptcies and the Sarbanes-Oxley regulations have accelerated the tempo--and made the world of private business that much more attractive. Public-company executives complain about burdensome reporting, and directors wonder if board service is worthwhile anymore. They daily feel the probing eye of equity analysts, the heavy hand of institutional investors and shareholder activists, and the caustic attitude of politicians and journalists. The outside world is demanding better performance and lesser pay, but private-company...