What Private Equity Needs Now...

Is Success all about Closing the Deal?

No. Success is great execution of strategic goals.

The numbers have been crunched, the operational inefficiencies identified, the value strategy decided upon. There is a gaping hole in the analysis - the people who have to execute.

No problem, we have our pool of ‘athletes’ - Seasoned executives who have done this many times - leading a company to better outcomes (sometimes).

A true differentiator in the PE industry is a focus and understanding of the people that come along with the transaction. Will they be able to quickly start executing the new strategy? Can they motivate others to produce? Can they make new teams work together?

In Bain & Company’s 2018 Global Private Equity Report, they stated:

“Hesitation…can be a major source of value loss, as it too often results in unplanned replacements to course correct for suboptimal performance.”

The report also found that PE assessments of management teams - especially in failed deals, were excessively optimistic. In an analysis of deals that ultimately ran into trouble, private equity’s pre-close management assessments rarely identified problems. Only 2% of Management Team assessments were categorized as ‘Weak’.

The Tool

The Predictive Index® Behavioral, Cognitive and Job Assessments reduce the risk of getting it wrong. The data from the tools provides invaluable insights into the factors that can reliably predict the success of each person and team being evaluated. The tool can be used to scientifically evaluate not just the leadership team but mid-level management who will be critical to the success of the new strategy. It can also be used with the Sales team to identify people who can aggressively find new customers vs. those who rely on product expertise to sell, which may result in lower revenue.

PI Team Workstyle Report

In the above visual, this team might be great at running a mature business that focuses on operations, it may not be able to execute a growth strategy that relies on finding new markets and developing new product lines that fuel growth.

The Predictive Index tools are easy to use and only require about 5-10 minutes to complete the assessments. The science has been developed over 60 years and is rigorously validated and is highly reliable.

Day 91 Consulting is a Predictive Index Certified Partner who specializes in helping small to mid-market Private Equity firms assess and develop talent in their portfolio companies.

For more information on using Predictive Index tools to mitigate your ‘People Risk’ contact

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