[Bain & Co.] If private equity came knocking, which execs make the cut?

If private equity partners came knocking at your door looking for a portfolio company, would your current leadership team make the cut?

PE firms are all about accelerating growth and company valuation as quickly as possible.

So are you.

But in an increasingly competitive environment, are you prioritizing the leadership behaviors PE firms know accelerate growth even faster?

Hugh MacArthur, the head of Bain & Company’s global PE practice, describes PE’s “final frontier” as, “Getting much better at talent assessment and performance management in portfolio companies.” He goes on to share Bain’s observation of a growing push within PEs for “fit-for-purpose” talent, defined as having a leadership team with the capability to “execute on the investment thesis” of the General Partners.

In other words, the right leadership (as always) is the key to success.

But how do you measure that within your firm?

Bain & Company’s recently released 2018 Private Equity Report highlights the vital need for strategies to identify the strengths and constraints of a company’s leadership.

According to the report, top performing PE-held companies are first and foremost, “Honing their leadership assessment skills, learning to identify the right team early and fill roles with fit-for-purpose talent, from the C-suite to the front line.”

To accomplish this critical task of identifying the “talent needed to win,” these same top-performing companies are, “Using traditional tools, advanced analytics or a combination of both.”

Many of the premier PE firms around the world use Flippen Group tools and processes.

Here’s an example:

“We engaged the Flippen Group to help us assess the strengths and constraints of the CEO and Executive Team of a recently acquired portfolio company. Data from the Flippen Profile™ gave us actionable insights to quickly optimize the company’s performance. We made these changes in early 2017. As of spring 2018, we are on a path to an early exit, perhaps 1.5 years earlier than expected!”
— Board Chairman of a Private Equity Group

What are some behaviors we measure and coach on that fuel the phenomenal growth of our PE client companies?

First is Urgency and Intensity. This scale measures an individual’s value of time and task motivation, indicating their ability to drive tasks to completion promptly. As Dr. Chris White, chief science officer at the Flippen Group, says, “I don’t mind providing people external motivation when needed, but if you want rapid growth, it’s better if they have an internal fire and task urgency.”

Next, we look at both Nurturing and Criticality. PE firms are going to push their new acquisitions hard. Leadership teams need an intentional balance between holding their teams and each other accountable for execution and expressing enough care and encouragement, so people feel valued and don’t jump ship.

Dominance and Deference are bilateral behavioral scales helping identify who within the entire series of interactions might come across as overly controlling, overly passive, or can push for their point of view without appearing stubborn.

Finally, we measure an individual’s Need for Change, which helps identify who within the target company may be resistant to imposed changes. If a team has a low aggregate score on this scale, it creates friction, and execution slows.

So, how are you measuring and improving your leadership team’s ability to accelerate growth to create value?

You don’t have to be a PE portfolio company to have a leadership team capable of delivering growth and value.

We’re standing by to help! Contact us.

For more than 25 years, the Flippen Group has leveraged neuroscience, psychometrics, and adult-learning technologies to bring out the best in Fortune 500 companies, school districts, government organizations, and professional sports teams. Our behavioral analytics tools, combined with expert coaching, help leaders solve the complex people issues that make leading teams so challenging.