The Speed of Private Equity


All CEOs think they move fast, but private equity almost always moves faster.


Overview

If corporate America is the fast lane, then private equity is the autobahn.  It’s as if the term urgency doesn’t translate across asset classes. We need a new word, for private equity purposes, that loosely translates to working faster and harder than you’ve imagined, sustained over 4-5+ years.

Self Aware Blind Spot

Every CEO I have ever interviewed has believed herself or himself to have a deeply rooted sense of urgency.  And yet most executives are caught flat-footed by the breakneck pace of private equity.  Sponsors frequently complain about the pace of management and this disconnect creates unnecessary friction between the Board and the CEO.  CEOs need to get into sync with their Board’s pace and, if they can, move slightly faster still.

100 Day Plan Mentality

The urgency starts the minute the new portfolio company is acquired with the launching of the 100-day plan.  This plan is designed to make massive progress across a number of key initiatives.  The theory is that the momentum gained from this plan will pay dividends throughout the hold period.  The truth is that every quarter will have the feel of its own 100-day plan with ample measuring sticks in the form of the weekly/daily update calls with the Chairman, monthly operating reviews and – of course – the quarterly Board meeting.

What about Mitigating Mistakes and Failure?

The reality is that CEOs can’t move at a private equity pace without making mistakes…frequent mistakes.  Mistakes are welcome so long as CEOs fail fast, pivot quickly and stay focused on creating massive action.  With enough activity, a smart CEO’s mistakes will fade in the blinding light of their wins.  CEOs need to accept risk as part of the equation.  When leaders swing for the fence, they will occasionally strike out, and that is more than OK – its the point.

What to Do?

When CEOs believe they are moving fast, they need to move faster.  Leaders will benefit from open lines of communication with the Board about pace.  CEOs would be wise to remember that in private equity, now means yesterday.  When leaders master the psychology and habits of pace, they set the groundwork that improves their chances to win in a private equity-backed company.

About Rob Huxtable

Rob serves as the Managing Partner of Integis, a retained executive search firm with offices in New York, Cleveland and San Francisco that is exclusively focused on the private equity-backed, middle market.  The firm’s mission is to drive multiples of invested capital (MOIC) for private equity firms by recruiting high-impact portfolio company C-Suite leaders.  The firm has played a key part in helping many of its private equity clients achieve top-quartile and top-decile results.  Under Rob’s leadership, Integis has been twice recognized as one of America’s fastest growing privately held companies by the Inc. 5000 in each of the last two years.

Written by Rob Huxtable

Rob is a recognized expert on the topic of private equity CEO performance and recruitment. He is Founder & Principal of PrivateEquityCEO.com. He is also Managing Partner of Integis which is the nation’s leading search firm focused exclusively on the private equity-backed, middle market.

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