This article was previously published on LinkedIn.
Here are some of the highlights that resonated with me...
I. Current Trends in PE Impacting the Operating Partner Role
- Pressure to create value from LPs is pushing GPs to cut HQ costs and push them out to portfolio companies, compressing growth trajectory for many OPs
- More emphasis on industry specialists and ex CEOs with specific industry backgrounds
- Role is evolving, smaller operating staffs and more integration with deal teams
II. Talent - Improving Hiring Outcomes
- More emphasis on outside independent assessment protocols such as Hogan and Scorecards
- Have a clear idea of who you are trying to hire
- Use assessments and scorecards during diligence
- Insist on a consistent approach to interviews
- Consider how culture will impact performance
- Ask if the position spec is realistic
- Invoke onboarding and follow up with new executive hires
III. Turnarounds - a How-to-Guide
- 68% of attendees polled cited incompetent managers as the single biggest cause of business failure
- Belief is that good leaders build companies that can withstand competition and cost pressures
Best practices include:
- Flatten the organization
- Find the “go-forward” team
- CEO needs to communicate with all employees
- Reorient employees to what the real business is
- Focus on the sales team
IV. Growing Revenue in Portfolio Companies
- Conference attendees believe more focus is needed in driving revenue growth in their portfolio companies.
How to motivate portco CEOs to improve in this area?
- Bring in outside advisors; let them choose between two firms
- Share opportunities discovered during diligence
- Ensure that the CEO is aligned with value creation model of PE
- Develop a systematic approach to tracking and measuring sales growth
- Be agile, reallocate people, money and time every 90 days