We assess the current- state human capital of potential portfolio companies against the forward-looking investment thesis. Our analysis helps identify strengths to leverage, gaps to close, and needed organizational and people development to accelerate value creation out of the gate post-close. We arm the investors, Board, and CEO with counsel to strengthen their partnership and alignment.
Private Equity Due Diligence
Building confidence in investment hypothesis through leadership insights
Situation & challenge
- Our client was a private equity sponsor in the diligence phase with a healthcare software company that was led by multiple co-founders who were also serving as first-time co-CEOs
- Our client’s investment thesis relied on strong tailwinds in the industry, but required very rapid scaling of the portfolio company’s core technology into new verticals
- The sponsor had questions about the leadership team’s ability to scale, the viability of the co-CEO structure, and their openness to guidance as new CEOs – and turned for ghSMART for support
Scope of work
- ghSMART helped the sponsor translate their investment thesis into critical outcomes to be delivered during the hold period
- We conducted SmartAssessments® for the co-founders against this organizational Scorecard and collected 360-degree feedback for them to understand their potential to scale as well as their current effectiveness
- From the review, we drew insights on their ability to deliver on the Scorecard and analyzed their motivations and preferences to understand their likely openness to feedback from the sponsor
- Finally, we developed an action plan for the sponsors that laid out the most critical moves, key hires to make and a systematic influencing approach to drive towards achieving the investment goals in collaboration with the leadership team
Impact and results
- The analysis showed that while both co-CEOs were talented technologists, who were key to retain, neither leader was motivated or equipped to scale the organization. However, both were willing to partner with the sponsor
- Through our analysis, the sponsors gained confidence to pursue the deal, and had “a much better idea of what we are getting into now”
- Within a year, the co-founders had stepped into new roles on the leadership team that were better suited to their strengths. Subsequently, ghSMART helped assess and onboard a new CEO who would work well with both the co-founders and sponsors
- The company has since outperformed its targets over the last two years and is one of the highest growth companies in our client’s portfolio
"No investment is more important than building our teams, and ghSMART helps us do it right."
"I have worked with ghSMART for over 10 years while I was Chairman and CEO of AMETEK Inc. Our biggest challenge was in sourcing and developing leadership, while growing at a very rapid rate. ghSMART was instrumental in their assessments of potential candidates to facilitate the selection and subsequent onboarding of top tier individuals for high level positions. The ghSMART methodology is superb."
"When FORTUNE broke off from Time Inc., we needed to build a high functioning team, much of it from scratch. ghSMART made it possible for us to do that. In an economy where talent is the most important resource, ghSMART understands that resource, and how to get the maximum from it, better than anyone else I know."