The C-Suite Imperative

This issue of Pilot's Log focuses predominantly on management - how to measure (and predict) successful CEOs and what differences top CFOs can make to a portfolio business.

As pointed out in Dunedin Capital Director Mark Ligertwood's substantial Q&A piece, management change occurs to (at least) 25% of the individuals starting out with acquired portfolio companies. Some firms change in excess of one third (or more even), depending on what their investment strategy is. Changing out the FD is easier, and happens much more frequently, although having the wrong CEO in place can clearly be devastating.

Mark also touches on the importance of having appropriate NEDs around to act as mentors and to supplement perceived weaknesses among or between the CEO and CFO. This resonates with us as our recently launched Chairman and Non-Executive practice ('CANE') really swings into action. No part of our business is so sensitive to personality challenges among candidate short lists.

For me, however, Tony Lahert's contribution looking at what one's customers are really thinking is perhaps the most surprising. Buying a business is ever so complicated, particularly in the current climate. I know from my banking days when providing debt to sponsors, we inevitably focused on numbers and sector trends, but rarely had time to dig deeper. We relied upon the sponsor knowing the management teams and presumably the customer base. It would be interesting to see what failed deals of the past few years can be traced to customer issues/tastes rather than economic or competitive issues.

PILOTpartners is really grateful to all the contributors to this edition of Pilot's Log:

• Mark Ligertwood, a director with Dunedin Capital Partners, provides his insight into what traits successful private equity backed CEOs display, along with his top 10 CEO wish list. Coming from a 'management-friendly' firm, and having worked with many different management teams, Mark's insight is very informative.
• Tony Lahert, CEO of Customer Heartbeat and widely credited as one of the top consumer/retail analysts in the UK, points out a potentially dangerous 'blind spot' when investing in a new business, namely not thoroughly understanding the customers of your future investment. Hugely important in retail but a warning for all sectors, surely.
• Another issue of PILOTcases, our feature highlighting recent and very relevant case studies; this one focuses on four interim CFOs, all with a mandate for significant change in tough situations.
• David Ives, a long term committed turnaround CFO, explains why he went down the interim executive route, the dangers of displaced permanent FDs masquerading as interims, and why top notch interim FDs really can be counted on to be appropriately aligned with the business, its sponsor and lender.

Pilot's Log readership increases every issue which pleases us immensely – maybe we have more time on our hands? No, surely not. We are always happy to consider content suggestions for Pilot's Log, so don't hesitate to contact James Wheeler or me.

Michael Gebauer Partner – private equity practice E. m.gebauer@pilotpartners.eu T. +44 (0)783 423 5458