PE Heading in a New Direction
To succeed in a world where variables such as leadership, talent, culture, and reputation rival traditional financial performance and industry analysis, the industry needs new comparative benchmarks and tools to help make the intangible tangible.
An article published in Harvard Business Review entitled Private Equities New Phase states that from 1996 to 2015, the number of publicly traded companies in the United States alone dropped nearly 50%. And as a result there has become a shift in the evolution of private equity. And that this shift means that PE firms’ approaches to talent and leadership must also change. This doesn't come as a surprise to us. We are seeing more and more transactions where a leadership and culture focus is part of the process. And studies that suggest that assessing the collective leadership capabilities of acquiring and target companies should be part of the due diligence that precedes an M&A offer and supports integration planning. This suggests that middle managers at targeted companies are crucial to success, and efforts to retain them (through contracts typically given to higher-level leaders) could be beneficial.