Reflections from the Savant Event on 8th April 2025
On the 8th of April 2025, Savant had the privilege of hosting an exclusive dinner at The Royal Air Force Club, where senior executives gathered to explore the intricacies of leading within Private Equity-backed businesses. With valuable insights from Wendy Hart of HMT LLP and Mike Hicks of Catalysis Advisory, we delved into what makes a successful management team in the Private Equity space, and how senior leaders can navigate this dynamic environment.
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Wendy Hart, The Seven C's of Building a Winning Management Team
In her thought-provoking discussion, Wendy Hart shared her expertise on what Private Equity investors are truly seeking in a management team. In an environment where the stakes are high and the expectations from investors are equally significant, understanding the core attributes that investors evaluate can make all the difference.
Wendy highlighted her “Seven C’s,” a framework to assess whether your team is ready for the rigours of Private Equity backing:
Competence: Private Equity investors seek management teams that demonstrate real competence, with leaders who possess both the technical expertise and hands-on experience to tackle current business challenges.
Coverage: A strong team ensures all key aspects of the business are covered, even in founder-led businesses where titles may be informal.
Conviction: Investors want management teams that are deeply involved in shaping business strategy and are fully committed to executing the business plan while growing the company in a defendable niche.
Chemistry: Internal chemistry is essential, with collaboration and respect between team members being crucial. Equally important is ensuring that investors believe they can work effectively with the team for the long term.
Capacity: As Private Equity-backed businesses often face rapid growth, investors need to assess whether the current management team has the capacity to handle accelerated expansion, acquisitions, and international growth.
Commitment: Investors are looking for teams that are fully committed to the journey for four to five years, ensuring alignment with investor goals.
CEO: The role of the CEO is paramount. Investors seek a strong, decisive leader who is prepared to take responsibility for the business’s direction. For founders, it’s vital to prepare a capable successor when Private Equity investors come on board.
Mike Hicks, Key Leadership Insights for Private Equity
In his session, Mike Hicks presented an invaluable set of propositions designed to help senior leaders navigate their relationships with investors. His advice centred on the importance of understanding the investor mindset and aligning expectations from the outset.
Investor Diversity: Private Equity investors come in many forms, with diverse leadership styles. Recognising these differences early and understanding who you're working with is essential to ensuring a productive relationship.
Divergent Views on Growth: Investors and management teams often approach business growth from different perspectives. It’s crucial to have a “translator” who can bridge this gap and ensure mutual understanding of growth strategies to avoid potential misunderstandings.
Establishing Clear Expectations: One of the fundamental pillars of a successful partnership is mutual clarity. Taking the time to clearly define and align expectations with your investors is critical for smooth collaboration.
Investor Focus on Returns: While investors are deeply focused on generating returns, their approach can lead to both positive and negative behaviours. It’s essential to unpack what ‘value creation’ means in practice and ensure alignment between your team’s objectives and investor expectations.
The Strategy Gap: Investors are typically strong in financial strategy, but business strategy often requires a different set of skills. It’s important to ensure that the management team has a firm grasp on the strategic direction and is prepared to lead the business beyond just the numbers.
The Role of the Chair: Many PE firms delegate much of their relationship with management to the Chair. Understanding the power dynamics within this role—and ensuring you have a say in the appointment—is vital for maintaining alignment between the management team and investors.
Team Effectiveness: Investors often overlook team dynamics and organisational effectiveness. As a management team, it’s your responsibility to stay attuned to how the team is performing and ensure it is primed for the challenges ahead. Mike’s insights serve as a powerful reminder that navigating leadership in Private Equity requires a careful balance of clear communication, strategic foresight, and an acute awareness of both team and investor dynamics
Conclusion
The event on 8th April offered valuable insights into leading in Private Equity-backed businesses. It highlighted the need to understand investor expectations, build strong leadership teams, and maintain clarity in roles and relationships. Reflecting on the frameworks shared by Wendy Hart and Mike Hicks will help you assess your team’s readiness and align expectations with investors, positioning your business for long-term success.
We look forward to continuing these vital conversations and collaborating with you to foster exceptional leadership in your businesses.
