Bull or Bear? | October
BULL OR BEAR?
“What are the key success factors for a Private Equity CEO that are equally relevant to his or her executive leadership team?”
According to a 2017 Alix Partners survey, 73% of Private Equity CEOs are replaced during the investment life cycle (usually five years) and 58% are gone within two years. So, what are the questions you should ask yourself if youâ€™re considering moving into this high pressure/high reward position? Here are five:
- Can you be satisfied executing the predetermined Private Equity sponsor strategy prebaked into the investment thesis rather than formulating an original business strategy?
- Can you cope with tight and frequent oversight by the Private Equity sponsor/board members with a board meeting or board call at least once per month?
- Can you make rapid decisions with incomplete information including the removal and replacement of senior executives who are not doing the job you need done?
- Can you wear multiple hats â€“ for example, CEO/COO/CAO all rolled into one — and consistently multi-task without contracting attention deficit disorder?
- Can you focus on EBITDA above all other performance measure, even at the expense of growth if necessary to exit well?
If, after some genuine introspection, you can honestly answer the questions above in the affirmative you may be better off as a CEO than dealing with quarterly earnings releases and related analyst conference calls, often hostile activist shareholders, and short-term hedge fund driven stock price gyrations that often characterize the public markets these days.
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