Author: Gerald O'Dwyer

Written By: Gerald O’Dwyer the PE Guru

In the challenging world of Private Equity (PE), preparation for a CEO role begins far in advance. A case in point is the BlackmoreConnects platform, created by Blackmore Partners, Inc, and five PE firms. It was designed as a nurturing ground for executives, both seasoned and new in PE, to expand their knowledge base and secure their future success. 

The platform highlights the importance of establishing a broad network of PE relationships, emphasizing that the preparation for a future CEO role should start by building a network of 200+ PE relationships. This extensive funnel of contacts, when combined with active interactions, ensures a secure future role and a substantial monetary benefit at the end of the line. 

Executives must also forge strong ties with owners in their respective industries in the current climate of high deal costs, soaring interest rates, and inflation. Being ready with a well-structured playbook before making a purchase is crucial, as attempting to learn and hone PE skills after being hired can lead to a turbulent experience. 

The Challenges of Private Equity Leadership 

The CEO role within a PE firm offers a unique set of challenges. These leaders need to perform with the efficiency of a public or private company CEO but at a heightened pace. It is also crucial that executives get to grips with the specifics of the PE landscape quickly as there is limited written guidance on the unique demands of a portfolio-company CEO role. 

The leadership traits considered essential for success in this role include non-hierarchical thinking, a deep understanding of financial metrics, and superior team-building skills. Additionally, CEOs need to capitalize on the vast support network provided by large PE firms, which includes operations teams, functional experts, senior advisors, and other CEOs. 

The CEO must learn to thrive in this high-stakes environment, considering the historical increase in PE deals and the urgency to understand the CEO role. The increase in global PE deals after significant COVID-19-related disruptions further intensifies the need for adept leaders. 

Navigating the PE Landscape: Key Strategies 

The unique demands of a PE CEO role require a set of specialized strategies and an adaptable mindset. The following strategies are found to be particularly beneficial: 

1. Align with the Investment Thesis:

It is important for CEOs to align their decisions with the investment thesis and keep a keen eye out for creative ways to expand the value-creation plan. 

2. Maintain Speed:

As capital in PE clocks at 20-25% per year, it is critical for CEOs to maintain speed and stick to strict timetables to deliver the deal thesis. 

3. Build Stakeholder Relations:

A PE CEO needs to understand the views and expectations of stakeholders, assemble a competent team, and form a network of trusted advisors. 

4. Develop a Realistic Plan:

 Unrealistic, overly optimistic plans can be detrimental to the company’s future. Realistic goals aligned with the management and board are essential for success. 

5. Leverage Resources:

 Top PE firms offer a wealth of resources to improve the operating performance of their companies. The CEOs should identify these resources and integrate them into their operating model. 

The role of a PE portfolio-company CEO is undoubtedly demanding, but with the right mindset, network, and strategies, it can be a highly rewarding experience. The guidance offered by BlackmoreConnects equips CEOs with the necessary tools to navigate this intricate landscape successfully, better aligning their leadership style with the way companies are financed, run, and valued in the PE world.