knowing your people

Too often, investors ignore, underestimate or postpone dealing with people. They focus on financial, commercial, and operational data and miss entirely the significance and the importance of human issues.

A company is not a collection of human resources, but a community of human beings. Leadership due diligence is unfortunately an exception when it should be a rule when investing. Why? Simply because if the company to be invested in has a people problem, ultimately this will have a negative financial impact.

When dealing with a target company, we help investors identify the gap between the skills the leadership team needs to flawlessly execute the strategy and the skills and competencies they actually have. The goal is to empower the right people and give them the means to successfully lead the company to the next phase.

1What Most of Investors Do

We did some interviews in order to define what you actually do:

Unstructured, non- standardized, non-expert opinion based on interviews and presentations of the management team (pre and post transaction)

  • Typically in "normal" circumstances

Focused on technical (functional) skills and competencies

  • Is he/she a good CFO or not
  • Team dynamics of less importance

Backward Looking

  • Business performance as the ultimate assessment tool
  • Keep or replace type of decisions
  • Often first year as the threshold

Replace (negative scenario)

  • Decisions made after one year
  • New CEO arrives at the end of the second year in portfolio
  • Half of the investment period without a high performing team
2Our Leadership Due Diligence Process

We have developed an assessment model:

Structured, standardized process based on professional science-based and widely recognized assessment tools, interviews, and reference checking

  • Assessing "Professional" personality and potential derailers if under stress

Assessment of:

  • Technical/functional skills
  • (Soft) competencies
  • Professional behaviours
  • Team dynamics

Specific to the business case/strategy

Forward Looking

  • Predicting performance
  • Develop and support type of engagement
  • Business risks mapping

Replace (negative scenario)

  • Full picture available in the first quarter of investment
  • Team dynamics taken into account
  • Often current team engaged into change (buy-in)
3Our Science-Based Tools

We are using well-recognized assessment tools as well as face-to-face interviews to:

  • Clarify roles team members naturally fit and the mixture of roles on the team
  • Bring to light strengths and team culture
  • Highlight potential blind spots or derailers
  • Provide insights and recommendations in a blueprint of changes to implement that will enhance team performance
4How Clients' Benefit - Business Case 1

Investing and Scaling Up a Tech Company

Background 

The client is an Asian Family Office investing in a tech firm based in Europe that was supposed to scale up from 200 FTEs to 1000 FTEs in one year, including by opening offices in the US.

Problem

Prior to investing in the company, the FO needed to be sure that the Leadership Team was able to flawlessly execute the strategy and that they had the leadership skills to lead the scaling up of the company.

 

Read Amrop's solution for this case. 

5How Cleints' Benefit - Business Case 2

Venture Capital Fund

Background:

The client is one of the most active Early-Stage Fund in the Nordics, backed by institutional investors, who have invested in over 30 companies since 2018.

Problem

We began the collaboration with the fund upon inception of the business, as the client knew that people is the biggest risk of a company and was convinced of the importance of knowing the leadership team in the success of an investment. The approach was to systematically evaluate the founding teams of the start-ups they invested in, using a well-recognized, structured and  credible leadership assessment tool, rather that only the gut feeling of the investors.

 

Read Amrop's solution for this case. 

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