{"id":1892,"date":"2003-12-09T00:00:00","date_gmt":"2003-12-09T00:00:00","guid":{"rendered":""},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-30T04:00:00","slug":"this-weeks-private-equity-report","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/12\/2003\/this-weeks-private-equity-report.html","title":{"rendered":"This Week’s Private Equity Report…"},"content":{"rendered":"
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12\/10\/03: #8 <\/font><\/font><\/font><\/strong><\/i><\/font> <\/p>\n

Private Equity Update<\/font><\/font><\/font><\/strong><\/i><\/font> <\/p>\n

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How do you spot a good CEO? <\/span> \u00c3\u00af\u00c2\u00bf\u00c2\u00bdYou\u00c3\u00af\u00c2\u00bf\u00c2\u00bdll know one when you see one,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd we used to believe . . . but recently we acquired a powerful new tool that we are using to objectively assess CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds of companies we are considering investing in.<\/font><\/font><\/font><\/i><\/font> <\/p>\n

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Recently we held a workshop for our portfolio company CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds as part of a series of such workshops we periodically hold. <\/span> The topic was pure \u00c3\u00af\u00c2\u00bf\u00c2\u00bdcastor-oil\u00c3\u00af\u00c2\u00bf\u00c2\u00bd human resources topics such as employment practices, sexual harassment, and the like. <\/span> But there was a rich \u00c3\u00af\u00c2\u00bf\u00c2\u00bddessert\u00c3\u00af\u00c2\u00bf\u00c2\u00bd that followed that we as investors appreciated. <\/span><\/font><\/font><\/font><\/font> <\/p>\n

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Young company CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds are far more eager to improve their skills in the areas of business development and sales practices, where they can see an immediate benefit, and tend to ignore the human resources area. <\/span> Yet this is the area that can consume their time, energy and the firm\u00c3\u00af\u00c2\u00bf\u00c2\u00bds capital when they get into difficulty.<\/font><\/font> <\/p>\n

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After reviewing compliance and motivational issues, the program facilitator, Gabrielle (\u00c3\u00af\u00c2\u00bf\u00c2\u00bdGaby\u00c3\u00af\u00c2\u00bf\u00c2\u00bd) Jenkins, of Bridenbaugh Partners, reviewed the strengths and weaknesses of the CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds as a group. <\/span> This was their reward for having endured the previous material, however interesting it actually turned out to be. <\/span> Prior to the workshop each CEO completed a ten-minute assessment over the web consisting of multiple choice questions. <\/span> Upon completing the assessment a 25 page computer evaluated report was immediately emailed to them.<\/font><\/font> <\/p>\n

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The partners of our fund took the on-line assessment as well and we were impressed with how accurately it described each of our strengths and<\/i> weaknesses. <\/span> We generously awarded an 80-90% accuracy to it. <\/span> Then Gaby reviewed the assessment with us individually by phone, and each of us increased our accuracy rating. <\/span><\/font><\/font><\/font><\/font> <\/p>\n

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Gaby explained that the assessment is an excellent tool for determining the fit of an executive with a particular position. <\/span> She described how she used it to evaluate a candidate for a sales engineering position who management thought was perfect. <\/span> \u00c3\u00af\u00c2\u00bf\u00c2\u00bdHe won\u00c3\u00af\u00c2\u00bf\u00c2\u00bdt close a customer,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Gaby told them. <\/span> \u00c3\u00af\u00c2\u00bf\u00c2\u00bdHe\u00c3\u00af\u00c2\u00bf\u00c2\u00bdll schmooze them and the customers will love him, but he won\u00c3\u00af\u00c2\u00bf\u00c2\u00bdt ask for the order.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd <\/span> The Company hired someone else who has performed above expectations.<\/font><\/font> <\/p>\n

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What about \u00c3\u00af\u00c2\u00bf\u00c2\u00bdgood\u00c3\u00af\u00c2\u00bf\u00c2\u00bd CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds and \u00c3\u00af\u00c2\u00bf\u00c2\u00bdbad\u00c3\u00af\u00c2\u00bf\u00c2\u00bd CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds we asked . . . can they be identified with any reliability? <\/span> \u00c3\u00af\u00c2\u00bf\u00c2\u00bdThey too, have a distinct profile,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Gaby responded. <\/span> I believe that I can tell you which of your current CEO\u00c3\u00af\u00c2\u00bf\u00c2\u00bds are the weaker ones and those that are likely to be most successful,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd she added. <\/span> So we are working with Gaby to create a profile that we can correlate with our own experience and that of other venture capital funds, to refine the pattern for a \u00c3\u00af\u00c2\u00bf\u00c2\u00bdgood\u00c3\u00af\u00c2\u00bf\u00c2\u00bd versus \u00c3\u00af\u00c2\u00bf\u00c2\u00bdbad\u00c3\u00af\u00c2\u00bf\u00c2\u00bd or potentially problematical\/underperforming CEO.<\/font><\/font> <\/p>\n

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Why? <\/span> Because the CEO of any company is the prime mover, the driving force that can affect the company\u00c3\u00af\u00c2\u00bf\u00c2\u00bds performance. <\/span> As fund managers, we have the responsibility to seek outstanding performance in each of our investments. <\/span> We now have one more tool to accomplish this, to help us sort out the right people before we invest.        <\/span><\/font><\/font><\/font><\/font> <\/p>\n

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Andrew Clapp is a founding partner with Boston-based Brook Venture Fund, which is currently raising Brook Fund II. <\/span> He can be reached at<\/font> aclapp@brookventure.com<\/font><\/a> or 617-451-2450. <\/span> Or visit<\/font> www.brookventure.com<\/font><\/a> <\/i><\/font> <\/p>\n

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#  <\/span> #  <\/span> #<\/font><\/font><\/font><\/span><\/font> <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

12\/10\/03: #8 Private Equity Update   How do you spot a good CEO?  \u00c3\u00af\u00c2\u00bf\u00c2\u00bdYou\u00c3\u00af\u00c2\u00bf\u00c2\u00bdll know one when you see one,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd we used to believe . . . but recently we acquired a powerful new tool that we are using to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1892","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/1892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=1892"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/1892\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=1892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=1892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=1892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}