The Weak Link in Predicting Private Equity Investment Success
Talent decision analytics pay off across every business metric!
No industry is more disciplined in analyzing data relevant to investments than are Private Equity firms. Their financial, operational and market analyses are comprehensive and rigorous to ensure the best investment decisions for their investors and portfolio companies.
On the other hand, evaluation of leadership, organization and culture is subjective at best. While many case studies demonstrate that the health of an organization’s culture and quality of leadership are top predictors of success, measuring those critical factors has been more an art than a science. In fact, recent McKinsey research found that investors have attributed 65% of portfolio company failures to people and organizational issues. 1 Having a sound succession plan and the right team in place for ongoing success has been a top priority for global organizations for many years. This advice is equally vital for PE firms. Yet, measuring leadership fit and cultural health has been the weak link in predicting success for Private Equity investments!
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