Collaboration with the private equity sponsor is something that most CEOs need to learn by trial and error. The level of transparency and partnership demanded by the general partner is often not something a senior executive is used to, especially if they previously ran a family business or corporate division.
Who said it: Andros Payne, founder Humatica, management consultancy
In Context: The turnover of CEOs in private equity- owned companies is on the rise, says Andros Payne (indeed, departures of US CEOs reached a six-year high in 2014, with churn up by 7.6% from 2013, according to a report by Challenger, Gray & Christmas). It seems that PE owners are pressing the eject button more often. Andros Payne says it may be true that turnover is increasing but so is pay for top level managers. He explains the higher pay/higher churn trend like this: the “gifted” CEOs who understand how to manage and balance conflicting expectations of diverse stakeholders are paid well and retained longer. Those that are not will be released faster. He also has tips for both CEOs and buyout houses to have better and more productive relationships, such as giving CEO’s a crash course in governance, having board members spend some time in mentoring, and being sensitive that to the fact that the CEO skills needed to do a turnaround are not necessarily the same as those required to grow a venture. CEOs that want to improve their longevity once a buyout house has taken a stake in his/her ventures have to be more transparent and communicative, and get very good at taking calculated risks. (Image source: Humatica)
Where we found it: Real Deals