Success in private equity-backed portfolio companies is largely contingent on whether cohesion exists at the top. Executive cohesion is especially critical when managing the complex relationships with stakeholders and the board, which is endemic to private equity. Despite the importance of this attribute in a PE transaction, according to PE-CXO’s recent survey, 72.5% of all respondents gave the cohesion among their executive team a low rating.
This is concerning given how important executive team cohesion is to productivity, employee retention and success overall. A lack of cohesion is a problem at all levels of an organization, but when the executive team is in disarray, it makes it particularly challenging to achieve the kind of growth necessary for a successful exit. According to a recent study by Bain & Company, company performance is highly dependent on the leadership team’s ability to act as a collective, and effective leadership teams consistently outperform strong individual leaders.
Communication is Key to Executive Cohesion
PE relies on upfront, transparent communication throughout a hold period, particularly during due diligence and acquisitions. As such, when the executive team experiences conflict, it’s critical to address these at their root to prevent complications from multiplying across an organization. According to our recent PE-CXO...