Leadership Risk A Guide for Private Equity and Strategic Investors

by Cooper, David

• ISBN13: 9780470032640
• ISBN10: 0470032642
• Edition: 1st
• Format: Hardcover
• Copyright: 2010-05-03
• Publisher: Wiley

Summary

This book is a practical guide for private equity investors. It sets out a framework for understanding, assessing and managing the risks associated with senior management during the due diligence process of an acquisition.. This provides an essential input into the wider due diligence review and a sound basis for managing the investment after the deal has been done so as to maximise the chances of a successful exit. The book comes at a time of significant growth in the field of private equity. In the UK over 3 million people (around 18% of all private sector employees) now work for private equity backed companies. It is estimated that European funds currently have somewhere between #200 and #300 billion to invest over the next few years. In the US, the whole issue of private equity due diligence is much more advanced but it is still likely that due diligence will remain a significant issue for private equity investors for the foreseeable future.

Author Biography

David Cooper is a specialist in the assessment and development of senior executives and supports investors in managing leadership risk. For the first eleven years of his career he worked in the risk advisory group at Arthur Andersen. He then completed a Masters degree in Organisational Psychology at the London School of Economics, where he began to develop the concept of 'leadership risk'. He went on to become one of the few Chartered Accountants to qualify as a Chartered Psychologist and founded Cooper Limon, a professional advisory business specialising in management due diligence and portfolio review for Private Equity and Strategic investors. Through Cooper Limon and in his role as head of executive assessment at Praesta Partners, an international coaching firm, he has assessed and coached several hundred senior executives and advised some of the world’s leading Private Equity funds. He continues his research into leadership risk and has spoken internationally at both Accounting and Psychology conferences.
David can be contacted at [e-mail]

Table of Contents

Acknowledgements	p. xi
Introduction	p. 1
The Problems of Leadership Risk	p. 2
The Problems of Leadership Assessment	p. 3
The Principles Underpinning this Book	p. 4
The Audience for this Book	p. 7
The Structure of this Book	p. 9
The Landscape of Leadership Risk	p. 11
Introduction	p. 11
The Financial Perspective	p. 12
A Brief History of Risk and Uncertainty	p. 14
Leadership Theory	p. 17
Leadership Risk and Uncertainty	p. 18
Leadership Risk in Business Performance	p. 19
The Four Quadrants of Awareness	p. 22
Summary	p. 23
References	p. 24
Overview of the Leadership Risk Mapping Framework	p. 25
Introduction	p. 25
Overview of the Stages of the Framework	p. 30
Summary	p. 35
Planning and Preparation	p. 37
Introduction	p. 37
Planning Through the Four Quadrants of Awareness	p. 38
Summary	p. 49
Deciding What to Assess at an Individual Level	p. 51
Introduction	p. 51
Leadership Competencies	p. 53
Psychological Traits	p. 56
Motivation	p. 59
Some Common Characteristics of Successful Private Equity-backed Chief Executives	p. 62
The Importance of Context	p. 64
Summary	p. 66
References	p. 67
Conducting Assessments at an Individual Level	p. 69
Introduction	p. 69
Individual Interviews	p. 71
Multi-rater Feedback	p. 75
Assessing Psychological Traits	p. 78
Review of Available Documentation	p. 80
Summary	p. 81
Deciding What to Assess at a Team Level	p. 83
Introduction	p. 83
Which 'Team' to Assess	p. 84
The Outer View of the Investee Team	p. 86
The Inner Perspective - Team Dynamics	p. 93
The Outer View of the Investor	p. 96
The Inner View of the Investor	p. 97
Summary	p. 98
Reference	p. 98
Conducting Assessments at a Team Level	p. 99
Introduction	p. 99
Interviews with Team Members	p. 101
Interviews with Other Stakeholders	p. 102
Feedback Questionnaires	p. 103
Existing Documentation	p. 105
Aggregate Data from Individual Team Members	p. 106
Live Observation of the Team	p. 108
Summary	p. 110
What to Assess at an Organisational Level	p. 113
Introduction	p. 113
Insights from the Four Quadrants of Awareness	p. 116
Summary	p. 123
References	p. 124
Conducting Assessments at an Organisational Level	p. 125
Introduction	p. 125
The 'Top-down' Perspective	p. 127
Data from Other Levels of Assessment - the 'Bottom-up' View	p. 133
Summary	p. 135
Reference	p. 136
The Review Phase	p. 137
Introduction	p. 137
Considerations in the Four Quadrants of Awareness	p. 138
The Review Process	p. 141
Report Format	p. 146
Summary	p. 150
The Address Phase	p. 153
Introduction	p. 153
Addressing Leadership Risk at an Individual Level	p. 154
Addressing Leadership Risk at a Team Level	p. 157
Addressing Leadership Risk at an Organisational Level	p. 160
Summary	p. 161
Reference	p. 162
Third-party Service Providers and their Approaches	p. 163
Introduction	p. 163
Considerations in the Four Quadrants of Awareness	p. 165
Third-party Suppliers and their Approaches	p. 167
Identifying Potential Suppliers	p. 172
Summary	p. 174
Appendices	p. 177
Index	p. 233
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