How to Avoid ‘The Disgruntled CEO’

After investing in a company, a deal’s success often depends on how well a GP can get along with the existing CEO. Experts from ADP, 3i and The Riverside Company explain.

GPs typically face one of two attitudes when mapping out a human capital strategy with the founder of an newly acquired company: willing acquiescence or thinly veiled deceit.

An important discussion about alignment must come early on in the deal, Chris Capko, vice president of global private equity at ADP, tells Privcap in an exclusive panel. Also important: knowing how to handle the founders’ reaction to the plan.

Capko says there are two typical outcomes. The best is when a GP comes in, the founder is receptive and there’s perfect synergy. The worst? A founder says, “Ok, that’s great, we’ll go with it,” and the next day tells the team otherwise.

Michael Thompson, an operating partner at The Riverside Company, said he follows an approach described by former Yankees’ manager Joe Torre: “I sit one-on-one with each player and I understand what is the essence that they’re trying to get out of being a part of this team.”

You can view a clip of the video here:

https://privcap.wistia.com/medias/lc6j6p8iri

Watch the full video or download the transcript here, in which the panel discusses the best practices in vetting founders after the investment.