5 Questions with a 5%-er

5 questions with a CEO


We had a chance to sit down with a Lancor 5%-er in Software and Information Services to ask him five questions.

In our conversation, we chatted about what exactly makes a "5%-er", top tips from his playbook, and his approach to building strong and successful management teams.


1. What makes a 5%er?

I believe 5-%-ers effectively call upon a collection of intellect, curiosity, leadership, perseverance, and discipline. The most successful leaders are versatile enough to switch between strategic and operational matters, especially within a global context, and are equally good at building and leading teams. Top performers ask good questions because they realize they don’t have all the answers, and their ability to quickly learn, and get to the essence of an issue is often a key differentiator.

2. What are the chapters of your playbook?

I’m a big believer that everything must be considered within the proper context. It’s important to first understand your industry and competitive landscape as a CEO since that environment shapes whatever strategy you develop for the success of the company and organization that you lead. Then, it’s focusing on the economics of your business and determining what the 2-3 drivers are that will generate the most sustainable long-term value for the business. I always find it essential to visit customers, along with your sales team, to gain an unfiltered view of how you’re doing and how to better add value to their business so a true partnership is forged.  Spending a lot of time with all levels in your organization is essential to determine how to best improve your people and create a more collaborative, high-performance team. It also helps employees or the team get to know you better so they gain a higher confidence in your leadership and decision making; and it’s essential to creating the type of culture you need for success. Finally, it’s paramount that you communicate your strategy and company priorities to your organization frequently. I have never regretted holding a company-wide town hall, or office specific conversation. It helps bond the organization, as well as being a great experience for all as everyone gets to speak up, share their perspective, and have some fun.

3. How can PE firms differentiate themselves with top talent?  

Access to capital is increasingly easier to attain these days so how a PE firm works with management teams during a transaction, and then once the investment is made is increasingly critical. A few basic, yet important, areas of differentiation are how involved in the operations of the business does a PE firm become? Some firms are investing heavily in internal consulting teams which then amass a large, historical fact base and norms that enable them to direct management teams on implementing best practices. Some firms are more aggressive with respect to new customer acquisition, and can proactively help their companies open doors at potential customers much faster and more effectively given their broad and senior-weighted networks. Others are more differentiated in their visibility and access to potential add-on acquisitions that can accelerate an asset’s strategic plan and growth. Finally, often firm style can differentiate PE firms – do you engage with your CEO and exec teams in board meetings only; or do you have more frequent interactions that foster a more effective, and personal, working relationship?

4. What are you most interested in when reviewing a new PE-backed opportunity?

I’ve been fortunate to have worked closely with several PE firms in my career. It always starts with the PE firm’s investment thesis – what is/was compelling about the asset that drove initial investment? How has the business performed and why? It’s always important to me that there be plenty of growth potential and white space associated with the business, and that its competitive advantage is clear and sustainable. I typically work in the tech sector, so assessing the tech platform and team is critical before the investment is made. The PE firm always has data and ideas associated with the company’s performance and management team before you walk in the door. That provides helpful context for any CEO, but it ultimately rests upon you to quickly diagnosis the business and the organization so you can set a clear strategic direction, change the cadence of the organization, and ultimately, improve the performance of the company.

5. When building your management teams, what are the consistent themes of top colleagues?

I often draw upon my experience playing team sports as a metaphor for management teams. Sports helped me better value harmonizing diverse players into a unified organization that have a common goal. It’s important to build a team of people who are smart and intellectually curious. I find it critical to have a group of people comfortable with challenging the status quo and not falling prey to an industry’s tribal practices (and every industry has them!).  I find that members of a team are most effective when they are able to work within a framework based on fact and data, and rely less on historical practice and gut feel.  This often de-politicizes decision making and creates more of a culture based on meritocracy and performance. I have found it critical that teammates be transparent with each other, and to be able to debate workplace matters in a manner where everyone’s ideas are respected.  However, once a decision is finalized, everyone equally supports and executes that decision if it were their own. Finally, I find that the best teams are ones where the individuals enjoy being around each other and truly value their colleagues’ experience, diversity and personal perspectives.  That takes some time, engineered events to create a team environment, and the CEO modeling the desired team behavior.

 

Scott Estill

Scott is a Partner at Lancor and has over 20 years of deal generation, M&A, financial services and executive recruiting experience. He leads Lancor's New York City office. Through Lancor's Advisory practice, Scott and his team assist private equity funds with originating and appraising potential transactions, sourcing industry experts for pre-acquisition due diligence, and finding backable senior management teams. Scott has worked within the banking and private equity ecosystem as a banker and by serving C-suite and board level multinational clients within the private equity and family office sectors.