Saddle Creek LLC has partnered with Perth Leadership Institute (“PLI”) to launch an innovative new product for Management Due Diligence (“MDD”) for Private Equity firms. This new service is the only one of its kind and can be utilized for both the initial evaluation and due diligence of a CEO or management team for a new investment or as an evaluation tool for existing management of a portfolio company. This approach is based on over 10 years of research in the area of behavioral finance which integrates psychology and financial behaviors of executives. Our assessments can provide a forecast of management financial results based solely on executives’ behaviors, both team and individual.
When evaluating a new investment, this process assesses levels of business acumen of executives and how this will impact their financial results in measurable terms and how they are likely to perform in a larger and rapidly growing organization. The past record of an executive is not necessarily a reliable guide for future performance. PLI’s research indicates that all individuals have distinct, identifiable, and measurable financial traits and competencies. These traits have a highly predictable impact on financial decisions and, ultimately, profitability and growth. This approach can evaluate executive’s behaviors, business personality and unconscious cognitive biases which will impact financial outcomes and results. This is invaluable information to more accurately forecast financial results when evaluating executives or forming a profitable management team in private equity transactions.
For existing portfolio companies, MDD can answers questions such as:
- Where are the hidden profitability problems?
- Which executives have not been discovered who could supercharge portfolio profitability?
- Which managers would be good for different types of businesses, companies and markets?
MDD allows for more scientific decisions about hiring, firing and succession based on behavior variables which are connected to financial results which lead to an overall increase in returns on investment. Insights are also gained on where executives are most valuable in financial terms, types of companies & financial cultures. New talent can be evaluated more thoroughly for the best fit and utilization. These assessments, both individual and team, can also be used for improving performance by strengthening areas of behavior.
Our MDD program provides the following unique deliverables:
- Pschometric assessments
- Team Financial Outcome Analysis
- Individual Behavioral Proforma ™ Income Statement for all participants
- Team Behavioral Proforma ™ Income Statement
- Team training (optional)
- Individual Coaching Sessions (optional)
© Saddle Creek LLC & Perth Leadership Institute