The Morgan Samuels Perspective

Morgan Samuels gives back with Operation Gratitude!

Posted by Morgan Samuels on Fri, Aug 5, 2016

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L to R: Alicia Montgomery, Angela Wynn, Robby Kempton, Bert Hensley

Recently, the Morgan Samuels team proudly participated in Operation Gratitude's Battalion Buddies program.  Our team members built over 100 of these cuddly bears to be sent in care packages to the youngest Warriors — the children of deployed Military.  The specific intent of Battalion Buddy packages is to provide comfort to those children who will not see their parent for a long time and need something to hold on to.  Each Battalion Buddy wears a tag saying: “Hi Brave Young Warrior! I am your Battalion Buddy. I am here to cuddle with you while your Mommy or Daddy is away.”

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L to R: Stacy FitzgeraldRobby Kempton

Supporting our military holds special meaning for Morgan Samuels' Chairman & CEO Bert Hensley, a military veteran himself.  Earlier in his career, Bert served five years in the United States Army Aviation Branch, where he held various leadership and staff positions, including helicopter pilot, aviation detachment commander, battalion adjutant, and brigade war plans officer. He received several achievement and services awards for his contributions while on active duty, including the Meritorious Service Medal.

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L to R: Bert Hensley, Anne Hoversten, Lindsey Hoesterey-VilletteZach JensenLindsay Higgins Vane

The teddy bear building took place during our bi-annual Kaizen retreat, part of our commitment to Lean Six Sigma and continuous improvement initiatives. Twice a year we bring the whole team together for a company off-site where we challenge ourselves to solve tough problems, innovate how we approach the market to better serve our clients and candidates, and brainstorm how to more effectively communicate with each other. We also take this week to form bonds that help our teams create optimal results all year.  We believe that good ideas come from everyone in our firm.

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L to R: Celine FintziBryce Raney, Rebecca BendelStacy FitzgeraldAlyssa Robinson, Todd Wyles

At Morgan Samuels we strive to be more than an executive search firm.  By fostering a culture of collaboration and service, we aim to have a positive impact on our communities along the way. 

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L to R: Martin Hewett,  Linda RebrovickAnne Hoversten

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If you or your organization would like to learn more about Operation Gratitude's Battalion Buddy Program and how you can help, click here

For more information about Morgan Samuels, click here:      VISIT US HERE!

  

Topics: morgan samuels, lean six sigma, executive search, Philanthropy, human capital consulting

What Makes a Great Private Equity CFO?

Posted by Todd Wyles on Mon, Nov 16, 2015

For private equity investors, ensuring they have the right CFO is widely thought to be the most critical decision they will make from a talent standpoint, second only to installing a top CEO.  

unsplash_businessman_suit2.jpgOver the past three years, nearly forty percent of all the PE-backed searches Morgan Samuels has conducted have been CFO searches.  Why is this search such a common one throughout the investment cycle?  Is there a common profile for the best CFOs?  And if there is, what are the specific attributes that are most often observed?

In an attempt to answer these questions, Morgan Samuels has captured and analyzed extensive quantitative and qualitative data from CFO searches we have conducted for PE-backed businesses ranging in size from $8M - $75M EBITDA, across multiple industries.  By culling the data collected from assessing hundreds of chief financial officers for these searches, we have identified three critical attributes of great CFOs for PE-backed companies:

  1. They all have the desire and ability to be a true partner to the CEO, both internally and externally.
  2. They have command of the levers and metrics that drive value in the business, and they play a major role in executing the strategy.
  3. They are hands on, decisive, and they have a very high sense of urgency.

Let’s look at each of these characteristics in more detail:

True Partner to the CEO

This may appear to be a relatively soft attribute and difficult to measure, but based on our experience a CFO must not only fit the culture of the portfolio company, but also the style and vision of the CEO.  And they must simultaneously focus on both the internal and external aspects of their position.

One of the reasons the CFO role is so critical to get right at a PE-backed company is that they must have the skills and ability to advance the vision and strategy of the CEO, across multiple functions. They need to be able to translate the financial impact / projected outcomes of the strategy across the organization.  This is the internal aspect of becoming a partner to the CEO. 

Additionally, they must be focused externally.  They need to manage banking relationships and ensure covenants are not broken.  They often own multiple professional service provider relationships.  Perhaps most importantly, they have to be comfortable serving two masters – both their CEO and also the Board which will typically include at least one senior member of the GP.  And when it comes time to exit, the CFO plays a major role in interfacing with potential buyers, which requires both strong presentation skills and the ability to influence buyers.

Metrics Driven

Cash is King is a trite anecdote.  But for many middle market private equity-owned companies, it is still a very relevant mindset.  Most control investments are levered such that the management team has to be extraordinarily thoughtful about how they manage cash to ensure growth (whether that be organic, or via acquisition) and liquidity.  The CFO is at the tip of the spear regarding cash management.

One CFO we recently placed at a $150M business services company recognized within about 30 days on the job that the company was going to run out of cash 60 days later!  The CEO and the Board were not as aware of this, and so the very first order of business for this CFO was to create a set of metrics/KPIs that provided visibility for cash management on a daily basis.  That is how critical managing cash can be for a midsized business, and CFOs who install systems to ensure this happens are the most successful.

Hands on and Decisive

One of the most striking differences we have observed in successful CFOs for middle market companies with private equity owners is that they truly appreciate (and accept) that resources are at a premium, and that time is of the essence. Very few CFOs in private equity enjoy the resources (both from a staff and budget perspective) that their counterparts in the marketplace have.  Similarly, they do not have nearly as much time to create value for the PE-backed business, with an exit often only a few years away.  Being willing to get their hands dirty—and do it quickly by making great decisions (often without as much information as they would like) are hallmarks of the most effective private equity CFOs.

Private Equity Practice Leader Todd WylesA private equity firm’s greatest asset lies in its people and their capabilities to deliver across a myriad of stakeholders’ expectations. Top talent that is a great fit for private equity is extraordinarily scarce across the board, and finding the right CFO is especially critical to success. We have conducted dozens of successful CFO searches for PE-backed companies over the past few years, and we have found that candidates who possess the criteria described above thrive within the unique demands of private equity.

Click here to find out more about Morgan Samuels’ Private Equity Practice.

 

Topics: executive recruiters, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, Todd Wyles, CFO, executive search private equity

A New Front in the War for Talent?

Posted by Morgan Samuels on Thu, May 23, 2013

Todd Wyles Morgan SamuelsThe May issue of PE Manager includes a piece by our firm's own Todd Wyles on how private equity firms approach talent management across their portfolios. Increasingly, PE firms are adopting an Operating Partner in charge of Talent or Human Capital to help facilitate executive hiring at their portfolio companies. Todd interviewed several Heads of Talent, including leaders at Genstar Capital and Welsh, Carson, Anderson & Stowe to learn how they create value.

Todd is the Private Equity Practice Leader at Morgan Samuels. As a human capital consulting firm, we are always enthusiastic about putting a focus on talent issues. We think the emergence of the Head of Talent role at PE firms is a positive development in the private equity space for reasons outlined in Todd’s commentary.

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Topics: executive recruiters, top executive search firm, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, executive employment agency, Private Equity International, Magazine, Head of Talent, CHRO, Todd Wyles

Smarter Metrics, Smarter People

Posted by Morgan Samuels on Thu, Apr 4, 2013

It’s called Big Data.  Every transaction, every contact with a customer, every employee interaction is a data point that gets recorded, analyzed and processed.  It’s going to be a boon to companies that can get a handle on how to use it.  You can read a lot about how it will change business here, here and here.  But you’ll notice that most people discuss Big Data as an outwardly focused phenomenon: How can it improve profits?

What you don’t see enough of, we think, is how it can improve hiring.  In other words: How can it improve the teams that drive those profits in the first place?

In the human capital business, that’s a thing we think about a lot.  In a recent write up about the movement they call “Talent Analytics,” Forbes explained its importance thusly:

There are around 160 million workers in the US alone, and most companys’ largest expense is payroll.  In fact in most businesses payroll is 40% or more of total revenue, meaning that total US payroll expense is many billions of dollars.  How well do organizations truly understand what drives performance among their workforce?  The answer: not really very well.

Simply put, companies know how to measure success.  That’s what the bottom line is for.  What they don’t know is why people are successful.

Do we know why one sales person outperforms his peers?  Do we understand why certain leaders thrive and others flame out?  Can we accurately predict whether a candidate will really perform well in our organization?  The answer to most of these questions is no.  The vast majority of hiring, management, promotion, and rewards decisions are made on gut feel, personal experience, and corporate belief systems.

We all know that past performance is not a guarantee of future results.  But everyone wants to hire the guy with the past performance because he has demonstrated results.  Even if it works, the guy with the past performance is expensive.  No one likes expensive.  But we need results.  Round and round this loop we go.

How do we get off?  Talent Analytics.  The concept is familiar to anyone who follows baseball or saw the Brad Pitt film “Moneyball.”  (Baseball calls their analytics Sabermetrics.)  Much of the old, analog world hasn’t yet caught up to Big Data so there are huge market inefficiencies to exploit.

(The business world) operates under a belief system that employees with good grades who come from highly ranked colleges will make good performers.  So their recruitment, selection, and promotion process is based on these academic drivers.

Makes sense, right?  So they looked at the data.  You want to know three things they found did not matter when correlated with performance?

  1. Where the candidate went to school
  2. Their grades
  3. The quality of their references.

You need to find the traits and process of successful people, and hire people who have those traits and processes.  If you focus solely on a candidate’s past results, you’re using too small a sample size that is too largely affected by chance.

Focus on process, process and process.  (Billy Bean of “Moneyball” fame had the simple but brilliant observation that batting average was a terrible stat because it was dependent on the luck of where the ball landed.  Why not get cheaper players who put the ball in play but had so far been unlucky or hadn’t gotten opportunity?  i.e. find the players who had the best batting process, but not results?  Voilà, competitive advantage.)

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Here at Morgan Samuels, we love this kind of stuff.  As a Lean Six Sigma company, we’re big on fine-tuning our own process as we figure out what works for us.  But we’ve also found that we can make better executive placements across industries by matching skill sets, and sometimes ignoring the particulars of a candidate’s experience, as long as they have enough of it.  We can find a bigger slate of great candidates that way because no one else is doing it.

What can you accomplish by getting ahead of the data curve? Read this book: “Trading Bases.” It’s an out-of-the-box example of a former securities trader turned sports-bettor who used data-heavy analytics to turn $1 million into $1.41 million in one baseball season.  (He made only a 14 percent return the second year.)

How could he do that?  Simple.  He’s using Big Data, and the people he’s betting against are using their instincts.  Or as the trader, Joe Peta, put it:

Sabermetrics in baseball allows employers to pay for skill sets and not get confused by results.

When your competitors are stuck in the past, confused by attributes that don’t matter, that’s competitive advantage.

Topics: executive recruiters, top executive search firm, morgan samuels, leadership, lean six sigma, human capital consultants