The client: A private equity sponsor - immediately following the acquisition of a healthcare company led by two co-founders who were also serving as first-time co-CEOs.

Situation and challenge: The sponsor had concerns regarding the viability of the co-CEO structure given a recent uptick in conflict between the two CEOs which had culminated into the formation of two internal camps. The sponsor had questions regarding the ideal organizational structure given the internal politics and disruption that had transpired, and turned to DRD Advisors, LLC for guidance. The sponsor also needed our service to do some “marriage counseling” to help the co-CEOs get along and maintain a professional and productive relationship.

Scope of work:

• Our team conducted thorough diligence on the executive team and employees in the next layer down in the org chart (15 people total).

• Our team administered the Hogan Assessment to all employees to be interviewed and reviewed their results to screen for value misalignment and developmental areas.

• Our team spent 2.5 days conducting interviews following our proprietary Culture & Team Dynamics template.

• From our qualitative and quantitative data, we drew insights on the effectiveness of the Co-CEO structure and its impact on the health of the organization. We also uncovered the root of the conflict between the CEO and built awareness around the complex dynamics of their relationship.

• We provided a comprehensive report replete with a culture and team dynamics analysis as well as recommendations for org chart redesign and board redesign.

Our findings:

• Our interviews illuminated that one of the two Co-CEOs was completely checked out from the relationship with his Co-CEO and had no desire or intention to repair it.

• We recommended moving one out to board/advisor role and keeping other one in place since the majority of employees were supportive of and loyal to him.

• Through this assessment work, our sponsor gained a much deeper understanding of the situation on the ground and the dynamics at play undermining company culture and performance. Outcomes:

• Within six months, the portfolio company adjusted its org chart to include only one CEO and moved the other into an Executive Chairman role, which greatly improved effectiveness and culture.

• The company has since continued to scale and has outperformed its targets, emerging as one of the highest growth companies in our client’s portfolio.

Case Study #2

The client: A private equity sponsor in the diligence phase of an M&A of two software companies.

Situation and challenge: The sponsor had questions about the loyalty of the incoming CEO of the business, should the merger go through. Specifically, they had concerns about key man risk and flight risk surrounding the CEO and the damage to the business that would occur should he leave after receiving his check.

Scope of work:

• Our team conducted thorough diligence on the CEO in question and administered a complete Hogan Assessment to him.

• Our team spent two days interviewing 11 employees in 90 minute meetings to ascertain whether or not there was key man risk as well as flight risk in the organization (related to the CEO).

• Employees were not privy to the purpose of our intervention and believed we were conducting a routine culture assessment.

• Upon completion of interviews, we provided a comprehensive Executive Profile Report replete with recommendations and an action plan as it related to the individual in question.

Our findings:

• We concluded that there was minimal key man risk as it related to the CEO.

• We concluded that the CEO would not walk after receiving his check since he had high commercial aspirations and aimed to make even more money as CEO.

• Interviews revealed that the greatest upcoming challenge would actually be subordinating this CEO to the CEO of the newly merged organization, given his distaste for submission.

Outcomes:

• The sponsor had a much deeper and nuanced understanding of the CEO in question entering the merger, and was therefore able to implement strategies to best tee him up for success.

• Armed with the knowledge that the CEO was not a flight risk, and that there was little key man risk, the sponsor was able to proceed with the merger with more confidence.

• An organizational structural and framework was put in place that encouraged a positive relationship between the two CEOs in the newly merged organization.

Case Study #3

The client: A risk management software company, recently acquired by a PE fund.

Situation and challenge: The sponsor requested a culture and team dynamics assessment to be conducted on the management team as a proactive measure to get a good lens into the human capital behind their new investment. They had specific concerns that the current CFO was not strong enough to drive the business to the next level and wanted our insight into his potential in the organization.

Scope of work:

• Our team spent two days interviewing eight members of the management team. Each meeting was an hour and was structured like an interview.

• Prior to traveling onsite, our team administered the Hogan Assessment to all employees to be interviewed and reviewed their results to screen for value misalignment and developmental concerns.

• At the start of each meeting, our team informed interviewees that the purpose of the meeting was to conduct a culture assessment as part of a larger effort to ensure that the management team and deal teamed would experience a smooth and profitable partnership.

Our findings:

• We compiled a robust culture and team dynamics report that highlighted major strengths and pain points in the organization.

• We concluded that the CFO did not possess the skillset necessary to scale the business. However, given that the CEO was highly dependent on him to run the business, it did not make sense to upgrade him at this point but rather to transfer him to a Chief of Staff or Chief Administrator and begin the search for a new “A caliber” CFO.

• While culture has been historically strong, attention to culture took a back seat since the acquisition, with scarce organization-led culture and team building programs (e.g. holiday parties, company-sponsored charity events, and leadership off-sites).

Outcomes:

• With an upgraded EVP of Sales, sales in the offshore operation have produced increasingly better numbers.

• The addition of a more qualified CFO coupled with the transition of the former CFO into CAO has allowed for employees to fill roles more suited to their strengths and skillsets.

• The sponsor has increased awareness and understanding of their newly acquired investment, which has led to a more trusting and constructive partnership.

• The reinstating of culture and team building programs has led to increased employee engagement in the workplace.