Private Equity Experience

The PE Leadership Gambit: What Happens to the C-Suite After Acquisition?

• Emily Sander • Season 1 • Episode 10

Share episode

What happens to leadership teams when private equity enters the picture? In this revealing episode of The Private Equity Experience, Emily Sander, Rory Liebhart, and Ed Barton discuss the dramatic shifts that occur when PE firms acquire companies. Drawing from their battle-scarred experiences, they explore how founders navigate new stakeholder relationships, why CFOs often become CEOs, and the critical importance of meeting financial covenants. Learn why "business as usual" isn't an option, why flash reports become non-negotiable, and how to identify hidden talent during reorganization. Whether you're a founder considering a PE partnership or an executive navigating post-acquisition waters, this episode offers invaluable strategies to survive and thrive when the deal closes.

#PrivateEquity #Leadership #MergersAndAcquisitions #CEOTransition

Timestamps:
00:00 Introduction to Post-Deal Changes
01:04 Initial Leadership Changes
04:32 Navigating Founder and CEO Transitions
09:43 Collaborative Solutions and Team Dynamics
11:27 The Role of Chief of Staff
15:34 Legal and Insurance Considerations
29:25 Recognizing and Promoting Hidden Talent

Who We Are

If we haven’t met before—Hi! We’re a team of professionals who’ve worked together at multiple companies, seen private equity from all sides, and are here to share what we’ve learned to help you succeed. Ed Barton brings decades of tax and financial strategy experience; Rory Liebhart is a finance and M&A pro with a track record of high-growth exits; and Emily Sander is a former Chief of Staff, multi-time author, podcast host, and founder of Next Level Coaching, helping leaders and organizations accelerate their growth.


Connect with Ed

Connect with Emily

Connect with Rory

emily-sander_1_02-11-2025_151330:

So we are chatting about deal has closed. So, PE partners have come in, due diligence has happened, decision has been made, what happens to the leadership team? What happens to the founder's role? How does this all work? So, we've each been through this a few times. We've got some, some fun. Adventurous stories with some battle scars. So

rory-randall-liebhart_1_02-11-2025_151330:

many

emily-sander_1_02-11-2025_151330:

where do you, where do you guys want to start with this one?

rory-randall-liebhart_1_02-11-2025_151330:

well, it could go any number of ways. I think you touched on a couple of specific roles, but, you know, as far as just generally kind of high level, what can one expect change wise? Because change is a constant here in these scenarios. maybe we can talk about that, and just what, what, uh, what may feel different, what may, may not feel different, but, uh, in general, you know, you're under a new ownership group, so that, that basically necessitates a lot of change.

emily-sander_1_02-11-2025_151330:

Yeah. Well, I mean, it's like, let's start with the CEO. Right. And then I think CFO is also like the second one who's most impacted, but like the CEO, and if that's the original founder, that's a much different structure and outlook and ballgame for, for that individual. So,

rory-randall-liebhart_1_02-11-2025_151330:

a new CEO when there wasn't one aside from the founder, perhaps. Maybe we can start there.

emily-sander_1_02-11-2025_151330:

Yeah. Okay. All right. Take us through that hypothetical scenario that we may or may not have seen a couple different times here.

rory-randall-liebhart_1_02-11-2025_151330:

I'll, I'll give the baton to Ed on this one. He's got a little more experience than I do in this particular role. Yeah.

squadcaster-j7bi_1_02-11-2025_151330:

Yeah, I was gonna say in a lot of, in a lot of cases, um, certainly where my experience has been is the private equity team. So deal closes and they may have some question as to whether the CEOs got the right, got the right chops to be able to operate in that environment. Um, and their normal approach is not, we're going to forklift you out day one and put someone in. Although, you know, I've seen that happen, but normally they give it some time rather they go, okay, we're going to give you some help. that help might be in general, a new chief financial officer going to, who's going to come in and help set the stage for, so I'm kind of shifting us back to the chief financial officer. Because almost every one of my experiences with one exception have been, I've been hired as a chief financial officer and ended up as a chief executive officer after the deal. And it was, they wanted somebody in who, who they felt comfortable was going to be able to give them visibility in the language that they understood, which was generally gonna be numbers and KPIs and, and progress against plan

rory-randall-liebhart_1_02-11-2025_151330:

Mm hmm.

squadcaster-j7bi_1_02-11-2025_151330:

to allow them to be able to evaluate the performance of the chief executive officer and management team. in the last couple of cases, it was, you've done this before, so you can help try and coach the CEO through, and if you can't, then the, you've built that level of trust as a chief financial officer with the private equity firm, and they tend to go, okay, you're either in the interim seat or you're in the permanent seat, I've had a couple of both, um, to be able to run this, to run this business. Now, the, the. chief executive as, as you're kind of going through that, that cycle, the chief executive, as we've talked about numerous times, this is a significant change in how they do business and, and how they operate and how they think. And, you know, if the private equity folks encourage you to hire a somebody to help with the transition, that somebody is probably got two missions. One is to get to know the business well, just in case. two, is truly to get you set up for success. So listen to, listen to kind of the advice you're getting and don't just dismiss because that's a generally going to end up in a bad spot.

rory-randall-liebhart_1_02-11-2025_151330:

you

emily-sander_1_02-11-2025_151330:

Do you want to talk through

rory-randall-liebhart_1_02-11-2025_151330:

really quick there and touched on something really important there, which is this concept and notion of professionals that have been there and been through this and done that before. And I think that is something that is consistent that I've observed in private equity transactions either, you know, into or out of is, You know, having a team of people that know the playbook, because there is a fairly, you know, at a high level there's a lot, there's a pretty defined playbook of how this all works. And so when Ed talked about brought in as the CFO, you know, or to, to evaluate, as somebody that's been there and done that, to evaluate, you know, in a lot of ways the rest of the team capabilities that we have. I think that, that happens a lot. Um, you know, I, I was part of a process, you know, not too long ago, like this in 2024 or looking at a role that was, you know, going into a PE backed company at the time of close, because no one else on that team had ever been through something like that and they need somebody to do that connective tissue. Now, I wasn't going to be a CEO candidate, but sometimes what it's describing is like. You go in, there's a CFO, his case, and you're recognized as, oh, this person's actually the most capable of actually leading this from the chief executive seat. And then, and then you kind of take it from there and reshuffle the deck. That's actually how I first kind of got my first CFO role, is I actually came in and worked for Ed, because I had previously been the CEO, or excuse me, CFO. Became the CEO, needed a CFO, because he wasn't going to wear two hats. Uh, so that, that was kind of how these things happened. Right. You know, and then you find yourself in these scenarios where, because you've done it once, that means you'll then go through it again, and then you kind of get in a situation where that becomes your career, and that's like the whole, the whole thing is, you know, you're sort of singled out because of just having been through it and done it, so, super important. Yeah. Yeah.

emily-sander_1_02-11-2025_151330:

Well, I've seen something similar with the chief of staff role where a lot of VC or PE firms will bring in a chief of staff Who has been there done that? Pair them or partner them with a founder who's like this is their first rodeo like everything's brand new they're like what the heck is happening It's exciting and fun and challenging but like what it what is happening And so having someone ride sidecar with them can be really beneficial and like you said Like you mentioned Ed chief of staff Uh, CFO, sometimes COO, who can translate into the language the capital partner is used to speaking in, it can be invaluable. Because if someone's like, I don't like, I don't like, you want a flash report, you want to like KPIs, like, what are you looking for? And then someone who's a little bit closer. And embedded into the company who can then translate the other way and say, here's like, what's going on. Here's the puts and takes, here's all the different levers you can, you can pull. But I think the commonality between those, those roles that I just mentioned, chief of staff, CFO and COO is, is they have a holistic view

squadcaster-j7bi_1_02-11-2025_151330:

Right.

emily-sander_1_02-11-2025_151330:

of the business.

rory-randall-liebhart_1_02-11-2025_151330:

Mm

emily-sander_1_02-11-2025_151330:

not just like specific function. And I think that is, is a big piece of what they're looking for.

rory-randall-liebhart_1_02-11-2025_151330:

hmm. Super true, and, you know, you, you, you get touched on something really important, too, this, this. This is one of those places and times where, you know, there's, there can be some stuff lost in translation and that's unacceptable when they do actually, I've seen more instances of founders not being able to speak the language and then having a really tough time post, in this operate phase as we call it in our book. Because you just can't get with the program. If you're just a true entrepreneur and you're used to running everything yourself in your own exact way, um, and because the company is you, you are the company in some ways changes incredibly, um, into this phase. And so kind of either sink or swim in a lot of cases. Sometimes it works well when you bring in a operating CEO to sort of compliment the founder and their vision and their ideas. As much as, you know, 50 50, and maybe more times than not, it actually doesn't work out very well. And so, changes end up getting made, really. So,

emily-sander_1_02-11-2025_151330:

What would we, what would you say? What would we all say? Like, given our different. experiences and perspectives with this, of like how well that works. Like if someone's like, oh great, someone who's like kind of from the board, but like kind of independent from them, they're just here to help me versus like who the heck are you? Like I'm not trusting you as far as I can throw you.

squadcaster-j7bi_1_02-11-2025_151330:

the best private equity firms get buy in from the chief executive. on that process before the deal closes,

rory-randall-liebhart_1_02-11-2025_151330:

Right.

squadcaster-j7bi_1_02-11-2025_151330:

they kind of say, Hey, this is what we're going to be doing. They get the seat, the chief executive involved in the hiring process. They, it becomes a collaborative hire and the understanding. And again, I I've been part of those of my most recent, most recent plant was, was that structure where it was, you know, here's, here's, it should be collaborative and here's the approach we're going to use. And here's what we're trying to accomplish. Um, And then, know, I think if you do it that way, you've got a fighting chance, 50 50. If you don't, and again, I'll go back to, you know, the last one that, uh, that Emily and I were at together. That one was like, we're sending this person in, they fired the prior president, the chief operating officer and chief financial officer. They had me show up on a Monday and said, you know, you've got these roles. A chief executive officer, did not buy into this process and didn't last, you know, 90 days past my arrival.

rory-randall-liebhart_1_02-11-2025_151330:

Yeah.

emily-sander_1_02-11-2025_151330:

and further to that, we had someone Um, like we had, I'm going to be careful here. An executive come on our team who like, we spoke to them before they officially started, but it was like, you're getting this person. Um, so I've been on, we've been on like the receiving end, uh, of that as well, which can have mixed, can have mixed outcomes. Um,

rory-randall-liebhart_1_02-11-2025_151330:

matter, again, my observation has been It, it takes at least, there's at least like kind of a three month coming in period where everything is great, you know, these founders and others involved on the early ends, their bank accounts are rather flush, things are great, but then when it comes to actually, um, you know, hitting plan numbers that you set forth in front of, know, potential suitors, ultimately kind of putting yourself out there as this is my operating plan and I'm going to hit it. when that doesn't come so easy, then things get a little bit strained, and then within, you know, a certain amount of time, it really, I see it a lot where, you know, there's loggerheads between founder, uh, and, and PE group, and sometimes CEO in the middle, trying to do damage control both ways. Um, and yeah, it gets, it gets contentious, but the best thing I've seen is when you deal with those things early on, rather than let them linger.

emily-sander_1_02-11-2025_151330:

that's the key though. Right. Cause you come up with this business plan and like, there has to be agreement and discussions on that in, in the upfront process. And then like your job as a leadership team is to execute. On that business plan. And if you are doing that, then everyone's going to be fine.

rory-randall-liebhart_1_02-11-2025_151330:

by the way, by now you have much less wiggle room with your business and your operating plan because you've probably put on a significant

squadcaster-j7bi_1_02-11-2025_151330:

Yep.

rory-randall-liebhart_1_02-11-2025_151330:

on your books.

squadcaster-j7bi_1_02-11-2025_151330:

Yep.

rory-randall-liebhart_1_02-11-2025_151330:

restrictive, um, negative covenants, you know, you name it. There's not one, you know, one, and, and lenders are typically, you know, they're, they're, they're, um, they're issuing debt based on your history, but also, you know, the credibility of your plan, backstop, IPV fund, and something else guaranteed. Um, but that being said, you know, start missing numbers, it creates a whole lot of havoc. And, you know, people tend to end up doing human things, which is getting out of each other's throats a lot of time, especially if you've

squadcaster-j7bi_1_02-11-2025_151330:

and, and,

rory-randall-liebhart_1_02-11-2025_151330:

investment and ego tied up in the business,

squadcaster-j7bi_1_02-11-2025_151330:

and those covenants normally do not have a ton of wiggle room. I mean, they're normally, they're normally fairly, fairly tight. Yeah. And they're fairly tight. Um, so, you know, if you start deviating from plan more than 10 percent or so, you're going to trip covenants and

rory-randall-liebhart_1_02-11-2025_151330:

Yeah.

squadcaster-j7bi_1_02-11-2025_151330:

my, my Where I've seen this go bad, um, a couple times has basically been this, the, we start getting off numbers the CEO comes up with a new idea. So they

emily-sander_1_02-11-2025_151330:

Yeah. Danger.

rory-randall-liebhart_1_02-11-2025_151330:

There you

squadcaster-j7bi_1_02-11-2025_151330:

type, okay, we're

emily-sander_1_02-11-2025_151330:

no, no.

squadcaster-j7bi_1_02-11-2025_151330:

Mary. Now, and I've even been guilty of some of these Hail Mary type ideas because, you know, we're, we're missing numbers. And I'm like, okay, you know, we're going to invent a new, um, a new product that, you know, reads websites to blind people. So I mean, you know, it's, no, it,

emily-sander_1_02-11-2025_151330:

But you know, those like deliberately and like thoughtfully, like you do them quickly on the fly, but it's, I've seen people just like flail and it's like, no, no, no, no. Stop panicking. Stop panicking. Just like go back to the fundamentals. Like hit your, hit your mark. Like,

squadcaster-j7bi_1_02-11-2025_151330:

they go the other direction. And, and I've, I've recently talked to a founder where they basically were like, yeah, we're missing numbers, but that's not my problem. Cause it's not my money anymore. I got my, I got a bunch of my money out, so I'm not worried about it. And, you know, I, I used to stay up at night worried about worrying about whether we could make payroll. That's not my problem now. And I'm like,

rory-randall-liebhart_1_02-11-2025_151330:

if you

squadcaster-j7bi_1_02-11-2025_151330:

that's not gonna,

rory-randall-liebhart_1_02-11-2025_151330:

of your money involved, but you know,

squadcaster-j7bi_1_02-11-2025_151330:

That, that's not going to last. You're not going to last too long in the, in the king seat. If, if you're not paying attention to the, to the, uh, the capital. And that's, you know, that, that, well, what me worry is not really going to be a success. So I've tended to see, you know, those two extremes where it's like they start to flail because they freak. And they're not logically moving through, okay, how do I get back on track or, or is something fundamentally changed? They don't want to have the difficult conversation with their private equity sponsor. They don't want to go, you know, hey, we're, we made a premise here in our business plan that is no longer holding and trying to understand why. they go, well, I got a new great idea, you know, we're gonna, we're gonna go make a chopsticks rocket launch holder thing, or You go to the other or they go the other direction where they're like, you know, screw it I can't do it. No, you know, is their problem. Not

emily-sander_1_02-11-2025_151330:

which on one end is like, why are you doing that on the other end? It's like, that's what they did to be successful before. Like if something goes wrong, they have to do something. They have to come up with something. And so I think. Like what we're highlighting here is there's like a mind shift and like approach change. And there's also like, you're in a different financial position. Like you just might not have, like when you're at a founder led company and you're like one of you're the original founder, if you want to move money around, you can. And in this scenario, you've got a plan and the wiggle room is,

squadcaster-j7bi_1_02-11-2025_151330:

of cases, you don't have those, you don't have those tight covenants either. those tight

rory-randall-liebhart_1_02-11-2025_151330:

I

emily-sander_1_02-11-2025_151330:

yeah,

squadcaster-j7bi_1_02-11-2025_151330:

ones that are really going to, and you

emily-sander_1_02-11-2025_151330:

yeah.

squadcaster-j7bi_1_02-11-2025_151330:

someone else to answer to. You, you might have your, your family to

emily-sander_1_02-11-2025_151330:

That's a big one.

squadcaster-j7bi_1_02-11-2025_151330:

you, you know, you might not take a paycheck. You might, you might struggle yourself, but in this particular case, it's the, you've got upstream folks to answer to, and you've got covenants to meet. And if you're going to fail on those, you, you're, you know, that's going to be a bad answer.

rory-randall-liebhart_1_02-11-2025_151330:

I mean just to put a finer point of that if you're not used to having a a you know an active like an actual board to answer to You know, it's it can be it can be culture shock, you know in a lot of ways for a founder that may have a board But it's more like friends of many investors and

squadcaster-j7bi_1_02-11-2025_151330:

Yep, and

emily-sander_1_02-11-2025_151330:

think there's like a nuance in there. I want to call out that, that there are times within the, the premise of we have a business plan execute, execute to the plan where like, Hey, we had this plan and now it needs to change for like valid, legitimate reasons. So let's talk about that. Like, let me not just do that on my own, but Hey, like COVID happened or an industry shift happened or just like, this isn't working like we expect it to. And here are some of my ideas about. You know, moving to an adjacent approach and like those conversations can and should happen. And a founder and CEO can bring those ideas to the table knowing that they might get told no, but sometimes it is like, what's the creative process and what ideas, what new ideas can you bring to the table?

squadcaster-j7bi_1_02-11-2025_151330:

is going to know that market and that business's capabilities better than anybody. Same with that management team that that when you start going on and we're getting a little off topic, but when you get a little bit off course on your business, engage the management team and then engage the private equity folks. And this becomes a group, a group, collaborative, uh, group. solution session rather than, you know, it's all on your shoulders or it's not your problem. It's, it's, it's in the middle. It's actually everybody's challenge, everybody's problem, and everybody can contribute. And your job as a chief executive is to manage that process.

emily-sander_1_02-11-2025_151330:

and I think like one of the things there is everyone's first option is for this to work like with the management team intact. I mean, like, because they do know so much about the company, the industry, et cetera, like everyone's option A is to make this work. They will have, like, there will be contingency plans for option B, C, D, E, F. But like, it's in everyone's best interest, interest to get this thing to work. to work.

rory-randall-liebhart_1_02-11-2025_151330:

On paper. Anyway. Yeah. Yeah.

emily-sander_1_02-11-2025_151330:

And the, and the next thing is, you know, from the investors perspective, they've just invested a whole bunch of money in this thing and they want results. So basically like when we're talking about prove that you're executing to the business plan is like prove that you are tracking and making progress to the results that the PE firm wants. Is that like a simplified version

rory-randall-liebhart_1_02-11-2025_151330:

Oh, I mean,

emily-sander_1_02-11-2025_151330:

of

rory-randall-liebhart_1_02-11-2025_151330:

You know, it's, that's spot on. I mean, again, I keep coming back to this concept of debt. It's such a big part of this, this operative phase of a private equity. There's a lot of it and it's pretty much always there. Um, and so hitting your business plan means you're able to generate through cash over service. New debt. It's, it's, it's, So that's a major deviations from that are just problematic. It's, you know, you know, a founder led business pre pre transaction. You might be bootstrapping, might be on your own money. It might be equity from friends, family, seed investors, angels, et cetera. And you don't really actually have a, a payback period or, you know, anything really specifically defined, but now you're in a more structured, it just, there's more structure, like from top down, it's just more structure in this world, governance wise. Financing wise all of the above. So yeah, hitting numbers is probably more way more important than

squadcaster-j7bi_1_02-11-2025_151330:

Yeah. The, the,

rory-randall-liebhart_1_02-11-2025_151330:

getting to

squadcaster-j7bi_1_02-11-2025_151330:

key that, the key that we used Emily and the companies that I've run or been chief financial officer in, have been has been the concept of a flash report a weekly flash report where we identified based upon our business based upon our business requirements and a business plan what are the four to six not 600 not two what are the four to six key drivers to ensure that we're either on track or off track and can be early warnings to be on track off track or ahead of plan behind plan we would report that out internally Every week, we would report that out to the private equity team every week. And you know, I, I would generally voice over on my weekly calls when I was a chief executive. I would use that as the briefing sheet, and we would, you know, I would voice over a, a narrative around it. I would generally ask my, my, uh, C-level folks and department heads to get me inputs, but you can't allow. It's that classic, like, the further you get off track, it's that, you know, one degree, one degree off, off, you know, on an airliner. you decide to go from Seattle and you're headed to London, you may, you may very well end up in Paris. And that's, that's a problem. The further you go without making the course correction, the harder it is to course correct. And so we use the flash report, and it was a weekly, like, it's a weekly cadence. And with the clients I've got today, they have flash reports and it's a weekly cadence. And you know, at least then, you know where you're at and you can start making, um, start making adjustments accordingly to, to get yourself on track or to reset expectations.

emily-sander_1_02-11-2025_151330:

Yeah, we should do a whole episode on flash report. We'll take a note of that. Okay, so we talked about like CEO founder changes CFO changes which might be a brand new CFO brought in by the PE firm What are some other like call out changes to the leadership team that people should be aware of?

squadcaster-j7bi_1_02-11-2025_151330:

The, the biggest one that I, and I, and I'm going to, I'm going to go right into your wheelhouse, Sander. Um, the biggest one is I have found, and it didn't matter whether it was at Beeline with Karina, whether it was, Um, at G2 Web Services with Karina, or whether it was at Fusion Zone Automotive with Emily. Anytime I've been in a chief executive role where you've had a private equity sponsor, is a change in how you have to manage those, disparate departments, those dis, you kind of internally manage. And I have relied on either in name or in function, a chief of staff, where a lot of times folks don't have such a such a function in their organization prior to private equity you're generally going to need it after because there's so much additional reporting there's so much additional intelligence that's needed you're moving that much faster that the coordination becomes very very very difficult to have the ceo or cfo trying to do all that at once and it's Beyond it's a broader scope than even a chief operating officer is going to have. And so that's that, that change is one that I, you know, I will pound on the table. I think when I did your leveraging leadership podcast, um, a year or so ago, I kind of said, look, this is something you need to consider if you're in that position. And I'd say it again here.

emily-sander_1_02-11-2025_151330:

Yeah, no, I mean I see like lots of Capital partners pretty much demanding like you will have a chief of staff. You can go find one or will we have one, um, in our team that we can deploy into, into this portco. And I also see a lot of founders, like five to 10 people in.

rory-randall-liebhart_1_02-11-2025_151330:

Yeah,

emily-sander_1_02-11-2025_151330:

One of their first hires is a chief of staff now. And it's like, they're doing functional roles and then they hand off as they recruit and hire people. But it's, it's becoming more of a thing because they are that like Jack or Jill of all trades. And they can be a sweeper and kind of porpoise in and out of like the tactical and practical strategic back down again. And, you know, altitude of involvement is high. And then they kind of dive deep down into the organization. So, um, yeah, it's a.

rory-randall-liebhart_1_02-11-2025_151330:

other stakeholders in this new world, you know, um, coordinating vertically and horizontally, you know, whether whether it's like to line up the requirements of lenders with the operations of the business, line up the governance of a board with the management of the business, coordinating all of those things and making sure that all these things are running. Oh, and by the way, executing a core business plan. I mean, there's just so much involved that you do need that a conductor in a lot of ways. Even if you have very capable C level executives individually. All right.

emily-sander_1_02-11-2025_151330:

And sometimes, I mean, I remember talking to people further down the org, VP directors, management level, who like their world, like maybe not had been as, uh, changed as much by PE investors coming on, but they knew things were different and they knew things were at a different pace and different things were happening around them. And, you know, if, if the CEO. And a C suite team, like this is their first rodeo. How are they going to communicate that down to their people? So just helping at all levels of the organization, like it's going to be fine. Here's what's happening. Here's what we need to do. Everyone go this way. I'm like, good job going this way. And now we're just going to rinse and repeat and keep making progress. So I think even someone just in and out of the organization like that can be, can be helpful. Um, what else I'm trying to think in our last few minutes here for this one. Big transition has happened. new board structure, maybe some new leadership members.

squadcaster-j7bi_1_02-11-2025_151330:

other piece, and this is going more on a CFO side as well, um, I know we put it in the book, um, but there's a lot of new reporting that's going to, that's going to happen. And one of the, one of the positions that I have tended to be late in hiring to my own detriment has been someone who is, uh, financial planning and analysis specialist, um, whether that's at mid tier, senior, or even junior. Um, and we've had some, I mean, between Rory and I, we've had some really talented folks,

rory-randall-liebhart_1_02-11-2025_151330:

have,

squadcaster-j7bi_1_02-11-2025_151330:

um, have, that have been, that have been in that FP& A role. Um, but that is, that is,

rory-randall-liebhart_1_02-11-2025_151330:

you know, C level officers themselves. Like, it's been

squadcaster-j7bi_1_02-11-2025_151330:

Liebhardt. So, I mean, those are,

rory-randall-liebhart_1_02-11-2025_151330:

and then, I mean, others, others that have kind of, um, you know, worked for me over time as well.

squadcaster-j7bi_1_02-11-2025_151330:

Yep. Yeah. It's, it's a,

rory-randall-liebhart_1_02-11-2025_151330:

role. You can

squadcaster-j7bi_1_02-11-2025_151330:

it's a cri. It is an absolutely critical role and a lot of times what I, what I see is, is CFOs and CEOs, especially those that have gone through the transition and they're kind of riding through, so they were there before, they don't realize kinda what the tsunami of reporting is gonna be and the level of detail that they're gonna need. And I, I would put high on my list of like, here's something that needs to change. The reporting is going to be forced on you. The, the data gathering, the data driven decisions and all this other, you know, kind of, kind of wonky stuff is going to come down on you. You should be pretty quickly prepared to bring on an FP& A, uh, analyst or at least, uh, If not, bring someone on. Talk to the private equity folks about can they provide you with some help initially to get you set up with reporting packages and, and because they should be reasonably familiar given that they did the underwriting, what they're looking for for KPIs and other things. So ask them to help at the beginning and, and they may see the need and authorize you to hire, uh, even if it's not in your budget, but that's going to be something that is, that's a big change and that's going to be something

emily-sander_1_02-11-2025_151330:

Yeah.

squadcaster-j7bi_1_02-11-2025_151330:

needs to embrace quickly.

emily-sander_1_02-11-2025_151330:

And they often, the PE firm also often has a associate because we use, you know, we use basically their associate level on a fractional basis for a number of our companies we've been at. So that's a good call out. Yeah.

rory-randall-liebhart_1_02-11-2025_151330:

Again, when you take on additional stakeholders at an institutional level, that sort of thing. Yeah. You may never have gone through financial audit before, you know, you may

squadcaster-j7bi_1_02-11-2025_151330:

Oh yeah.

rory-randall-liebhart_1_02-11-2025_151330:

you know, and then you start to get into that, that level of, uh, requirement from not only PD group, of course, but like member requirements and things like that, borrowing bases, all of these things. And that's where I think the premium in the prior generation of a business is all about bookkeeping and, you know, some, some, some, some very high level financial analysis, probably, but in this iteration, it's much more about, as I said, FPA, and analysis. uh, governance, uh, compliance, all of these things that maybe the, homegrown person that you've had in the role, you know, that's, I don't know, whatever title it may be, but the head of and accounting may just just be over their head, you

squadcaster-j7bi_1_02-11-2025_151330:

Yeah, I got, I got one, I got one last one, which is, uh, as I was thinking through it, which is, as the chief executive probably dealt with, you know, I'll do my own contracts or I've got, you know, my, my brother in law Stu will do the contracts and, you know, my insurance. I've got, you know, my buddy John does my insurance. When you get into this, into this environment, expect your legal bills and your insurance to go way up because the, the private equity guys are looking at this going, how do I mitigate uncontrollable risks? Or how do I control risks that would otherwise be, uh, existential and outside my control? And so you will end up with probably about two thirds of the time, we've had new insurance, brokers who had completely new policies and the policy, the amount of the premium went up to three X because they wanted to get higher, higher limits or additional coverage. And then the second was, you know, I've been in situations and again, I'm a, I'm a practicing attorney. Where I've been told, nope, you're, I, that's nice, I, I, I like your, I like your JD, I like your license, you're sending this off to 700 an hour law firm to review, and you know, and just because we're not going to take that risk, and you know, it could be simple stuff like a lease, and they're going, nope, we're not going to take that risk, send it off and get it done, and don't take that, don't take that personal and recognize that that's a change, it's a risk management approach that the private equity guys use to take their risk premium down. Okay. And, you know, Stu and John are great guys, and I'm sure you've enjoyed working with them over the years, but it ain't your company anymore, and you're probably going to have to work with some new professionals in that risk management area.

emily-sander_1_02-11-2025_151330:

Okay. And the last one I'll throw out there is, um, as you're kind of like shuffling the deck chairs, there's often hidden talent in your organization that might have an opportunity to pop out into a different role, like a promoted role. And so if you have talent on your team, this can be a catalyst for like putting them in positions to, to go on and do good things. I mean, I've had this happen to me, Rory, you've had that experience. And, um, I, all three of us have. paid this forward to other people as well. So that's just something to keep an eye out for, like who on my team is like, Oh my gosh, okay, you know, Sandra over here or Damien over there, like, yes, let's move them into, into this new role.

rory-randall-liebhart_1_02-11-2025_151330:

Yeah. I think, um, well first off, I think, you know, talent, talent, recognition, talent management, all that stuff is like, you know, that should be happening whether or not you're owned by private equity. Let's just say

emily-sander_1_02-11-2025_151330:

For sure. There just might be big moves happening right now where you'd be like, okay,

rory-randall-liebhart_1_02-11-2025_151330:

is moving pieces around to accommodate the new needs of a business. And what, what I've observed and experienced and, you know, led is this change that really unlocks, you know, more capability for people. It gives them a shot where maybe in a, another environment that just, that the, the, the playing field was just, Small, right? So people

squadcaster-j7bi_1_02-11-2025_151330:

Yep.

rory-randall-liebhart_1_02-11-2025_151330:

lanes and now there's just more to do. The last thing anyone wants to do is go spend a bunch of money buying something new. You know, and we all know that there's so much value in what incumbent you know, folks have as far as knowledge of the business, knowledge of the customers in particular. So yeah, you, you just, you expand, you look inward first. I think that that's, that's always the best thing. And I think in private equity I've seen it the most because, you know, You know, it seems like the most logical step, um, having to go completely outside the business, incur more costs, probably, and, and, uh, you know, have a longer ramp to somebody up and running. And that's what I would say, too, is, you know, time seems to move very quickly under PE.

emily-sander_1_02-11-2025_151330:

yeah.

rory-randall-liebhart_1_02-11-2025_151330:

You're under strict timelines, and, you know, results are required fast. So you, you really want to put a premium on the talent. You already have that already. And it's a super. by product if they, you know, flourish in that role and, you know, get more opportunity, that's, that's

squadcaster-j7bi_1_02-11-2025_151330:

And if you're the, if you're the new guy that gets inserted by the PE, do one on ones with everybody. If you can get away with it. I've, I've done that pretty much every time I've walked into an organization and found hidden talent that had gotten pigeonholed because they'd been there so long and they blah, blah, blah, blah, blah. And they didn't. And you, if you're the new guy. Talk to everybody. Do one on ones. Get it all out on a table. You're going to find some amazing people that probably have not gotten recognized because they were hired as the receptionist and that's all they've done for 15 years, but they're capable of doing a hell of a lot more.

rory-randall-liebhart_1_02-11-2025_151330:

Yeah. I,

emily-sander_1_02-11-2025_151330:

Yes.

rory-randall-liebhart_1_02-11-2025_151330:

completely with that.

emily-sander_1_02-11-2025_151330:

I'm going to leave it on that. That's a good note to leave it on.

rory-randall-liebhart_1_02-11-2025_151330:

Yeah.

emily-sander_1_02-11-2025_151330:

Beautiful. Now, all right listeners, now you know a little bit more about what happens after the deal goes down and we will catch you next time on the Private Equity Experience podcast.

rory-randall-liebhart_1_02-11-2025_151330:

Catch you later.