Evaluating Your Stable: Portfolio & Management Teams

To label portfolio companies and their executive suite of talent as a stable may seem disrespectful, however for the purpose of parallel discussion of performance, it’s fitting. 2023 was a challenging year for private equity and investment managers with distributions falling to levels not seen since ¹2009. With a few years of stubborn and uncertain inflation, rising interest rates, high employment, revenge-spending consumers, sky-high government debt and global political uncertainty the mood has been somber. As we’re sensibly advised, “when thunder roars, go indoors” this too applies to holding / managing companies’ and boards’ focus. Focusing on internal matters, specifically operations and talent management, is essential for performance. To investors, performance is ALL that matters and that’s why the health of stable, the ones responsible for performance, should be top of mind but it is of particular focus during challenging external forces.



Regrouping and focusing inward on the stable can feel like standing-still, or worse, looking backward which is an uncomfortable sensation for private equity / investment management teams. The DNA of these teams are suited for hyper-forward progression; continuous ambition of the next trophy which is typically celebrated with an aggressively incentivized compensation bonus. Recognizing the need for forward progression, evaluating the stable of portfolio companies and your executive suite can at least provide the sense of progression while external forces take their time to work through their turbulence.

Beyond the obvious causes of downturn (higher interest rates, fickle consumers, failed product launches, legal disputes) are the more subtle erosions of performance, such as distraction of the teams, relaxed KPIs, management skill gaps and postponement of hard conversations with key personnel due to conflict avoidance. When the management team stables are impacted by any of the reasons mentioned, performance will drop.

The summer months provide an excellent window of time for evaluation. Management teams moods tends to swing in favour of having more thoughtful conversations and generally, people’s calendars are more flexible for availability. Most importantly, it sets up the perfect time to align so the final four months of the year will be successful. 

Interested in working on your strategy? Let’s talk.