The power of aligned leadership: A collection of related businesses transforms into a cohesive industry leader.
After more than a decade of ownership and growth through multiple strategic acquisitions, a large private equity firm was ready to evaluate a specialty distributor on its readiness for sale. Ampersand was brought in to conduct a thorough mid-investment temperature check and recalibration for the next phase of its lifecycle. We were charged with understanding the interim president’s impact on the enterprise, determining the organization’s readiness for sale, and creating a developmental framework to assist in the company’s ongoing growth.
Confronting the Challenge: What We Knew
When the firm first connected with Ampersand, it was with a request for us to engage with a portfolio company that was floundering, reporting lackluster results at the midpoint of the investment cycle. Revenue had come in below plan, missing the projected $450M annually, and EBITDA had slipped by 7 percent from an already tight margin. And looming questions on stability and leadership were hindering progress toward realizing growth targets.
While the recent departure of a toxic leader was a cultural breath of fresh air, the lack of a clear leader to breathe new life into the organization for the next chapter left the enterprise – and the investors – uncertain about the future. Although an interim president was in place, her effectiveness and ability to scale was yet unknown. A clear “buck stops here” leader was needed to make the call, set an enterprise strategy for the future, and unify decision-making in order to achieve the desired exit strategy.
The investors were looking for a purpose-built method of assessment that would get answers to their most pressing questions around talent and establish a path towards a successful exit without losing what was great about each individual business they had acquired. Success in the next phase would require understanding and addressing key strengths and opportunities for the organization in strategy, culture, morale, talent, capabilities, and overall organizational effectiveness.
Ampersand’s Approach
Ampersand integrated elements of assessment and development, at both leadership and organizational levels, to identify strengths, weaknesses, and opportunities. Because there were questions on culture and its impact on current performance, the project scope was expanded to include a broader swath of the management team. A half-day feedback and action-planning session was added to solidify learnings and plan for the future. Through the use of focused group sessions; individual interviews; 360 feedback; organizational analysis; and executive diligence for the interim president, we were able to provide a nuanced understanding of the company, guiding investors on how to best position it for cohesive growth and ultimate sale.
Discovery: What We Found
There were many areas in which the organization was excelling: a shared sense of purpose and commitment to the mission, a strong work ethic resident in all of the leaders, and a mutual respect – even if not clear collaboration – across the team. But the path to achieve shared success was cluttered with obstacles to growth.
Instead of operating as a whole, the organization existed as multiple, separate businesses working in tandem due to an acquisition that was never fully integrated. Unbeknownst to the investors, this hidden disconnect had trickled down throughout the structure and processes of the entire organization. A fragmented, ill-defined culture created lack of role clarity and decreased alignment and collaboration, effectively blocking the ability to realize synergies to achieve and sustain a performance-based environment.
Existing strategies were lackluster and too narrow to support growth, and the willingness to invest for growth was equally anemic. Further, key functional areas were in need of talent, headcount, and structure. Filling those gaps required refining their shared value proposition as well as implementing a more focused, strategic plan to implement on-time delivery and order accuracy.
And despite being thrust into the role, the interim president unknowingly had the confidence of the team – but was yet to develop a self-assuredness in her abilities. The challenge was to help her leave behind a somewhat indecisive, volatile style to galvanize the disparate team members (and resist the urge to retreat into the familiar weeds).
Outcomes: What We Contributed
- Strategic leadership development paved the way for a successful sale of the organization to the next buyer, enabling a 9X multiple return on initial investment and an EBITDA margin of approximately 13X.
- Provided incisive feedback and light-touch coaching for the interim president to reinforce what the data and feedback showed; not only was she technically capable of what the role entailed, but she proved able to rise to the occasion to lead. The resulting sense of purpose she inspired and concomitant strategy she imparted became part of the foundation for actualizing the resulting growth.
- Uncovered the context and evidence to make the tough calls with regard to talent and leadership: to clarify roles and build an org structure to scale.
- Facilitated the creation of a shared set of values that could permeate the culture across acquired businesses to enable a whole that was greater than the sum of its parts.
- Crafted key decision criteria on how to assimilate new acquisitions and build the leadership team of the future through a new integration playbook.
- Clearly defined the roles that leaders of newly acquired companies would play in the larger organization to avoid an overly cumbersome executive team (without usurping relative power).
- Identified the need to hire an enterprise CIO; outlined developmental opportunities for existing operational leaders in the context of this new, higher-level role.
- Created a CIO scorecard to aid in the search, assessment, and onboarding the right leader to fill this critical leadership gap.
Our commitment to confidentiality prevents us from disclosing the identity of our clients and other confidential information. The information contained in this case study is not intended to serve as advice.
