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Tell me if this sounds familiar....

You run an investment portfolio and you’re acquiring, or recently acquired, your latest company. This isn’t your first rodeo. Past investments have taught you that there are MANY unknowns when you’re sizing up a business:

 

  • How risky is this investment?

  • Will I spot any red flags in time?

  • Did this company get to where they are through blind luck or shrewd decision making?

  • Does their leadership have what it takes to get to the next level?

  • Will this acquisition be a success… or lead to our downfall?

Did you notice what all those questions have in common?

 

The answers ALL hinge on the quality of the people within the portfolio company—especially its leadership.

You see…

The biggest factor in the success or failure of your investment is the capacity of the company’s human capital to deliver your VCP.

 

Right now, you’re probably thinking…

 

"That’s true, but humans are unpredictable, and therefore impossible to measure."

If that’s what you believe, no wonder you’re feeling anxious, unclear, uncertain, skeptical and unenthusiastic about the prospect of putting your money behind this company. After all, the last thing you want to do is back the wrong horse.

 

Yes, humans are the biggest wildcard in your business. As I often say to my clients,

"If you were employing robots, managing a business would be a whole lot simpler."

As the saying goes, we can’t manage what we can’t measure.

Here’s the good news…

We CAN measure human capital.

And then we can accelerate it.

This checklist will enable you to identify the greatest competitive advantages hiding within your target or portfolio company… and the biggest red flags lurking beneath.

It will reduce your risk of making the wrong investment and increase your probability of success, so you can feel confident, clear-headed, assured, trusting and excited about the company you’re adding to your portfolio.

HOW THIS WORKS

Use this checklist to rate your target or portfolio company’s CURRENT capabilities within each of the 11 core business dimensions that drive performance and profitability:

  1. Personal

  2. Employee Alignment

  3. Personnel

  4. Team Effectiveness

  5. Leadership

  6. Strategy & Planning

  7. Customer Service

  8. Sales & Marketing

  9. Operations

  10. Culture

  11. Management

1.  PERSONAL

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How do individuals in the organization feel?

For example:

  • Is their workload too heavy, too light, or just right?

  • Do their skills align with their role?

  • Do they have a plan for their development?

  • Do they clearly understand their role?

  • Does their work give them a sense of accomplishment?

2.  EMPLOYEE ALIGNMENT

Is everyone driving for results and profits?

For example:

  • Do their training programs address job knowledge and skill gaps?

  • Does every role have a clear definition of success?

  • Are employees well matched to their roles?

  • Do they recognize individual needs and concerns?

  • Do employees have flexible career paths?

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3.  PERSONNEL

How effectively do they lead people?

For example:

  • Is employee turnover low?

  • Does every employee have an accurate job description?

  • Are performance reviews objective and valuable?

  • Do employees have clear paths for advancement?

  • Are the compensation and benefits plans competitive?

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4.  TEAM EFFECTIVENESS

How strong are their teams?

For example:

  • Do they consistently perform at a high level?

  • Are they well balanced in talent and experience?

  • Do they have sufficient autonomy to achieve results?

  • Are team objectives clearly understood?

  • Are individual expectations clearly communicated?

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5.  LEADERSHIP

How trusted and inspiring are the leaders?

For example:

  • Do employees trust in the leadership?

  • Do the leaders delegate effectively?

  • Are the leaders’ actions and results consistent and effective?

  • Do the leaders guide employees toward the right goals?

  • Is the leadership agile and able to capitalize on new opportunities?

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6.  STRATEGY & PLANNING

How comprehensive and secure is their strategy?

For example:

  • Are KPIs used and measured frequently?

  • Is their long-term vision clearly understood and communicated?

  • Is the level of planning effective?

  • Do they effectively assess and act on competitive threats?

  • Is their overall strategy accurate and sound?

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7.  CUSTOMER SERVICE

How loyal are their customers?

For example:

  • Do they provide a high level of service?

  • Do they exceed their customers’ expectations?

  • Do their internal departments cooperate well?

  • Are customers loyal?

  • Does every employee prioritize customer service?

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8.  SALES & MARKETING

Does their pitch resonate, and do their people sell?

For example:

  • Overall, do they do a good job of selling?

  • Is their sales force effective?

  • Is their sales management effective?

  • How well do they understand their market?

  • Is their marketing message clear, consistent and effective?

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9.  OPERATIONS

Do they run efficient and quality operations?

For example:

  • Are their operations effective and efficient?

  • Is operations management competent and respected?

  • Is quality a key area of focus?

  • Do they have a solid quality improvement program?

  • Do they measure and share quality and profitability results?

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10. CULTURE

How cohesive and beneficial is their culture?

For example:

  • Are organizational values well defined and communicated?

  • Is the working environment healthy, supportive and productive?

  • Do most employees feel a strong sense of belonging?

  • Does the company’s culture support overall success?

  • Is the workplace culture a competitive differentiator?

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11. MANAGEMENT

How effectively do they manage the business?

For example:

  • Do managers receive consistent development?

  • Are their clear lines of communication between managers and employees?

  • Do managers receive effective skills training?

  • Do employees respect their immediate supervisor?

  • Do managers effectively gain commitment and motivate staff?

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Want to make this checklist as actionable as possible? Skip to the end.

BRINGING IT TOGETHER: LIABILITIES

Which areas are risk flags?

The 2-3 lowest-scored dimensions - those you rated a 1 or 2 - are potential derailers that require immediate attention.

Are any of these areas deal breakers? Then walk away.

BRINGING IT TOGETHER: ASSETS

Which areas are profit levers?

The 2-3 highest-scored dimensions - those you rated a 4 or 5 - are profit levers that you should reinforce and reward.

Are any of these areas competitive advantages? Leverage them ASAP.

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WANT TO GO DEEPER?

This checklist just scratches the surface of how you can evaluate, leverage and accelerate your value creation plan.

If you’d like to…

  • …apply the 3 key lenses that determine the success or failure of your business…

  • …implement the system that makes your VCP integration process faster, easier and better…

  • …and accelerate your VCP with more confidence and less risk…

Apply for a free Target Company Success Assessment here.