Why Managers Need Passion, Numbers, and ‘Touch’ in Private Equity

David Evans, ’91, looks for three characteristics today in private equity managers. “The number-one thing they can contribute to the success of the business is passion,” Evans, chairman and managing director of Glencoe Capital, LLC, said during the Winston & Strawn LLP panel on leveraged buyouts. “Number two is that over time, they should share the view that the numbers we set are sacrosanct. And lastly, we want managers with a high level of touch who, once their strategy is set, let their people carry it out.”

The event was one of several panel discussions at the fifth annual Beecken Petty O’Keefe Private Equity Conference at Gleacher Center on February 24.

Daniel Blumenthal, managing partner of Willis Stein & Partners, said he’s learned that he doesn’t necessarily have to like his management team. “We had some great people who were just not effective,” Blumenthal said. “We had some other people who, frankly, were a little difficult to deal with, and those are the deals where we’ve made a lot of money.”

Using former corporate executives as partners and executives in private equity deals is trend that has been validated by a recent BusinessWeek cover story, said Paul Yovovich, AB ’74, MBA ’75, chairman, principal, and cofounder of Lake Capital. “It’s not enough to be a financial engineer,” Yovovich said.

Using former operations executives lends his firm credibility and a competitive advantage, said Ward McNally, ’04, partner in Edgewater Growth Capital Partners. Edgewater also uses a CEO network and a list of advisors for particular deals, McNally said. “We take a different tack in that we’ve brought those people in-house and found it’s been a big advantage for us, both from an operational standpoint and as an opportunity to display to the sellers and the management team that we’ve been there and done that.”

—Phil Rockrohr