Successful CEOs of Private Equity Funded Ventures

Abstract

There is wide agreement that the quality of top managerial leadership greatly influences the success of any business. The character and personality of the leader can drive business outcomes. Leadership quality is more important in new ventures than in established companies. Private equity investors need to find and use the most effective tools. This article argues that clinical psychological techniques can provide unique insights into the leadership quality of a prospective manager. We argue that private equity should learn how to become intelligent consumers of these methods. In particular, we believe that projective and semi-projective techniques provide the most valuable information. Using them in combination with more traditional evaluation tools should substantially increase the confidence that investors have selected the most capable executive, thereby enhancing private equity returns in portfolios of new venture investments.