FM Analysis

Management Due Diligence

Contact:

Jana Klimecki Tyler Mangan Jana@tylermangan.com

Our business, Tyler Mangan, is a leadership consulting firm focused on supporting leadership teams in transition. Transitions that we have successfully supported since our inception in 2009 include changes in strategy, restructuring exercises, turnarounds and changes in ownership. I am a co founder and Director in the business, and specialise in supporting transitions in ownership in particular. In this capacity we have supported over 40 businesses over the last 3 and a half years, working either with investors directly or with the management teams pre or post transaction. We have also supported teams focused on getting themselves ready for institutional investment.

Tyler Mangan is a boutique leadership consultancy that works with senior executives and leadership teams to enhance their organisational performance, particularly during times of transition. Can you discuss how you would do this?

We get involved during the due diligence phase of a private equity transaction, for example, to provide analysis and recommendations around the management team and the organisational leadership of the business. This includes views on the organisational structure, their strategic planning and objective setting process, roles and responsibilities as well as succession planning. We also work with businesses post-deal, supporting the set up of a new team, in the case of an MBI for example, or advising around the performance management process, development of the next layers of management or the organisational structure. All of our engagements are short, sharp and very practical in nature. We do not structure drawn out consulting engagement and simply focus on supporting management teams to set themselves up to create value through the deal cycle.

Management Due Diligence evaluates executives who make up the senior management team(s) prior to the close of a business deal. What questions should the management due diligence process answer?

Management Due Diligence is about more than

just learning about the characteristics and personality traits of individuals. For us, Management Due Diligence needs to be firmly rooted in the investment strategy, and identify and test what specific challenges a team will have to overcome until the next exit. A business looking to do ‘more of the same’ in new markets needs fundamentally different skills to a team looking to establish a track record of consistently commercialising innovative propositions.

In addition, it is important to look at how the team works together; the dynamics, the roles individuals take on, as well as the decision making and governance processes and how the team holds themselves to account. Furthermore, we look to assess risks around individuals leaving or becoming less involved the business and seek to understand if these skills and capabilities are replicated lower down the organisation. Answering these questions can inform the building of a new board including the selection of a Chairman and non Executive Director and can support the team in optimising the way they operate throughout the deal cycle.

What are the common challenges faced by your clients?

Common challenges include working with new teams (for example as a result of BIMBOs and buy and builds), integrating people and processes, as well as exiting team members and establishing an infrastructure that works to set up the team from day one of the deal.

How can your firm assist the client when such challenges arise?

We believe that regular reviews of the management team, the board and the management infrastructure allows for better (and quicker) decision making around what support is required to develop the team and set them up for success. We found that difficulties with people and how they operate often linger and are - if at all - addressed too late. In many cases, this leads to significant losses in productivity and makes value creation more difficult. Our work can help to establish a platform to address these questions before the deal closes and – often more importantly - throughout the deal cycle.

Is there anything else you would like to discuss?

Whereas no investor and no management team can influence the economic climate we all operate in, there is a lot that can be done to ensure that management teams and boards function properly and can truly add value. However, although most investors and CEOs spend a lot of time thinking about these alleged ‘soft factors’ there is relatively little rigour in place to ensure that decisions around the management teams and boards can be made quickly and confidently and that as little time as possible is wasted in setting the team up to succeed. This is an area that we provide support around; after all, as soon as the deal closes, the value creation clock is ticking.