The document discusses management due diligence in mergers and acquisitions. It describes how RHR International assesses underperforming management teams using a proprietary survey to benchmark performance. High performing executives are identified as having strong business acumen, critical thinking, leadership skills, and insight. When assessing management teams for M&A deals, RHR looks at the capacity of the team to deliver on investment goals by evaluating strengths, weaknesses, team dynamics, and track records. RHR follows a proven process using psychometrics, interviews, and benchmarking to assess management capability.

1. 2 www.finance-monthly.com
Spotlight On...
Anna Bond Gunning, Partner, RHR International, talks about the importance of management due
diligence in mergers and acquisitions, and identifying underperforming teams or high achievers
Anna Bond Gunning, RHR International
SPOTLIGHT ON...
Management Due
Diligence UK
How do you identify underperforming man-
agement teams?
We will typically assess and benchmark team
performance against our proprietary Senior Team
Effectiveness Survey. This assesses the performance
and ‘health’ of the team through the lens of: Vision
and Purpose, Roles and Responsibilities (i.e. what
we refer to as, ‘agile design’ – right people, right
roles and right focus), Disciplined Focus (i.e.
focus on the right enterprise issues), Decision
Making (i.e. efficient decision-making, balances
speed with efficiency), Process (i.e. frequency and
quality of meetings, communication), and Culture
(i.e. team behaviours and norms). The Survey is
benchmarked against top quartile performance
companies across a number of key performance
indicators.
How do you identify high performing execu-
tives?
There is no one template that fosters successful
leadership, owing to the complex nature of leading
organisations, but we do look for certain things.
High performing executives are usually defined
by strong capability against the following four
dimensions: Business Acumen (i.e. setting the
direction) Critical Thinking (i.e. solving complex
problems), Leading People (i.e. executing through
others) and Insight (i.e. maximising impact).
Also critical is their contextual adaptability.
the two companies, potential synergies, opportunities
and risks.
In terms of creating a cohesive management team,
we find one of the biggest barriers to achieving this
is a lack of clarity and alignment around vision
and purpose and then a lack of shared objectives.
Without this there is no basis for trust and mutual
accountability, and a team will never come together.
The second typical challenge we see is the leader
not being sufficiently aware of their impact on the
executive team functioning and performance. We
refer to this as, ‘the shadow of the CEO.’ And the
third frequent challenge we see is executive teams not
focused on the right issues, at the right level.
What type of support do you provide to newly
formed management teams?
We support with new leader and team integration
sessions, which are structured, facilitated workshops
focused on the key areas of challenge specific to the
team, as identified in the assessment process upfront.
We use our proven process and methodology around
executive and team integration, and also supplement
this with individual coaching work. This is based
on our research Beyond the First 90 Days and
concentrates on working through five key success
factors to achieve success: ensuring role clarity and
alignment, establishing relationships and building
trust, defining, understanding and building culture
and norms, establishing and achieving early wins,
and accelerated learning.
Management due diligence is increasingly
recognised as a critical part of a wider due
diligence process for a merger or acquisition.
Typically, what are you looking for when you
assess management teams?
Yes, we’re certainly being asked to do more and
more of this work. Ultimately, we’re looking for the
capacity of the team to deliver on the investment
thesis. Within this, we assess individual and collective
strengths, weaknesses and risks, as well as team
dynamics and functioning.
Do you follow a set process when assessing
management capability?
We do follow proven process and methodology.
We start with gaining a clear understanding of
the investment thesis and consequently, the
leadership behaviours required to deliver to this.
We then use a multi-method approach to assessing
and benchmarking executives’ capabilities and
potential. Our methodology includes psychometrics,
a behaviourally-based interview, as well as a
benchmarking of each individual’s track record
and experience against what one might find in the
marketplace for similar roles.
The coming together of different company
culturescanoftenproveachallengeforanewly
merged entity, how do assess the potential
challenges? What are the remedies available
in order to produce a cohesive management
team? What are the typical challenges?
The first way to assess potential integration challenges
is by understanding exactly how, and to what extent,
the two companies need to come together. Clear
strategy around this needs to be established at the
outset, but is all too frequently implied.
The second is to employ robust assessment process
and methodology that picks up on cultural aspects of
Tel: +44 (0) 207 799 5243 | Email: abondgunning@rhrinternational.com
About RHR International
RHR International was founded in 1945 and is a privately held LLP. The firm specialised in the assessment and
development of executives at the senior most levels in organisations. Today, RHR specialises across four core service
areas: Individual Executive Assessment (for hire, promotion and development, management due diligence), Executive
Development, CEO Succession and Senior Team Effectiveness.