Go beyond analyzing the founding team by treating the entire employee base as a key asset. By measuring metrics like employee retention rates, hiring velocity, and geographical or role-based growth, investors can build a quantitative picture of a company's health and culture, providing a powerful comparative tool.

PE investors often fail to unlock a portfolio company's full potential by only interacting at the board level. Engaging deeper with operational leadership is crucial to understand the team's true quality and identify opportunities to transform the value proposition, which are often missed from the boardroom.

As an organization scales, some leaders become skilled at managing up while being poor managers to their teams. Executives must conduct regular skip-level meetings with frontline employees to get direct, unfiltered feedback and catch these bad behaviors that would otherwise be hidden.

Experience taught Herb Wagner that great leaders consistently surprise on the upside. He now weights leadership quality far more heavily, assessing CEOs not by interviews or charisma, but by their verifiable track record and through trusted backchannel references who have worked with them directly.

To combat the private equity industry's low success rate with CXO appointments, Speyside Equity uses a two-axis framework. It evaluates executives on their ability to achieve results (the Y-axis) and their personality and competencies to do it the 'right way' (the X-axis), effectively creating a 'no jerks' filter.

The primary focus for a new portfolio company leader in the first 100 days should be on three pillars. First, align the company's plan with the PE firm's thesis. Second, ensure the right executive team is in place. Third, establish reliable data and KPIs to measure progress.

A rising tide lifts all boats. The true test of a founder partnership emerges during downturns. Diligence should focus on teasing out traits like adaptability, humility, and accountability, which predict how a founder will react when plans inevitably go awry.

High-performing CEOs don't hesitate on talent decisions. One mentor's advice was to act immediately the first time you consider firing someone, as indecision only prolongs the inevitable and harms value creation. This counteracts the common tendency for CEOs to be overly loyal or fear disruption.

An effective leadership assessment measures two distinct axes: the team's alignment on the *importance* of a strategic goal and their agreement on how well it's being *executed*. This dual focus pinpoints misalignment on priorities, not just execution gaps.