A business case

The Private Equity (PE) industry was a high growth sector during the years prior to the 2008 financial crisis. Today, the entire industry is being forced to re-evaluate itself and its operating model from financial leverage to operational value creation. Discovering the best industry practices is crucial because the failure of an investment in a portfolio company can threaten the very life line of the PE firm.

Many experts believe that focusing on operational value creation of the portfolio company will be the way forward for the PE sector. Therefore, the valuation of non-financial levers during the due diligence process is gaining rapid importance. Experts have repeatedly stated that human capital is one of the key attributes, if not the most important one that determines firm performance. They also acknowledge it is the most difficult to assess during the due diligence process.

KennedyFitch sponsored a research project at the ETH Zurich that examined the latest and the most effective methods used in Europe to assess senior and middle level managers of prospective later stage investments. Motivated by a similar research conducted for the USA in 1999 by G.H. Smart, this study analyzes 49 PE investments from 35 of the most renowned firms in Europe to unveil new and modern insights. The key finding of the study was that spending more quality time on management assessment and using a set of balanced and robust methods enabled significantly better predictions of management performance. However, PE firms tended to limit the number of methods used, mainly due to restrictions of time and resources and reluctance to irritate the prospective management team. This research also includes the most sought after management attributes/qualities and the typologies for assessment approaches followed by PE firms.

Substantiated with this research, KennedyFitch has the capabilities and competencies to assist Private Equity firms with their human capital due diligence.

This research project was carried out by Roshan Tantirimudalige. With a triple degree in finance, marketing and engineering combined with several years of international work experience in BAT, he was one of the candidates that fulfilled all the KennedyFitch criteria. His groundbreaking research project was awarded at the ETH with the highly selective Master Thesis medal. Subsequent to this project, KennedyFitch guided Roshan into a role as Business Analyst within the Strategy Group of Unilever's Global Supply Chain.

You can download the study for free following this link.


PE companies that participated in the study
  • Global Equity Partners, Austria

  • Groupe Alpha, Switzerland

  • H.I.G. European Capital Partners, United Kingdom

  • HANNOVER Finanz, Austria

  • Heliad, Switzerland

  • Investitori Associati, Italy

  • Invision Private Equity, Switzerland

  • LD Invest, Denmark

  • LODH Private Equity, Switzerland

  • M2 Capital, Switzerland

  • MBB Industries, Germany

  • Odin Equity, Denmark

  • Partners Group, Switzerland

  • Perusa, Germany

  • Polaris Private Equity, Denmark

  • Riverside Europe Partners, Germany

  • Riverside Europe Partners, Sweden

  • TIG Capital, United Kingdom




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