Notch Partners: Finding Executives for the Right Deal at the Right Time
Andy Thompson is founder and CEO of Notch Partners, a boutique executive talent consultancy retained by leading private equity firms such as Advent, Charlesbank, Warburg Pincus, and AEA. Notch Partners creates competitive advantage for PE firms by cultivating high-impact relationships that result in superior returns for investors and transformative career opportunities for executives. They source industry-specific CEO-level talent as well as executive-led investment theses. Founded in 2002, the firm maintains a network of 40,000 executives and works with later-stage investors purchasing control positions in mature companies. We are grateful for the niche knowledge that Andy shared during our recent Expert Insight Series interview.
The interview covers four themes: how executives should approach PE firms with investment briefs, how PE firms should build and access a deep bench of executive talent, why economic headwinds create investment opportunity, and how dashboard reporting and data visibility support portfolio performance. Watch below or listen on Spotify. Access the full transcript here.
How Executives Should Approach PE Firms
Notch Partners is frequently contacted by current or recently retired CEOs interested in working with PE firms. These executives are often in the later stage of their career looking to apply their talent and experience to help turn PE deals into big successes, but are sometimes unsure of the best way to get engaged.
If an executive has experience in an industry and ideas for value creation aligned with a PE firm’s investment profiles, Notch Partners advises them to develop an original, industry-specific executive-led deal thesis for PE firms’ consideration. As part of their service offerings, Notch Partners will support executives in creating single-focused investment briefs, and this mutually beneficial approach has proven to be a valuable strategy for building relationships between PE firms and executives.
How PE Firms Should Approach Executive Advisors
Having worked with PE firms for 20 years, Andy advises investors to be straightforward in two ways when engaging with potential executives. First, firms should not hesitate to approach an executive with experience running a much larger business than the one they are considering buying. Executives often grow their experience as their businesses grow, and a CEO who successfully led a $500M business is often the person who grew it from $100M originally. Second, firms should not be afraid to engage an executive in an area where they may not already have deep expertise. After some research, initiating a conversation with “here is what we think is going on in your industry, and here is why we like that for this opportunity” invites discourse. A long-time industry veteran may think the conclusions are not quite right, but they generally welcome the dialogue and a mutually beneficial relationship can develop from it.
“Don’t be afraid to stick out your neck.”
Andy Thompson, Notch Partners
Invest During Economic Headwinds
Andy observes that good investors find high-quality deals where there has been a downtick in price, while the rest of the field stalls due to uncertainty. Taking a cue from Warren Buffett’s well-known advice to be fearful when others are greedy and greedy when others are fearful, Andy suggests investors consider the full investment lifecycle before adopting contractionary measures. If investors are not at the end of a fund cycle, they are usually willing to be patient for two or three months as a downturn develops to find opportunities to do more with their dry powder.
Andy reminds our audience that private equity funds are sticky, and downturns have not historically impacted deal volume for sustained periods. When markets rebound, organizations that invested during recessions outperform those that did not, a pattern that has held across multiple cycles according to Harvard Business Review research.
The Role of Data Visibility in Portfolio Performance
Andy emphasizes that PE firms should not underestimate the impact of dashboard reporting. Having good data, ideally in a somewhat standardized form across portfolio companies, gives both PE firms and their portcos the visibility they need to monitor performance and drive timely decision-making. The PE-backed executive’s perspective on data visibility is worth reading alongside this interview for a fuller picture of how dashboard reporting plays out at the portco level.
If you would like to learn more about how Blue Margin’s managed data service helps PE-backed companies build the data visibility that supports deal performance and exit readiness, contact our team here.
