Mark Supperstone gives five reasons why ReSolve is not put off by a bumpy track record.
As a specialist corporate finance house, we need to have confidence in the management teams we back in order to take the business forward, whether in M&A, IPO, equity or debt financing. Their relevant experience is critical and we don’t mind if that is borne from clear-minded choices having been made in the process of business closure.
Behaviour and decision making is critical. We’re familiar with how people react in the highs of business success; scenarios including growth, revitalisation, merger and acquisition; and we see a different side of people when there are tough choices to make, for example in determining whether a business is viable. It’s our job to retain perspective, but we need to know the management team has the willingness to make it through and the experience of a failed business may be a critical part of their make-up.
It is received wisdom that the UK as a nation is typically uncomfortable with trusting individuals previously involved in an unsuccessful business.
In our view, that simply is not the case. The attitude, strength and clarity of purpose required can in fact be invaluable.
Take for example the bag less vacuum cleaner which took more than five thousand failed prototypes before James Dyson finally got it right, or consider that Walt Disney’s first animation company did not succeed – a failed venture does not mean an individual should be seen as a failure.
Creating a successful team might need some failures
Here are five key attributes that we look for in a management team:
1. An ability to see the wood for the trees. An individual needs to show lucid thinking and focus in the midst of significant other pressures, perhaps coming from other stakeholders with different interests. We need to know that individuals can see the bigger picture and can respect all sides’ point of view, whilst retaining their own.
2. Good people empathy. We need to see in a business manager that they are able to get on with people. Motivating staff through a significant merger may need a similar style to boosting confidence in the retained employees through a wind up and sale to a new owner.
3. What we call “mirror-honesty”. Can a significant operational player in a business investment look at themselves with integrity and honesty when viewing the reality of the options open? The opposite of wishful thinking is needed.
4. Strong financial awareness. It may seem obvious, but it is not unusual to come across a business manager with limited grasp of the financial fundamentals of a business. Someone who has been to the edge is likely to have a very clear view of how the numbers work – whether they were able to step back from it or not.
5. Being almost unshockable. No deal is ever concluded without a bump in the road. If we are to back a business we need to know its people can roll with the blows.
Clearly we’re not in business to celebrate failure. But we respect entrepreneurs with a thick skin, and if the management team have the five attributes above, then in our minds they have earned their spurs and the chances are that ReSolve will work to try and support them.