Interview: Industrial Psychologist

According to a 2022 study from AlixPartners, a global financial advisory and consulting firm, 75% of private equity (PE) portfolio company CEOs are removed during the investment life cycle and half are replaced in the first two years. Failure to understand a chief executive’s strengths and weaknesses before an acquisition can significantly undermine the performance of the investment. To avert disaster and avoid costly turnover, many PE firms are hiring industrial and organizational psychologists to protect their investments.
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‍Marc Prine is the founder of MIP Consulting and a referral partner of Attolon. He’s an industrial-organizational (I-O) psychologist, which means he studies and assesses individual, group, and organizational dynamics and applies this research to help improve the performance of organizations and their employees. In other words, Marc is a shrink for businesses and lately, PE firms have been spending more time on the couch.

Prine’s assessment process is tremendously thorough. First, he develops a framework that strives to understand the motivation of the investment to determine which competencies will drive success. Then he uses psychometric testing to determine the personality or cognitive ability that best aligns with that framework. He conducts behavioral interviews designed to probe each of the critical competencies and collects feedback from key stakeholders on current performance. Finally, he debriefs with an assessment report that reviews the results with the stakeholders and the individuals assessed. This process gets results.
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“I did due diligence for a company that had an aggressive roll-up strategy with a very inexperienced CFO on staff,” Prine said. “I performed an executive assessment that encouraged the company to hire interim fractional help that ultimately guided them through several transactions and an exit above the projected multiple.

"In other situations, I have evaluated the leadership team of companies where the founding members of the team were just not the right people to get the organization to the next milestone. They got the business to $50M in revenue but were not going to get it to $150M. By understanding where the organization was going and learning the motivations of the founding team – I was able to help them navigate the idea of relinquishing control.”

Prine came to the rescue in another relatable scenario. A founder-led consumer goods business where their spouse was also an executive was gaining a lot of momentum with national retailers, but the company was experiencing high turnover amongst the executive team along with poor internal processes and financial management. Prine conducted executive assessments and transition planning, resulting in the addition of a president over the CEO and adjusted deal roadmap and priorities.

Prine’s business focus is private equity because he knows PE firms are “betting on the jockey as much as the horse.” Translation: the investment (e.g. portfolio company) will only perform well if it has competent executive leadership at its helm and I-O can help identify the right people for the job.

“If you have to swap out an executive leader multiple times during an investment life cycle or deal, it crushes you,” Prine said. “I know how to assess what companies and individuals need to be successful from day one. Knowing employee behaviors early in the deal process allows organizations to start on second base.”

Attolon Partners often works with PE firms and their portfolio companies on retained and interim searches for senior-level accounting, finance, and technology leaders. We understand that the right placement is as important for the candidate as it is for the client.

Contact Marc (marc@mipconsultingllc.com) if you would like to learn more about how an I-O can help your firm or business.

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