In February 2021, Drax was engaged by a leading European Investor to help assess the leadership structure of an operating division within the largest industrial manufacturing company in Europe (headquartered in Germany). The multinational was in the process of carving out the business unit to become a standalone entity, thereby increasing the possibility of a future sale.

The key questions the client was looking to answer included:

  • What does good leadership look like in similar businesses undertaking a carve-out

  • What does the leadership team operating within the division look like today

  • What is optimal leadership given the specific context and what changes should be made in order to optimise the team for success as a standalone entity

  • What factors should be considered to ensure the leadership team is investable and able to increase the likelihood of a prospective sale to either a trade buyer or institutional investor (such as private equity)

In order to develop insight and understanding around these questions, Drax undertook a 2 week arm’s length Leadership Dynamics project in order to provide recommendations against the key questions. The work undertaken included:

  • A comparative peer group analysis in which seven previous carve outs were evaluated. The companies in questions all shared common characteristics; carve outs from large multinational industrial conglomerates, enterprise value of $250M+ at the point of carve out, provided both technology hardware and software services.

  • An evaluation of the incumbent leaders in the business and an assessment of both individual suitability from an experience and behaviour perspective as well as an assessment of the team’s overall readiness to operate as a standalone leadership team, taking into account structure, experience and behaviours.

This Leadership Dynamics report recommended a clear route to optimisation of the leadership team, comprising a sequence of steps the current owners and / or prospective buyers should take to maximise the likelihood of the team successfully executing against the company’s value creation plan. Overall, the insights provided the investor with a preliminary roadmap to maximising value through leadership for the company.