When Blackstone researches a company before a deal, it brings in not only financial experts but also HR mavens.
Every company Blackstone considers investing in gets evaluated for its financial performance, growth potential and leadership—the personnel that should, in theory, be shepherding that company toward a brighter future and a higher multiple.
“We think about succession planning day one,” Blackstone senior managing director Courtney della Cava said at Coins2Day’s COO Summit on Monday.
Della Cava is an influential figure inside Blackstone, which is the world’s largest alternative asset manager with $1 trillion in assets under management. After 10 years at the consulting giant Bain & Company and a career in HR at the highest levels of corporate America, della Cava joined Blackstone in 2021 to improve hiring across its more than 250 portfolio companies.
During her tenure she turned talent evaluation from an art that relied on gut feelings and intuition to a precise science. It was the exact sort of transformation that appeals to investors like Blackstone who are eager to quantify every aspect of businesses they evaluate. Human resources became just as critical, and carefully appraised, in an investment thesis as projected cash flows or market opportunity.
When evaluating a deal, della Cava starts with imagining what kind of return on investment she’s like to see: “If this is the point of departure, when we sell it in 12 months or 18 months, what do we hope [the value] will be at the end?” She said. “And then we work backwards to the people.”
Della Cava focuses on two roles in particular: CEOs and board chairs. “Those are the two anchors for a deal,” she said.
One of the CEOs that della Cava and Blackstone recently selected to lead a portfolio company was Howard Hochhauser, CEO of Ancestry.com. Hochhauser stepped into the top job in February, after having served in a dual role as CFO and COO and a brief stint as interim CEO from October 2017 to May 2018.
Even someone like Hochhauser, who was a veteran executive, said he was surprised by how all-encompassing the corner office could be.
A CEO at a Blackstone portfolio company is tasked with running the business but also with planning for a future exit—whether that be an IPO or another sale—which adds another layer of consideration to their work.
“Everybody wants a successful exit,” Hochhauser said. “To do that, you have to grow the company. And so now it’s spending 110% of my time on growth.”
The exit plan is never far off from Blackstone’s plans
“We have opportunities to seize and also, ultimately, when we go to exit, they want a good, strong leadership team that’s going to sustain,” della Cava said. “So I wish it were just identifying a CEO—one and done. But what makes it fun is the end to end ecosystem.”