International CEO Forum: ROUND TABLES
Key ideas that emerged during the CEO round tables hosted by Scotto
Scotto hosted a cycle of conferences during which CEOs shared experiences and insight on best practices.
Round table: “Building and motivating a dream team”
Moderated by Isabelle BOUJNAH, Senior Client Partner Private Equity at Korn Ferry
The CEO needs to understand the company’s background before joining.
“Every company has a different story and history. The first thing to do is to understand the background of it. You have to do research on the company before joining.”
Michel GIANNUZZI - Chairman and CEO VERALLIA PACKAGING
“What I tried to do, at first, was to understand the business. I also needed to understand the people and to know who was on board and who wasn’t. So I spent the first 2-3 months visiting all the plants, meeting with customers, employees… in order to make informed decisions, not based on past loyalties, impressions… but based on facts!”
Laurent MUSY - CEO TERREAL
As a CEO it is essential to be clear with your team on your strategy and your values.
“When you think about changing a team and making some adjustments, you should be clear with your expectations and with your strategy” “You need to explain what changes you intend to make and to give the team time to adjust to your vision. You will quickly see who will be able to follow and who will not.”
Michel GIANNUZZI - Chairman and CEO VERALLIA PACKAGING
“The CEO’s actions must be based on a vision with a clear strategy but also on a lot of courage. Strategic vision and courage are leadership qualities. You need them to change things and people.”
Alain-François PIALAT - Head of HR/Communication FRAIKIN
When a new CEO takes over with a new vision, changing the organization and the team may be necessary. The CEO needs to analyze the key strengths of the company and link them up with the changes he is planning.
“The key is to keep the right balance between developing new ideas and keeping the key strengths”
Jean-Marc BIANCHI - CEO KERNEOS
“You need to have a mix of internal people and external people.” “It is important to have a balance between “experienced managers” and “new blood”
Laurent MUSY - CEO TERREAL
Round table: “Business Plan Debate”
Moderated by Claire DELARBRE, Executive Director at EY
Trust between CEO and shareholders is key. The Business Plan needs to be ambitious but also remain achievable to build trust with your shareholders.
“After more than one LBO, you learn to be prudent about what you say on upsides and downsides. Indeed, you can’t change your story too much, because the new investor will have access to your previous engagement. You have to demonstrate that what you have said to the previous shareholders has been delivered (more and less).” “My advice is to be realistic on your business plan and try to identify additional upside following investment that can balance any difficulty you may encounter on your plan.”
Patrick MATHIEU - President & CEO ARMACELL
“You need to pull out something you can deliver. The management team needs to stick together and have the same goal.”
Jürgen SACKHOFF - SACKHOFF RA
Keeping your shareholders involved is always beneficial.
“Before setting our road map on digitalisation, we clearly defined our vision and established where we wanted to go. We had a lot of tests, discussions and exchanges with our franchisees but also our shareholders. What are the priorities for our franchisees with the clients? What are they expecting?” We discussed many subjects to set the outcome of the project
Eva IVARS - CEO Spain AFFLELOU
Round table: “Build-up and value creation strategies”
Moderated by Julien BERGER, Managing Partner at INDEFI GROUP
Innovation and digital strategy are key performance levers going forward for PE funds and their portfolio companies. Not all the funds have the same understanding of the importance of the digital transformation for their portfolio companies. PE investors have a role to play to allow companies to take advantage of digital opportunities and limit the risk during the implementation.
“In France, investments in private equity are booming (+23% p.a. over the past 5 years) and becoming more and more competitive. Digital strategies could emerge as a differentiation lever for private equity funds and their portfolio companies. Private equity funds need to differentiate themselves and to find new levers to grow. (…) Digital strategy is a way to anticipate disruptive business models, to access new markets, to develop new client segments and new distribution channels and to improve profitability and optimize processes”
Julien BERGER - Managing Partner INDEFI GROUP
“Digital strategy is one of the three levers of value creation we are focusing on. The question may be why we are specifically focusing on that lever. One part of the answer is that today, we are witnessing an acceleration of time.” “This acceleration of time is driven by IP, technology, data, etc. It is also driven by a rapid shift in the way consumers (in BtoC but also in BtoB) consume or interact with products and in their expectations” ”We ran a survey that showed that 9 out of 10 companies think that digitalization will be an important factor in their business ; And only 1 out of 10 consider that they are at an advanced level of digitalization of their company. So, our view is: we have all these companies that have great brands, great teams, which have built great businesses with great assets… and they have a great opportunity to create value leveraging digital and tech”
Grégory SALINGER - Chief Digital Officer Apax Partners
Other ideas that emerged during the CEO Round Tables
It is necessary to have your own advisor for the deal
“A lot of CEOs are not used to having an advisor, although this can be a key element in helping them realize theirs plans. As CEO, you are always focusing on the next deal and the next management package. In fact, your advisor will spend as much time on assessing the existent management package upon the exit: there are many aspects that you don’t even think about, such as accounts issues or different ways of defining what are “net proceeds”, but your advisors will be there to help you. They will also help you to negotiate the next deal without exposing you too much, you don’t want to start negotiating and disagree with your future shareholders.”
Patrick MATHIEU - President & CEO ARMACELL
The management equity plan is a great LBO tool to engage your team over the long term. Managing the MEP may take up some time, depending on the number of people coming in and going out.
“Top management should always be equity holders; it gives everyone the same goal and aligns interests”
Bernard LE BOURGEOIS - Managing Director PROCADRES INTERNATIONAL
“When you want to attract new talent, the management equity plan is a great magnet.” (…) “A few months after people had invested, nobody was talking about the equity plan anymore. They will start to talk about it again, when you get close to the exit. That means that you don’t use the MEP as a day-to-day tool to motivate or engage your team.”
Michel GIANNUZZI - Chairman and CEO VERALLIA PACKAGING
“Over the years you can change your position. Initially, you want to have many participants to the MEP, but this means you can have many people coming in and going out. Depending on the jurisdictions, transferring MEP interests to other managers can be also complicated from a tax perspective.”
Patrick MATHIEU - President & CEO ARMACELL
“I agree with Patrick next time I will probably limit the number of persons who participate in the management package. (…) Also, to be frank, depending on the structuring of the MEP, the return depends on how high the investment amount is.”
Jürgen SACKHOFF - SACKHOFF RA
The exit is often a difficult time to keep the teams engaged. The CEO needs to find new objectives, but also maintain a long-term vision. The change of shareholders is a financing mode, to transform and to drive the company toward its goals.
“After two LBOs, we need to build another story. Finding a new project to motivate the team is not easy. It is key to keep engaging and inspiring the team”
Alain-François PIALAT- Head of HR/Communication FRAIKIN
“Timing is an additional challenge when you are undergoing an LBO. Management needs to think longer term than PE funds. This is the reason why having real leadership is key. It is important to have a strong management that can say “no” to PE funds who have more of a short-term vision than managers who want to take long term efficient decisions”.
Bernard LE BOURGEOIS - Managing Director PROCADRES INTERNATIONAL
“It is important to avoid too much upheaval during the change of shareholders. The management team (and the CEO above all!) needs to demonstrate that the long-term vision is not impacted by that. The change of shareholders is a financing modality in order to continue the transformation and the journey of the company towards its strategic objectives.”
Jean-Marc BIANCHI - CEO KERNEOS