Experience breeds intuition as it pertains to healthcare executive recruiting. Does it benefit horse racing too? I won't try to prove whether experience improves your outcome at the track. However, healthcare venture capitalists often use horse racing analogies when discussing ideal investments. These venture capitalists prefer to bet on the jockey versus the horse. Their logic, it's the people that drive the business healthcare executive search firms.
A healthcare venture capital firm's success is influenced by their ability to recruit and retain a high-performing Jockey, a.k.a. "the CEO." If it was only very easy to win The Kentucky Derby or deliver a ten-bagger return. My healthcare executive recruiting experience working together with healthcare venture capital firms provides intuition in defining the firm's CEO need. Once understood, identifying and recruiting the CEO and creating a solid support team for the CEO requires experience, extensive networks, new and real-time research and a thorough process. The intent of this information is to supply outcome-driven insights for the healthcare venture capital firm that chooses to locate internally for a portfolio CEO versus retaining a healthcare executive recruiting firm.
Recent quarters show an increased amount of new capital investment from healthcare venture capital firms. The Health Care M&A Monthly reported in March 2008 that healthcare services deal volume in February 2008 totaled thirty completed deals. Looking back once again to 2007, total funding for healthcare venture capital deals was significantly more than $9 billion across significantly more than 480 deals. Healthcare venture capital investment escalates the demand for these firms to conduct a thorough and accurate executive search process in order to identify, recruit and retain the CEO. While a healthcare venture capital firm often retains a healthcare executive recruiting firm to help in CEO recruiting efforts, healthcare venture capital firms can mimic the search procedure for the very best healthcare executive recruiting firms.
Insights from healthcare executive recruiting firm processes will result in an improved exit:
1. Healthcare venture capital firms are devoted to recruiting an established CEO for the portfolio business and may occasionally be inclined to conduct an in-house CEO search process. The approach is to place a CEO in place that is known by the healthcare venture capital firm from previous experiences and business dealings. However, many times these healthcare venture capital firms will admit they "don't know very well what they don't know" about the business, the segment, or the pool of available CEO talent. However, if there clearly was any doubt at the onset, it quickly becomes clear they should bet on the jockey to operate an unfamiliar race. It's at this time the firm should consider duplicating the search methodology that healthcare executive recruiting firms utilize for CEO assignments.
Healthcare executive recruiting firms are engaged to recognize and recruit leading CEOs for high-growth, venture backed businesses. To cut back the risk of creating a hiring mistake, a healthcare venture capital firm's internal search process should assess those executives the firm knows and trusts in parallel with proven executives who are newly introduced to the healthcare venture capital firm. Ultimately the CEO may be selected from the firm's personal rolodex. However, the worth of benchmarking known CEOs against a broader CEO talent-pool will prove valuable.
2. CEO contingency and succession planning belongs early in the healthcare venture capital firm's investment. Recruiting strategies to recruit key CEOs, senior leaders and board members are at the inspiration for a portfolio company's success. Common practice is for the healthcare venture capital firm to recognize and recruit an experienced and industry-experienced board member, one capable of leading the business if the present CEO cannot finish the race. The immediate need is fiduciary but both succession and contingency planning should be thought about too. Though some individuals feel that succession planning must certanly be below the CEO, healthcare venture capital firms are enthusiastic about developing concepts and financial carry much more than developing future leadership talent. Therefore, succession and contingency planning belong in the board room for just two reasons: one, if the CEO in place is successful the new board member can maintain his or her fiduciary duties. However, if the CEO loses control of the business or industry, this board member is engaged and in a position to part of immediately. This hedge strategy can succeed to dramatically reduce downside risk.
If the CEO loses control of the business or industry and the healthcare venture capital firm did not plan appropriately, you will see many sleepless nights. It's during those sleepless nights once the unprepared healthcare venture capital firm will incorrectly pursue one of these three options:
o Retain a healthcare executive recruiting firm. However, the search is often initiated on quick sand since the healthcare venture capital firm needs to recruit a savior. Conversely, the venture capitalist may decide to prevent retaining a healthcare executive recruiting firm because it is perceived to be too cumbersome of a process during this time of panic. Neither scenario contributes to a high-multiple exit.
o Turn to someone the healthcare venture capital firm knows from previous dealings. This approach isn't focused on growth but instead on building a ground to minimize investment loss.
o The healthcare venture capitalist will take over the business and become CEO. My experiences say that poor planning and a subsequent reactionary jerk won't deliver an optimistic cash outcome.
The success of a risk-taking healthcare venture capital firm is founded on hiring and recruiting the best Jockey for the business. While healthcare executive recruiting firms tend to be critical resources to venture firms, there are occasions when a healthcare venture capital firm chooses to conduct their CEO search internally. In those occasions, healthcare venture capital firms should mimic the proven search procedure for the very best healthcare executive recruiting firms. healthcare executive search firms venture capital firms may benefit by conducting an unbiased and thorough executive search process tied to board level contingency and succession plans. This will develop strong businesses and deliver solid returns.
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