Key executives are as important as key financial figures when evaluating a company, says Christian Frick of private equity firm Nordic Capital, who is a strong proponent of background checks.
“It’s at least as vital to do due diligence on the people as it is on the numbers before an acquisition. Ultimately, these are the people you’ll be working with.”
Christian Frick joined Nordic Capital 19 years ago and is now a partner and head of the Financial Services sector, with considerable influence over Nordic Capital’s acquisition decisions in the sector.
“Before an acquisition or investment, it’s standard practice to investigate the companies, but alongside an audit of the numbers, annual reports and customer contracts, it’s at least as vital to do due diligence on the people. Ultimately, these are the people you’ll be working with. Nothing is more critical than working with the right people,” says Christian.
Christian Frick
Partner and Head of Financial Services
Nordic Capital
Private equity has long been at the forefront when it comes to background checks, but as the market changes, the nature of such checks is also changing.
“We’ve always conducted background checks, but the whole industry used to be more reactive. Today, we operate much more proactively, because the market is different now. Capital flows across national borders much more freely than it did 20 years ago, for instance.”
Nordic Capital is committed to acting as a present, engaged, and responsible owner towards the companies it invests in. At the same time, these companies in turn have high expectations of Nordic Capital as an owner. They expect Nordic Capital to refrain from investing in the wrong businesses or partnering with dubious parties. This creates an added layer of caution about which companies Nordic Capital chooses to work with.
For almost 10 years now, Nordic Capital has enlisted the services of Look Closer ahead of executive recruitment or investments.
“There’s little point in doing the background checks ourselves, when Look Closer has the tools and experience to conduct this kind of work so incredibly effectively.”
Have you ever chosen not to proceed with a deal because Look Closer uncovered something?
“Yes, we have. If we find out that we’re dealing with people who have committed crimes or failed to demonstrate proper business ethics, it naturally raises questions about the business they run. On the flipside, however, when we get a report from Look Closer showing that everything’s in order, that’s great news. Of course, it’s no guarantee that there won’t be any problems, but it does give us a degree of reassurance.”
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