In October 2021, MML invested in Zanders, a global consultancy that specialises in treasury and risk.

Confidas People supported MML with the people and organisational elements of due diligence, and subsequently, the consultant has supported Zanders with key-hire assessments for the buildout of the management team, and for the recently announced acquisition of Fintegral.

Real Deals speaks to Jessica Ring, investment director at MML Capital Partners, Laurens Tjidhof, CEO of Zanders, and Bruce Douglas, director at Confidas People, about the importance of organisational due diligence throughout the investment lifecycle. 

RD: What is the purpose of carrying out management due diligence (MDD) and people due diligence (PDD) from an investor perspective and how is the information used to support value creation?

Jessica Ring: MDD or PDD is a pivotal aspect of the due diligence process for investors. It not only assesses the competence of the management team concerning the investment hypothesis and strategy but also plays a crucial role in supporting value creation. Specifically, PDD informs the following areas. 

Firstly, it informs team enhancement by identifying the strengths and weaknesses of the current team, enabling the investor to supplement skills through strategic hires or executive coaching.

It also creates an alignment of interests. PDD reveals personal objectives and interests, which informs the investment structure and ensures that incentive structures are aligned with those driving the most value. It informs risk identification and mitigation. PDD highlights significant people-related risks, such as key man risks, where the business relies heavily on one person.

Finally, it creates a governance framework. PDD assists in shaping new governance structures, including the establishment of an investor board, performance metrics, roles, responsibilities and accountability measures. Overall, PDD helps investors mitigate risks, optimise resource allocation and ensure the management team’s capability to execute the business plan effectively, ultimately supporting value creation.

MDD or PDD is a pivotal aspect of the due diligence process for investors

Laurens Tjidhof: PDD is essential from an investor perspective because it provides a deep understanding of the human capital aspects of a target company.  This information is used to make informed decisions, mitigate risks, enhance value, align the workforce with strategic goals and manage change effectively, all of which contribute to the overall success and value creation of the investment.

Bruce Douglas: We view the management team as the most important aspect of any investment – understanding the team an investor is backing and then supporting them appropriately as they grow the business optimises working relationships, which are crucial to success. We intend to become part of the toolkit for investors and their portfolio companies, to de-risk significant decision making related to people decisions, but also to ensure teams are set up for success, with the right people in the right roles, playing to their strengths. 

RD: As a CEO, how did you find the experience and how did you and the team benefit?

Tjidhof: Undergoing PDD can be a valuable experience. It provides insights into the organisation’s human capital, identifies strengths and weaknesses, and helps in assessing cultural alignment. Zanders worked with the team from Confidas People to support us with our initial investment, the recruitment of senior team members and the acquisition of Fintegral. During the various projects, the team has continually asked probing questions, showing strategic thinking and bringing clarity during the entire process. This support has contributed to our accelerated growth and continued success at Zanders. 

PDD provides insights into the organisation’s human capital, identifies strengths and weaknesses, and helps in assessing cultural alignment

Douglas: Management team experience is crucial to us and we want to make sure any MDD or PDD process is additive to both the investor and management team beyond the completion of a deal.

RD: How important is it to get some insights into people before making senior recruits, or during an acquisition, and how does Confidas People help with that?

Tjidhof: Obtaining insights into people before making senior hires or during acquisitions is crucial for cultural alignment, risk mitigation and value creation. Confidas People specialises in people and organizational due diligence, using assessment tools and methodologies to evaluate candidates, identify risks, assess cultural fit and provide recommendations for informed decision making. This helped with our own firm. 

Douglas: Cultural fit and complementary working styles help to improve the effectiveness of a team. We take the view that no individuals should be perfect at everything, but rather they should have genuine strengths they can apply to the maximum by working as part of a balanced team.

We take the view that no individuals should be perfect at everything, but rather they should have genuine strengths they can apply to the maximum by working as part of a balanced team

Ring: Gaining insights into individuals before senior recruitments or acquisitions is crucial, especially in businesses heavily reliant on their personnel, such as consultancies. This process helps mitigate risks by understanding personal track record and motivations, assesses cultural fit, ensures new talent complements the existing team and strategy, aids in integration planning, and enhances the likelihood of a successful outcome. 

Confidas People further assisted Zanders in meeting their ongoing people due diligence needs as they considered additional external hires and acquisitions. Their extensive familiarity with the current management team’s skillset, acquired during the initial investment process, enabled them to accurately assess the potential value and cultural alignment of new talent. Importantly, their evaluations are impartial and grounded in in-depth psychometrics and interviews, reinforcing the credibility of their assessments.

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