Human Factor & Deals: 7 Key Insights to Invest Smarter 🤝

Human Factor & Deals: 7 Key Insights to Invest Smarter 🤝

When a transaction fails, it’s rarely because of the business plan.

It’s often the human factor that derails things.

As an executive coach and expert in leadership due diligence within private equity, this is where I focus my efforts—identifying those invisible human risks that are often overlooked but crucial for a deal's success.

Here are the 7 key points to consider in order to secure your investments.

1. My Expertise

I’m a former corporate lawyer with over 15 years of experience, now based in London and founder of JBC Executive Solutions.

I work with investors to provide deep insights into leadership teams before the deal is closed. My role is to identify human risks early, align the interests of investors and management, and ensure long-term performance through strategic support.

2. The Most Common Mistakes in Deals ❌

In my experience, here are the most frequent mistakes I see in transactions:

• Confusing individual talent with collective team performance.

• Underestimating underlying tensions between leaders that can surface at critical moments.

• Waiting until post-closing to assess team alignment, which should be done much earlier in the process.

  
  

These mistakes can jeopardize a deal, but they are preventable with early, thorough evaluation.

3. My Impact on Deals 💥

I make human risks visible and actionable. For example, in a recent tech investment project in Luxembourg, I evaluated the management team through several interviews and identified a significant gap between the team’s vision and its ability to execute.

This report led the investors to walk away from the deal, saving them millions 💸. I continue to support this team to help them prepare for a future fundraising round.

4. The Evolving Practices in Private Equity 📈

The industry is changing, and human due diligence is becoming a more integral part of the investment process.

We are seeing a rise in the use of behavioral analytics and predictive leadership tools that help assess a team’s long-term success. Investors are also refining their post-deal governance practices to ensure that teams deliver on their objectives.

5. Why the Human Factor is a Deal-Maker 🔑

The human element, often overlooked, is the critical factor that will determine whether a deal succeeds or fails.

This is why it’s crucial to understand the dynamics within the leadership team before making investment decisions. Ensuring that the values and objectives of both management and investors are aligned is essential for the long-term sustainability of the business.

6. My Recommendations to Secure Your Deals ✅

The decisions you make before, during, and after a deal can be strengthened by adopting a human-centered approach.

This includes:

• Thoroughly evaluating the leadership team early in the process to ensure strategic alignment.

• Maintaining post-closing follow-up to ensure retention of key leaders and proper governance integration.

• Proactively managing any leadership tensions to prevent them from disrupting future performance.

7. Unconscious Biases to Avoid in Transactions ⚠️

Human biases, often invisible, can derail a deal.

It’s essential to be aware of them to avoid costly mistakes. Some of the most common biases include:

• Overconfidence in a charismatic founder, without considering the internal dynamics of the team.

• Confirmation bias in interviews, where one only seeks to validate preconceived notions.

• The halo effect, where past performance is blindly linked to future success, without objectively evaluating current capabilities.

With these insights, you’ll be better equipped to make informed decisions and secure your investments in the long run.

If you'd like to learn more about how human due diligence can improve your transactions, feel free to get in touch. 📩