Wednesday, June 14, 2006

The Importance of a Good Team:
One thing that is regularly underestimated by individuals looking to join the world of private equity is the breadth of perspectives of the team. As I have stated in past posts, Pharos believes strongly in analyzing and managing the risks in the private equity business, as opposed to looking only at the upside potential of specific deals. Part of our ability to succeed in managing risks goes all the way back to the creation of our firm and our strategy for hiring. While all private equity firms strive for the best and brightest employees, we have always looked to hire from a mix of educational backgrounds, job experiences, professional experiences and other interests. The reason for this is simple, if we all came from the same great school with the same great professors and the same great jobs, we would have similar perspectives and opinions and most importantly we would be likely to make the same mistakes. By hiring professionals that have a diverse set of experiences, we are likely to look at transactions from slightly different perspectives, and as such, become less likely to make the same mistakes. In addition by empowering our professionals at all levels to say `no' to particular deals, we put that diversity of experience to the test. If five or ten analytical and skeptical professionals with different backgrounds and different experiences can't find a reason to say `no', then in all likelihood it is a pretty interesting deal that is worth exploring. On our team, Kneeland Youngblood, one of our founders and managing partners has a very diverse background including time as an emergency room physician, as well as serving on the boards of Starwood Hotels, Burger King, and the money mangement business of American Airlines. This breadth of experience is invaluable in reviewing and analyzing a large variety of deals. Similarly Mike Devlin has worked both domestically and internationally, has been a securities lawyer in new york, an investment banker with Goldman Sachs, and has been actively engaged in a large number of non-profit endeavors to expand his range of experiences. We carry this depth of experience through to our hiring at all levels and it helps us ultimately to be better investors. As my partner Kneeland Youngblood has stated many times, there is nothing more important than building the right team.

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