“Do we need to have a stamp as women?” asks Rania Missoumi, as I call to congratulate her on being selected as NCA’s first female searcher for its “Entrepreneurship Through Acquisition (ETA)" program. It’s a good question. NCA believes that selecting a diverse pool of talented searchers is essential for the program’s success. Equally, it believes how that diversity is achieved is crucial.
THE ETA PROGRAMME ATTRACTS DIVERSE TALENT
The ETA programme supports exceptional individuals to search, acquire and then run successful SMEs as CEOs. Since the programme’s inception in Q4 2020, NCA has launched 9 searchers, the 8th of whom (Rania) is female. Four more will be announced shortly, with another women amongst their ranks.
The ETA programme is still in its infancy, yet the diversity it has already generated is already significantly better than the industry average. At the start of 2021 only 6% of companies in the S&P 500 had a female CEO. That is just 30 companies led by women. Within Private Equity the figures are even worse. According to a 2020 study by Investec, women only account for 18% of the entire workforce and none of those surveyed wanted to start their own PE firm (down from a paltry 2.3% in 2019).
THE PROGRAMME’S EXISTENCE UNSHACKLES CANDIDATES FROM NEEDING A TRADITIONALLY MALE SKILLSET
Christian Malek, founder and CEO of NCA, believes the programme’s structure is key to generating diversity in its searchers. “Traditional Private Equity investing is very focused on the acquisition and generating short term gains. This aggressive style of investing tends to appeal more to a subset of men” he commented.
“The ETA programme is purposefully different. There is a whole team supporting the searcher to acquire a company. This includes an M&A team to help structure the deal, a data centre to aid their search and various formal training opportunities. Then, there is a captable with around 15 investors, none of whom has a majority share, to lead, collaborate with and learn from as they grow the acquired company” he added. This breadth of support takes the focus off the traditional transactional skillset and enables a wider pool of individuals to succeed.
THE JOURNEY TO DIVERSITY MATTERS
“It is not in anyone’s interest to target diversity to the detriment of the quality of the candidates,” said Christian. Rather NCA is building a culture that puts talent first. Rania’s route to being selected was no different to her male predecessors. Like them, she had to make her CV shine bright enough to be short listed from a pool of over 800 other candidates, pass a first round interview, pass a second round interview, complete a gruelling financial case study and finally convince a three person panel that she was the right person for the job. By putting talent first, NCA believes it allows the diversity and individualism of its searchers to shine through as positive attributes and enhance its programme.
DIVERSITY MAKES GREAT BUSINESS SENSE AND IS ESSENTIAL FOR ETA
Diversity is good for business. According to research by McKinsey & Company, gender diverse companies are 15% more likely to outperform their peers and ethnically-diverse companies are 35% more likely to do the same.
At NCA, the business case for a diverse pool of searcher is even stronger. Each searcher needs to convince an SME owner that they are capable of managing their company. But SMEs are by their very nature personal, idiosyncratic and diverse. By selecting a diverse group of talented people who are backed by the support, structure and knowhow of the ETA programme, NCA believes searchers will be better placed to find, acquire and grow a company.
MAKES SENSE FOR INVESTORS TOO
Investing in a searcher to become a future CEO started in the mid 1980s. Since then, it has delivered phenomenal returns, with Stanford’s latest study finding an average pre-tax IRR of over 30% and a return on invested capital of 5.5x. By encapsulating the search process into the ETA programme, NCA believes it can further improve the asset class’s metrics – great news for investors. As, if not more important, the programme offers investors who value diversity and impact investing, the opportunity to build a tailored portfolio of direct investments in SMEs across Europe and US. And there are no fees. For more information, click here.
STILL MORE TO DO
The diversity that the ETA programme has achieved within its first 6 months is to be applauded. However, Christian is keenly aware that there is still more to do. “We need to understand the reasons behind having less women and people from ethnic backgrounds applying to the program. There may be structural issues that are difficult to change quickly but we are committed to supporting a broader pool of talent applying to the programme. That is why we are looking closely at how we communicate, considering how we reach talent that hasn’t taken the traditional business school route, as well working hand in hand with those schools to reach all the talent there.”
JUST A TALENT STAMP NEEDED
To answer Rania’s question, women don’t need a gender stamp to be a searcher on the ETA programme. Everyone just needs a talented stamp. And with over fifteen years of senior management experience across healthcare and finance in the US, UK, and Gulf region, experience as co-founder of a successful business, an MBA from Columbia Business school and fluency in two languages she certainly gets that!
IF YOU ARE TALENTED APPLY
If you have an entrepreneurial spirit and believe that with the support of the programme you could be a future CEO, apply! NCA particularly wants to encourage women and those from more diverse backgrounds to get in touch. To find out more, click here.