
Gwyneth KettererChief Operating OfficerBear Stearns Merchant BankingYou manage the internal workings of a sizeable private equity firm. Is there anything different about running an LBO shop than running one of your portfolio companies?
I’d have to say that many of our portfolio companies are better managed than we are, allthough we have a lot more type-A personalities than our portfolio companies combined! Most private equity firms are pursuing a lot of strategic initiatives simultaneously. The strategic plan of any one of our portfolio companies is probably more focused than our own. But that said, over the last couple of years we’ve spent time focusing on how to better run our business. We’ve started programs like portfolio-wide sourcing, we created an entity called Strategic Services to think broadly about ways to add value across our portfolio—including improving relationships with our own vendors and advisors, lawyers and consultants—and we’ve been trying to develop our own intranet so our portfolio companies can communicate with to each other. I don’t know if a lot of people are doing that.
What have you done recently to build the culture at Bear Stearns Merchant Banking?
Our business is all about people-attracting, and motivating them is part of our strategy. Among other things, we annually review everyone’s equity participation in the firm, we try to keep lean deal teams so the younger professionals have more opportunities to take on responsibilities, and we ask our new partners to develop sub-silos of focus. We also have a strategic off-site meeting every year. This past June we took 40 guys to Canyon Ranch in the Berkshires, a terrifically serene place. It’s a place focused on eating well and being physically active surrounded by natural beauty, bringing together mind, body and spirit. That’s one of the advantages of being a woman COO—you get to pick the venue. It was a great holistic experience.
Your division works with a lot of entrepreneurs, like women’s shoe designer Stuart Weitzman. How do you structure those deals?
One of the things that differentiates us is that we do entrepreneur-driven investments where we take less-than-control stakes. Most of our buyout peers will only do control investments. We look at control differently, not just economic control. There are many ways to control a company–through negative controls, for example. If certain things don’t happen, or certain goals aren’t attained, there can be different consequences. But these types of deals are more complicated to structure and negotiate and require a lot of involvement post-closing.
After working with so many entrepreneurs, is there something you personally like about them?
What I like is that they are visionaries and are the best at what they’ve done. These guys have created something unique and are at the forefront of doers in their spaces. I guess it appeals to the academic side of me—they are typically very creative and interesting and not bogged down in the trappings we have in big corporate America and Wall Street. They are very interesting characters, not your cookie-cutter managers.
You’re in a field dominated by men. Is there room for more women in private equity? How did you find yourself there?
I certainly hope there’s opportunity for more women. I’m a proponent of women in any business, especially private equity, where women’s strengths around people—their ability to understand and evaluate them—are so important. No matter how good you are at financial engineering, you can’t get around the key driver, that’s it’s all about backing the right horse. I got into private equity because it seemed to me that the best and brightest were part of it years ago. It was creative, I liked the challenge, and I had good partners that understood the value of women to their business.