Knowledge Center: Podcast

Private Equity

From the health sector to financial services: Insights from Dr. Alex Dibelius, managing partner at CVC Capital Partners

4/26/2021 Heidrick & Struggles

In this podcast, Heidrick & Struggles’ Roman Wecker speaks with Dr. Alex Dibelius, managing partner of global private equity firm CVC Capital Partners. Well-known for being the dealmaker behind the mega-deals Mannesmann-Vodafone and Daimler-Chrysler and a long-standing supervisory board member of several publicly and privately traded companies, Dibelius discusses the specifics of leadership at a private equity firm, what private equity–led firms can learn from other companies in other sectors, and what he learned moving from a career as a heart surgeon to consultant at McKinsey to partner at CVC, as well as what lessons from 2020 his firm is carrying forward into the future.

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Some questions answered in this episode include the following:

  • (6:25) In your current sector, how does leadership in private equity–led firms differ from leadership at other companies?
  • (8:58) What can private equity–led firms learn from other companies in other sectors?
  • (10:41) How important is the influx of external talent?
  • (12:42) How much did the pandemic affect your overall portfolio? What were maybe the most challenging but maybe also the most beneficial things you experienced?
  • (16:04) What's maybe the single most important way your organization is building on the lessons of 2020?

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to the Heidrick & Struggles Leadership Podcast, the premier provider of leadership consulting, culture shaping, and senior-level executive search services. Every day, we’re privileged to talk with fascinating people who are shaping the future through their leadership and vision. In each episode, you’ll hear a different perspective from thought leaders and innovators. Thanks for listening to the Heidrick & Struggles Leadership Podcast.

Roman Wecker: Hi, I'm Roman Wecker, a principal in the Heidrick and Struggles’ Frankfurt office and a member of the global Industrial Practice. In today’s podcast, I’m speaking to Dr. Alex Dibelius, managing partner and head of the DACH region of CVC Capital Partners, a global private equity firm that recently ventured for the first time in Israel. Alex started his career as a heart surgeon, then moved to consultancy, working for McKinsey, and then spent 23 years at Goldman Sachs. Well-known in Germany and within the financial services sector for being the dealmaker behind the mega-deals Mannesmann-Vodafone and Daimler-Chrysler, Alex is also a long-standing supervisory board member of several publicly and privately traded companies. Alex, welcome and thank you very much for taking the time to speak with us today.

Alex Dibelius: Roman, great meeting you.

Roman Wecker: Alex, you started your career as a heart surgeon and then moved to financial services and private equity. What parts of being a doctor were surprisingly helpful and gave you an advantage in business?

Alex Dibelius: Well, there might be two. One is a pretty obvious one: if you are in surgery and if you are often in extreme situations with people, with human beings, you start to realize that at the end of the day—and that sounds a bit strange, but everybody is, to a certain extent, a patient—somebody who’s looking for help or support and is, in extreme situations, very much susceptible to stress. And [you can apply] almost same recipes in daily life for how you can help a person. Sometimes, business is also about helping individuals get on the right track, and doing the right stuff almost always has to do with their personality and the fact that they are human beings and not machines, and that is something that you are trained in to be a medical doctor.

The second one hasn’t as much to do with being a medical doctor but if you study medicine, [I would say] it is almost like a studium generale of natural sciences; you have understood how basic principles in physics, physiology, biochemistry, chemistry, pathology, and so on work. So, there are certain things you can bring into your new life because perhaps you understand some science questions better. There are the two things that immediately come to mind.

Roman Wecker: Thinking about a challenging time during your career, how did you overcome it and what were your lessons learned?

Alex Dibelius: Making a decision like moving from the theatre to McKinsey was pretty challenging because I knew nothing about business; I had not done any sort of formal business training. I did the last appendectomy on the Wednesday nightshift and on Monday I was starting with McKinsey. I was sent to Novartis—at that time it was called Sandoz—to do the restructuring of the headquarters and I didn't know what a cash flow was, I didn't know what an organic ram looked like. So, you take some risk yourself, and I think one important lesson was you should always know what you don't know.

Second, you should reach out for help and learn how other people can support you in acquiring additional knowledge. And you also should not underestimate the immunological reaction of an organization and how to deal with that. For example, when I moved from McKinsey to Goldman, it might not have been such a business risk, but it was an organizational risk because investment bankers tend to have the perception that consultants aren’t any good. At McKinsey, I was made a partner pretty early. I had made it in the hierarchy, and I could have said, “OK, let’s go and let's try to become a similar position at Goldman.” But I thought, “No, I don't know what investment banking is all about and I’d rather join as an associate.” And a lot of people misunderstood why I was going, asking why an apparently successful partner at McKinsey was going to become an associate at Goldman Sachs, you know, wondering if there was something wrong. But it wasn’t wrong, it a deliberate decision to start as an associate, to try to learn from scratch and earn my accolades (if there were to be any) rather than coming with a chip on my shoulder. At the end of the day, the organization will tell you if you don't know enough or you are not good enough, because it never just depends on you, it always depends on your role within an organization. From that perspective, that was also a lesson—or rather, not a lesson but something that I luckily applied. I was then promoted within Goldman relatively quickly. But had I come in at the title or at the hierarchical level that I had achieved after half a year or a year, it would have been much, much more difficult for me to make my mark on the organization.

Roman Wecker: In your current sector, how does leadership in private equity–led firms differ from leadership at other companies?

Alex Dibelius: Within private equity firms, basically, you are representing the shareholder very directly and you take the responsibility. So, decision making is more direct, more entrepreneurial, and is, alongside what some might call a pretty one-dimensional function, creating value, in a way. So that's one thing as a private equity player. Overall, though, you have the managers who manage the company—we as private equity sponsors don't manage the businesses, but the managers are also shareholders of the company. From that perspective, private equity resolves the embedded conflict between capital and management because we, feel, particularly at CVC as managers, that we want to stay close to our money, despite the fact that we don't manage the business, only the deal or the case. On the other hand, through the typical private equity–specific incentive mechanisms, managers are also becoming shareholders, and that makes for faster decisions, more direct decisions, and more entrepreneurial decisions for a company.

Roman Wecker: How important are soft factors of leadership such as mindset and cultural change versus the hard ones such as restructuring, rigor, and execution?

Alex Dibelius: I don’t think that’s really a worthwhile distinction. I don't know what hard skills are and I don't know what soft skills are. Do you mean hard decisions, such as intellectually rigorous decisions that might sometimes be hard on certain businesses or on certain people or certain individuals? To implement these decisions you always need “soft skills,” if by that you mean empathy and the ability I mentioned in the beginning to understand what an individual wants and what drives him and why it might be a “hard decision” for him. I think the analytical rigor always has to be there and then you have to apply your skills together.

Roman Wecker: What can private equity–led firms learn from other companies in other sectors?

Alex Dibelius: A portfolio company can learn a lot from family-owned businesses because thinking through generations offers long-term perspective. That's something we wouldn’t have because private equity is always ownership over a certain amount of time, because we have to, basically, pay back the money we got from our investors. So, by definition, we can’t have a perspective over 20 or 30 years. But it’s also a kind of prejudice that we are only short-term orientated because even if we sell after 5 or 6 or 7 years, we still have to sell a company for which the buyer has, at the minimum, an additional perspective of 5 or 7 years. You always have to managing accordingly, [ensuring that the company] is attractive for 10 years. With regard to publicly quoted companies, we’ve learned much on our way to making some of our portfolio companies publicly quoted companies. So, there are certain things about communication with the broader public, with stakeholders, that we can learn how to do better. But we try to implement that—we have done many successful public offerings, and so we know what a public company needs to do in order to migrate from a private equity–owned company to a public one.

Roman Wecker: How important is the influx of external talent, and on what level for not only your portfolio companies but for CVC?

Alex Dibelius: It’s very important. It is different, though, in quantity as compared to Goldman or McKinsey and, talking about CVC as a high-performance organization itself, we don't hire that many people. McKinsey hires in thousands in Germany alone per year, and I think Goldman hires perhaps in the fifties or hundreds—we at CVC here in Germany have hired, perhaps, in two years, one or two. So, it’s a very small group. Nevertheless, every individual is important and that’s why we still keep the same level or the same kind of criteria by which we select the people. It’s different in portfolio companies. One of the key tasks of a private equity firm is, obviously, to hire either advisors who have some experience in the given industry or company or to hire management teams, a CEO, or you might even have to upgrade or add some additional management talent. We work with our own networks, but we definitely also use executive search firms like yours because they play a very important role, empowering the private equity firm to get the right talent in place.

Roman Wecker: We didn't want to spend too much time on the pandemic, but still—two questions. Allow me to ask about the influence of COVID-19. How much did the pandemic affect your overall portfolio? What were maybe the most challenging but maybe also the most beneficial things you experienced?

Alex Dibelius: The most challenging thing was perhaps obvious and [had two levels]. On the business level—for example, we own a large retailer. If all businesses or all shops are closed, that has a definite impact on the revenue line and the profit line. [We saw that at] the beginning of the pandemic, throughout our whole portfolio. We had to focus on the immediate cash impacts on a company, ask, “Can we survive? What can we do? What do we have to do in order to ensure that this company is not getting into trouble?”

The second direct impact is also obvious, that we had the chance to accelerate some programs in the companies. For example, when it came to digitalization in the given retail company, we were able to jumpstart and leapfrog the digitalization effort and significantly accelerate that. Then, the way people communicate with each other is changing as well, despite the fact that I, from time to time, am getting a bit getting tired of looking over some of these small video conference screens. But that’s what we had to learn as well. As of now, our portfolio—and I’m talking on the global CVC level, we are relatively (knock on wood!) positive on the outcome, but we don’t know how long this is going to last and what impacts it will have in the future.

Roman Wecker: What further changes are you foreseeing?

Alex Dibelius: It depends whether it’s on an individual basis or on a corporate or organizational basis. On the individual basis, I’m always saying that there are three things: One, stay intellectually curious. Two, know exactly what you don't know. That’s the key thing. I always said that I know what I’m able to do but, for example, I admire big CEOs a lot because I don’t know if I am the big corporate guy who I could lead thousands of people. I don't know if that would play to my skills, for example. Third is never forget that working or doing a job should—and I'm trying to tell this to the most junior hires we have here—should always have an element of fun or personal satisfaction or whatever you want to call it. If you don’t have that you can’t learn to be good at what you’re bad at.

On the corporate level, I think that the way we all interact with each other might change if this meeting and traveling escapism returns to normal. I don't know. [I think] we will find ways to implement new business models faster. To a certain extent, as negative as it might be, destruction is always a chance to build something new. That is, I think, the chance of this pandemic as well.

Roman Wecker: What's maybe the single most important way your organization is building on the lessons of 2020?

Alex Dibelius: It is very important to stick to the culture that makes an organization. At CVC, that culture is one of de-centralized decision making, entrepreneurial spirit, and meritocratic behavior. Whatever happens around you, if you stick to your cultural values, you're able to deal with the adversities externally.

Roman Wecker: Alex, great insights. Thank you so much for making the time to speak with us today.

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