Houston expert looks into behavioral analytics in private equity, growth equity, and venture capital

houston voices

The larger the deal, the higher the chances of failure, says this Houston expert. Photo via Getty Images

Study after study puts the failure rate of mergers and acquisitions somewhere between 70 percent and 90 percent (2011, HBR). One KPMG study narrowed the band of M&A failures to 75 percent to 83 percent (2015, KPMG). One constant in the research is that the larger the deal, the higher the chances of failure.

A FAILED MERGER, ACQUISITION, OR DIVESTITURE CAN BE UNDERSTOOD IN 2 WAYS:

  • Qualitative – what the companies had in mind that caused them to merge in the first place doesn't work out that way in the end.
  • Quantitative – shareholders suffer because operating results deteriorate instead of improve.

Deloitte's M&A Trends 2020 reports that 38 percent of PE firms cite revenue and growth improvement strategies as their primary strategy or focus area for driving value in their portfolio companies.

In the same report, EFFECTIVE INTEGRATION is key for the success of the deal. It accounts for 20 percent of a successful transaction, tied for top place with ACCURATELY VALUING A TARGET.

Post-M&A integration is defined as the implementation of changes in functional activities, organizational structures, and cultures of the two organizations to expedite their consolidation into a functional whole. Of course, this all involves people.

Moreover, Aon Hewitt research shows that:

  • There is a 23 percent increase in "actively disengaged employees" after a change event – even if no one's job is affected.
  • It takes about three years to return to pre-merger engagement levels.

With these figures, it is startling that there is not more focus on talent. Executives attribute 72 percent of their company's value to their employees, yet a mere 12 percent of companies align their talent strategy with their business strategy (Predictive Index, The 2020 State of Talent Optimization).

HOW ARE INVESTORS IN THE PRIVATE MARKET CHANGING THE TIDE?

According to Mike Zani, CEO of The Predictive Index, "When you look at the world of PE, growth equity, and to a lesser extent, VC, we are starting to see more talent officers, someone on staff to assist with strategic HR challenges with their portfolio." For example, Vista Equity has a consulting division that is solely focused on the talent and people analytics of its portfolio companies. They go beyond just finding the right executives, they have proprietary analytics tools to add value.

THERE ARE THREE USE CASES FOR ANALYTICS WITHIN THE PRIVATE MARKET:

1. Due Diligence

"One of the most powerful ways behavioral analytics are used for due diligence is understanding the strengths and blind spots of the future leadership team. It's about applying analytical rigor to the people side of the business to create a nuanced understanding of individual and team dynamics so you can be intentional about how to enable and de-risk the execution of future growth plans. We surface people challenges and opportunities early in the process so our clients can put strategies in place for effective change management and talent optimization." Heather Haas, President, ADVISA.

After signing a letter of intent, a consultant can assess the leadership team with behavioral, cognitive, and organizational assessments. In the process of evaluating leadership fit, consultants may identify gaps between the leadership abilities needed and those present in the executive team, and investors must focus attention on closing those gaps. It is much easier to suggest fixing them before the deal is closed, where investors can work with the company to create leadership development or hiring plans. If investors discover that the executive team lacks financial or operational excellence 6 months after close, it is going to be much harder to communicate that in a positive, forward-looking way.

Predictive Index isn't the only tool used for due diligence. Specialty consulting firms that provide due diligence support with people analytics include GH Smart, Green Peak Partners, Korn Ferry, and Deloitte. They use a host of tools ranging from Hogan assessments to proprietary software. "Out of the 150 PE clients with The Predictive Index," Zani says "about 1/3 are using it in due diligence regularly."

2. Post-Deal Value Creation

Effective M&A integration accounts for 20 percent of the success of a deal. As I mentioned in the last post, behavioral analytics can provide insights that allow each person to easily understand how their new team members are wired. This can drastically reduce the time it takes to build cohesion among the group and make for more effective collaboration as project teams are regularly assembled and reassembled. Put simply, instead of using our energy to try to figure each other out, we cut through the noise so we can run faster.

3. Scale

The use of behavioral analytics for hiring is nothing new. With an infusion of cash, one of the first thing a company does in response to growth goals is to hire. People data can help companies scale quickly and with confidence. Max Yoder, CEO and Founder of Lessonly shares about Predictive Index, "Now, every time we hire, we use the assessments as another tool in our toolkit. The results will never decide whether a person gets hired or not, but they do provide guidance as to whom should be in sales, whom should be in client experience, whom should sit in a quiet space, and whom thrives on commotion."

Even with such impressive results, still there are two schools of thought when it comes to how much control private market firms want to have over the operations of their portfolio companies. General Catalyst, the PE firm that invested in Predictive Index, in particular, says they don't want to be the management team. Kirk Arnold, Executive In Residence, General Catalyst says "We're very founder supportive. We invest in entrepreneurs and innovators and work to support them. We share feedback and insights with those teams – and encourage them to The Predictive Index toolset to help them scale effectively. But we don't force any of our teams to invest in any particular tool or strategy. We believe great businesses are built by great teams, and we believe that PI can help companies excel in team building – but we look to the leadership team to make those investment decisions based on their needs and culture.

Prior to becoming a Predictive Index Consultant, I spent five years integrating acquisitions. I only had access to PI for the very last year. It was so powerful in building dream teams that I wished I had known about it sooner. Areas I used PI heavily was in post-deal value creation as well as scaling. In my current practice, I spend about 20 percent of my time performing due diligence for start-ups as well as working with them to round out their team from a data-driven perspective.

------

This article was written by Wendy Fong, founder and principal of Chief Gigs, and originally appeared on Liu Idea Lab for Innovation & Entrepreneurship's blog.

Talent optimization goes beyond human resources practices, management consulting, and productivity tooling to describe a model that empirically aligns strategy and people practices. Photo via Getty Images

Houston expert: Finding your tech talent through analytics

Houston Voices

You know the work that needs to get done, and you know the environment that you want to build. How do you find the people who will build it with you? Historically, we relied on relationships, intuition, and track record when we evaluate potential team members. This is the same approach we use to find our mates, and well, the divorce rate speaks for itself.

Perhaps you know your potential partner from a previous job when you both worked for a public company, and they were a high performer. Even when we have worked with someone before and they had a great track record, things can go awry. Humans are messy beings. When factors that affect motivation (such as equity percentages, the potential for exit, working 80-plus hours a week) change, performance can be affected. The people who do really well as a cog in the wheel do not necessarily have the same drive to BUILD the wheel. So how do we pick the team members who will best suit the work and environment?

Did you know that 95 percent of people think they're self-aware, yet only 10 to 15 percent actually are (Tasha Eurich)? If people don't know themselves, how can you possibly know your potential partner's fit?

Behavioral assessments aren't new. If you've ever worked for a large company, you've likely taken one. What is different now is that The Predictive Index is harnessing the power of behavioral analytics to predict success and help us visualize teams in a whole new way. We can now look at people's work style in under 6 minutes and quickly give you data on how people will perform in their role and with your team to drive alignment in your organization.

As a founding board member and active investor in Valhalla Investment Group, we recently implemented the practice of using behavioral analytics in our due diligence. We then look at individual and team results to identify any gaps between strategy and the team's ability to execute the strategy. We specifically look at a team's appetite for risk, approach to change, and response to pressure.

The results for one startup we were evaluating came back with a potential red flag. Five of the six in the executive team were exploring leaders in the "Innovation and Agility" quadrant. These leaders are independent and comfortable with risk. We had one who was a very strong stabilizing leader in the "Process and Precision" quadrant. This person is very precise and cautious with risk. We immediately reached out to the CEO to schedule a Zoom to ask how the team works with what could be seen as an "outlier" and how they deal with the friction. The CEO understood the strengths and cautions of his team and explained that while this person is different, they are very much needed. They provide balance and contribute to areas that are blind spots for the rest of the team. The way the CEO handled the question showed us that he was self-aware enough to manage such differences and gave us the confidence to invest in this startup.

HOW IS THIS RELEVANT FOR YOUR STARTUP?

Founders

Wouldn't it be great to know potential partners' appetite for risk, how they deal with deadlines, their proactivity or reactivity to issues before you meet them? Or how they respond to pressure? Founding partners can be evaluated to ensure their behavioral drives align with the startup strategy.

For example, if the strategy is to fail fast to obtain product-market fit and grow market share quickly, founders would need to be innovative, risk-tolerant, comfortable with ambiguity, and they'd need to thrive under pressure. Conversely, if your startup serves a highly regulated environment, your founding team needs to be well-organized, careful with rules, and cautious with risk.

Team dynamics and inclusivity 

Without insight into team dynamics, results are left to chance. Behavioral analytics can provide insights that allow each person to easily understand how their new team members are wired. This can drastically reduce the time it takes to build cohesion among the group and make for more efficient and effective collaboration as project teams are regularly assembled and reassembled. Put simply, instead of using our energy to try to figure each other out, we cut through that noise so we can run faster.

Lastly, by creating a job profile and looking for candidates who fit the profile, we can cut out the biases that relationship-based recruiting can introduce to an organization.

"The alignment of business strategies and talent strategies is known as talent optimization."

Talent optimization goes beyond human resources practices, management consulting, and productivity tooling to describe a model that empirically aligns strategy and people practices. It weaves talent improvement practices into the everyday workings of a company to nurture and employ a workforce that is specifically calibrated to the company's strategic objectives. The sooner we utilize people data to look at our organization, the sooner we can spot potential blind spots. Leaders can then address the issues and focus on what's most important for their startup.

------

This article was written by Wendy Fong, founder and principal of Chief Gigs, and originally appeared on Liu Idea Lab for Innovation & Entrepreneurship's blog.

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

Property Showcase

Axiom Space expands executive team with two C-suite hires

new leaders

Fresh off officially making Texas its legal headquarters, Axiom Space has named two new C-level executives.

The Houston-based spacetech company, which is developing the first commercial space station, announced earlier this month that it had appointed Zach Gitomer as its new chief financial officer and Erick Wegerer as chief information officer.

Gitomer served as vice president of investor relations and capital markets for Axiom from March to June of this year. Before joining Axiom, he held various leadership roles at Bank of America, Merrill Lynch, and Citi, where he supported technology and growth companies, according to Axiom.

"Building era-defining space infrastructure and pioneering the orbital economy is a complex endeavor that requires not just an audacious vision and stellar engineering talent, but the financial infrastructure, discipline, and capital strategy to match," Gitomer shared in a LinkedIn post. "I’m honored to take on this role ... I’m looking forward to partnering with the exceptional leadership team here at Axiom Space during a defining chapter for the company and commercial spaceflight broadly, as well as a crucial period for maintaining U.S. human presence in low-Earth orbit and leadership in space exploration."

Wegerer joins Axiom after most recently serving as CIO of Washington-based Insitu Inc., a subsidiary of Boeing that develops customized unmanned hardware for commercial, government and defense customers.

"My time at Insitu was defined by talented people, meaningful challenges, and work that mattered. I'm grateful for the teams, partners, and leaders who made progress there possible. Stepping into Axiom, I'm energized by the mission, the momentum, and the opportunity to help shape what's next," Wegerer shared.

Photo via LinkedIn

The duo was celebrated on the floor of the New York Stock Exchange last week.

“We are pleased to welcome these exceptional leaders to the Axiom Space team," Axiom CEO Jonathan Cirtain added in the announcement. “Their strong record of helping complex organizations advance their strategic priorities will strengthen our executive team to further advance our core business objectives."

It's been a busy summer for Axiom. The company tacked on an additional $175 million to a previously announced capital raise, bringing the oversubscribed round to a total of more than $525 million, in June.

It also announced plans to open a Japanese subsidiary July 1. It tapped veteran Japanese astronaut Koichi Wakata to lead Axiom Space Japan as chief technology officer in the Asia-Pacific region. It also shared plans to establish Axiom Space Switzerland, a wholly owned subsidiary based in Lucerne that is also expected to begin operations this summer.

Axiom also officially redomiciled its legal headquarters from Delaware to Texas last month. Read more here.

Houston hardtech accelerator names 8 founders to 2026 cohort

hardtech fellows

Hardtech-focused organization Activate has named 50 new members to its 2026 cohort of scientists, which includes eight startups joining Activate Houston.

Activate aims to support scientists at "the outset of their entrepreneurial journey." It partners with U.S.-based funders and research institutions to support its fellows in developing high-impact technology. Its fellows receive a living stipend, research and development funding, connections from Activate's robust network of mentors and access to a curriculum specific to the program for two years.

This year's fellows represent 41 companies from 22 U.S. cities and 11 states.

“This cohort clearly demonstrates that the next industry-defining companies won't choose between modern technology and deep science; they'll be built by combining both,” Cyrus Wadia, CEO of Activate, said in the announcement. “These are the scientists and engineers turning our most urgent global challenges into the companies that will deliver a more sustainable future.”

The Houston fellows are working across the energy, space, AI infrastructure and agriculture sectors. They include:

  • Sophie Clare Broun, founder of Anning Corporation, which is producing clean hydrogen by stimulating naturally occurring geologic deposits
  • Kathy Andersen, founder of Brint Tech, which builds optical sensing systems that quantify hydrogen for infrastructure operators
  • Dorsa Talebi, founder of Kinetiq Drive, which builds rare-earth-free, contact-free electric motors with wireless rotors for small appliances and heavy industry alike
  • Neethu Pottackal, founder of Nivera, which is developing natural, edible coatings made from agricultural byproducts to reduce food waste and extend the shelf life of fresh food
  • Jonathan Huffman, founder of Orbital Arc, which is shrinking spacecraft propulsion to a microchip powerful enough for deep space
  • Tim Lee, founder of Renesin, which develops advanced materials for faster, more efficient AI hardware
  • Joshua Livingston, founder of Selerra Separations, which is developing high-performance membranes that cut the cost and energy consumption of water treatment
  • Wenli Jiang, founder of SwieNitro Recovery, which is developing technology that converts nitrogen-rich waste streams into valuable fertilizer

"Home to the largest concentration of engineers in the United States and a dense ecosystem of Fortune 100 and Fortune 500 companies, Houston is uniquely positioned for scientists tackling large-scale industrial challenges. Activate Houston fellows are connected to the city's deep networks in energy, chemicals, and materials," Activate said in the announcement.

Activate named its inaugural Houston cohort in 2024. It has other hubs in Boston, New York, and Berkley, California—where Activate is headquartered. The organization also offers a virtual and remote cohort, known as Activate Anywhere. Nationally, it has supported 346 fellows and 276 companies since 2015.

Activate Houston is led by managing director Jeremy Pitts, who co-founded Greentown Labs in Boston. It is based out of the Ion. The latest cohort is Activate Houston's third. Read more about the last year's cohort here.

Rice, Houston Methodist award $90K for cancer research projects

seed grants

Rice University’s Synthesis X Center, in partnership with the Houston Methodist Neal Cancer Center, announced earlier this month the organizations would award $90,000 in seed grant funding to two projects that could help fight cancer. One would ease the pain of chemotherapy, while the other could change the way the progression of leukemia is tracked.

“We’re excited to be collaborating with the Neal Cancer Center to support collaborative, novel and interdisciplinary proposals to improve cancer care and outcomes,” Han Xiao, Rice professor of chemistry and the director of the SynthX Center, said in a news release. “Together, we can achieve translational excellence.”

The projects

Chemotherapy is one of the most effective cancer treatments, but it can be hard on the body. The human body doesn’t like being injected with radioactive material, especially the skin around the injection point, which can become extremely irritated. For patients in long-term treatment, the skin irritation can be more than just a bother; it can lead to infections that are dangerous to a compromised immune system.

Angel A Marti, a professor of chemistry at Rice University, and Biana Godin, an associate professor of nanoscience at Houston Methodist Research Institute, are experimenting with metal nanoclusters as a way to block radiation at the injection site. The nanocluster could be applied in a cream or a gel on the skin, serving as a type of shield against the harsh radioactive material.

Meanwhile, Yuan Ma, an assistant professor of chemistry at Rice, and Shu-Hsia Chen, a professor of immunology at Houston Methodist Research Institute, are working with m6A. Discovered in the 1970s, m6A is the most prevalent chemical modifier found in mRNA in mammals. It is prevalent in many cancers, including leukemia.

Ma and Chen are working on measuring the amount of m6A in leukemia to see if it can determine the most effective cancer treatments. The team is also experimenting with ways to shut off m6A to see if it makes current leukemia treatments more effective.

Progress from SynthX

SynthX was first launched in April 2024 to turn research from Rice and Houston Methodist into real-world cancer treatments. Within a year, the center had secured $1.5 million in grant money to work on crossing the blood-brain barrier in brain cancer treatments. These latest awards show that SynthX Center continues to bridge the worlds of research and clinical practice.

“This collaboration reflects a shared commitment to team science in cancer research,” Daniela Matei, the director of the Houston Methodist Neal Cancer Center, added in the release. “These are the types of translational and pioneering projects that lead to transformation in patient care.”'

The SynthX Center awarded $90,000 in seed grants to three teams in 2025 and $80,000 to three teams in 2024.

View All Listings