In the first week with a new management team I ask a short list of questions — one for the CFO, one for sales, one for operations, one for the CEO, and one for everybody — and those answers tell me more about the next three years than any data room ever has. I’ve walked into a lot of first weeks: as the incoming CEO, as chairman, as the operating guy the sponsor sends in when the deal thesis and the reality have started to diverge. The financials arrive polished. The people don’t. And it’s the people who will pull, or fail to pull, the five levers on the EBITDA bridge — price, volume and mix, cost of goods, operating expense, cash. This post is the actual question set, what each answer reveals, and what I do with the answers once I have them.
One framing note before the questions. Roughly 70 percent of PE-backed CEOs get replaced somewhere in months eighteen through twenty-four of a hold. Most of those replacements were predictable in week one — not from the CEO’s resume, but from how the team answered simple questions about their own business. The first week is when everyone is still telling you the truth by accident. Use it.
Why Week One Beats Quarter One
There’s a fashion for arriving quietly, listening for ninety days, and only then forming views. I understand the humility. I think it wastes the single most honest window you’ll ever get. In week one, the team hasn’t yet learned what you want to hear. Their answers are still shaped by how they actually run the business, not by how they’ve decided to manage you. By month three, every answer is rehearsed. The information decays faster than your calendar fills.
The first quarter’s initiatives can be revised. The first week’s questions cannot be re-asked — not honestly. So I go in with a deliberately short list, asked one-on-one, and I spend far more time on how people answer than on what they say. The questions are simple on purpose. Simple questions are the hardest to hide behind.
For the CFO: Walk Me Through Margin by Customer
Not the P&L — they’ve rehearsed the P&L. I ask for margin by customer, and then I stop talking. What happens next is the whole test. The CFOs I want reach for it by instinct: they pull up something imperfect but real, they know the top ten by heart, they know which two big accounts are actually dilutive once you load in freight, returns, and the cost to serve. The number is never clean. The reflex is what I’m hiring.
The other kind of CFO commissions a project. They tell me it’s a great question, that the systems make it tricky, that they’ll have the team build an analysis in a few weeks. That answer tells me the company has been flying on revenue and gut, and that the 80/20 work — where the top quartile of customers reliably carries 105 to 150 percent of the profit and the bottom quartile quietly eats it — has never actually been done. At one industrial business I stepped into, the eventual customer-margin analysis showed the third-largest account, a name everyone was proud of, was losing about $2 million a year fully loaded. The CFO had suspected it for two years. Suspecting isn’t a finance function. Knowing is.
For the Sales Leader: Which Customers Would You Fire?
This one sorts sales leaders into two piles instantly. The good ones smile, because they’ve been waiting years for someone to give them permission, and they name names: the account that demands engineering support it doesn’t pay for, the one that beats us up on price every renewal and pays in ninety days anyway. They know their book the way a portfolio manager knows positions.
The other reaction is horror. A flinch, then a sermon: every customer matters, you never know which small account becomes a big one, revenue is revenue. That horror is revenue religion — the belief that top-line is sacred regardless of what it costs to serve — and it tells me the entire commercial engine has been optimized for volume over profit, comp plans included. You cannot fix mix with a leader who believes mix is heresy. Sometimes you can convert them with data. Sometimes you’re looking at your first hire.
For the Ops Leader: What Would You Fix With a Million Dollars?
I give them an imaginary $1 million and ask where it goes. The answer sorts machine-thinkers from system-thinkers. A machine answer is a thing: a new press, a packaging line, a fleet upgrade. Sometimes the thing is even right. But a system answer describes a flow: we’d fix scheduling because we build the wrong things at the wrong times and expedite our way out weekly; we’d fix the data between order entry and the floor because a third of our chaos is self-inflicted; we’d put it into maintenance planning because unplanned downtime is eating us alive.
System answers mean the leader sees the plant as a network of constraints, and the money will land on the binding one. Machine answers mean capital allocation by wish list. One ops leader answered me in about four seconds: she’d spend it on scheduling software and two planners, because the plant was fast but the plan was fiction. She was right, the fix cost less than the million, and on-time delivery went from the low eighties to the high nineties in under a year. Four seconds. She’d been carrying the answer around, waiting for someone to ask.
For the CEO: What Has to Be True in Eighteen Months?
When I’m chairman or the sponsor’s guy rather than the incoming chief executive, the sitting CEO gets this one: tell me what must be true about this company in eighteen months. I’m listening for whether the answer is a number or a vision. A vision answer — we’ll be the partner of choice, we’ll have transformed the culture — is a yellow flag at this altitude. Vision is real work, but it’s the Visionary’s seat in my Rule of Three, and a PE-backed CEO in the middle of a hold has to be able to translate vision into a numbered plan on demand.
The answer I want sounds like: EBITDA has to be at $42 million, which means price-cost has to hold at plus two, the new facility has to ship at 85 percent utilization by Q2, and I need a real commercial leader in place by Christmas — and here’s the one of those four I’m most worried about. Numbers, sequence, and a named worry. A CEO who can do that unprompted is running the plan. A CEO who can’t is hoping the plan runs itself, and hope is what gets replaced in month twenty.
For Everyone: Who Makes the Decision When You Disagree?
The last question goes to every executive, identically worded: when two of you disagree on something that matters, who decides? Healthy companies answer instantly and boringly — pricing calls go to Maria, capex fights go to the capital committee, and if it’s big enough it goes to the CEO and she actually decides. Boring is beautiful. It means decision rights exist and everyone knows them.
The answers that worry me: a long pause, a laugh, or the word consensus. Consensus means decisions are negotiated rather than made, which means the slowest and most stubborn person in every room holds a veto. At one company, four executives gave me four different names for who owned pricing. Not four opinions — four sincere, confident, different answers. That company didn’t have a pricing problem. It had a decision problem that showed up in pricing, in capex, in hiring, everywhere. No initiative survives an org chart where authority is a rumor.
There’s a variant of this question I save for the second or third conversation: tell me about a decision this team made in the last year that someone in this room argued hard against, and that got made anyway. Healthy teams have a story ready — usually with some scar tissue and a little pride attached. Teams that can’t produce a single example are telling me one of two things: either every decision gets sanded down until nobody objects, or objections aren’t safe to voice. Both are fatal to a value creation plan, because every plan worth running has at least one move that somebody senior hates.
How I Listen: The Pause, the Glance, the Rehearsed Answer
The content of the answers is half the diligence. The delivery is the other half. I watch for three things. The pause: a leader who pauses to think before answering a hard question honestly is worth ten who answer instantly with polish. The instant answer to a question they couldn’t have anticipated is usually a stock answer wearing a costume.
The glance: in any group setting, watch where eyes go when a hard question lands. If every head swivels toward the CEO before anyone speaks, you’ve learned how truth flows in the company — it flows through an approval process. In healthy teams, people look at whoever owns the answer, and it’s a different person each time. And rehearsed versus lived: a rehearsed answer explains the strategy; a lived answer complains about the details. When someone tells me about the specific customer, the specific machine, the specific Tuesday everything went sideways, I’m hearing the real company. When someone gives me the board-deck version, I’m hearing the company they’d like me to buy. I count how many specifics I hear per meeting. It’s crude and it works.
Scoring the Team Against the Plan, Not Against Each Other
Here’s the discipline that keeps the first week from becoming a personality contest: I never score executives against each other or against some Platonic ideal of the role. I score them against what the value creation plan demands of their seat. A B-plus CFO is plenty if the plan is organic growth and pricing. The same CFO is a hard no if the plan is a five-acquisition roll-up he’d have to integrate. The question is never is this person good. The question is: can this person pull the specific levers this plan assigns to this seat, in this timeframe, at this scale?
I take the bridge — price, volume and mix, cost of goods, opex, cash — and I write names next to levers. Every lever needs an owner who has done it before at relevant scale. Where I’m writing the same name three times, I’ve found either a superstar or a bottleneck, and it’s usually a bottleneck. Where I’m writing no name at all, I’ve found the hire. And I check the Right-to-Grow math while I’m at it: a company needs its operating house in order — roughly a 2.0 on my scale — before it has earned the right to chase aggressive growth. A team that scores well against a growth plan the company hasn’t earned yet is still the wrong team for now.
What I Do With the Answers: The Support, Change, Hire Map
By the end of week one, the answers become a one-page map with three columns. It’s the least sophisticated document I produce all year and the most consequential:
Support. The leaders who already see the business the way the plan requires. They get resources, authority, and air cover — fast and visibly, because the whole company is watching to see what gets rewarded now.
Change. Capable people pointed at the wrong things — the volume-religion sales leader, the machine-thinking ops chief. They get a direct conversation, a redefined scoreboard, and one full quarter of real coaching. Some convert and become your best people. Some don’t.
Hire. The empty seats — levers with no owner, and any seat where week one revealed a gap the plan cannot absorb. These searches start in week two, not month six, because a leadership search takes two quarters and the plan doesn’t wait.
The map is a draft, and I hold it loosely — people surprise you in both directions. But I’d rather revise a clear draft than drift for two quarters pretending I don’t have a view. The kindest thing you can do for a management team is tell them early what the plan demands and where they stand against it. The cruelest is to smile through month nine and then act surprised.
One caution from experience: resist the urge to let the map leak before you act on it. Organizations are ferociously good at reading a new leader’s face, and if the building figures out who’s in the change column before you’ve had the conversation, you’ll spend the next quarter managing anxiety instead of performance. Week one is for asking. Week two is for deciding. Week three is for telling people directly — every person on the map hears their column from me, in a room, with specifics. Nobody should ever learn where they stand from the grapevine.
Two First Weeks, Two Endings
First week number one: a $180 million manufacturer. The CFO pulled up customer margin before I finished the sentence — imperfect data, held together with exports and stubbornness, but alive. The sales leader named two accounts he’d fire and had the mix math to defend it. The ops leader gave me a system answer. The CEO gave me numbers, a sequence, and a named worry. Everyone answered the disagreement question with the same name. I told the sponsor we had a support-heavy map with one hire. Three years later that business had grown EBITDA about 2.4 times with essentially the same team. My contribution was mostly staying out of their way and making the cadence non-negotiable.
First week number two: a similar-sized distributor, a deal underwritten on a mix-improvement thesis. The CFO commissioned a project. The sales leader gave me the sermon. The ops leader wanted a new warehouse. The CEO answered eighteen months with a vision statement, and the disagreement question produced the four-names-for-pricing fiasco I mentioned earlier. None of these were bad people — they were a team built by a decade of volume worship, now attached to a profit-mix plan they didn’t believe in. The honest map was change-and-hire almost across the board. The sponsor, to their credit, acted on it in month two instead of month twenty. It was still an expensive two years. It would have been a catastrophic five. Same question set both weeks. The questions didn’t change the outcome — they just told the truth about it early.
Ask the Questions Before You Own the Answers
Everything above assumes the deal is done and I’m inside. But the best time to run this diligence is before the wire goes out, when the answers can still change the price — or the decision. A thesis that says we’ll improve mix is really a claim that this specific team, or a team you’ll have to build, can pull that specific lever. Most deal diligence never tests that claim. It audits the numbers and takes the machinery on faith.
That gap is why the 80/20 Institute runs Deal & Thesis Validation: we pressure-test the value creation plan against the actual management team and the actual operating machinery before you underwrite them — the same questions, the same bridge, the same map, applied while you still have options. If you’re staring at a deal where the model works and something about the team keeps nagging at you, that nag is data. Come talk to us before you sign, not after month eighteen proves the nag right.
Frequently Asked Questions
What Questions Should I Ask a Management Team After an Acquisition?
Keep the list short and diagnostic. Ask the CFO to walk through margin by customer and watch whether they reach by instinct or commission a project. Ask the sales leader which customers they would fire. Ask operations what they would fix with a million dollars. Ask the CEO what must be true in eighteen months. And ask everyone who makes the decision when two leaders disagree. How people answer tells you as much as what they say.
Why Is the First Week So Important When Assessing a Leadership Team?
Because it is the only honest window. In week one the team has not yet learned what the new owner or CEO wants to hear, so answers reflect how they actually run the business. By the end of the first quarter, answers are rehearsed and information quality drops sharply. Roughly 70 percent of PE-backed CEOs are replaced in months eighteen to twenty-four, and most of those outcomes were visible in week-one answers.
How Do You Evaluate Whether a Management Team Can Execute a Value Creation Plan?
Score each executive against what the plan demands of their seat, not against each other. Take the EBITDA bridge — price, volume and mix, cost of goods, operating expense, cash — and write a name next to every lever the plan depends on. Each lever needs an owner who has pulled it before at relevant scale. Repeated names signal a bottleneck; missing names signal a hire.
What Is a Support, Change, Hire Map?
A one-page output of the first week: leaders who already see the business the way the plan requires get support — resources, authority, air cover. Capable leaders pointed at the wrong things get a change conversation, a new scoreboard, and a quarter of real coaching. Seats with no owner for a critical lever go in the hire column, and those searches start immediately because they take two quarters.
Can This Assessment Be Done Before the Deal Closes?
It should be. Most diligence audits the numbers and takes the execution machinery on faith, yet every thesis is ultimately a claim that a specific team can pull specific levers. Pressure-testing the management team against the plan before underwriting — the way the 80/20 Institute does in Deal & Thesis Validation — turns week-one surprises into pre-close pricing and planning decisions.
