Serial entrepreneur Steve McHale has spent 30 years founding, investing in and building information technology companies, one of which was Explorys, a health care technology platform that was bought by IBM in 2015. That experience has led to some interesting insight into what “investable” management teams comprise.
“What I look for is behavioral traits as it relates to their ability to, obviously, lead, but how do they lead?" McHale says. "In these cases I look for those who operate from a servant-leadership perspective. They’re not coming in with a higher-order belief that they’re going to dictate out the vision and the strategy and the execution of the business, but instead operate more from a servant leadership perspective. And also embrace core values.”
He says these traits are fundamental for any business, whether it’s technology or landscaping. Leadership is about empowering people, so they should have good ethics and show initiative and independence, and be accountable.
“When they say they’re going to do something, they do it. And if they’re having trouble they put their hand up and ask for help,” he says.
When it comes to identifying opportunities for good deals, McHale says he says acquisitions his companies have undertaken follow a simple equation.
One is finding a target that would expand market access by being in channels or distribution mechanisms that can be leveraged and optimized by the acquirer. The other is intellectual property that’s synergistic the acquirer’s intellectual property, allowing the company to expand its value proposition both in the acquirer’s and the acquiree’s channel.
In health care and technology, McHale says his investment interest is in medications and drugs getting tech-enabled with more sophisticated workflow and more accurate pathing and prescribing.
“There’s an awful lot of there to save the individual cost as it relates to spend and copay, and there’s opportunity there as well to save overall costs which obviously can bring value to the system and margin that can be delivered in higher-quality care,” he says.
McHale talks about the Explorys deal, which he calls “the most intense due diligence I’ve ever been through,” and more at the Smart Business Cleveland Dealmakers Conference. You can check out the full conversation in the video above.
