Introducing the NightLight™ Program and Covenant
Make Your Investment or Loan More Secure:
Require CEO Coaches for the Companies You Put Your Money Into
Every private investor and financier knows the importance of looking closely at a company’s leadership before making an investment or allocating resources. You may structure the transaction with equity and/or debt, but you are certain to align the CEO’s compensation package with desired bottom line results, such that when the CEO wins, you win. So how about making it more likely for the CEO to win?
We developed the NightLight™ Program and Covenant to provide sleep assurance to investors and financiers by having a seasoned, uniquely well-placed professional significantly improve your CEO’s performance, no matter how well-performing the CEO already is. Increasingly, CEO Coaching is used as a best practice by CEOs and the investors and financiers who bank on them. The increased value delivered through the CEO is measurable by all stakeholders, including the board, investors, and financiers.
“I’ve written before about CEO Coaches. I’m a big fan of the work they do and how they can help entrepreneurs work on things that are holding them back from being the best leaders they can be. I encourage most of the CEOs I work with to get mentors or coaches (or both).”
– Fred Wilson, Union Square Ventures (investments include Twitter, FourSquare, Zynga)
By adding NightLight™ to your risk/return calculation and risk management practices, and making it a condition of each investment or financing transaction, it provides greater assurance that more of the companies you invest in will perform as you intend. Not only will your CEOs perform better, with NightLight™ in all of your deals, you have a tool to help screen out over-confident CEOs who are not team players, or not committed to their own growth and improvement, or who have a hard time taking or acting on good counsel. When you integrate NightLight™ into your decision model, you invest only in transactions with continuously improving CEOs, thereby dramatically increasing your rate of successful investments.
The NightLight™ Program is the CEO Coaching program we develop for you and deliver to your portfolio businesses. The NightLight™ Covenant is the term you add to LOIs, Shareholders’ Agreements, credit facilities, and/or other loan documents.
How the Night Light™ Program and Covenant Works
- Make it a condition of your investment or credit facility that the CEO hire and benefit from working with a NightLight™ CEO Coach.*
- Your NightLight™ Program’s CEO Coaches free up analysts or portfolio managers from the burden of putting in more time in to keep up with the CEO, or from having to use CEO performance management/development skills that may not be their area of mastery.
- Each CEO selects a coach by a specific date from the NightLight™ roster of CEO Coaches we develop for you.
- The coach works for and reports to the CEO, not the Board, and not the investor or the financier. This preserves the objectivity of the coach, the centrality of the CEO as the client, and eliminates any perceived conflict that the coach will have mixed loyalties. Consequently, the CEO is fully free to confide and be vulnerable -- which is the last and greatest frontier to cross for personal and professional growth to occur.
- Since the CEO is required to have and benefit from a CEO Coach, there is no reason for the coach to be in the shadows, a secret (as some CEOs fear “how it might look” to investors, the Board, fellow executives, and employees). The CEO Coach attends executive team meetings with the CEO at least quarterly, (1) for team buy-in to the coach’s role and (2) to provide the CEO Coach with an unmediated impression of team dynamics and personalities with respect to the CEO and the CEO’s agenda.
- The Coach should report to the investor, financier, or board only on the CEO’s “coachability,” as that is an indication that the CEO is not fulfilling the requirement to be coached and benefit from coaching that is a covenant of the investment or loan. If the CEO Coach is dismissed by the CEO or resigns the commission because the CEO isn’t being coachable, the board or investor/financier agrees to hear the CEO Coach’s perspective in case it contain useful data.
- If you are not satisfied that the CEO is benefiting from the CEO Coach or suspect that the CEO Coach isn’t serving the CEO well, or the CEO dismisses the CEO Coach, the CEO must select another coach within a specified period of time.
* The NightLight™ Program and Covenant’s checks and balances require that the CEO work with a CEO Coach, not something “like” a coach. A CEO Coach provides greater degrees of support and accountability -- and a steadfastness, closeness, and availability -- not typically provided by a YPO group, EO group, Vistage group, or the like, or mentor, advisor, investor, portfolio manager, investment manager, analyst, loan officer, or board member. We are generally supportive of the CEO working with any such group or person in addition to having a CEO Coach.