This Private Equity Veteran Credits Emotional Intelligence for his Success

In the private equity business, investors trying to convince business owners to do a deal must essentially say: "You’re special, I think we should get married, have a home and a family, but in five years, I’m going to sell you."

So says Stewart Kohl, a co-founder of The Riverside Company, a major investor in middle-market businesses around the world. In a recent interview with Privcap, Kohl says his ability to deal with the often emotional aspects of long-term investing are probably the most important skills he possesses, possibly more important than financial acumen.

Interviewer Don Lipari of RSM US LLP says to Kohl: "I want to read one of your own quotes. You said, 'Any success I’ve had might be more due to people skills rather than financial and analytic skills.' Provide me your perspective of how important a high EQ is when convincing entrepreneurs to sell their company or to allow you to invest in their companies, specifically in the middle market or lower middle market."

Kohl replies: "I think high EQ is critical to what we do in private equity in general, but particularly at the smaller end of the middle market, as we call it. In our world, it’s rarely purely a financial transaction... These companies are the creation of these entrepreneurs. They’re a part of their family... We forge very close relationships based on trust and communication. And the connection, having properly structured the transaction and grown the business together—there’s a level of closeness, rapport and shared accomplishment that’s remarkable."

In the wide ranging interview, Kohl also discusses his pony-tail days at Oberlin College and early career development, including a disastrous first deal.

Watch the full interview here.

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