How Private equity Firm Council Capital Approach Value Creation

In this episode, Alex Rawlings is joined by Tim Schulte, Value Creation Partner at Council Capital, a Nashville-based private equity firm investing in healthcare businesses across tech-enabled services, outsourced services, and provider platforms.

Tim brings a unique blend of consulting, operational, and investing experience. He shares how Council Capital drives value creation through collaboration, leadership development, and a structured yet flexible approach to talent and operations.

🔑 Key Highlights:

00:00 – Introduction
Tim’s background: consulting → startup growth → private equity. At Council for 6+ years, focused on scaling healthcare companies.

01:15 – Common Mistake in PE
Reinventing the wheel. Tim advocates for leveraging shared knowledge and collaboration across portfolio companies instead of starting from scratch.

02:12 – Three PE Value Creation Models
Tim outlines three styles:

1. Collaborative but shallow
2. Substantive but rigid
3. Collaborative and substantive – Council Capital’s approach

03:37 – Collaboration in Practice
Council’s CEO Council is made up of 30+ senior leaders who are both advisors and investors. Their involvement creates mentorship and alignment without top-down pressure.

05:02 – Council’s Value Creation Team
A large internal team supports portfolio companies with tailored toolkits (not rigid playbooks) across growth, ops, and talent.

06:11 – Hiring Top Executives
Talent is central to value creation. Council uses:

• Topgrading
• Aptitude & personality assessments
• In-depth referencing
• Case studies
  ...to ensure fit and long-term success.

09:05 – Role of Assessments
Assessments aren’t used to screen candidates out, but to guide interview questions and identify fit. Council tracks data across hundreds of hires to correlate traits with performance.

12:27 – Broader Talent Support
Beyond the C-suite, Council helps portfolio teams:

• Implement HR tech
• Refine hiring processes
• Improve onboarding
• Structure incentive plans

14:38 – First 100 Days for CEOs
New CEOs are expected to:

1. Align on strategy
2. Build out the right team
3. Ensure reliable data systems to track performance

16:58 – Recommended Resources
Tim recommends:

• Acquired – for business case studies
• Founders – for leadership traits & human stories

17:52 – Connect with Tim Schulte
Best via LinkedIn or at Council Capital

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn: https://www.linkedin.com/in/alexrawlings/
🌐 Visit Raw Selection: www.raw-selection.com

Looking to grow your team? Check out our Hiring Guides

for proven strategies, templates, and best practices to make smarter hires. 

Transcript

00:00
Welcome back to the Royal Selection Private Equity Podcast. Joining us today is Tim Schulte,  Value Creation Partner at Council Capital,  a private equity firm in Tennessee  investing in the healthcare sector.  Let's dive in.  Tim, if you can share a brief insight to you, Sure, Alex, happy to.  So Tim Schulte, I'm a partner at Council Capital.

00:27
Council is a healthcare focused private equity firm based in Nashville, Tennessee. We are investing in businesses, all within healthcare, largely on the technology and technology enabled services side, as well as outsourced and provider services deals as well. My background started in consulting, joined an early stage startup, helped grow that to what became a hundred plus million dollar business.

00:51
Went to business school and then got into private equity after school and have been with council for six or seven years now. Very much. Congratulations on the growth of the startups in both  the consulting world, the operator world, and now the investing world. That's right. What's one mistake that you see private equity firms or portfolio companies making and what would you suggest to correct them?

01:15
One that I think private equity firms and portfolio companies both can make  is too often recreating the wheel.  This isn't anyone's first time doing this functionally, looking at markets. We have a lot of resources at the firm and even more so across our portfolio companies. And I think people can often focus on how can we solve this problem.  And the first question isn't how can we solve this problem. The first question should be,

01:42
Who else has faced this problem? How have they solved it? And what resources, templates, learnings can we gather from them? And so in collaboration for us across our portfolio companies is a big area that we are focused on, as well as providing directly from the private equity firm and templates, resources, and other things to our companies. Marcus Radius, nothing new under the sun.  That's great. So they like the approach. Why  reinvent the wheel when you can just steal the wheel idea from someone else? uh

02:12
use it or make it better. Absolutely. So you're in the value creation  team. So talk to us about what that means with regards to your strategy around deployment and how you approach value creation at Council Capital. Yeah, I like a joke that there's three types of private equity firms. Type one,  from a value creation perspective, is often collaborative but doesn't have a ton of substance. So they can confuse pressure in a board meeting and help as the same thing.

02:41
Group two maybe has a lot of substance, but isn't always collaborative. Often can take more of an say authoritarian playbook focus. We have a playbook, we know what to do, go run the play approach. And then group three is a mix of both, real substance, but collaborative. I'm obviously biased, but I think there's a lot of intentionality and pride in falling into category three. So we wanna make sure that our companies have tools and resources.

03:09
but we bring them to bear more of a collaborative manner and that applies to growth and operations and that certainly applies to talent, which we believe is the single most important thing that we can get right at our companies. When we talk about collaborative, because  I haven't met a product actually firm, whether they're hands on, hands off, that would define themselves as collaborative.  It's a bit like strategy. Who's got a strategy? Everyone's got one, uh but it's whether it's any good. So  what do you...

03:37
How would you define how you are collaborative? Yeah, so a couple of ways. So one is even embedded in our name, Council Capital, we have what we call our CEO Council. So this is a group of three dozen successful public and private sector leaders to think former head of CMS and federal Medicare in the US, a couple of state Medicaid directors, CEOs of organizations like Brookdale Senior Living and

04:04
CFO at Cigna and large healthcare organizations like that. These folks are both advisors of the fund in our portfolio companies  and investors in our fund, which is a bit unusual. And so there's  a beauty of aligned incentives in that model. So you have senior industry executives who have aligned incentives with our portfolio companies  and the relationship and mentorship from those groups.

04:33
from that group of people comes across a bit differently than the private equity firm is asking you questions. Instead, it's a successful senior executive who's also invested in your business, who is working alongside you, mentoring you, sharing their lessons learned. And that relationship that we're able to essentially offer to our portfolio companies, nuanced difference, but I think is a really important difference. That's the first thing I would highlight. And the second thing that I would highlight would be

05:02
We have say an unusually large team for a firm of our size and what we call our value creation team, whose job is exclusively working with our portfolio companies across wherever they need help.  You've got some firms that have robust teams and those firms more often take a pretty formulaic approach. Every company gets a root resource. Here's the playbook that we were going to run. And it doesn't feel often collaborative. We, know it's nuanced instead of

05:31
playbooks, we like to term toolkits. We're not dictating the plays, we are equipping you with the tools and resources to be successful.  And there's a lot more, again, collaboration with the strategy of each company  is a bit different. The markets are a bit different. The needs are a bit different. And so working with them to figure out  which of these  W2 resources on our value creation team, which of these partnerships that we have with third parties.

06:01
make sense and then we help them adopt and implement rather than coming in with preconceived notions around what the business should or shouldn't do.

06:11
Yeah, makes all sense. So nobody gets on this podcast with references to talent without me dining all over it. So  you  referenced that AZ, obviously an important element of your business. I would obviously agree, given my line of work.  So let's kick off with the portfolio executive process. How do you go about helping your portfolios get the, or ensuring your portfolios have the best executives to lead, run and manage those businesses? Yeah. Nothing more important than getting the team right. If you get the right team.

06:41
and the business needs help, they can figure it out. If you get a great business with the wrong team,  you're not going to probably make a whole lot of progress.  so talent is the most important functional area that we focus with our  teams and portfolio companies. From a  process perspective, step one, get the right team in place. That is often the founder that we invest behind and supplementing him or her with other  executives around them.

07:10
For hires that we make, we are pretty diligent in following the top grading process. So we go through a lot of depth understanding people's  historical performance and experiences, understanding how those experiences translate into the future roles. Also a very in-depth interview process, number one. We do a series of assessments, both aptitude and personality assessments to understand both

07:38
Competency as well as equally importantly fit with the role. uh Want to make sure that someone is going to be energized by this work, fulfilled by it, and then retained  and stay in that role. So top grading one, assessments two, put a lot of value in reference calls, uh particularly with folks that we know in our network, not just the person that you as the candidate selected. And for many roles, we'll do case studies as well.

08:07
Sometimes, particularly at senior levels, to get to a senior level, you're probably pretty good at telling your story and sales and coming across as a thoughtful executive. That's why you're in a senior role. Can you demonstrate the ability to do the work that we specifically need you to do in this role?  So top grading, assessments, references, and case studies m are really where we focus, and we are quite consistent in how we approach that.

08:37
Interesting. Nice process. it. With,  um,  area of contention for me would be the personality profile assessment piece.  Uh,  I find that, which doesn't mean I'm right, but I find that the majority of private equity firms that use them do not, they do not predict performance. I'm obsessed, obviously,  about the prediction of performance and the likelihood of performance.  Um,  I'm always happy to be proved wrong.  What are you guys doing on that front?

09:05
and what you look for in your assessments. Yeah, I'll say a couple of things there. So on the personality side, specifically as you asked, there's not a good and bad personality. We use those less to screen people in or out of roles and more to inform the questions that we ask in the interview process. So like the person that you want running collections and the person you want running customer success are probably different personalities. That doesn't mean one's better or worse than the other.

09:35
but there's probably a different personality fit for those roles. So it  is a tool to help us ask better questions in the interview process,  not a tool to necessarily make decisions. So that's the first thing I'd say. And the other, we have sat down, we have a chief talent officer, Chris Nichols at the firm.  Chris and I have sat down and looked at  all of the triple digit number of hires that we had done as a firm going back many years and looked at,

10:05
an analysis of success of the people that we've hired.  How do they interview? How do they score on the personality assessment, on the aptitude assessment? What was the source of that candidate? Who is the hiring manager? Who is the portfolio company? What are the different criteria's that  are likely indicators of a strong candidate?  And we have found it's not a perfect correlation. If it was, we wouldn't spend time interviewing. And obviously we do.

10:34
It's not perfect correlation, but it is a strong correlation between performance on the assessments that we use  and performance in the role. And so we're not making decisions solely based on that, but it  is an important part. The last thing I'll say is just, you can find people who went to the same college and had different experiences. You can find people who worked at the same employer and had completely different experiences that held the same  title, but at different companies.

11:02
Your resume is helpful. Your interview is helpful.  None of these  are silver bullets, but if you have the opportunity to add an additional piece of information that is statistically proven to have a positive correlation, like we are absolutely going to use that information every time.  Tim, you've basically done the playbook of how I would suggest if you are going to use personality profile in testing. Ironically, we actually use it internally, but I imagine for something different, I'm not sure what that is, but the...

11:32
Um, my book eventually, and it sounds like a plug, but my book will eventually come out, which does not a priority for me to actually do a release at this point. Um, but it's 99 % done. It's my perfectionism holding it back. But I talk about that and I talk about if you're going to do it and I speak with private equity firms all the time, when they say what personalized profile test you use, I'm like, it's irrelevant. Why I use, have to test it. All of your portfolio companies, all the prior executive, keep the data, retain the data, look for trends, hire people on the basis of those trends.

12:00
Not a hundred percent record, but leaders interviewing, he's never said anything else, but  you guys are basically,  well, you can write my book actually next time, Tim, to be fair. So  that sounds like pretty good playbook with the guys to it. And  like the process, like the diligence, like the structure, like the organization, and it sounds like you constantly always tweaking, improving, and developing that as you're going through it as well. Yeah, we're trying to.

12:27
So, back to collaboration and the portfolio companies, but keeping on talent. How are you helping them hire, you know, they're obviously outside of the C-suite and supporting them with either playbooks or as you referenced, the toolkits. I like that. I like language. I think it's different than a playbook and a toolkit.  What are you doing on that front to help your portfolio companies grow?

12:46
Yeah, like helping, there's kind of helping make sure that we have the right executive team in place that's often is driven by counsel and working in partnership with the CEO and then helping that executive team make sure that they have the right team in place throughout the broader organization. There's a lot that we provide there and on the toolkit side of things. So, and number one is making sure you have the right infrastructure and data.

13:10
to  make the right decisions and understand if your actions are yielding the results that you want. And so we do have a few preferred partnerships in the HRIS,  applicant  tracking system,  applicant CRM solutions. We can help you  if you need it, have that infrastructure implemented right out of the gate, as well as a series of either toolkits or case studies or other portfolio companies that you can talk to.

13:39
to think about, how do you attract candidates? Should you be focused on job boards like Indeed? Should you be focused on referral partners like a school? How do you make sure your onboarding process  is much more efficient? We will sit down and actually make process maps with the portfolio companies to identify the most streamlined way that we can approach things. So sourcing candidates, evaluating those candidates, onboarding those candidates, the incentive

14:09
plans for those candidates once they are hired. The top grading executive is pretty consistent how we approach that. On this hiring at the portfolio companies, again, the needs vary quite a bit. There's not a  single approach that we take, but those are the areas across our chief talent officer, as well as our generalist chiefs of staff teams who then can inform our consultants that we're able to help implement those changes  when they're helpful.

14:38
Again, that kind of plug and play, here's your toolkit, adopt it to your business, here's we can support it, can  adopt the adaptation to your organization. Nothing's one size fits  all. So you grow your chief executive. What's your expectations of portfolio company chief exec within the first hundred days? Yeah, in the first hundred days, there was really three things at the highest level. There's a million details beneath those. Number one.

15:07
making sure that we have a clear strategy that we're all aligned around. Coming into a new deal, the company is going to have a trajectory that it's been on. It's going to have likely a strategic plan. We're going to have our investment thesis. Those things  are almost always 80 plus percent overlapping, but rarely are they 100 percent perfectly overlapping. And so in the first 100 days, making sure that we understand the experiences and the perspectives in the existing work.

15:35
across the company, the private equity firm, and now the board that we brought in as well with external independent advisors. Aligned strategy, number one. Number two comes back to the theme of talent, making sure we have the right team in place. uh Often we are supplementing an existing founder and smaller team.  so making sure that we're thoughtful and intentional if there's additional roles that we're going to need to invest in to scale the business.

16:04
having a plan and getting that in motion. Strategy one, team two, and then number three is just gonna be around reliable data  to make sure that we understand the progress that we are making  as it relates to  achieving the strategy that we've set out. That is  often and hopefully alignment around KPI, then pulling data from existing systems.

16:28
Sometimes that's  implementing new systems or making changes if there are different needs or requirements. In those instances, we are often in a position to make recommendations and have relationships based on our scale to get preferred pricing and implementation support and things like that. ah We're not a firm that comes in and replaces all your systems on day one. think we and you would both like to avoid that. ah But sometimes investments  need to be made.

16:58
Strategy team and data. Those are really the priorities for the first hundred days What's some what do you rock watch read listen to that you recommend the others to check out, please So take the big popular answer these days is acquired  which I do very much enjoy that I also struggle to find four hours per episode often and so I've recently gotten into founders ah Podcast which is I'd say more

17:28
For me, at least more digestible, 60 to 90 minutes and a bit more focused on the human stories, the leadership traits and characteristics of the individuals who built some of  the world's best companies. And so that's one on the more human story side of it that I really be going to join. And if anybody wishes to reach out to you, post this podcast. Tim, how best to get in touch, please.

17:52
Yeah, easiest way is LinkedIn. You can search for me or go into the Council Capital website. It has contact info and LinkedIn  on the profile there. Well, thank you very much for coming onto the podcast. Of course, speaking my favorite language of talent and sharing all of your exposure and experiences in Bali, Croatia. Thanks, Alex. Really enjoyed the conversation. Thank you for everybody yet again tuning into the Priority podcast. Till the next time, keep smashing it.