Interviewing Company CEOs: The Must-Ask Question Checklist Every Investor Needs

Valuable insights from hundreds of CEO interviews

You got a 45-minute slot with the CEO of a company that you are considering as an investment. What should you ask?

When I asked the business school students in my investing seminar this question, I got a variety of answers starting with “Tell us about your cost management plans.” This made me realize that without years of experience, this is not something that comes naturally to most.

Basic Ground Rules

1. Keep your questions short, and let the CEO do most of the talking

2. Stick almost exclusively to “what” and “how” questions. They are naturally open-ended and non-threatening, and are likely to elicit an in-depth response

3. Avoid “why” questions - they can come across as accusatory or adversarial. Even a simple rephrasing from “why did you do that” to “what made you do that” can work wonders in re-framing how your question is perceived

4. Avoid yes/no questions. The worst questions are a long ramble by the investor, followed by something like “wouldn’t you agree?”

5. Let the CEO talk, but keep track of time to make sure you cover your whole agenda

6. If you need to use numbers, keep them and the discussion high level. This isn’t the CFO, so this isn’t the time to dive into accounting details or grill the CEO on insignificant P&L line items

7. Don’t argue. Listen and form your opinion about the CEO, the company and the culture

How You Should Prepare

There is a variety of theories on this. Some investors like to read everything they possibly can about the company, do all the research and then speak with the management as the very last step. Others like to know almost nothing about the company and use the management visit to decide whether to invest more time and resources into getting to know the company better.

I remember my research trip to Australia and New Zealand a decade ago, when I was meeting with management teams from ~ 30 companies over slightly more than a week. It wasn’t practical to prepare in-depth for each meeting, so I walked in having only read the latest annual report on each company. I found the experience stressful and suboptimal, and it reinforced my view that I like to be reasonably well prepared ahead of the meeting.

What that means for me is that I like to read at least a decade of annual shareholder letters, read at least the last few quarterly conference call transcripts, review the company’s investor presentation and collect the basic financial data and key metrics for the last 10-20 years. If this sounds like a lot, remember that the goal isn’t to speak with the most CEOs, but to find the best investments. So if the company clearly doesn’t fit my criteria based on easily available public information, then why waste my and the CEO’s time?

That’s my perspective as a public-markets investor. Yours might be different - perhaps as an early-stage VC investor your first screen is the CEO interview. Whatever the case might be, the point is that the preparation should logically follow from the rest of your investment process and where interviewing management fits in.

What Are You Trying To Accomplish?

Your first CEO meeting isn’t just about learning more about the company. There are a few other possible things that you might be interested in. Possible goals from the meeting are:

1. Learning information about the company - that’s obvious

2. Building a relationship with the CEO

3. Getting access to other members of the management team to deepen your understanding of the company and its culture

4. Establishing yourself in a certain way in the eyes of the CEO. For example, I like to show that I have already learned a fair bit about the company and that I am a long-term investor who isn’t going to bother the CEO with the usual questions about intra-quarter trends that are so common among speculators trying to guess if the company is going to deliver an earnings surprise

5. Getting a feel for CEO’s values, the company’s culture and the intangible attributes of the team that don’t come through purely in the numbers

6. Learning about the industry and other potential investments among competitors, customers or suppliers

Topics To Cover During The Interview

Thirty to sixty minutes is not a lot of time. You need to keep the discussion on track to balance getting some reasonable depth on each of the following areas with making sure that the meeting isn’t over before you get through what you wanted to cover:

1. Company Strategy, its Competitive Advantage and the competitive landscape

2. Customers and Suppliers - both from the perspective of analyzing the company and to deepen your knowledge of other potential investments

3. Economics of the business and how they should evolve over the long-term if management is successful

4. Capital Allocation

5. Company Culture

6. CEO’s motivations - what makes him or her tick other than money?

The Questions

Below are the questions I would ask, organized by topic. Obviously you might want to customize this list based on your prior knowledge of the company. You also shouldn’t spend equal time on each topic, as what’s most important varies from company to company. The list below is longer than would fit in a typical meeting, so you will need to be selective and prioritize in order to be able to cover all the topics that you want to.

Company Strategy and Competitive Advantage

1. What is your strategy and how do you plan to implement it over the next 3-5 years?

2. How does your strategy tie in to your competitive advantage?

3. Who is your toughest competitor and what makes them the toughest?

4. How has the competitive landscape changed over the years?

5. How has your competitive advantage evolve over time?

6. What impact does government regulation have on your company and your strategy?

Customers and Suppliers

1. How else can your customers solve the need/want that your product/service addresses? What’s keeping them from doing that?

2. What are the different customer categories that exist in this business?

3. Who are your best and toughest customers?

4. How concentrated are your customers, and how has this changed over time?

5. How many providers do your customers typically do business with?

6. What would it take in terms of time and money for your customers to switch to another provider?

7. How concentrated are your suppliers, and how has this changed over time?

8. What are your switching costs in replacing suppliers?

9. Are there customers or suppliers that are vertically integrated into your business, and if so how does that affect your relationship?

Business Economics

1. How big is the addressable market and how fast is it growing?

2. What are logical adjacent markets that you might consider entering over time?

3. What is the margin structure of your business at scale/maturity? What needs to happen between now and then to reach it?

4. What is the return on capital that this business is capable of if you are successful with your plans?

5. What are some investments that you are making today that will only produce a return 3+ years out?

Capital Allocation

1. What are your priorities for the company’s Free Cash Flow?

2. What is the appropriate debt level for your business, and what makes it so?

3. How do you balance between organic growth and acquisitions?

4. What is your philosophy around share buybacks? Dividends?

Company Culture

1. What kind of company culture are you trying to build?

2. How do you approach hiring the right people?

3. How have you designed incentives to drive the behavior that you desire?

4. What non-financial ways do you use to encourage desired behavior?

5. What do you do with the “B-players” - those who aren’t great but aren’t an active problem in your organization?

6. What are some ways in which you try to make sure that you are appropriately challenged by other members of the team as the CEO to lower the risk of behavioral biases and poor decisions?

CEO’s Motivations

1. What are some things that you are passionate about?

2. What made you join this company?

3. How is being the CEO of this company different for you than being the CEO of another company in this industry?

No matter how well you prepare, be careful with CEO interviews. CEOs have had to sell a lot of people on themselves on their way to the top. They didn’t get there by not being able to make a good first impression. Cross-check what you hear with the company’s words and financials over the years. Finally, remember to pick up on indirect clues about the culture - from how the headquarters is decorated to how people seem to treat each other in the cafeteria.

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.