This week we received a good schooling from a seasoned business executive. Our friend and business partner, who we'll call Jerry, had spent his career building a start-up into what is now a Fortune 100 company. He then had a second career as a CEO of a national retailer. Today, Jerry is a private investor and, fortunately for us, was sitting in our office on a Thursday morning discussing a potential acquisition.

Our objective was to get Jerry's read on the investment opportunity. As our investors considered committing capital to this acquisition, they would welcome Jerry's perspective on the company, the market, and the strategic opportunity. Given that the company is in the retail sector, Jerry's experience would be extremely valuable, and a co-investment from him wouldn't hurt either.

We developed a full business case on the company and the investment opportunity and prepared the following questions for Jerry:

1. What is your view on the trends among retailers?

2. Do you believe the company is sufficiently advantaged relative to other players in the retail sector?

3. Do you believe the company can maintain and grow its core customer base and develop new customer segments?

4. What is your view on the company's profitability and growth prospects?

5. Do you agree with the valuation and terms of the deal?

6. Do you agree that our partnership model is attractive for an investor?

Jerry looked at the questions for a minute and stared back to us. "Those are not the right questions," he said.

"Okay," we replied, being open-minded partners. "What questions would you ask?"

Jerry said, "I'd like to understand the dynamics of the team."

First, he wanted to know about the CEO and his co-founder. What were their backgrounds? What were their motivations? What do they want to do with the business?  What are their goals in life? What are their personal and family situations?

Second, he wanted to know about our succession plan. Who would we bring in to grow the business? What role would that individual play in the current organization? Would he or she "play nice" with the current CEO?

Third, he wanted to know about the team around us. Who is on the board? What are the complementary skill sets that they have? What are their egos like? How well will they work together?

And that was it. Jerry was relatively unconcerned about the dynamics of the market, the customers, or the business itself. He knew there were opportunities in the retail sector that good people could exploit, and he cared more about whether we had a team that could execute those opportunities.

It's one thing to have ideas, concepts, and business cases. But what became clear to us in our conversation with Jerry is that unless you have the right people, in the right roles, in an environment where they can act as a team to achieve the vision and strategy, you won't create any value.

How have you incorporated an assessment of the team into your investment decisions?  Send us your thoughts at