Entrepreneurship is often compared to an emotional roller coaster, with exhilarating highs and gut-wrenching lows. This metaphor becomes even more poignant when an entrepreneur sells their company to private equity investors and decides to stay involved in the business. The shift from being the sole decision-maker to collaborating with new stakeholders can be daunting. However, it’s crucial to remember you don’t need to win every battle; focus on winning the war.
The Emotional Roller Coaster
Selling a company is a monumental milestone for any entrepreneur, marking the culmination of years of hard work, risk-taking, and perseverance. But when the ink dries on the deal, a new chapter begins—one that can be equally challenging. The business is no longer solely yours. Private equity investors bring new ideas, perspectives, and strategies, which can sometimes clash with the vision you’ve nurtured.
Loss of Control and Identity
One significant emotional hurdle is the perceived loss of control. For years, your business was your baby, with every decision resting on your shoulders. Post-sale, this dynamic shifts. You have to share control and accept that others may have different approaches. This can lead to feelings of frustration, resentment, and even grief as you adjust to your new role.
The Clash of Perspectives
Private equity investors are often driven by metrics, growth targets, and exits, focusing on maximising returns within a relatively short timeframe. Entrepreneurs may prioritize long-term vision, company culture, and customer relationships. These differing priorities can create tension and conflict, necessitating a clear head and strategic mindset to navigate these waters.
The Unpicking of Past Decisions
Seeing investors unpick decisions made pre-sale can feel like a personal attack, causing feelings of hurt and self-doubt. However, it’s crucial to adopt a different perspective. When investors review and challenge past decisions, it’s not necessarily a reflection on your capability or judgment. It’s a recognition that the business is now on a different path, with new directions and strategic priorities.
Avoiding Personalization
Taking this process personally can be detrimental to your emotional well-being and professional relationships. Instead, view it as an opportunity for the business to evolve. Remember that the goal is to ensure the company’s success, even if it means revisiting and revising past decisions. This mindset helps you remain focused on the larger objective rather than getting bogged down in feelings of inadequacy or resentment.
The Analytical Advantage
Entrepreneurs who are analytical, data-driven, and process-oriented are more likely to thrive in the post-deal environment and build stronger relationships with investors. These traits align well with the metrics-focused approach of private equity firms. However, few entrepreneurs naturally embody these characteristics, as most tend to be creative, visionary, and focused on employees and customers.
Bridging the Gap
The analytical approach helps create transparency and build trust with investors. Leveraging data and clear processes allows entrepreneurs to justify their decisions and align with investors’ goals. If these qualities don’t come naturally, developing these skills, or bringing in team members who complement your strengths can bridge the gap.
Learning and Adaptation
Adapting to a more data-driven approach can enhance collaboration with investors. Presenting ideas and strategies supported by solid data can help gain investor confidence and align on long-term goals. This adaptation doesn’t mean losing your visionary edge; rather, it means enhancing it with a foundation of solid analytics.
It’s about picking your battles wisely and recognising when to compromise for the greater good.
Focusing on the Ultimate Goal
Amid these challenges, it’s essential to keep your eyes on the ultimate goal: growing the business and creating value. This means accepting that you won’t win every argument or maintain total control over every decision. It’s about picking your battles wisely and recognising when to compromise for the greater good.
Embracing Different Ideas
New perspectives can be a catalyst for innovation and growth. Private equity investors bring experience, resources, and networks. Embracing their insights can open up new opportunities that you might not have considered. View this partnership as a strategic alliance rather than a power struggle.
Strategic Decision-Making
To stay focused on winning the war, prioritize strategic decisions over tactical victories. Understand that some battles are not worth fighting if they detract from the broader objective. This requires shifting from being a hands-on operator to a strategic leader who can delegate, collaborate, and focus on long-term goals.
The Importance of Experienced Advisors
Navigating this transition is not something you should do alone. Experienced advisors can be invaluable, both before and after the sale.
Pre-Sale Preparation
Before finalising the sale, advisors who understand private equity transactions can help set realistic expectations about what life will be like post-sale, including changes in decision-making processes and strategic priorities.
Post-Sale Coaching
After the sale, advisors can provide ongoing guidance and support. They can mediate conflicts, offer strategic advice, and serve as a sounding board as you navigate your new role. This support is crucial in maintaining focus on the goal and preventing burnout.
Conclusion
Selling your company to private equity investors and staying involved in its operations can be emotionally charged. The key is to remember that you don’t need to win every battle; focus on winning the war. Embrace new ideas and strategies, prioritize strategic decision-making, and seek the support of experienced advisors. By keeping your eyes on the goal, you can grow your business and achieve the success you envisioned.
About the author: David Twiddle, Managing Partner at TWYD & Co writes from first-hand experience having previously sold part of his business to private equity investors and remaining as part of the leadership team, ahead of an eventual exit. Today, David advises other entrepreneurs and family businesses on a range of talent and leadership challenges.