For business owners and management teams, a sale to private equity (PE) can raise questions about what the future will look like. While a PE firm can bring fresh resources and strategies to the table, they often rely heavily on existing management to steer the business forward. Here’s a breakdown of what changes—and what stays the same—when management teams transition to a PE-owned company.
What Stays the Same
- Operational Knowledge: PE firms recognize the value of experienced management who know the business inside and out. Managers familiar with company operations, customer relationships, and industry dynamics are usually essential to the transition and long-term growth plan.
- Company Culture and Values: Many PE firms aim to preserve the existing company culture. They’re often invested in keeping what’s unique and valuable about the business, which helps maintain stability and loyalty among employees and customers.
What Might Change
- Growth and Performance Goals: PE firms typically set ambitious growth targets and performance metrics. While this shift may bring new goals and reporting requirements, it also provides a clear roadmap for scaling the business.
- Strategic Oversight: While management handles day-to-day operations, PE partners often take an active role in high-level strategy. They bring industry expertise and resources that guide decisions on expansion, acquisitions, and other growth strategies.
- Increased Accountability: With new investors come regular performance check-ins, often with a focus on financial transparency and measurable outcomes. This structure can streamline processes, promote efficiency, and encourage management to meet objectives that contribute directly to the company’s growth.
Transitioning to a PE-owned company can be a unique opportunity for management to leverage new resources while continuing to play an essential role in the business’s success.
