How to Ensure a Smooth Business Transition: Five Must-Have Characteristics of a Good Private Equity Firm

You’re considering your business. While many entrepreneurs educate themselves on what it takes to make a successful transaction happen, they often fall short of preparing for how to ensure a smooth transition between stepping away from their legacy and handing the reins to someone new. 

The first step to ensuring a smooth transition is to secure a good private equity firm who understands your business - from your financials to your management style - and aligns with your values on how to treat your employees and customers. Selling your business is an exciting time in any entrepreneur’s journey and the lifecycle of a company. Having a knowledgeable partner by your side is invaluable when it comes to answering tough questions and navigating challenges that inevitably arise with such a monumental transaction. 

But how do you unearth that ideal private equity partner? Here are the five must-have characteristics of a good private equity firm. 

Five Characteristics of a Good Private Equity Firm 

1. The Good Private Equity Firm Practices Solid Communication.

Clear, consistent, open communication is paramount to an organization’s success. In order to maximize efficiency, achieve goals, and keep morale high, everyone needs to understand what’s expected of them. This goes for sellers, new presidents, employees, and the private equity firm. 

2. The Good Private Equity Firm is Results-Driven. 

Your private equity partner should be as invested in your business as you are. They’ll be enthusiastic about taking your business to the next level because they truly care about what you’ve built, from the culture to the brick and mortar location and every individual within it. They’ll hit the ground running with strategy based on calculated insights, collaboration, and a vision for the future. 

3. The Good Private Equity Firm has Balance. 

During a transition, employees will likely be concerned about change. A good private equity partner will identify elements that are working in the business and then work with the existing management team and employees to identify where opportunities exist. They will also be able to effectively manage the transition of leadership from the seller to a new president in a way that respects the seller and continues to move the business forward.

4. The Good Private Equity Firm Invites Collaboration. 

Collaboration is the key to success. Therefore, your private equity partner should ask for and encourage input from the seller, the new president, and employees to build a game plan for the future. A transition is also a great opportunity (with support from the new president) for valued employees to redefine their roles and take on new challenges, which results in increased engagement. 

5. The Good Private Equity Firm Leverages Emotional Intelligence.

The good private equity partner will show patience, understanding, and be willing to enter into hard conversations. They will be present in order to establish rapport with employees and develop a deep understanding of culture and operations. They will also recognize the fact that this is an emotional journey for the seller, and will interact with empathy, professionalism, and confidence, without letting emotions get in the way of making important business decisions. 

Selling your business is a significant event. While a lot of people focus on the transaction, it’s equally important to pay attention to all the details that go into the transition. Everything from hiring a new president who will take your business to the next level to preserving the best parts of your company’s culture while integrating progress is essential to the success of your business and employees’ overall wellbeing. 

When you’re ready to partner up with your ideal private equity firm, consider Borgman Capital. We have a wealth of industry knowledge, interpersonal skills, and expertise to ensure a smooth transition. Our vast network of sellers, investors, and other industry professionals means you have 24/7 support. 

We focus on lower middle market businesses with quality management in place. Contact us today and start preparing for your future. 

Thrive with us.