How PE Firms Can Build Trust with Management Teams

Much like founder-sellers, management teams of current or prospective portfolio companies are another group that should be approached with bespoke and personal PE marketing. 

While they may not always be the ultimate decision-makers, their buy-in and cooperation can be critical to the deal's success and the company's future under new ownership. 

So, how can private equity firms effectively market to and communicate with these key stakeholders?

Understanding the Management Team's Perspective

First, it's important to recognize the diversity of situations management teams may encounter when their company is considering a transaction. 

Some may be seasoned executives who have been through multiple PE deals before, while others may be completely new to the process and filled with uncertainty about their future. 

Their level of influence over the deal can also vary widely - from virtually none in the case of a corporate divestiture to significant if they have ownership stakes themselves.

Key emotions and questions that management teams may have include:

• Anxiety about job security and future roles
• Uncertainty about the acquiring firm and its reputation/track record
• Concern about cultural fit and working with new ownership
• The potential financial incentives if they are being asked to stay on

Private equity firms must be attuned to these scenarios and tailor their approach accordingly. A one-size-fits-all strategy is unlikely to be effective.

Building Trust Through Marketing and Messaging

Establishing trust is paramount because of the personal stakes management teams often have in their companies. 

While nothing can substitute for genuine relationship-building during the deal process, firms can lay the groundwork for productive partnerships through their upfront marketing and communications. 

Some pivotal considerations:

1. Lead With Warmth And Approachability

Avoid power-projecting imagery of Manhattan skylines and Zegna suits. Opt for a more down-to-earth, relatable brand image inviting conversation and collaboration. Showcase the human side of your team.

2. Demonstrate Knowledge Of The Industry

Management teams want to know that their company will be in good hands. Highlight your firm's experience and successful track record in their specific sector. 

Share relevant case studies and thought leadership that display a nuanced understanding of the the specifications and value creation levers.

3. Articulate Your Value-Add Beyond Capital

As the saying goes, "Everyone's money is green." 

Strive to differentiate your firm and get management excited about a potential partnership. 

Communicate the unique resources and expertise you bring to the table - whether that's help with digital transformation, geographic expansion, add-on acquisitions, or talent development. 

Link these capabilities to management's pain points and aspirations.

4. Provide A Window Into Your Culture And Values

Offer a glimpse into what it's really like to partner with your firm: 

• What are your team's working norms and communication styles? 
• How do you engage with portfolio company leadership post-close? 
• What's your philosophy around incentives and talent retention? 

Giving management a preview helps them envision the potential relationship.

5. Spotlight The Upside For All Stakeholders

If the deal goes through, management teams want to know what's in it for them and their employees. 

Do you have a track record of providing above-market equity compensation or profit sharing? Talk about it! 

Tout the professional development opportunities that arise from working with your ecosystem of experts and operators. Cast a compelling vision of mutual success.

Bringing It All Together

In the end, the foundation of any successful private equity deal is trust - between buyers and sellers, principals and agents, old guard and new. 

Management teams play a unique and critical role in this ecosystem, and the firms that take the time to understand and empathize with their perspective will be best positioned to build productive partnerships.

By crafting a brand and messaging strategy that leads with empathy, knowledge, and value, private equity firms can set themselves apart in a crowded market and create positive first impressions that pave the way for fruitful collaborations down the road.

Start by refining your marketing approach to emphasize relatability, industry expertise, and a clear vision for growth. 

Contact Darien Group today to discuss how we can help you create messaging that resonates with management teams and strengthens your position in the market.