Anxiety – The Enemy of Success

In today’s volatile investment climate many private equity investors find themselves in a position where they can’t fulfil the role for which they were employed, ie investing!

The changing nature of the private equity industry has meant that from top to bottom, investors have seen their role change. At a time when there are few investments to be made, the focus has shifted to managing portfolios and reporting to LPs.

I’m contacted by experienced investors every day who are looking for ways to be reassured about their future.  A large part of my time at the moment includes being a rational sounding board for the thoughts that they cannot express in the office.  If only private equity team leaders were pro-active in communicating with their team – even if the communication is that nothing is certain – then I’m sure the benefits would be felt throughout the business.  But the norm in many funds seems to be, say nothing.

The most common question people are asking me right now is: Am I in the right place?  More often than not, they are, but what makes them ask the question is anxiety and lack of communication about the future strategy for the business.  Imagine you are an investment executive. Not so long ago you would be busy researching markets, negotiating with managers and bankers and laying the groundwork for a string of potential investments. But now the opportunities have dried up and you find yourself fire fighting in the portfolio and talking to LPs to assure them of the worth of the firm’s portfolio. Naturally you begin to wonder where your job and your financial future, is going.

From my perspective, what private equity partners should be doing is making the team feel they are part of the future of the business. And one of the easiest ways of achieving this is by effective communication.

Change has always presented the greatest opportunity for private equity; the success of the buyout industry itself is founded on the need for owners of companies to find new business partners, and retiring MDs to pass the company on to the next generation of managers.

And it’s for this reason that I know that private equity will embrace the wind of change that blows in today’s market and come out on top.

Sure, roles within all businesses – not just private equity firms – are changing, but why not let your team know how you envisage the future and what their role will be going forward? And if you don’t know then involve them in creating the master plan for survival and revival.

I know it sounds corny and you’re all highly professional, super human investors, but it’s easy to forget that what your team wants is to feel needed, loved and involved. So by clearly communicating your thoughts about the future direction of the firm and the role you anticipate for them, you’ll help alleviate the uncertainty in their minds and have a more productive workforce.  Surely it’s better to be open with the team rather than risk losing them by saying nothing at all?