You're facing conflicts in your Private Equity firm. How can active listening help resolve them?

Active listening is crucial in resolving conflicts within a Private Equity (PE) firm by ensuring all parties feel heard and valued, fostering a collaborative resolution. For instance, at Apollo Global Management, active listening strategies facilitated a smoother integration during a challenging merger, improving team cohesion and reducing conflict by 30% over six months. By actively listening, managers identify underlying issues and address them effectively, enhancing trust and communication. Training staff in conflict resolution and active listening skills not only resolves disputes but also improves overall decision-making and firm culture, thereby strengthening the firm's operational efficiency.

Active listening in Private Equity is critical to managing conflicts, especially between partners and portfolio companies. Strategically listening to all parties’ perspectives helps to uncover hidden motivations, eliminate misunderstandings, and improve the quality of decisions. It is important not only to listen, but also to ask questions that reveal underlying interests: this allows you to identify potential areas of compromise, increase trust, and achieve mutual understanding. In a PE environment, where decisions are made under time and capital pressure, active listening allows you to reach consensus faster, avoiding escalation of conflicts and ensuring strategic flexibility.

At Projects RH our mission is to prepare materials from the perspective of the prospective investor. Investors are introduced by professionals and PE parties have to stand in for investors and work within their agreed mandate with their investors. For all parties involved int the investment making process we need be open, honest and frank. In discussions with PE you must listen and give full answers. If an investment opportunity does not meet a criteria we need quickly acknowledge this. Then the is the need to have a discussion to see if this can be addressed. If it cannot there is no point hiding things as in the end it will come out and we will wasted time hence money. In life it is always best to part friends so that you can meet again.

1) Active & nonjudgmental listening one on One basis. Discussing emotional issues in the group setting could be a dangerous move. All sentimental issues are powerful...even if you are a general partner! 2) Don't ignore spouses of the partners. 3) Don't pretend to be an expert! You never have all the answers...especially for an emotional issues! 4) Respect different background of the person and the level of emotional maturity! 5) Having a rich partner does not mean having a seasoned partner!

At Projects RH we know that the deal is not over until the cleared funds are received. As we work with people clients, investment bankers and investors there are always tensions. There is a deal to be done and everyone wants the best deal for their side. The answer is we need get to yes with all people feeling that they got most of what they wanted. PE firms don't want to lose deals and realise the the people they invest in must continue to stay focused on delivering the deal. The process must identify everyone's priorities and see how we get there. Recently we saw the need to issue bonus share on milestones. Not the best tax outcome but it got everyone over the line.

At Projects RH we are frequently introduced into a conflict situation because we have build our own financial model and drafted the IM, Pitch Deck and Teaser that the Investment Bankers used to introduce the project to the PE funds. Projects RH's roll is to defused the stress by calmly and honestly answering the questions posed. Most of these question arise because we have read more of the data room or know of like projects. What Project RH does is to answer the questions we can and acknowledge that not all question may be answerable at this point. PE needs to accept that there is a risk of the unknown in may projects and this is why they are able to seek the returns that they are wanting.

In the world of Projects RH we are often introduced to discuss points which cannot be resolved or agreed between the company seeking the investor and the PE potential investor. If there is already stress what is critical is that we listen and confirm that we understand the question. We are amazed at how frequently the stress between the parties means that the question is seen as a "threat" rather than being a question. It is vital we understand how critical the question is and that it is answerable. Some questions may not be answerable before the investment is made. If that is critical for the investor we need to see if we can go outside the project to find an answer. The key is to listen and keep clam.

At Projects RH we do see the importance of a period of silence not only as a sign of respect of complex question but also to make sure we understand the question and perhaps put the question back in our own words. It may also be desireable to have a discussion in an anti-room as to what the answers will mean. We don't want to say "it was told to us by the client". Even though it may be true, we may need to know were the client got it from even if we need say this was an assumption based on XYZ. PE will believe that their questions are important. Some will be tactical but these too need to be respected. Silence is part of the strategy of getting to yes.