Aligning with a new sponsor. The first 30 days

So you’ve done the hard bit.. you wrote the IM, you found some interested investors, you answered a million questions, managed to avoid biting your tongue off under the weight of advice from an army of ‘advisors’, you delivered the quarter despite having not slept and not seen your family in weeks. The rest is plain sailing right? Your new sponsor will give you time to adjust, maybe even have a holiday, the team will be patient and next quarter’s numbers’ not ‘that’ unrealistic…

Sorry, none of that is true. The pressure starts here. The plan is outrageous and all eyes are on you to deliver it, regardless of how exhausted you are. So what should you prioritise in a world that can’t wait? For me the answer is simple, align with your sponsor. This might sound like an obvious thing… the process took forever so surely we did that already? In my experience across a number of businesses this is usually not the case. If you think about it, how could it be?? Your sponsor has read your investment pack among hundreds they’ve read in the last few months. They’ve talked to countless ‘experts’ in your area to understand your market and they have commissioned expensive research that they’ve built their investment case on. Then they put their head on the block with their investment committee for the sake of their plan that you’ve inputted into. What you didn’t know was that they were working on six other things at the same time. You’ve been involved in a tenth of all that so don’t assume you’re all on the same page.?

Aligning everyone is, by far, the best thing you can do in your first 30 days. Actually you should have a go at doing this in ten days to save everyone the hassle. You could start by:

1. Asking to see the paper that their investment committee signed off. Whether they give it to you is debatable, but the level of openness you get in response to this might be telling. By seeing, in their own words, how they see the investment they’ve made in you, you’ll get a clear picture of whether you’re aligned or not. Differences are to be expected in many ways. Now’s the time to address them.
2. Spending time with the investment team - invite them to spend real time (aim for a week but be happy with 2 or 3 days) shadowing you at work, meeting the people you work with every day and understanding your operational priorities. A couple of fancy ‘completion’ dinners doesn’t do it. It’s all very pleasant, but entirely pointless in achieving what you need - to build a level of trust that you’ll rely on later in your relationship, regardless of what happens. Context is important here - you’ll have likely spent most time with your investor in plush bankers’ offices or at nice restaurants up to now. Get your investor to see you in your natural habitat where the real work gets done and lunch is a cheap sandwich down the street, in between customer calls and writing the board report.
3. Making a decision early and doing it together. On my first investment round we uncovered an M&A opportunity on day 8. It was way too soon and felt really risky. But together we concluded that it was the right move for the business and we got to see how each other really thought. We executed the transaction, learned a lot from the process and moved on together. Making an important strategic decision - a market to go after, a hire to make or, even better,? not make or a deal to conclude are all the best ways of building a constructive working relationship from the get go. My chairman once told me that you’d never really know what your investor was made of till you were in an awkward spot together and you got to see how they behave. Never was a truer word spoken… so good to get it over with early I’d say!
4. Being open about what’s keeping you awake at night. You’ve made a bunch of promises during the investment cycle and you probably still believe in almost all of them! But that doesn’t mean they come without risk and you’ll continue to evaluate decisions as you execute them. Coming clean on all the risks in your plan shows a level of maturity that most investors will appreciate and gives them the opportunity to bring their experience to helping you mitigate those risks. Don’t see this as a sign of weakness. It’s the opposite… and if you’ve got the right investor they’ll see it that way.

Needless to say the work doesn’t end on day 30. Keeping everyone aligned is the fundamental responsibility of the CEO in any business, and especially one that scales. Its never perfect and the challenge never stops. But like every journey, getting off to the right start is important and worth the investment.

Next week’s article is about anecdotes and data. The first draft is too sweary to post but I’ll refine for next week!