Recruit Your Clients to Ensure a Smooth Private Equity Transition

The following is adapted from Courage to Lose Sight of Shore.

A private equity partnership brings a lot of change to a company. This change can be scary not only for you as the founder and your employees, but for your clients as well.

Your clients chose your company for a reason. With the introduction of a private equity partner, your clients will likely worry about losing whatever it is they love about you, whether it’s the product, the customer service, or something else.  

Just as your clients don’t want to lose what they love about your company, you don’t want to lose your clients—and neither does your private equity partner. After all, your clients are what make your business so valuable. 

The solution to navigating this transition of change and uncertainty is to recruit your clients. By involving them in the process, you can ensure that your company doesn’t lose what makes it so special, while also helping your clients view the private equity partnership as a positive development for the company and for them.

Communicate Transparently with Clients

Recruiting your clients to the transition effort starts with transparent communication. Once your sale becomes public, people will start sharing the information among themselves. Will your clients hear the news from one of your account managers or from the grapevine? Will the news be delivered with excitement and optimism, or cynicism and gloom?

The answers to those questions depend on you. Take control of the narrative as much as possible. You know this partnership will be good for your clients, so make sure they know it too. 

Before the partnership is finalized, put a plan in place for how you will communicate the news to your clients, along with any changes they should expect. 

Speed of communication is critical, so think about who you will reach out to first. Of course we value all of our clients, but it will be nearly impossible to get ahead of communication if you are making personal phone calls to everyone. Perhaps some will receive personal phone calls, and others will be on an email blast.

Also think about who on your team will speak with which clients. Which clients will you reach out to personally, which ones will your management team contact, and which will hear from your account managers and sales team? 

And then determine which parts of the news are most important for which clients to hear. What should they expect? Are you staying on as CEO? Is your name changing? Will they be able to get in touch with you in the same way? Most importantly, let them know how this new partnership will benefit them and what they will get out of it. Remind them of your commitment to your products and services. 

Effectively planning your communication strategy will ensure that your clients hear your true message rather than fall prey to rumor-mill fears.

Build a Client Advisory Board

Once you’ve positively framed the partnership, the best things you can do to ensure a smooth transition is to create a client advisory board. This is a great way to get invaluable feedback and vested buy-in from your clients.

When I was working at Royall and Company, the founder Bill Royall did just this. As client Joan Isaac Mohr described it, “By inviting several of his longtime (and some new) clients to be part of an advisory board to help shape the company, he continued to respect those of us in the hot seat. We felt listened to, while providing or evaluating new ideas and products to grow the company and its revenue.”

To build your advisory board, choose clients that have a line of sight across all your products and services. Choose the clients who see you as a partner, not as a vendor. Most important, choose those who tell you when you mess up or when they think you have not done a good enough job. Those are the voices you need in a room. 

Start with a small group, just a handful. It should be an honor to be invited, and you want to leave room to be able to grow it later, if you need to. 

A couple of beautiful things will happen. First, you can share product ideas and strategies with this advisory board in advance of implementation in order to see their reactions and get valuable feedback. This will help ensure you don’t accidentally take the business in the wrong direction and result in smoother rollouts.

Second, those who are on your panel will become your advocates in the transition. If other existing clients begin to grumble that you are no longer the same company anymore because of your relationship with this new investment firm, your advisory panel advocates will push back. They will spread the word that you are definitely listening to and engaging clients, that your new products and strategies will help existing clients, and that you will be a better company as a result of the investment firm.

Your Clients Are a Valuable Asset

Your clients are one of your most valuable assets at all times, but especially as you grow and develop. More than anyone else, they understand what it is that clients love and need from your company.

Your clients are the ones who use your product, and they’re also the ones who will be targeted by your competitors. This uniquely positions them to provide valuable feedback on what works, what could be improved, and where the company should be headed.

This kind of input is critical in a private equity transition. Recruiting your clients in this process helps you to better retain your current clients and also prepares you to best recruit future clients.

For more advice on recruiting clients in a private equity transition, you can find Courage to Lose Sight of Shore on Amazon.

Kelley W. Powell is CEO and partner of MacLaurin Group, a company providing technology operating partner services to portfolios of private equity companies. Supporting companies in growth and M&A activities, Kelley brings a unique experience from founder-led organization to multiple private equity-led cycles. Kelley is an avid mentor, angel investor, and chairwoman for the da Vinci Center for Innovation Angels Advisory Board at VCU. She’s also a board member of the Richmond chapter of the Association for Corporate Growth, and in 2020 was appointed by Governor Northam to serve as a member of the Virginia Council on Women.