What should you do if senior management of a portfolio company does not agree with your growth strategy? (Private Equity interview)

As the owner, the private equity firm gets the final say on what decisions should be made. However, it is very important to not alienate senior management in these decisions and to make them feel unheard, especially if their presence and expertise are crucial to the functioning of the business and are hard to replace. A political clash between the owners and management is never good as it leads to misalignment, underperformance, poor execution, or attrition.

If you and the team at the PE firm feel strongly about the strategy you’ve decided on and have done the appropriate due diligence and analysis, then it’s important that this be presented to senior management in a way that is sensitive to their needs. They need to have opportunities to counterpoint the analysis and debate the decision so that senior management feels like their expertise in the field is not being discounted. To ultimately sway management on your side, you have to be able to answer their counterpoints with analysis and facts, which may take time to establish. You may learn things you had not thought of, not being industry experts, and realize that a compromise is the best solution.

It may take more than just one meeting to fully convince management, but if it is done in a way that is considerate of the political sensitivities of the management team, and you make your greatest effort to show how this is in the best interest of everybody, they will eventually get the message. Management is fully aware that the owners have the power to do what they wish, and if enough effort is put into the analysis, they will not have as many reasons to go against these decisions.

It’s better to over-communicate than under-communicate in these matters, as everybody is human and there are emotions or firmly held beliefs that come into play. At the end of the day, logic wins out and you need to present as many quantitative and qualitative facts as possible as you need management on your side to execute any strategy.