Posts Tagged ‘relationships’

Truly Connected

Tuesday, November 21st, 2017

Why does the size of a great many people’s personal networks (number of LinkedIn connections, Instagram followers etc.) say more about their own self-worth than the value they actually confer? If the objective is to build and cultivate an increasing number of peer-level trusting relationships and offer people of interest impressive value that cannot be done anonymously in cyberspace.

I recall an experience with a London-based recruiter keen to impress me with his Global Private Banking and UHNW wealth management connections and return a favour. “If you’d like my help, have a look at my LinkedIn connections and let me know, who I can introduce you to.” After reluctantly following his approach and mentioning three names, he immediately responded, “Sorry they don’t know me well or they’ll confuse you with my candidate work.” We settled on another one at his suggestion, a rather prickly character, running a private investment office with a venerable European family background. “Go and see him, I’m sure it will be a valuable use of your time”.

Five minutes into the meeting, it was abundantly clear that the investor had close to zero relationship with the executive search partner and that in offering the introduction, the recruiter was clueless about the investor’s needs. Indeed, I’d hazard a guess that of the recruiter’s 2000+ LinkedIn connections, perhaps only 15 know him well and he has a contemporary understanding of their needs.

This isn’t exclusive to the executive search sector. I have had recent examples with highly successful Board Chairs, private equity partners, bankers and corporate executives, who are conciously obsessing about the size of their networks, largely for their own ego trip. However when you press hard or follow through, you find 80% of the people in their network, really don’t know them that well, today, or at all.

Don’t assume someone is “truly connected”, however impressive their “past” or the size of their network. Ask for recent examples of highly similar introductions and the results that arose. Listen, do your own homework and make your own judgement.

© James Berkeley 2017. All Rights Reserved.

 

A Vulnerable Seller

Monday, November 13th, 2017

Here is something counter-intuitive for a great many sellers of high-growth and mid-market privately-held businesses. If you want to maximise the price on exit, you need to maximise your vulnerability. Yet most sellers have spent years doing the exact opposite.

Vulnerability is largely a function of a seller’s self-worth (“I won’t allow the sale outcome to influence how I think about myself”), giving yourself permission to be vulnerable and the quality of your support system (friends, family, advisers and acquaintances). Hence any transition plan in the lead up to the start of the exit process, needs to address all three aspects, in advance, alongside:

  • Any fractured personal relationships (spouse/partner/family members)
  • Any past, present or future “private promises” made by the business to fellow shareholders, managers and family members (financial or no-financial)
  • Any private grievances (key clients, key business partners, key suppliers) or events (disputes, potential regulatory breaches etc.) that might reasonably give the buyer cause for alarm in due diligence or god forbid, post-sale.

You are rightly proud of the business that you have built. You have had proprietary control of the reins (people, capital, resources). Your control has given you power (discretionary authority) and protection (preeing eyes). The “4 P’s”. Now a buyer (strategic or financial) is being asked to make an informed judgement on the value of your business to their ideal future. What is the sum of your pride, your proprietary control, your power and your protection worth to them?

A buyer can rarely understand it (quality of your people and management, quantum of uncertainty, competitive threats) clearly without you being voluntarily vulnerable (trust). You cannot negotiate successfully without putting yourself in a position of vulnerability (willing at any point to walk away from a proposed deal), irrespective of the  consequences (financial, non-financial, business or personal). That requires a mix of internal and external attention as early as possible in the transition process. If appropriate, hiring someone, who has successfully dealt with those issues in their own business and who can help navigate you through the process. Almost certainly, not an internal figure, nor your corporate finance adviser. Someone, whose skills, behaviours and expertise are strongly aligned to your discrete personal and business needs.

© James Berkeley 2017. All Rights Reserved.