The transition to PE-backed leadership of an acquired founder-led business requires strategic planning to strike the delicate balancing of preserving a founder’s vision while preparing to scale for growth. Below are five critical considerations to ensure a successful transition.
1. Understand the Founder’s Role
The first step to ensuring a successful transition is to understand the founder’s pre-acquisition, and what their role will be post-transition. Useful questions to help understand this include:
- What is the founder’s reason for leaving? Are they excited for the next stage of their company’s growth, or are they being pushed out?
- How does the team feel about the founder? What is the private equity sponsor’s view on the founder?
- What was the previous culture of the team?
- How involved will the founder be post-transition?
- To what degree is the business reliant on the founder’s willpower and personal efforts?
A founder’s post-acquisition role can vary widely. Typical roles include executive chairman, a member of the board, or a supportive advisor to the CEO. What works best differs for each unique situation; but in most cases, maintaining close contact with the entrepreneur post-acquisition helps ensure the retention of key processes, information, culture and support during the transition.
“We transitioned our founder to the board of directors. He has been a phenomenal advisor who is hands-off yet helpful when needed. In the first 8-12 weeks post-acquisition, we were meeting regularly to help me get up to speed quickly. To this day — and it’s been two years — we still meet every second week to check in outside of our regular board cadences.”