PE Communication: Tips From the Top

In the private equity (PE) world, communication is king. Without it, brands don’t get acquired and seasoned business professionals don’t get hired. However, there are certainly tricks to the trade. For Geoff Hill, Vice President of Roark Capital, an Atlanta-based private equity firm with more than $1.5 billion in equity capital under management, diligence, hard work and results helped him advance his career from franchisor to working on the PE side of the business. His path can provide some valuable insight for franchisors hoping to one day be acquired and for franchise executives hoping to one day work for a franchisor owned by a PE firm. FRANCHISORS WHO WANT TO BE PURCHASED The advice I would give to a new franchisor is really simple. When you start your brand, think about the exit and who you may sell to, but don’t get obsessed by it. There are people who open their third unit and get obsessed with the exit. I suggest just trying to build something great. Definitely think about the end, but don’t get obsessed with it. If you build something great, the next steps will happen. When developing your franchise program, have great files. I couldn’t tell you how many franchisors don’t have great files on their franchisees – even the most standard documents, like the franchise agreement. What happens is when they go to sell the company after growing to 150 locations, we are buying the franchise model and those franchisees. When we are performing the diligence on the company and start noticing missing franchise agreements, we have to make the business assumption that there may be some issues, like the franchisees never signed the agreements. When we look to purchase a franchisor, we look for great companies with great founders who grew their great ideas as the leaders in franchising. We are investing in those people. FRANCHISE EXECUTIVES WHO WANT TO BE HIRED Communication is so critical when working with private equity. Take the time to get together and make sure there is  alignment on what the two parties want, from start to finish. When there is not enough good communication, you will find that the wants are not always the same. Depending on who the private equity firm is will determine the desired communication style. Take the extra time to start the discussion, and make a conscience effort to understand exactly what the PE firm is expecting from you. Sometimes the simplest things can cause frustration – like reporting. Every private equity firm is different. If you don’t have that communication, a lot of times you won’t know how to communicate. One side will be upset, and the other will spend six months trying to figure out why they are upset. Well, it’s simply a communication breakdown. At the end of the day, whether it’s a private equity firm or a public company, the CEO that’s going to be hired has to fit that brand. There isn’t always a perfect fit. I would suggest executives really own an industry that interests you. If it’s food, build your career in food. If it’s service, build your career in service. Continue to diversify your skill set. I started out selling franchises. Then I moved up to management. Then leading a development team. Then on the real estate side of business. Then president of a brand at Cinnabon. It’s about producing results and building more knowledge. Use the IFA to network. Listen to what the best people are doing.  Be able to produce great results. People who can communicate with the right people – that’s attractive. When people come to me for advice and ask how they get to the next level, it’s usually one of those three things that is holding them up. Are you getting results? How’s your continued knowledge? Are you developing new relationships? If the answer is “no” to any of those questions, then they know why they are stuck.