Negotiating change: Taking your business to the next level
At every stage of a company’s growth, there is a capital structure and an ownership structure best suited to propel the company to the next stage. The formula that works at one stage may not work at another, and as leaders, we need to look for the change that will move the company forward. We must ensure that the company is ready to change, then embrace the change required to propel the business to the next level.
As an example, the last big revolution in the tech world was cloud computing, and it was vital for tech companies to lead rather than follow, lest the business and its customers be left behind. We are seeing something similar now with artificial intelligence, and the business model is the same: show leadership by building solutions that help customers leverage AI to capitalise on this opportunity to further their goals and achieve better outcomes.
There is no disputing that change is uncomfortable or that it requires us to work harder. However, change is non-negotiable in the tech industry, where becoming static is the precursor to coming apart. Thus, finding the right structure for your life cycle and embracing the change needed to continue to grow is critical to sustaining that growth.
The biggest opportunities come only once. When they do, every business aims to use them to the greatest possible advantage; but there is limited time to act. This is why even a profitable, well-financed, and well-established company might conclude that securing outside investment offers them the best chance for success.
In the best, most successful investor-company matches, the investor’s underlying values align closely with the company’s. This can encompass everything from culture, talent acquisition and customer retention to practising continuous innovation and cultivating strong partnerships. Bringing in an investor can help a company maximise its opportunity by exposing its blind spots and helping its leaders understand how to address them to deliver a better customer and employee experience.
Making it a priority to find an investor who can be a thought partner for the business, in addition to a source of new capital, can be game-changing. Consider the value of choosing a partner with broad exposure to hundreds of businesses, one who can bring that wider perspective, as well as a proven ability to help companies raise their competency to a whole new level.
Seeking expert advice in locating a partner increases the likelihood of a successful outcome because the right banker will guide you through all the options as you work through the process. As your ally, they can help you identify prospective partners who are aligned with your values and vision — and who have the skills and experience to help you accelerate your growth while maintaining strong customer and employee satisfaction.
Know when to keep looking
Investors look for companies with a track record of innovation and strong organic growth — with a good balance between growth and profitability. They are understandably interested in making a good return on their investment, and they want clear evidence that the companies they invest in know how to grow profitably.
Your business should be operating in healthy verticals that can benefit significantly from what your company offers, and those products or services should represent growth areas for the business. But value creation doesn’t come from focusing on profits, it comes from focusing on what drives those profits. That’s why investors looking for long-term value creation are looking for employees and customers that are being taken care of.
Employees build great products, and great products drive great profits, so when you focus on the people who create the value, the value takes care of itself. A savvy investor who has worked with hundreds of companies and gathered data on what makes a company successful can connect the dots between those values and a sound investment.
But suppose a prospective investor lacks an appreciation for how your business operates and how it regards its obligations to employees and customers. In that case, it’s a good bet that the investor is not the right fit and that you should keep looking.
In a relationship, the intangibles matter most
Getting the right help at the right time from the right partner can enable your organisation to take full advantage of an opportunity that benefits your customers, employees, and shareholders. This decision can be a turning point for your organisation — for better or worse — so take the time to consider it from every angle.
Yes, you should do your due diligence, and follow all the protocols for finances and procedures, but ultimately, it’s a relationship — and in a relationship, it’s the intangibles that matter most. So have many conversations with potential investors and involve other leaders. Interview the investor’s references. Talk with others in the industry. Then have more conversations. Don’t rest until you trust that their character is sterling, and their motivations are crystal clear.
And be just as transparent with them about what is important to your company, what you most care about. Securing outside investment may be exactly the right formula to propel your business forward, but remember why and for whom you are taking this shot, and keep your eye on the ball.
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