Published on September 16th, 2014 by Alan L Sklover
“Some people, when they learn that two wrongs don’t make a right,
try three. ”
- Author Unknown
ACTUAL “CASE HISTORIES”: For many years I have counseled and negotiated on behalf of employees when their employers (a) are being purchased by Private Equity investors, (b) are owned by Private Equity investors, and (c) are being sold by Private Equity investors. I’ve also represented employees being recruited to work for Private Equity-owned employers, commonly referred to as Private Equity “Portfolio Companies.”
In the course of those efforts I believe I have learned a thing or two about the nature of Private Equity-owned employers, and the tactics they commonly use in employment negotiations. And, though I am a few years younger than he was, as Michelangelo said at age 87, “I am still learning.”
Sure, every Private Equity investor and every Private Equity Portfolio Company is unique. And, too, you can’t paint tens of thousands of people with one broad brush. That said, there are certain commonalities and cultural norms to be found in certain industries, and certain lessons to be learned in reflecting on one’s experience over decades.
On the basis of those decades of experience, I’ve assembled this list of “Eleven Employment Tactics of Private Equity-Owned Employers.” I present them to you in the hopes that, for you, “forewarned is forearmed” (although I have never seen a person with four arms – just kidding!)
I present these thoughts to you so that you are better able to see what is likely coming your way, and more capable and confident in navigating and negotiating your way to success and security at work – the foundational purpose of SkloverWorkingWisdom.™
LESSON TO LEARN: Is it any wonder that Private Equity investors – whose job it is to (a) locate a company to purchase, (b) purchase that company, (c) reduce its costs and increase its sales, and then (d) sell that company, (e) all with one purpose in mind – to make as much money as possible for themselves and their investors – tend to conduct themselves in similar ways? It should not be surprising at all.
Likewise, it should not be surprising at all that those with a short-term perspective, who engage in the buying, exploiting (in all senses of that word), and selling companies tend to act with short-term objectives in mind, not concerned with the long-term consequences of their actions on employees, communities and other stakeholders. Why worry about the long-term effects of your actions on employees, communities and customers, when you won’t be around more than three to five years? After all, “no one changes the oil in a rental car,” now, do they?
As employers of their “Portfolio Companies,” Private Equity managers do all they can to (a) lower overhead, and (b) maximize the company’s eventual sales price – for themselves and their investors. They don’t work for, get paid by, or care much for, others. With one goal in mind – “R.O.I., or Return On Investment” – why would anyone expect anything different?
Know who you are dealing with, and keep a sharp eye out for the “sharpie” Private Equity investors who are quite convinced that their access to large amounts of investment capital is a sure sign that God has anointed them as a segment of the human race above all others.
These 11 employment tactics that Private Equity investors use when purchasing part or all of employers are to be watched out for and to stood up to, as best you can. While there is no guarantee that you will be successful in negotiating with a Private Equity manager, or in resisting the changes they will inevitably insist upon, the more you know the better you will do. That is guaranteed.
Below we present 11 employment tactics of most Private Equity-owned employers, and the best steps we have found to resist their impact. As noted below, one thing you might do, right away, is to consider changing employers, or at least testing the waters, because that is your ultimate response to these tactics: seeking employment elsewhere.
WHAT YOU CAN DO: Keep a sharp eye out for these 11 Employment Tactics of Private Equity Investors: Continue Reading. . .