Dan Lubeck – Four critical steps to help your company achieve investor success

If your company is sold in part or whole, there will be change. It is inevitable and generally sought. It is hard, particularly if the company was yours.

If the new investor is a strategic one, the change will be easier to predict. Typically strategic buyers, particularly the large ones, have well-developed systems and processes that they will implement in the newly added company.

These include reporting chains, standardized employment and compensation structures, and other authority systems. It generally is difficult for entrepreneurs and family business owners to adjust to these regimes — they typically don’t last long. As such, success in these situations comes from recognizing this from the beginning, and structuring the transaction and transition accordingly.

“Partnering” investments, however, have a much different dynamic. In these investments, the investor often is betting on one or more of the existing managers to lead the company going forward, even if they are selling some or most of their ownership. The investor views its role as partnering with these leaders to assist them in realizing their strategic vision and the company’s potential. Partnering is how our firm invests.

If you are contemplating a partnering transaction, the following are some thoughts regarding how to maximize your success in working with your new investor/partner:

Openness in the process

The clearer your post-transaction aspirations, the better your ability to communicate these to your future partner. If these are communicated, your future partner has the ability to accept them, or not, and then structure accordingly.

The future partner has a similar imperative of openness regarding objectives and timing. This fosters the most critical component of a successful partnering — alignment.

Strategic plan

For us, the strategic plan is the cornerstone of communication. It sets forth the vision, goals, path, responsibilities and budget of the organization. It sets expectations. You will be highly successful with an investor/partner if you present acceptable plans for growth and improvement, and then consistently meet or exceed them.

If choosing between a high-growth plan with high risk, or an acceptable plan with very low risk and potential to exceed it, I suggest the latter. 

Willingness to let go

Change can be uncomfortable. This is particularly true for most successful business owners. This includes the very difficult, but necessary, process of letting go of employees and managers — no matter their tenure or relationship — who can’t keep pace or aren’t embracing the company’s new direction.

This also includes letting go of the notion that it is right merely because it is “how it’s always been done.” 


Accountability can be difficult for those who aren’t accustomed to it (i.e., most entrepreneurs — which usually is why they are entrepreneurs). As such, success with a future partner will depend in part on how, and how often, the leader and team agree they will communicate.

Ideally, this communication and accountability can be accomplished without creating new tools (and more work) for the team. The goal is to keep the partner apprised of key issues and challenges. In doing so, the partner is able to bring assistance and potential solutions. In not doing so, you and the company are deprived of that opportunity for support.

It takes considerable effort to bring on an investor/partner. If done well, however, the benefits greatly outweigh the costs. You gain a skilled sounding board, a provider of resources and capital, a vastly greater network, asset diversification and a risk sharer.

Your ability to execute in the four areas described above can greatly impact your success. The onus is on you.

Dan Lubeck is founder and managing director of Solis Capital Partners, a private equity firm headquartered in Newport Beach, Calif. Solis focuses on investment in lower-middle market companies, typically located in the Western U.S. Lubeck was a transactional attorney and has lectured at prominent universities and business schools around the world. For more information about the company, visit www.soliscapital.com.