When Steve Sloan, managing director at private equity firm Everest Group International is negotiating to buy a company these days, the selling family is looking for more than just money, he says. “They also want to know how we are going to grow the company,” Sloan says.

The example underscores a shift in private equity, away from a model in which a firm acquired a company, monitored it, then sold it and made money, to a more-involved approach, in which management teams and investors work together to add value to the business.  In order for that to work, PE firms need to engage the management teams of their portfolio companies, panelists said at the Axial Concord 2014 conference, which took place in New York on Sept. 30.

Joining Sloan on a panel about adding operational value to portfolio companies were: Dave Moylan, chief operating officer of New York private equity firm Yenni Capital; Tim Ristoff, CEO of Orange County, California-based consulting firm TriVista; and Mitchell Davidson, managing director of New York private equity firm Post Capital Partners.

“In 1998, every company had fat on it,” Sloan says. “Today, companies are leaner.”

PE firms need to focus on getting the buy-in of the portfolio company’s management team. One way to do that is by setting common goals. For example, if the owner maintains a minority stake as a way to “get a second bite at the apple,” the PE firm should keep that goal in mind as it moves forward, Sloan says.

“People follow their financial interests,” says Davidson.

Getting management on board also requires on-point communication, including simple metrics. PE firms should pick the top three performance metrics to track in partnership with management, Moylan says.

In tricky communication situations, it could be helpful to have an adviser step in to deliver less-than-ideal news to maintain a smooth relationship between the PE firm and company. “It’s hard for a CEO to accept that the baby has a few warts on it,” Ristoff says.

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