How To Manage Your IC's Resistance

When you really want to do a deal and your IC throws up resistance,

You can get frustrated and defend your view.

It ends up you versus them. It’s painful and draining to get anything done.

There’s a better way to live.

The Classic Spiral

1. CIO raises concern.

2. MD explains why it’s not a problem.

3. CIO feels ignored, becomes more anxious and digs in. CIO eye rolls thinking

   “MD hasn’t even taken the time to think my point through.”

4. MD becomes irritated by more questions and becomes anxious deal won't get done and defends more aggressively.

5. CIO creates more resistance or eventually checks out or just says “NO.”

The Better Way

1. CIO raises concern.

2. MD clarifies “so you’re concerned what XYZ would mean to the deal?”

3. CIO says “yes exactly” or clarifies…

4. MD joins CIO in their concern: “thinking out loud, my intuition tells me ABC.”

A collaborative discussion ensues. Not a two-sided debate where both sides dig in their heels.

After some time, MD may suggest digging deeper with the team and circling back.

Advantages of this approach:

1. CIO feels heard. More experienced investors don’t like a deal partner with an answer to everything; it makes them suspicious that the MD is ‘managing’ the message and glossing over the negative aspects of a deal.

2. MD and deal team learn from the more experienced investors and make a better decision on this deal and future deals.

3. Energy between CIO and deal team is positive: connected and collaborative. Versus divided and alienated with the old cycle.

Note: it’s not ok to not know answers to table stakes questions like numbers and business facts.

This “better way” applies to “gray area” questions and deal risks. These are complex problems.

While there are concrete answers to basic factual questions, there is no right answer to these murkier questions about possible future outcomes… and you look pretty silly if you insist you know an answer in the moment.

If you’re wondering why people tend to get defensive in committee, it’s simple. There you are in the spotlight with the whole firm watching. And to your reptilian brain, questions can feel like an indictment of your insufficiency as an investor.

It’s hard to manage your animal spirits in the moment. Additionally, some IC members enjoy a bit of the blood sport of winding you up in front of the group.

Related Insights

• Is Your Ambition Stronger Than Your Ego?

• Are Your Instincts Helping Or Hurting

• Perfectionism in Private Equity Is Useful Until It Hobbles You

Additional Reading

• Institutional Insider, What’s Troubling Private Equity Executives, according to their executive coaches

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