Companies seeking investment often say that ultimately, they made the choice to have 51% of something rather than 100% of nothing. Nine times out of ten, this is the right decision. However, managing the change of culture and priorities which comes with bringing investors on board can be turbulent and friction or conflict is almost inevitable. What is critical is that they are resolved quickly and efficiently. These simple steps can be instrumental to resolving the conflict without unnecessary damage to the relationship or the business.
Acknowledge the conflict
One of the biggest dangers in a conflict situation is to pretend that it doesn't exist. We like to brush over irritations but when we do they can quickly escalate out of hand. This does not mean that everyone has to have a deep and meaningful conversation as soon as the conflict arises. Rather, that the issues are acknowledged and an appropriate way to address them is then found. In this way, we can accept that conflict is a normal part of business and address it in a professional manner.
Often investors and founder owners of businesses are automatically conflicted. The investors will be focused on getting a return and profitability, they may also have experience of making companies profitable and therefore have strong views about how this is done. Founders may be more emotionally attached to the business and its people, products and services. They may feel they know more about the issues relating to the business and that investors don't understand them for example. Acknowledging these and related issues allows you to drill down on the issues without being angry, irritated or ashamed that they exist in the first place.
Separate Principles from Personalities
When the stakes are high, our egos come to the fore and often accentuate behaviours that upset or irritate others. One party might over emphasise their experience, another may feel put down and undervalued. Concentrating on the personality issues can very quickly divert from the main issues at hand. Behaviours and attitudes may well need to be addressed but they need to be separated from not conflated with the business issues.
A simple way of doing this is by writing down:
- Key presenting issues for you
- Key presenting issues for the investor
- Areas requiring clarification
- Areas of disagreement
- Behaviours or attitudes you don't appreciate in the investor
- Behaviours and attitudes you have exhibited that have not represented you at your best
- Common interests and needs
Once you have established these factors, you can then prioritise which ones you want to discuss, in which order, and work out how to address them.
Be clear on your walk away points
In any conflict, it is crucial to be clear on what you can live with and what you can't. Added to that, you also need to consider what the consequences of not resolving the conflict are and what might happen next. So, before engaging in arguments and negotiations, it is really important to conduct a thorough risk analysis to ensure that your approach is going to work for you in the short and long term. Once you have done this, you can then be clear on your bottom lines or walk away points. What this does is makes you more realistic about your negotiation stance and informs your negotiation. What it also guarantees is that you avoid spending time on building arguments and delivering threats that you have no intention of following through on.
Bring in a third party mediator
Third party mediators can be extremely efficient in supporting the resolution of a conflict and ensuring that it does not resurface. They can also take the heat out of the conflict. Key to effective and sustainable resolution by a third party is that that third party is independent and can keep confidences. It is crucial that they are not only perceived by all involved as not having an agenda but that their only agenda is to support the parties in resolving the issues. This means that at all times you are in control of the resolution but can be confident that the resolution process is being handled competently.
Efficiency is crucial in resolving disagreements with investors as time is always money and both are of the essence. In preparing your strategy for resolving conflict carefully and picking your battles, you are more likely to build agreement with your investors whilst at the same time getting what you want.
Louisa Weinstein is an experienced mediator and the author of The 7 Principles of Conflict Resolution, out now, priced £21.99.