5 Ways Working in Private Equity Is Like Playing Soccer
With its fast-paced environment and emphasis on teamwork, private-equity investment can feel like a sport.
By Eric S. Thurston •
Opinions expressed by Entrepreneur contributors are their own.
Private-equity investment sounds complex for most people, but it doesn't have to be. It's a strategy that works to improve business performance through aggressive methods that guarantee results. In many ways, it's like a contact sport. More specifically, private equity is a lot like soccer.
Here's how.
1. You have to invest in the team
As the saying goes, a team is only as strong as its weakest link. In soccer, a team will constantly look for a way to bypass the opposition's defenses in the hope of scoring a goal. That's why every team member has to be in prime condition to ensure he or she doesn't provide a winning chance to the other team.
It's the same way in private equity. The effectiveness of the company will depend on the proficiency of the members. With this in mind, one of the tried and true private-equity strategies that can help a business grow is training staff to do their work more effectively.
Like a soccer coach, a private-equity investor aims to achieve specific goals (e.g., product innovation, cutting costs, aggressive growth or market expansion), and this requires a solid plan. Whatever the intended outcome, the investor will need a strong executive team to implement strategies that ensure the objectives are achieved.
Related: A Beginner's Guide to Private Equity
2. There's intentional placement
Something else that characterizes soccer is the placement of players according to the value they provide to the team. Different positions on the field require different skill sets, and matching a player's skill to the right position is the coach's primary job. If a team member is in the wrong place, the entire strategy to win the game will be in jeopardy.
Likewise, the private-equity investor has to determine the best way to distribute the staff according to their strengths. There is no room for mercy or sentiment because the wrong move will not bring the intended outcome. The organization must be structured on merit and results.
3. The environment is dynamic
The soccer field is one of the most dynamic environments because a team will face different opponents throughout the season. This means each game will come with a new set of challenges that will require team members to adapt, or they'll get benched. Relying on a single strategy will certainly lead to the team's downfall, which is why the players must change according to the specific problems they face.
The same goes for the private-equity industry. Investors must come up with new plans for running the organization because if they are fixed on a particular way of doing things, they might end up being replaced. They need to be able to learn new methods and find effective ways to execute tasks. People resistant to change won't appreciate such a performance-driven environment, which probably means they'll lose their position on the field.
Related: The Beautiful Game of Soccer and Sales
4. It uses a teamwork-centric approach
Even the best soccer players understand the essence of teamwork. If the team members cannot function as a unit, they stand no chance of making decent progress in soccer tournaments. Each player will have to use his or her skills to make the whole team function more efficiently on the field. Anything less won't allow the team to win the season.
Like a soccer coach, a private-equity investor will need the executive team to work together toward the business's specific goals. This could require the oversight of a team facilitator since it can be challenging to interweave the ideas and skills of different members toward a common vision. Nevertheless, when a team can work as a unit, there will be higher productivity, and the results will be undeniable.
5. It necessitates accountability
At the end of the season, the coach will have to account for the team's performance to the owners who fund it. This evaluation will determine whether the strategies that were enforced worked. In other words, it'll be an assessment of the coach's aptitude for training and driving the team to wins, which will inform whether or not he's fit to run the team.
Similarly, at the end of a set timeline, the private-equity investor will need to provide an account of the company's performance. Depending on whether the goals were achieved, the investor could receive a new project or be sent home. The results-oriented nature of the private-equity industry doesn't offer leniency for failure.
Related: The Do's and Don'ts of Private Equity for Entrepreneurs
Private equity is one of the most fulfilling business models you can find. However, not everyone is cut out for it because it's an energy-intensive field that requires resilience and hard work. That said, it's still a rewarding experience offering visible results that can tell you whether you are improving. And, just like in soccer, when you put your heart into it and give it your best shot, you'll find yourself having a lot of fun with your team members while you secure wins.
