Venture capitalism: Change is fine as long as it enhances what came before

With private equity buyouts soaring in the UK, Caroline Bullock says the pursuit of growth doesn’t always mix well with job creation and security

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Venture capitalists’ dogged pursuit of the highest yield rarely proves compatible with job creation and security. It’s why, on average, corporate buyouts lead to a 5 per cent loss of employees – a disregard for the status quo that also exposes one of the workplace’s harshest realities: in the fight for survival, loyalties split, allegiances are fragile and teams and workplace culture prove to be painfully disposable – as I discovered first-hand.

For me, the new era post-acquisition started on a late August afternoon in a marquee heavy with heat, stilted conviviality and temperature checks after a just-lifted lockdown. Tense, darting eyes and nervous smiles shyly assessed the investors – one of whom had just been appointed the new chair – heading to the stage ready to address the masses. Inevitably, they were the most relaxed people in the room – on the cusp of a cabinet reshuffle, blessed with all the answers and control.

Their task that day was to convey a tricky message, one that would allude to an agenda set to rip out the heart and spirit of a 30-year business built on the credentials of its warm-hearted founder while reassuring the masses they’d be no disruption. Truth and detail made way for “business as usual” soundbites with assurances that the process would amount to little more than seeing some new faces around the building. Indeed, what incentive would there be to deviate from the established path, such was their esteem and appreciation for the existing values and integrity? Another blazer and jeans added that no one was going to lose their jobs with an excessive laugh as those listening forced weak smiles that didn’t reach their eyes.

No one really believed it, hence the general discomfort. We’re all creatures of habit and nowhere is this more acute than in the workplace, where routine, repetition and familiarity anchors us and offers an odd comfort in an environment where pressure and expectations pulse away in the background. Yet most venture capitalists want to be much more than a cheque book. Research from Harvard Business Review found 60 per cent of the 900 venture capitalists interviewed “interacted substantially” with their portfolio companies at least once a week, while 58 per cent offered operational guidance and almost half were involved with the hiring of employees.

Inherited staff who thrive and indeed survive amid this type of transition are able to detach themselves most efficiently from much of what has gone before – an approach that often demands a certain thick-skinned duplicity. So for those whose career centred on the business and its next evolution, where progression meant cultivating a new set of faces and making it work at all costs, the mission began that afternoon as empty champagne glasses were discarded amongst the fresh ones and melted cream dripped from paper tubs.

My own occasional consultancy role; external, detached and recently introduced by the retiring founder, made me particularly vulnerable to this new force, a pariah status soon established amongst those in the know and one step ahead. It explains why the only people I recall speaking to in that hot tent, other than the founder and his wife, now sidelined non-entities in this rapidly unfolding drama, was a marketing manager who would be fired the following month. Interestingly, the two people who I had worked with the closest for the past year – made plans with, laughed with and who would euphorically high-five me over some big, collective result – now looked through me when I approached them as they talked animatedly to someone that wasn’t introduced – a sign of much to come.

In the weeks that followed, this sense of alienation and being on the periphery accelerated – the once regular meetings stopped as did the replies to emails – basic answers and information I needed to do my work. Apparently it’s quite common; in the University of Birmingham International Human Resource Management Journal, Ian Clark argues that such takeovers are not only associated with redundancies, union derecognition and employee transfers, but also the downgrading of information-sharing and consultation.

Indeed, news and developments happened while I remained uninformed and oblivious, and given my work relied on collaboration with a wider, full-time team, this stunted my progress. A series of zoom meetings followed to discuss this lack of progress without ever directly saying that. Each time, the screen would be populated with anonymous faces given some purpose by said meetings, led by someone I’d never see again, who would join late without an apology and fire a scatter gun of questions at me about my work and achievements to date. It was a dynamic that always put me under scrutiny with no support, while I’d be encouraged to make suggestions that were never followed up.

Meanwhile, former colleagues were now just fleeting appearances on zoom, blank-faced and efficient as if we’d never met, saving their energy for someone called Dom, a new chief commercial officer, the name on everyone’s lips and the nucleus of the most fervent sycophancy. By contrast, the retiring founder was patronised and occasionally a butt of jokes by those he had originally recruited. It was all pretty depressing and disappointing; sad that good things can’t stay as they once were. Change is fine as long as it improves and enhances what has gone on before. It’s when it brings with it inferior values and inflated egos that swiftly filter down to distort the principles and behaviours of others that it becomes toxic.

I finally caught up with Dom one afternoon to tell him I was leaving – not in person, at the office as we had agreed because he didn’t bother to turn up, but over zoom, which informed me that he hadn’t got to know me; I was just a number of spreadsheets, an assessment as clinical as it was predictable.

Private equity buyouts of UK firms were up almost 60 per cent in 2021 compared with the same period pre-pandemic in 2019, according to financial data specialists, Refinitiv. Wouldn’t it be good if the next wave could be handled a little better?