Founder-led companies benefit from an unusual intensity of purpose and vibrant culture. It’s what keeps us going but can become what holds us back when we fear having more to lose than gain from change.

I’m going to go out on a limb and ask fellow business founders a tough question: Is your loyalty to your culture today limiting your opportunities for growth in the future?

Founder-led companies take tremendous pride in their culture and seek to preserve it no matter what – believe me, I felt the same way. It was one of many reasons why my two co-founders and I bootstrapped Magaya, our freight forwarding software business, for nearly 20 years.

But by 2019, our market was “having a moment” and we weren’t growing fast enough to capitalize on it. We could see the supply chain world changing around us and didn’t understand why the tactics we’d relied on in the past weren’t positioning us to become a dominant player in our space.

It was a difficult realization, but to keep up with the market and emerge as a leader, we had to evolve operationally and take some major steps, like making our first acquisitions. And we had to raise capital to do it. With that, came all the common fears about change weakening our culture, but I knew that the right private equity partner could allow us to disrupt Magaya in all the necessary ways to achieve growth, while preserving the elements of our culture we valued most and preventing the complacency that encumbers many founder-led companies from reaching their full potential.

In less than two years, the decision to disrupt is paying off: we’ve doubled in scale, tripled our employee base, acquired four companies, and increased employee happiness as reflected by a recent engagement survey.

I get it. I said to myself several times over the years, “We built this company. We are the experts in our industry. How is a private equity firm possibly going to tell me how to do this better?”

Through this experience, I’ve learned several lessons and developed some contrarian views (for a founder) about embracing change as a primary path to growth. But I believe they can help other founders facing similarly difficult decisions take the leap with private equity and realize the tremendous opportunities it can bring for you and your people – before your “moment” passes you by.

Embrace disruption as a change agent

Employee and customer happiness are foundational elements of a strong culture. As a founder, it’s very normal to feel like you can’t disrupt those clients with something like a new pricing structure or push your employees too hard. But that’s a slippery slope toward complacency and obstructs both you and your teams from having a growth mindset.

If growth acceleration or market leadership is your goal, you must be willing to disrupt processes, push people beyond their comfort zones, hold them accountable to performance metrics, and break that cycle of playing it safe. The idea isn’t to take away the things your employees and clients love but to enable them to be even more successful through meaningful change.

The key to any positive culture disruption is to help employees find renewed purpose in their roles and allow them to own their contributions to company growth. Start by communicating your quantifiable goals for growth and aligning individual goals to firmwide strategy. Be as specific as possible about the role employees will play in achieving those goals and what they can expect to gain with the company’s success.

You’re better off owning a piece of something high value than the whole of something marginal.

Appreciate the value of a smaller piece of a bigger pie

Contrary to popular belief among founders, you can raise capital without giving up control of your company. In a literal sense, this can be done with a minority capital raise. It can also be achieved in any ownership scenario where you are aligned with your capital partner.

Take the time to define what success looks like for yourself, your team and the investor – if you’re aligned on what that looks like, you can debate how to get there while feeling comfortable that everyone has the same goal in mind.

The question you need to ask yourself is, “does bringing on a partner improve my odds of reaching my definition of success?” The point being you’re better off owning a piece of something high value than the whole of something marginal. When I mentor or speak with other founders, everyone panics over the idea of dilution. Now that I’ve gone through the private equity process and seen the growth it enabled for my company and my people, I can’t stress enough to them how positive the outcome can be when a shift in control comes with indisputable alignment.

Recognize that change can happen without eroding your purpose or founder-led culture

From our earliest conversations, LLR saw that we were very concerned with preserving what we thought was the perfect scenario, particularly for our people. Together, we looked carefully at what we had built and made measured evaluations over the course of several months to determine if our growth targets were achievable without significant changes to our business strategy.

Not unexpectedly, we needed to make changes. My co-founders and I elected to take on specific executive-level responsibilities, bring in a new CEO, deconstruct our pricing model, and completely revamp our sales and marketing process. These changes may seem radical, but when you partner with a firm that you trust and that understands and respects the impact on people, you can find paths to increased profitability and meaningful operational change without eroding your fundamental purpose or culture.

Remember that the right private equity firm can be more than just a conduit to cash. Look for a partner who offers the experience and guidance you need to reshape elements of your business for success while respecting what you built so far.

You have to be willing to loosen your grip on some things and take guidance from those who’ve grown businesses before to see the full value of what a private equity partnership can bring.

Pay attention to what questions PE firms ask you

After hiring an investment banker and presenting at least 40 pitches to private equity firms, LLR won our trust by showing up well-informed and asking thoughtful questions. They did their homework and they cared about us and our business. The chemistry was right, and we collaborated to create a deal that aligned our interests.

As you meet potential investors, feel out whether they understand your perspective as a founder and respect where you place elements like culture in the equation – and don’t wait until you’re far into a process to do it. Ask yourself some tough questions about what is truly sacrosanct and what is flexible, but always keep an open mind. You have to be willing to loosen your grip on some things and take guidance from those who’ve grown businesses before to see the full value of what a private equity partnership can bring.

Here’s the bottom line.

I get it. I said to myself several times over the years, “We built this company. We are the experts in our industry. How is a private equity firm possibly going to tell me how to do this better?”

Founder-led companies benefit from an unusual intensity of purpose and vibrant culture. It’s what keeps us going as entrepreneurial organizations but can become what holds us back when we start to fear having more to lose than gain from changes in control and culture.

So as founders, we face a dilemma: we want to grow and disrupt our markets, but that means being disruptive internally as well. Rather than entering a capital raise process from a place of fear and preservation, I encourage you to be open to evolving and to put your energy behind finding a private equity partner who will walk every step of the change journey alongside you.

This GrowthBit is featured in LLR’s 2022 Growth Guide, along with other exclusive insights from our portfolio company leaders and Value Creation Team. Download the eBook here.