What happens when a private equity or venture capital firm purchases your management company?

Private equity firms will prioritize their investors over the needs of your property and your residents.

On the surface, who owns your management company may seem like a minor detail, but corporate ownership plays a huge role in your experience as a board member and a resident.
 
Private equity companies are in the business of making a profit.
When they acquire a company, they ruthlessly cut costs to boost margins.  For buildings, this can mean reduced on-site staff, slower and less personalized service, and processes that feel impersonal.  

They often restructure the companies they acquire.
The goal is to make their acquisitions fit a profit-first business model. When property managers are undervalued and seen as just a number, they are more likely to leave, causing frequent turnover and disruption for boards and residents.

Management companies are pressured to increase revenue.
To increase profits, private equity firms may force contract renegotiations, raise management fees, or add additional service fees. Keep an eye out for extra charges on items that used to be included in your management contract.

Your preferred vendors may no longer be an option.
When a private equity firm acquires a management company, it can impact your vendor contracts. They may pressure management to bundle services into one vendor, reducing board control over preferred vendors.
  

Private equity companies are not in it for the long haul. Their goal is to boost company value and sell their acquisition to the highest bidder. 

Should a private equity firm acquire your management company, be proactive to ensure the quality of service you receive doesn’t taper. 

1. Review your management contract. Check for renewal terms, cancellation clauses, and service levels.
2. Meet the new owners. A meeting may provide clarity on what changes are coming and how you should pivot.
3. Hold them accountable. Request service level agreements in writing.
4. Listen to your residents. Request feedback or hold townhall meetings to track whether residents notice changes in service quality.
5. Explore alternatives. Should service begin to decline, you have every right to consider other management options.

FirstService Residential: 40 years of stability and transparency

FirstService Residential is backed by FirstService Corporation, a publicly traded company that provides a wide range of services across the residential management industry. For more than 40 years, that steady support has allowed us to focus on what matters most — our clients, our communities, and their success. 
 

If you think your management company is hiding something from you, it may be time to consider new options.Contact our local team today at 212.813.3000 or [email protected].