For much of its history, the community association management industry has been built by operators. Most management company owners started as community managers themselves. They learned the business from the ground up, saw opportunities to serve clients better, and eventually decided to build companies of their own. Often, the original business proposition was straightforward: I can do this better.
That entrepreneurial spirit created many exceptional companies and helped shape our industry. But over the past 10-15 years, things have been changing fast and whether we like it or not, we have entered a new era.
Three significant shifts are happening simultaneously. Private equity and institutional capital have become permanent participants in the community association management industry, technology is finally maturing to the point that it will fundamentally change the client and employee experience, and the sophistication and talent of leadership has increased dramatically. These forces are converging to transform our industry, creating both new challenges and tremendous opportunities. It is an incredibly exciting time to be part of an industry that is evolving so rapidly and helping shape what comes next. It’s a true rags to riches story.
From Great Operator to Great Business Builder
Historically, someone could build a successful management company primarily by being very good at community association management. Know your boards. Hire good managers. Deliver responsive service. Build relationships. Win referrals. Work hard. Those things still matter enormously and will always be the core of our industry. But they are no longer enough.
As the industry develops, management company leaders increasingly need capabilities that extend well beyond the technical aspects of managing communities. They need to understand how to build a business with a clear purpose, how to build great employee and client experiences, develop leaders and people, and understand digital transformation and technology, strategic planning, change management, and scalable operations. In other words, our industry is now building leaders who aren’t simply running larger versions of the great businesses they originally founded. They are scaling purpose and culture across sophisticated business models.
One of the biggest challenges for entrepreneurial companies in any industry is that the skills required to start a company are not necessarily the same skills required to scale one. In the beginning, the founder can personally solve problems. They can maintain important client relationships. They can make most of the decisions. They can recognize when an employee is struggling or when a client is unhappy. At 30 employees, that becomes difficult. After 100 employees, it becomes impossible. AI is rapidly changing the landscape by supercharging skill sets and accelerating growth while changing what the workforce of tomorrow will be doing and the value they can deliver to clients.
Eventually, leadership of any sized company must shift from personally producing results to building an organization capable of consistently producing those results. That means developing leaders throughout the organization. It means creating repeatable processes while still empowering great people to use good judgment in service of a great customer experience. It means establishing accountability to the client while maintaining operational discipline. And it means building an intentional culture (a set of learned behaviors) rather than assuming the culture created by the founder will naturally survive growth. Most importantly, it means building a profitable business model that actually and consistently serves the client better without relying on one or two great managers.
Scale for the sake of scale isn’t the goal. A larger management company that becomes less responsive, less personal, or less effective isn’t progress. The challenge for the next generation of industry leaders will be figuring out how to combine operational sophistication with exceptional local service regardless of size.
Private Equity Is Not Bad and Is Not Going Away
Another major shift is the rapidly increasing presence of private equity and institutional capital. There is understandable skepticism about private equity within community association management. Some of that skepticism comes from legitimate concerns about what happens when financial objectives collide with service expectations. Some comes from experiences—good and bad—with consolidation. And some simply comes from the fact that change creates uncertainty.
Whether someone likes private equity is becoming less important than understanding what its presence means. Capital has entered this industry because investors see characteristics they value: recurring revenue, fragmented markets, long-standing client relationships, and opportunities to improve operations through technology and scale. That will not disappear. And that capital is changing the game for management companies and their leaders. So instead of spending our energy debating whether private equity belongs in community association management we should be embracing it and asking:
What can we learn from it and how can we benefit from it?
Private equity firms tend to be disciplined about things that entrepreneurial companies sometimes postpone. They:
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None of those practices belong exclusively to private equity. And none require a company to sell to private equity. Now more than ever with the advent of AI tools, this can all be done by anyone at any size.
In fact, some of the strongest companies of the future will be independent organizations that learn from institutional investors without trying to become institutional organizations. They will combine entrepreneurial speed, novel client experiences, local relationships and client intimacy with stronger financial discipline, better technology, more sophisticated leadership development, and repeatable operating systems.
We Should Be Learning from Each Other
Our industry has historically been particularly good at teaching people how to manage communities. We have certifications, educational programs and tremendous technical expertise around governance, financial management, maintenance, risk, and association operations. The next opportunity is to become equally serious about people development, leadership development, and teaching people how to build great companies.
- How do you scale from 10 employees to 50 and scale your great culture?
- How do you develop the next generation of executives who are better leaders than you are?
- How do you create accountability without creating bureaucracy?
- How do you measure culture, performance, and profitability? Once you measure, how do you use the data to create constant improvement in your organization?
- How do you decide where technology improves service and where human relationships still matter more?
- How do you evaluate the fit of a potential acquisition and then integrate successfully so you keep the people and clients that made them really successful in the first place?
- How do you build an organization that doesn’t depend on one founder or one rainmaker?
And most importantly: How do we build more sophisticated companies while continuing to improve the experience of the associations and homeowners we ultimately serve?
These are not simply M&A questions or private equity questions. They are leadership questions.
The Next Generation of Industry Leaders
Just as the role of community managers will change significantly in the next decade, a quite different kind of community association management executive is on the horizon as well. Some will still be founders who started as community managers. Others may come from finance, technology, hospitality, professional services, or other industries. Increasingly, the strongest leadership teams will include both. That diversity of experience can make our industry better.
The community association management business is becoming more complex. Our clients are becoming more sophisticated. Technology is rapidly changing expectations. Teams expect more from their leaders. Companies are becoming larger. Capital is entering the market. Leadership must evolve with it. We shouldn’t fear that evolution. We should embrace it. There will be winners and losers in the next 10 years. Instead of fearing disruption, we must all learn from each other, support each other and be the disruptors.
The future of this industry won’t belong exclusively to private equity-backed companies or independents, to the largest organizations or the smallest. It will belong to organizations whose leaders recognize that being exceptional at community association management and building an exceptional business are no longer the same skill, and that success requires both.
The opportunity is to embrace what is changing: AI, new sources of capital, greater investment in technology and leadership to strengthen what should never change: making our team members and clients feel heard, valued, supported, and genuinely well served.
The organizations that bring those two worlds together, embracing change without losing sight of what matters most, won’t simply succeed in the future of our industry. They will help define it.