In this episode of the Private Equity Podcast, host Alex Rawlings sits down with Chad Kalland, an experienced CEO in the industrial services sector with multiple private equity-backed exits under his belt. Chad shares his insights on navigating cultural changes, integrating acquisitions, and driving growth in a private equity-backed environment. He also dives into key lessons learned from his successful exits, how to keep teams engaged during times of rapid change, and the importance of choosing the right private equity partner.

[00:00] Introduction of Chad Kalland.

[00:12] Importance of growing as a platform company with potential runway.

[00:41] Chad’s experience with private equity-backed exits and acquisitions.

[01:46] Mistakes private equity firms make by implementing changes too quickly.

[02:16] Understanding business strengths before making changes.

[02:43] Evaluating talent and their unique skills in an organization.

[03:12] Transitioning from founder-owned businesses to private equity-backed environments.

[03:42] Evaluating a company’s culture before acquisition to ease integration.

[04:11] Incorporating the acquired company’s strengths into the platform.

[04:39] Fostering a merger mindset instead of a takeover during acquisitions.

[05:08] Injecting private equity-backed speed into founder-owned businesses.

[05:38] Bringing acquired leadership into the fold to integrate with the platform.

[06:07] Key lessons learned in integrating companies, especially service lines.

[07:04] Missteps by not integrating acquired companies quickly enough.

[08:02] Adding service lines to increase market share.

[08:30] Ensuring smooth service line integration for long-term growth.

[09:28] Maintaining employee engagement during changes and new processes.

[09:57] Motivating technicians and engineers during transitions.

[10:27] Developing employees and offering leadership opportunities to improve retention.

[11:27] Strategies for retaining employees in a labor-intensive industry.

[11:53] Keeping new hires engaged and committed during the first 90 days.

[12:23] Onboarding and training to improve retention.

[12:52] Lessons from two successful private equity-backed exits.

[13:22] Adapting to private equity decision-making processes with new stakeholders.

[13:51] Finding the right private equity partner for growth.

[14:20] Evaluating private equity partners beyond the highest offer.

[14:49] Choosing between remaining a platform or joining a strategic acquirer.

[15:17] Benefits of staying on as the platform versus integrating into a larger organization.

[16:16] Focusing on high-margin services for profitability.

[17:15] Adding organic growth to acquired companies for value creation.

[18:09] Understanding employee motivation as a leader.

[19:35] Other leadership podcasts and books, like Simon Sinek’s work.

To be added to the book waitlist, you can email alex.offer@raw-selection.com

Thank you for tuning in!

You can connect with Chad Kalland on LinkedIn by visiting his profile here.

To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.

Lastly, if you have any feedback on the podcast or want to reach out to Alex with any questions, send an email to alex.rawlings@raw-selection.com.

Welcome back to The Private Equity Podcast, by Raw Selection! In this episode, our host, Alex Rawlings is joined by Marc Jourlait, a seasoned Private Equity Operating Partner with extensive experience as a former CEO, leading multiple successful exits. Marc shares his unique insights into the role of the Operating Partner, the importance of driving value creation early in the investment cycle, and why private equity firms must act quickly in their hold period.

Breakdown:

[00:00] Introduction of Marc Jourlait.

[01:36] Overview of Marc’s career journey, from Apple to private equity.

[02:03] Importance of acting quickly in the hold period to create value.

[03:00] Why replacing key personnel, like the CFO, is crucial early in the investment cycle.

[03:30] Causes of delay: risk management and decision-making dynamics in private equity.

[04:30] The importance of early involvement, even pre-close, to maximize value creation.

[04:59] Benefits of operating partners engaging with the management team before deal closure.

[05:49] How early engagement can lead to stronger value creation and faster exits.

[06:18] The operating partner model and its differences between the US and Europe.

[06:46] Riverside’s model of using former CEOs as generalist operating partners.

[07:37] Operating partners at Riverside: from acquisition to exit, staying engaged.

[08:05] Benefits of operating partners serving as board chairmen for governance and guidance.

[09:02] Shift in private equity from financial engineering to operational improvements.

[09:31] Importance of having a clear value creation roadmap from the start.

[10:01] The short five-year hold period in private equity requires fast action.

[11:00] European firms’ reluctance to invest in operating partners compared to the US.

[12:07] How value creation is now more focused on operational improvements over financial strategies.

[12:35] Key areas for value creation: pricing, operations, and cost management.

[13:04] How private equity firms create a clear story to maximize exit premiums.

[14:01] Discussion on employee ownership and its growing adoption in private equity.

[14:37] Riverside’s involvement with Ownership Works and its impact on employee ownership.

[15:07] How Ownership Works offers equity to all employees, driving engagement.

[16:12] Employee ownership as a catalyst for company success and value creation.

[17:57] Impact of employee ownership on engagement and business performance.

[20:14] Marc’s enthusiasm for the Ownership Works program and its positive transformation.

[22:13] Marc’s encouragement for more private equity firms to adopt employee ownership.

[22:41] Importance of employee ownership in driving engagement and maximizing value creation.

[24:04] Marc’s commitment to continuous learning and networking for professional growth.

[24:58] Marc invites listeners to connect with him on LinkedIn.

You can connect with Marc Jourlait on LinkedIn by visiting his profile here.

To be added to the book waitlist, you can email alex.offer@raw-selection.com

Thank you for tuning in!

To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.

Lastly, if you have any feedback on the podcast or want to reach out to Alex with any questions, send an email to alex.rawlings@raw-selection.com.

Welcome back to The Private Equity Podcast by Raw Selection! Alex is joined by Drew Schardt, Vice Chairman and Global Head of Investment Strategy at Hamilton Lane. Drew brings over 17 years of experience at the firm, sharing valuable insights into the current state of private equity, how the market is evolving, and what’s in store for the rest of 2024. He dives into the importance of using data and technology to make informed investment decisions, and how Hamilton Lane is preparing for upcoming opportunities in sectors like healthcare, industrials, and private credit.

Breakdown:

[00:00] Introduction to Drew Schardt, Vice Chairman and Global Head of Investment Strategy at Hamilton Lane.

[00:45] Overview of Drew’s role at Hamilton Lane and his background in private equity.

[02:09] Key mistake private equity firms make: not acting quickly enough on management changes.

[03:06] Importance of transparency and using real-time data for better investment decisions.

[04:32] Role of technology and data platforms in improving decision-making in private equity.

[05:59] Private equity's recovery after global downturns.

[06:42] Lower leverage levels compared to the global financial crisis.

[07:37] How private equity evolved with stronger financial resilience and broader acceptance.

[09:00] Soft landing vs. recession risks in the economic outlook.

[09:58] Emerging deal flow and closing the buyer-seller price gap.

[10:56] Impact of global monetary policy on deal-making.

[12:09] Stabilized purchase price multiples aiding deal flow.

[12:53] Increased exit activity and liquidity in private equity markets.

[13:51] Robust deal flow and exits expected in the second half of 2024.

[15:50] How interest rate policies influence pricing and deal-making.

[16:17] Stabilized purchase price multiples across industries.

[17:11] Historical trends showing Q4 as the busiest for deal activity.

[17:40] Managing investment risk through asset selection.

[18:39] Drew’s approach to portfolio diversification and risk management.

[19:43] Key sectors of interest for Hamilton Lane, including healthcare and industrials.

[20:39] Importance of having multiple levers in value creation strategies.

[21:50] Emerging opportunities in private credit, infrastructure, and secondaries.

[24:33] Focus on defensive sectors like healthcare and industrials.

[26:10] How Hamilton Lane is preparing to capitalize on market opportunities.

[31:27] Focus sectors for Hamilton Lane: clinical research, supply chains, and logistics.

[33:05] Supply chain automation as an investment area.

[34:17] Sector-specific investment strategies for Hamilton Lane.

[35:40] How technology is increasing transparency and attracting new investors.

[37:09] Drew’s reading recommendations: "Radical Candor" by Kim Scott and works by Malcolm Gladwell.

[40:00] Closing remarks from Alex.

You can connect with Drew Schardt on LinkedIn by visiting his profile here.

To be added to the book waitlist, you can email alex.offer@raw-selection.com

Thank you for tuning in!

To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.

Lastly, if you have any feedback on the podcast or want to reach out to Alex with any questions, send an email to alex.rawlings@raw-selection.com