Andrew: The keynote panel – Top Trends that will Shape Private Equity in the Coming Years. I would like to welcome my panelists by Rich Lawson, Mark Sotir, T.J. Maloney. So, I will let Rich start off with introductions, and then we will walk and go straight into the trends.
Rich: Hello everyone, Rich Lawson, HGGC. We are operators that sit out in sunny California, is as it has been called in recent times. We are a partnership investing firm. We have done $25 billion of transactions over the past decade, with roughly $6 billion of equity across 180 discrete deals. We are multisector, we invest in partnerships. We think there is a gap between buyout focus control investors, and earlier stage growth capital and venture firms, and just delighted to be here and join this virtual discussion.
Andrew: T.J.
T.J.: Sure, happy to get it started. Good afternoon, everyone. I am T. J. Maloney, I am chairman and CEO of Lincolnshire Management. Our firm is roughly 2 billion under management through five funds. We started in 1986. So this is our 35th year, we have purchased over 100 companies include such iconic names is Prince Tennis Racquets. For those of you who are divers, we owned a company at one point called PADI. Wabash was another business we own which was truck trailers, you will see that on most highways that we have owned. At one point a company called Riddell for football helmets. Holley, which was a designer marketer, branded performance auto parts, sometimes called Holley carbs. Another business transcript was Flatbed Trailers. And for those of you with swimming pools, we owned a business called Polaris, which was a manufactured pool cleaning device. So we have had a lot of iconic brand names over the years. Today, I would like to address my remarks in two areas. First, managing your portfolio companies through this pandemic. And secondly, purchasing new companies during the pandemic. Firstly, when the pandemic hit last March, and I will never forget that.
Andrew: T.J., we are gonna let her Mark introduce himself, and then we are going to start with the questions. Is that okay?
Mark: Thanks, Mark Sotir, work as the president of equity group investments, and we are a private investment firm that goes direct investing, very much like a PE firm. But we have committed capital from Sam Zell and his family. And that is where our capital comes from. So I get the nice benefit about raise capital. We have a lot of flexibility in our investment mandate. We cut across industries and geographies. We do not just do private deals, we invest a lot in public entities and do not have a lot of pressure to deploy money each year. If we think there are opportunities, we do. And if we do not, we do not. The big thing, though, that we spent a lot of time on is the capital, we have an ability to hold companies for a very long period of time. Again, I have real investment, reinvestment risk. And so duration is a thing we pay a lot of attention to. Sam, we just saw one of his companies that he has owned for 34 years. We own a lot of businesses, at least a decade, if not more and so not that is good or bad. But it makes you think you are the lens you stare at, in terms of how you make investments is a little different when you think in 10- 15 years out, so that is who we are.
Andrew: My name is Andrew Wilson. I am the Vice President of Private Equity and Mergers & Acquisitions here at Global Upside. We have been around for 20 plus years. We specialize in International Human Resources, due diligence, and employee transitions on carve-outs and spin-offs, setting up legal entities, and standing up human resources, payroll, and benefits. And then hiring employees also on our own PEO, employer of records services, where we have 60 plus international legal entities in countries around the world. So very much happy to be here. So I would like to start with Rich if we could and talk in terms of shaping the coming years is definitely the pandemics very much in our minds at the moment. So in terms of the pandemic Rich, how do you react to the changing landscape in different industry segments and geographical areas?
Rich: Well, I can certainly speak for the state of California and the sky is not orange today, as I was mentioning before, thank God but it was very interesting because California was one and we are based here at one office only in America right. Or only in this global economy you can have a private equity firm that employs some 1000 people in the portfolio spread geographically all over the world. But when we learned of the pandemic, March 11, the state of California was rather forward-thinking and shutting down on March 13. We closed our office, no one has returned to our offices in California. But it created two interesting situations for us. As we thought about focusing on our portfolio companies, we attacked all of our portfolio companies with this notion of employee health and safety, how are we going to deal with changing investment impact and strategic impact, capital structure, how were we going to work with our companies, as well as demand revenue risk and supply-side operations risk? Having been former operators, we approach every one of those companies and what we found was that there were certain end markets that were profoundly impacted, we have a number of companies that serve the auto industry. Never in a million years did that we think that Detroit was going to stop manufacturing vehicles, nor would dealerships stop buying products that would service those very end customers. So from a standpoint of end markets like retail, end markets like automotive even event, we have a company that does event planning software, if you can believe it, imagine no conferences, right. When a third of its revenue is derived from services associated with that. So we had to fundamentally rethink as we supported these businesses, how we were going to navigate this new normal. And I would tell you the other interesting pieces, it was not just by end market, it was by geography. So again, in the state of California, having a very large company that is a manufacturer, where 40% of their product is being manufactured in the state of California, has a very large impact for us. So we had to rethink how in working with those businesses across those six different metrics, particularly around employee health and safety. We were going to navigate this and be successful. And that is the lens we have taken, Andrew.