How Private Equity Firms Scale Their Portfolio Companies With Dan Cremons

Foreign.

It is Nick Bradley here. Welcome to this week's show. So joining me on the show today is Dan Cremens. Now, I was going to introduce Dan by saying that he is a recovering private equity guy like me, but that wouldn't be 100% true because whereas I work with business owners who are wanting to build a high value exit to private equity to sophisticated buyers, Dan works with the private equity firms themselves, but he works specifically with their portfolio companies, helping to increase their value. So what we're going to get into today is the way that private equity firms specifically increase value, you know, expand value with their companies and the nuances, the differences, if you like, between the way a business owner can prepare for an exit to private equity versus what they're going to experience when they kind of go into that world. It's a really rich conversation, a fireside chat, so to speak, around all things scaling and exiting. Now a little bit more about Dan. So Dan has spent something like 13 years in private equity. He says he stumbled into PE in 2007 and kind of got stuck there. But what I really like about his career is not only has he worked on the financial side, the deal side of private equity, he's also worked on the operating side. He's had several CEO and kind of senior leadership roles within portfolio companies. The other thing I really like is his experience is very much focused on people and how that you can create value or value creation, understanding the human capital side of things. And where I think this is a big change, certainly from my experience and my career in private equity, is that the PE firms now have to think a lot more of the strategic and operational value that they add to the companies they acquire. It's not just about how well they can deploy money.

We became very proactive and intentional about identifying what does this business need in a CEO to get from 10 to 100. Just following the example through, do we have that in the incumbent leader? If no, which the answer was no in a lot of cases, we got to get on with it in very early days in the whole period. Make a priority getting the right CEO in there.

So I think you're going to enjoy this conversation. We're going to go through a little bit of Dan's book, which is called Winning Moves, which is an excellent book around how private equity create value. And we're going to touch on the specific things that you should be considering, you should be thinking about, particularly if you are preparing your business for a high value exit to a sophisticated buyer in the future.

Begin with the end in mind of what does success look like at the end of the road? And for the private equity firm, the end of the road is five years. For the management team, the end of the road should be 10 years because not only do they have to get us to five years, but they need to sell the dream to the next buyer.

So there we have it. That is today's show. Two private equity guys going backwards and forwards. I hope you enjoy it. Welcome to the show. Dan Kremens. Hey everybody, it is Nick Bradley here. Welcome to Scale up for this week. And I am delighted to say that we are going to have a bit of a masterclass in private equity today because I have a gentleman joining me on the show who has a pretty full on illustrious career in private equity, spent a lot of years in the trenches, has managed to dig himself out of the trenches, but still plays with one foot in is probably a way to describe it. So welcome to the show. Dan Cremens.

Thanks, man. Thanks so much for having me. I can't promise a masterclass, but I can tell you plenty of things not to do in the private equity that's.

A masterclass in our book. We were joking before pressing Record. It's going to be a bit of a fireside chat. We do have some topics that we think are very important to get into today, but we're just going to go backwards and forwards and talk about some of the stories, I think, because it is a crazy world. And whenever I speak on stage, Dan and I talk about, I talk a lot about private equity just because it's where the game is played. For a lot of people who want to create certainly an eight or a nine figure exit. There's this kind of mystery intrigue. Like as soon as you mention, it's like, oh my God, what's that like? Did you find that? I mean, have you found that when you bring it up? Because, you know, because obviously your background's not dissimilar.

I have found that especially dealing with business owners who don't have familiarity with private equity. However, being a, you know, born and bred Midwestern state school kid from the us I sort of stumbled into private equity in a way that didn't, you know, see me ascending through high finance as a lot of the private equity peers do, I sort of lucked my way into a role with a private equity group back in 2007. And so I think my path has been, perhaps made it feel a bit more approachable to me. But, but I. To your point, I deal with That a lot when dealing with, with founders who haven't dealt with private equity before. And a big part of. I wrote a book which we may or may not talk about as we get into it, but I wrote a book a couple of years ago that is in part aimed at demystifying private equity for the selling business owner such that they can understand better how do, how does, how does private equity think about businesses and in so doing sort of remove this veil or this mystique that surrounds the business.

It's an important message. And we were saying that where you and I probably differ a bit is you still work with the private equity firms with their portfolio companies. Whereas not that I'm not allowed in the room anymore, but there is a, when you jump to the other side of the table. And as I said, I work with the business owners. You know, there are two sides here. Right. And when you're getting into high stakes, you know, eight, nine, sometimes more sort of figure exits, there's a lot of risk there. So let's go through your story. So 2007, you got into private equity. What were you doing before that?

So I did my undergrad here in Cincinnati where I now live. We just moved back here two years ago and spent the early chapter of my career working in operations management for a short period of time. So I was running a logistics and supply chain organization for a small privately held company here in Cincinnati, which gave me great, just great early experience in the fundamentals of managing people.

And then I did a bit of a hard left career wise and did a fairly short couple of year tour of duty in investment research working for a investment advisory business in the Midwest. And what's interesting is private equity, the firm that I landed at in 2007 in a way that wasn't well planned out, but sort of melded those two worlds in a sense that fundamentally the private equity group was. They were investors. And so I could draw on some of my early investment experience and judgment in doing that part of the job description. But we also happen to be very involved, active investors. And so I knew while I was not a seasoned operator at that point in time, I knew a little bit about how things run on the shop floor, which I think just made me again, I was still relatively.

What was the attraction then? I mean, obviously. So you went from, from operations to some interest in investment, as you said beforehand, which, which obviously then takes you into a pathway into private equity. Were you. Did you know much about it at that point or did you start to learn about private equity? When you were starting to get more into understanding investment research, I didn't know.

An EBITDA from a debt service coverage coverage ratio. Okay, right.

So pretty early. Okay, got it. Early stage experience.

You know, I had experience in, I was a finance major in undergrad accounting minor, entrepreneurship minor. So I knew finance. But, but you know, the application of finance to private equity is, is relatively unique. And so I had to make some of that translation. That was a big part of the learning curve for me early in private equity was just understanding how do the fundamentals of finance that I have learned and begun to exercise in my career, how do those actually apply to this very unique world of lower mid market investing? And that was a bit of a learning curve, but a lot of, as you know, just a lot of new, not only a lot of new applications of the same fundamentals, but a lot of new language that I had to understand early on. And that's why I say I didn't know an EBITDA from a debt service coverage ratio. Only half jokingly.

Well, you know, let's be frank about this to some extent though, right? Some of those words, and I've learned this since leaving because when you're in there, you're kind of programmed, right? You're kind of indoctrinated into a way of doing things. Yeah, I've learned that some of those words that are thrown around are there to confuse people. All right? So not to say that they're not important. You need to know what EBITDA stands for and what it means. But there are other things that are thrown around that, that are just complex because they sound intelligent or they want to confuse. So I'm going to.

I think it also is, I don't mean to interrupt your flow. It also is, and I say this from personal experience, first 10 years of my career, I was a prolific user of private equity jargon. And that was in part because. That was in part because I learned a fancy, shiny new skill and I wanted to show it off. But that was also in part because I was a relatively young guy, early career, who was in a lot of rooms that by traditional standards I didn't belong in. You know, I had a massive case, as many of us do in this space, had a massive case of imposter syndrome. And so one of the antidotes to that imposter syndrome, at least in my subconscious brain, which is using a bunch of big words that made me feel a sense of self worth and belonging in a space where people had all sorts of fancy degrees that I didn't have.

Yep, I get it. It's the same as if you go to McKinsey or BCG. I did some, I did a stint in BCG for a while. And it's the same thing because people come through, they might have great academic qualifications, which gets them in the door, but then when you're in there, you're kind of around these other people, but it becomes its own language, its own narrative. And I think, you know, back to the early part of our conversation about the, the mystery of private equity, some of it is that baffling with bs, the kind of, you hear these words, so therefore it must be smart, intelligent and it creates a hierarchy.

Yes, totally. Totally. Well. And I learned, I, I learned pretty early in my. So I had some early operating experience when I got into private equity. I landed in the space in 2007. Global recession hit in 2008. I don't know if you heard about it.

Oh wow. That. Yeah, yeah. I was working for, I was at Getty Images buying companies. We had a great time.

I can imagine, I can imagine. But you know, the point being I, during the 08 09, even 2010 period at the firm I was with, we had battened down the hatches. We were all hands on deck trying to get our portfolio companies through the recession. And so I had, I stepped into one of our companies along with one other guy from, from our, our firm to lead the transition, the management transition of that business. What I learned in getting early operating experience in a private equity backed business is the sort of use of jargon, the sort of bad habits that quote unquote, high finance teaches us can be massive liabilities in, in a business, for example, you know, you drop. I. One of my early, I still remember this vividly. One of my earliest experiences within my early operating experience was landing on the ground in Louisiana at a small office. We were trying to open a market in Louisiana with this company that I was helping to lead. And I showed up with briefcase in hand, you know, laser on, dressed as the private equity guy. And I walked into a warehouse in the middle of Louisiana with a bunch of guys sitting around, you know, with wearing, wearing jeans and tattered T shirts. And I walked in, in like the record scratched and everybody looked over to me and I learned that you really have to meet your audience where it is not only in look and style, but also in just the, the language you use, the way you are approaching them. And that's not to say I was better than or worse than or it was Just a very different environment. And I, I learned an early and kind of painful lesson in the fact that some of these things that private equity teaches us can be real liabilities. As an operator of people in these companies, A leader of people in these companies.

Yeah, no, indeed. And it has changed a bit. I remember I was in the, in the PE world when chinos started to become more popular. And it was kind of weird because you had half the firm would turn up still in the navy suit and the white shirt Sometimes, well, they weren't wearing ties at that point. It was very cool just to have the cool suit and the shirt with the buttons undone. And then people started wearing chinos and kind of sports coats. And that was kind of weird.

Right? Yeah.

I have a question for you here because I think this is an interesting one for you to kind of take is how do you define the world of private equity? So I've talked a lot about this on my show and kind of what it's like, secret handshakes, secret clubs, all sorts of stuff. And that was my experience certainly in the uk, where most of my PE kind of working has been. But how do you define the world? So when you're in it, what does it feel like? What are some of the key kind of things that happen just so you can kind of unpack it for people listening?

Well, I think that, I think the world of private equity is changing. And so I'll give you, I'll give you maybe two answers. A point in time answer from 2007 when I joined, and the point in time answer from today.

Perfect.

And I think, I think just a level set, broadly speaking, I would define in the most simplistic term private equity is, are providers of private capital to invest in things a subset of the private equity market. That broad definition of the private equity market is the world in which I play, which is mid market, lower mid market. Private equity acquirers of small, medium sized companies that are typically privately owned or founder owned.

Yep.

So that's like the broad classification in the world that I, when I speak about private equity, I really speak through the lens of that second subcategory.

So do I, by the way. And I talk about it in terms of big P, little big P, big E, little P, little E in terms of that. So this private equity equity, which is exactly your first definition, and then there's the firms and how they operate.

Yes. Yeah, Well, I like that. I like that a lot. 2007, when I joined the space, private equity to me felt like, felt synonymous with Deal makers. The business was largely focused on we have a pool of capital from our limited partners, from our investors. We need to deploy that capital into small mid sized companies. So private equity was largely a capital allocation game. Fast forward to present and there's a lot that's happened in between that we can unpack. But fast forward to present day private equity is what I just described. You know, the price of admission into the private equity game is you have to raise money and do deals. But there's an and function that's been added over time to private equity, which is investors now have to have something productive to say and contribute when it comes to how do we actually create alpha or value post closing, once we own these companies.

So private equity, the definition of private equity, the feel of it has expanded considerably to focus not exclusively on investing, but investing and operations, value creation. How do we buy good businesses and how do we make them better businesses under our ownership?

Yeah, okay, I agree with that fully. And there's a differentiation there. I'm going to add something to it as well because I think it's important. I mean, a lot of people who listen to this show are investors and business owners of different sizes. Right, of course. And what you'll find that's interesting is when I was floating around, my last proper private Equity gig was 2018, 2019. Interesting story about how I left that company in a blaze of glory, but we'll come back to that. And then I can't remember the exact figure, I was talking to Adam Coffee about this, but there was like three to four thousand firms in North America or something and now it's like double that. And the point I want to make here is you've got kind of three tranches of private equity that I see in the world today, right? You've got the traditional firms that still do traditional things, right? You know, they have capital, they deploy it, they're quite aggressive in the way that they operate. They're very traditional. They're what I call the old school private equity. You're 100% right. That they are starting to get disrupted by more progressive private equity firms that are bringing people in who can actually add value and partner with people. And the idea that when you sell the business, you're not just selling the entity, you're actually partnering up with someone who can take it to the next level, that's really interesting. But then you've got this, this kind of at the bottom end. All these websites that have gone up in the last two or three years since COVID that are private equity firms, right. And just for everyone's reference here, they're not, right. They're, they're people who have done a course somewhere, they've put up a website saying they're an investor, right. And they're going to go out there and do no money down deals or whatever you want to call it, seller finance deals. And I just bring that up, not that we want to talk too much about it here, but just to say that if you're in there looking out there at of private equity, there are different layers, different levels. Some are what I would call real. So what your definition is, Others I would call just be careful, be careful of the letter or the phone call from someone who doesn't really have the capital to acquire your company.

Yeah, well, well, I think you're right to point out the different. Private equity is not private equity is not private equity. And you have, you know, this, this builds the case, what you're describing builds a case for having a trusted advisor at your wing. If you're a business owner that's considering selling and trusted advisors can come in all shapes and forms, but somebody who knows the landscape you're describing, who can serve as somewhat of a river guide in helping you to find the buyers that are actually a fit with your goals and objectives. It's just, it's so important for business owners that aren't private equity experience and maybe can't discern between some of these, you know, these different, you've got to.

Navigate, you've got to navigate the minefield. Right. And, and you know, I liked your point though because the last few private equity firms that I was associated with were more of the latter camp. So the, the kind of more premium end words. They have the capital but they also have the operating expertise to help. And what I'm finding these days, certainly the deals that I'm involved in where differentiating between those firms, certainly anyone who wants to sell to private equity, we're talking to those firms and it becomes a much more difficult conversation because you know, there might be a price that's put down for the business but then it's about can I get on with these people? Because I'm going to be around for at least, you know, one or two years on some form of earnout. I might stick around and, and roll over some equity and play again. But then there's the piece about, you know, is this the, the partner that's going to help take the vision of the company forward? I think it's a really, the reason I'm sort of making the point again is that's, that's in private equity. That's kind of what exists now as an opportunity. So people who think private equity is bad because of the traditional, you know, stigma. Actually, it's not. And these newer type of firms are operating. I think they're excellent.

What to your mind and what in your experience discerns a quote, unquote good partner from a less good partner?

Yeah, and this is where, I mean, I always talk about price and terms as, as the things you need to look into with terms being more important than anything else. Terms being defined as. It depends on what your personal end game is. It depends on what the vision of the business is. And it depends then of what the core capability is of the firm that you potentially will sell and partner to. So all of those things have different answers. But let's say, for example, and I talk a lot about the exit story or the growth story right when we work. So the idea is that, you know, you're going to hand the baton to someone else who's going to take that baton and run the next leg of the race. Okay. Some firms are fantastic at international expansion. Some firms have a great track record within your industry and have, you know, bolt on acquisitions lined up and ready to go. Some firms focus more on cultural dynamics. Some firms have more of a bias towards technology enablement. And what I often get people to do is when you're interviewing and you are interviewing the firms for a process, you start to ask them the same things they're asking you, right? And then you start to build up a sense of that, and then you've got the human element, which is the rapport between the people, which is obviously critical. So that's kind of how I play it these days. And I'm finding that private equity firms are now starting to call it maybe marketing, but they're creating their own brand propositions, their own value propositions so that they can differentiate themselves in the ways that we've just been discussing.

This is so. I mean, the point you're hitting on is so key, which is in today's day and age, look, 6 to 12,000 private equity firms, depending on how you define private equity. Six to 12,000 firms out there, trillions of dollars of capital. This is, let's just call it what it is. Private equity is a red ocean market. If you're familiar with red ocean.

I am. I am. I study that at insead, my friend. And, and I, and I love it. I still bring that up every Day with people. But yeah. So actually, let's unpack it quickly, though. Dan. So just to find red and blue ocean quickly, because I know some people will know it, but just we should always do a. Hold on, here's a footnote.

A blue ocean market is. Think of a blue ocean market as uncontested market space.

The book will define it more precisely. But think of a less competitive, uncontested market where you have a real opportunity to become the market leader. Red ocean is the opposite of that.

Where it's. It's ruthlessly competitive. A lot of me too, sort of.

Companies blood in the water, as they say. All the fish competing for scarce amount of plankton.

Right, right, right. Yeah, great metaphor. So in a red ocean market, if you want to survive, let alone thrive, it's incumbent upon firms to find their points of differentiation. Step one and step two, be able to articulate that in a way that's clear and compelling. I remember doing this was back in probably 2011 or 2012, as one of my little, you know, I was. The firm I was with at the time was we were probably eight to 10 people. And so everybody was doing a little bit of everything. I was doing deals, I was, you know, sitting on the board. I was cleaning the dishes like the rest of us were. And one of the projects I took on was to help revamp our website. It was just, it was atrocious back then. And so the first thing I did, I was taught, you know, in business school to if you're, if you're trying to figure out what your messaging and positioning, step one is to go out to the market and understand, well, how are your competitors messaging positioning? How can you find your sort of way to wedge in.

Yeah. And what language are they using as well, which is critical.

So what we did was we went and scoured. I grabbed one of our interns or analysts. We went and scoured like 100 private equity websites to understand how are people positioning. And we actually tagged, began to tag and codify some of the language they were using in this idea of vaguely describing the firm as a good partner. Value, quote, unquote. I'm using air quotes for those not on video, but value a value add partner. It was all the same bs. And that's not to say they weren't value add, but it's to say that in a, in a market that's becoming increasingly red ocean, you have to A, build points of differentiation that are substantial, substantiated by actual operating activities that are different, and B, figure out Ways to articulate those in a different way. So I think all this said, you know, fast forward, whatever it was, 10, whatever it's been, 10 years since that time, the market's become more competitive. The onus is increasingly on firms to find ways that they are demonstrably different, such that they can stand out in a deal process where you're often competing with, you know, 20 to 30 other buyers.

Side note here, if you're. If you've got a branding agency and you want to go and think about another market to play in, I think being a branding agency for private equity firms could be an interesting place.

Side note, reach out to me. This is an idea I thought of spinning up. I convinced myself I didn't want to be running an agency, but I'd love to find a partner who's interested in cracking this nut, because there you go.

Well, I, I'd come in on that one as well, actually, because I think that'd be fun. Well, last question on private equity before we kind of get into some more meaty topics. Same question, back to you that you, you went to me, right? In terms of. When you look at private equity firms now, and I know you work with them, right? So you're in there helping their portfolio companies. When you, when you see the good ones or what you define as the good ones, what are the characteristics, the ones that you think are the most progressive and the ones that are really starting to adapt to the red ocean, to the fact that they need to be more competitive?

The good. I'm going to speak in generalities, and then I'll give an example. The good ones have identified a series of activities that they can meld together to be both different and valuable. Okay, that's very broad, but let me use an example. I'll use the example of the firm that I know best, which is the one I worked for for, you know, 13 years. We.

The company, the firm is called Alpine Investors, based in San Francisco. We realize probably 12 years ago, 11, 12 years ago, that we're really not in the capital allocation game per se, we're in the talent allocation game. And there were a variety of lived experiences we had as a firm that taught us that bringing people to the center of the, of the private equity equation was going to be increasingly important to our success. We looked at the deals we've done where we've had success, where we failed, and one of the highest correlated factors with success for us, or lack thereof, was the quality of leadership team and the intentionality with which we brought great Fit for purpose people into the business. So that light bulb taught us that we've gotten pretty good. The firm had been around for 10 to 12 years at that point. We've gotten pretty good at the capital allocation, the deal making part of the business. What if we dedicate the next 10 years to getting really good at the people allocation business? And that, that became the, the seed that formed this people first strategy that Alpline ended up pursuing. And that was an example of we identified an activity or you know, kind of a strategic thrust that we thought was going to be very valuable to our business. And we figured out how to articulate to that, that to the market such that we could attract people, people being talent and business owners with whom that got it with a differentiation that that value proposition resonated.

What did that just, I'm curious, how did that change, change how you were structured? So what type of capability did you have to bring into the firm to be able to do that value add piece successfully?

It came in, there was a bit of a crawl walk run when it came to the evolution of it. And it's still evolving. Alpine has just done amazing things and the firm's crushed it. It's really been a validation of the strategy. So it's been an evolution. But I think when we had this realization that people were important, the starting point was how do we attract and identify good fit for purpose talent for our portfolio companies. So what did we do? We stood up. A sort of recruiting function is where a lot of firms start, a lot of firms that are leaning into human capital start stand up of recruiting or talent acquisition function and then solidify our point of view on what is, how do we figure out what is fit for purpose talent for a given role or company and then how do we create an assessment process and a structured interview process that allows us to suss that out such that we can make high quality hiring decisions. So that was the starting point. Over time that evolved considerably to where once we, once we figured that piece of it out and we were always getting better and making mistakes and learning from them, but once we largely figured that piece out, the next horizon was okay. We're getting pretty good at going out to market and finding good talent for our portfolio companies, what if we create great talent from within and instead of having to go out to market and rely on recruiting the all the same great CEOs that everybody else is trying to recruit, what if we create great CEOs from within? So that seed formed the basis for what is now the CEO and training program which 10 years after its inception has, we've had, I don't know, 50 to 100 people pass through that program. It's one of the most. The returns that it has generated from CEO and training backed companies have been insane.

Insane is not a legal term, but.

You can say what you like here, it's all good.

So the point being, you know, crawl, walk, run, let's get in the game, let's start to stand up some capabilities that can allow us to actualize this people first strategy and then let's just constantly have our head up to understand what's the next horizon. That's going to add sort of turbo boosting and rocket fuel to the strategy it makes.

The reason I'm smiling a lot here is in our core program that we work with business owners on, the first thing we talk about is people performance maximization. Like we have a thing called the people Performance Maximizer which is partly because every business that I went in did turnarounds, which is, you know, I'm sure that's how you help us a lot now is we just have to get rid of the people and bring different people in. You know, without being, you know, too romantic about it. It was like, you know, you know, right people, right seats, drives, value. Once you've got that wrong culturally or capability wise, you know, it's, it's one of the things that cripples businesses. And I remember I learned when I was working with a mid market private equity firm in London a number of years ago, one of the guys there said, listen, you know, it sounds ruthless to say this, but changing in and swapping out the CEO and get until you're getting that right, even though it looks like it causes massive disruptions, it's still the quickest pathway to value creation. Because I was always of the thought before that, which is like, well, you're destabilizing the culture and the people and all that. But the numbers, if you look at it from the numbers, prove the point. But you know, obviously you have to do that the right way or the best way you can as well.

We used to, yeah, that jives with my own lived experience in private equity. We used to have, have a slide on our fundraising deck that showed the performance of companies where we backed the existing CEO compared to the performance of companies where we brought in a new CEO within some defined time period. And the, the actual performance statistics were night and day favoring situations in which we proactively brought in a new CEO. And I think it's important to say that's not to say that founder CEOs that we had backed are bad leaders.

Quite the opposite. It takes, and I learned this through working alongside different founders as a, as a board member and as an operator. It takes a, it takes a real skill set that I probably don't have to get a business from, you know, 0 to 10 million or 0 to 100 million revenue.

However, it's the old saying of what got you here ain't gonna get you there. For a lot of companies, the skill set in a CEO that got you to 10 billion isn't going to be the same skill set that gets you to 100. And some can cross that chasm, some can evolve as leaders, but statistically speaking, very few have in our experience. And so we became very proactive and intentional about identifying what does this business need in a CEO to get from 10 to 100. You know, following an example through do we have that in. In the incumbent leader? If no, which, the answer was no in a lot of cases, we got to get on with it in very early days in the whole period, make a priority getting the right CEO in there, understanding that, that, that can create some transition pain.

Yeah, absolutely. And you can do that in your own business before you sell. And a lot of the stuff I talk about with business owners, particularly if they don't have succession planning in, is realize, you know, where you've played the game well, but where it's time to bring in someone else to kind of, you know, finish it off or take it to that next point. A lot of the business owners that I work with, they can get a business to, let's say, 3 to 5 million net profit, EBITDA. Right. There's a, there's a, there's a way of getting to that, which you could argue is getting close to eight figures right, in revenue, but then to take that business from that 3 to 5, up to 20 million of EBITDA. Right. You know, possibly pushing the 100 million of revenue, whatever that looks like. That's a different skill set. You know, you're going to be doing very different things, different decisions in terms of what the business footprint needs to look like, the optics and all that sort of stuff as well. And quite often understanding that's the bad and pass moment is an important thing, I think, both before you sell your company, if that's where you're at, but also obviously through a transition process, just.

To affirm what you're describing. I do a lot, A big part of what I do nowadays in My advisory business is organizational due diligence. So pre closing and working with a private equity firm to go in there and develop a point of view on the leadership, the talent, the culture and the capabilities that exist within the business and how those map to, or don't in a lot of cases map to the investment thesis that the deal is being underwritten to. And I will say that the presence of a clear successor, to the extent that the founder is trying to transition out or doesn't have or has acknowledged they don't have the skill set to carry it forward. The presence of a successor is a exit multiple booster. The absence of a successor is a, an exit multiple drag.

Yep, love that. Exactly what I'm going through this right now with, with a business and we're in the process of hiring that role. It's going to be a president role because we haven't got it right. Like, you know, we have a couple of people who could do it. But as I said, you know what, like you don't want to have the kids, right? Because they're going to go to assess very quickly. Right. And you know, private equity with, you know, internal rate of return and the speed to kind of realization of the invested capital, like there's no mucking around here. Right. I love what you're doing about getting people ready to be CEOs and putting them in. But I also know that if someone's got training wheels and an acquisition gets done, that, that can be a big risk as well. So let's, let's talk now. I definitely want to spend a bit of time during this conversation talking about building a high value business. Right. And maximizing the value of a business through the process. So, you know, I talk about this a lot, but I want to hear your view and I know your book Winning Moves covers some things on this. But if you're a business owner listening to this now, they understand what private equity is. They understand that the opportunity for an eight or nine figure exit is most likely going to be there. Actually could, could be something else, but that's a big part of the market. What do they need to be doing and thinking about, you know, let's say 12 to 36 months before they want to even start a sales process with a banker or whatever. What are some of the things they have to be thinking about now to maximize that exit value for them or the multiple as well?

In the most fundamental sense, I think business owners need to be thinking about how do I build a business that buyers, the sort of buyers that I Want to attract would be lining up at the door to buy.

That doesn't tell you much about what is that and how do you go about actualizing it. But I think that's the starting point for this conversation is begin with the end in mind. If my goal is to build is to have a multiple maximizing exit, which is some of the language I use in the, in the book, start by thinking about what does a business need to look like to achieve that and what I like to do. So, you know, in my private equity days, one of the plays we would run early in a hold period in the first, you know, three to nine months is do an exit planning session with, with our leadership teams. And a lot of leadership teams that hadn't been through this process would think that that's weird. Hey, we just, we just did this deal. Why are we talking about the exit? It's for the same reason I just mentioned, begin with the end in mind of what does success look like at the end of the road? And for the private equity firm, the end of the road is five years. For the management team, the end of the road should be 10 years. Because not only do they have to get us to five years, but they need to sell the dream to the next buyer. And so we would think long term and say what is, what does success look like in the business in order to have a multiple maximizing exit? And it, the simple frame of mind I like to step into that conversation with is thinking like a private equity buyer. If the goal is to create a business, the private equity buyers are going to want to buy. We have to understand how do they think and how do they assess businesses. And well, let's go through that, let's.

Go through specifically that because I think that's interesting because, you know, you've got different people out there like the exit Planning Institute selling kind of what I call generic kind of stuff, right. It's pretty basic stuff. If you haven't seen it before, it looks new, but it's pretty basic. If we go into the private equity mindset for a second, right. Ruthlessly into that, right. What are they looking for? What are the things that are. If they see it, you know, the multiple goes bing, bing, bing, bing. That's up, by the way, for people because they don't know what bing means. And I'm talking to a microphone or it goes down. That's down, right? So what are those things? Because that would be interesting. We haven't covered that before here.

I'll give you like the off the top of my mind, the top five. And there's more in the book on this. But so for backdrop, every private equity buyer for people who haven't, are familiar with the space or haven't been through a deal with private equity. Every PE buyer has a criteria sheet that spell out what are we looking for in a business, in an investable business. And every deal that they do or are considering doing, they hold the deal up to their criteria list and say how well does this map? And so the criteria are going to be different depending on the style, the strategy, the end market of the firm. But here are five things that I think are pretty universal. What are private equity firms looking for? Minimal enterprise risk.

So what's the call to action for business owners over the, you know, over the, the whole period in private equity lingo or over the lead up to a sale, an eventual sale process, systematically identify and eliminate or reduce enterprise risks in your business. In so doing your, your exit multiple will go up and the key, and.

The key risks are just give us the summary because I know there's lots. If you run a due diligence process, there's like 770 pages of this stuff. But in principle there's obviously legal compliance, things like that. What else?

Legal compliance, regulatory. There are business, you know, business and commercial risks such as customer concentration. So if you have customer concentration and you recognize that four years or five years out from an exit, in the case of the exit planning, you know, timeline I shared, make a priority to diversify your customer base and your revenue base. Key person risk is another example of a business or human capital related enterprise risk that can weigh on your valuation. So if you have key person risk, what do you do over that four to five year period? Backfill and cross train those key people. So, so you know, the big message.

Got it. And a lot of that just, just to add on that very quickly because again I just want this to be useful for everyone is when a due diligence process is run, right. And I actually get businesses to do what I call a shadow due diligence process at the very be of working with me. So we actually do that within the first 12 months. So we get a really forensic view of what to work on on these risks. But you anything that due diligence kind of assesses is kind of what we're talking about here, right? Not, not entirely, but, but predominantly. And that's quite a robust process at the best of times.

Yeah, we think about it similarly. There's a winning move. I'm busting out my handy dandy copy of the the book I I wrote Winning moves. Right now, winning move number 90 something is to do reverse due diligence on your business.

Oh, perfect. There we.

It's just another way of describing what you're describing, but it is to say, poke holes in your business. Poke holes in your raft and see if it still floats. If you look at your business like a buyer would and understand what are the vulnerabilities or the weaknesses that could impair our exit value. And then provided you have done reverse due diligence early and continuously.

Feed those weaknesses or those deficiencies or those things that need to get shored up back into your operating plan and have make them priorities in terms of things that you need to get short of the exit.

Got it. So obviously minimal minimizing risk is the first thing. Right. And we just went through kind of what that could look like. What's. Let's go for three to five of the big things that the private equity mindset would be, would be looking at.

I'll just, I'll list them and then we can click on which ones you want. So what is private equity like? Minimal enterprise risk. They like predictable revenue.

The high growth end markets.

Yep.

Increasingly they like M and A opportunity.

So ability to scale via open A.

Ability to scale via M and A. A proven ability or the prospect of scaling by M and A. Yep. They like number five that I think would make the list is the presence of a management team that is capable of actualizing the value creation agenda. That said private equity firm is, is underrated.

Yeah, I agree with that. But it's particularly. We're talking about portfolio acquisitions here where they're buying the structure, the process, obviously the people, the operation to scale from, you know, and that becomes. It's called a platform for a reason. Right. In the platform that you then grow from. Let's, let's jump into recurring revenue because. And you call it, I think, predictable revenue. Right. So let's talk about the importance of that and why. Because this is something that I think particularly when I work with business owners on sort of their scaling phase, the majority don't have this or they get confused by it and they think it's just a subscription or whatever else. How do you define it and why is it so important?

Well, it's important because more predictable revenue equals better visibility. Better stability and visibility and stability in combination can be inputs to higher growth. If you have better stability and visibility in your revenue base, it allows firms to make bigger bets, more aggressive investments. In growth. And so those are the reasons why recurring revenue or predictable revenue is important. And you're right to point out there are a bunch of different flavors of recurring revenue. I list some of these in the book. But it's not just subscription revenue. It can be in the case of service based businesses, retainers.

There's the old razor razor blade model. That's another flavor of recurring revenue. There's like 10 to 12 that I list. I did a workshop on this that I put on the Winning Moves portal, the digital platform that supports the book where I list out 10 to 12 different flavors of recurring revenue. So it's not just subscription, but all of these flavors achieve the same thing which is just better revenue, visibility and stability which allows these investors to, to invest more aggressively in, in growth.

Yeah.

And there's all sorts of case for, for businesses that aren't, that don't have high, you know, recurring revenue or predictable revenue today. There are lots of case studies out there. I reference some of these in the book of companies who have found ways to add more repeatability, predictability, recurringness to their revenue base. Caterpillar. You know, you see this even in the automotive space where jury's still out on whether this, this model will take hold. But you've seen more automotive companies that have begun to dabble in subscription models which is just a sort of a derivative to the old leasing model. We saw this in a plumbing and H Vac business. I invested that my old firm invested in a long time ago, which is not really recurring revenue in the classic sense. But if you add a subscription agreement or service agreement, 99 bucks every year will come out and check your systems. That's a great way. It's a great tactic to use to add to the predictability and recurrentness of your revenue. So message being there are creative ways for even less predictable revenue businesses to.

To make their revenue more predictable and in so doing boost their, their exit model.

And do you find that obviously just having it increases the value. So if you haven't got it, you got it, that increases the value. What about the percentage of revenue? So let's say for example I am one of those H Vac businesses because example I work with one quite recently where we did add a service kind of membership, if you want to call it that. And I think it was going to be end up being like 15% of their revenue once it got going. Right. So quite small what happens in that situation versus a, let's say more of a SaaS based business. Let's say it's a profitable SaaS business, not just a tech business where like 80% of their revenue is recurring. Is that automatically a higher valuation because the percentage is higher or is it like obviously depends on different characteristics. How do you, how do you think about that?

I, I think you're, it depends on other characteristics. But I'll paint in generalities to here to say the 80% recurring revenue business will definitively be all, all else equal will definitively be higher value, higher multiple than a 15 percenter. So the, the general rule of thumb here is the more recurring revenue you have, the better. The less recurring revenue you have, the lower the, the, the exit multiple you can expect. And I referenced the stat in the book, but as I was writing this part of the book on, on recurring revenue and its impact on the exit, one of the studies I found concluded that a dollar for buyers, buyers of businesses, they are likely to value a dollar of recurring revenue three to five times greater than a dollar of non recurring revenue. Now that's very general. But if, you know, if you want to do the simple math on your business, just multiple, take the, you know, comparing the 15% or to the 80 percenter, just apply that three to five times markup on every dollar of recurring revenue. Assess for what is the delta that is created by having less recurring.

It makes a lot of sense on the basis that I, I look at it through the lens of organic and strategic growth. Right. So we used to kind of say organic growth is your dialed in kind of marketing sales strategy. Right. So however you're going to market now. Right. Without anything, anything too clever and if you can pivot that or you can evolve that to be more focused on a recurring revenue model. Right. Then it creates more stability for the, for the buy and build strategy, the acquisitions. Yeah. Because you kind of don't have to go hunting for a customer each time. You've already got customers coming in, you're managing the customer journey, you've got repeat purchase, building lifetime value all from a recurring base. And then when you go and bolt other acquisitions on you can, you can flip them into that model or you can actually add them on top of something which is more predictable, repeatable, sustainable. So that's how we would look at it. And I try and get that across all the time to say, because lots of people come to me and say I just want to buy other businesses. And the first thing we do is go, well hold on, let's have a look at, let's have a look at your current, you know, revenue model and let's understand how that works because you might be able to optimize that first or optimize that as well as going out and doing the clever stuff.

Yeah, I like it.

So let's talk a couple more things before we wrap up. So I did ask the question also about, like we said about what does a private equity firm look for? What are two or three red flags that like if they came in they, you know, the business might, you know, be talking about. Businesses look attractive from the outside, but they might not be built ready for a transition. What are two or three red flags that if you see them straight away, it's kind of deal off.

The easy one is the opposite of some of the pluses that we have we've talked about. So let's move beyond that. I think another red flag. This is more process related as opposed to something that is germane. You know, the business or its revenue composition is learning about things deep in the exit process or the buying process from the perspective of a buyer that you should have known about, you wish you would have known about early on. So like when I, when I first, I've done a bunch of exits like you have just within PE backed companies and early on when I was leading or involved in exits, it's easy to have this fear based mindset of hey, there are things about this business that a buyer's not going to like. We need to sort of put lipstick on the pig or window dress them such that they're not the buyer can't really understand them. And that wasn't disingenuous as much as it was just the way that, you know, you prepare anything for sale is try to make it look as, as, as good as possible. What I learned, having traveled through a few sale processes and learned the hard way.

The consequences of that approach is every buyer understands that there are things about a business that are going to be less savory or appetizing. Now your goal as a, as a seller of a business is to make that list of things as short as possible. Back to the earlier conversation. But there are things about the business that are, are going to be, you know, perceived as weaknesses or gaps. What I learned over time is don't let a buyer discover those things at the 11th hour in a due diligence process. That is a great way to blow up critically important. Yeah.

And if you find something, you're better off being honest about it because if they find it later on, you're just wasting time and money.

Be honest about it. And articulate a plan to how you're going to shore it up. That is a great credibility booster for a seller is to say, Here's a balanced 360 degree view of our business. Here's what has served us today and how those things are going to have positive impact going forward. Here are the gap areas that we have identified. By the way, if you've, whether you've identified them or not, a smart buyer is probably going to identify them. So it behooves you to reverse due diligence your business, understand the weaknesses, be prepared to articulate those and be prepared to describe the plan that you and the management team are going to pursue to shore those things up.

Love that.

So I think that's another one.

Well, the key point you said there though is it builds trust, right. It builds that relationship, which is critical because as I said, like, you know, and to be clear, again, when you sell your business, unless it's like a strategic exit where they're going to, you know, move you out pretty quickly, you're partnering with this, this firm, right. And, and, and a lot of that to be able to get to the next level or just enjoy the next couple of years. It's all about that relationship for sure.

It adds trust to the relationship. It also inspires confidence in the buyer to say every private equity buyer understand. Again, every private equity buyer understands there are going to be things about businesses that are weaknesses or gaps. A CEO coming out and saying I'm clear on what those are and I have a plan for addressing them is a sign of CEO maturity.

Yeah.

And the sort of CEO that I can, I can have confidence in as opposed to the counter opposite, which is the CEO that is either blind to, or the risks in their business, the weaknesses in their business and, or is playing hide the ball on, on those.

On those risks we were talking before about. As I said, you know, a lot of, a lot of business owners in my world, they come in is that curious amateur. We want them to be the worthy opponent. The worthy opponent, meaning that I can play the game on, on the level that's expected. And half of that is about confidence, Right. It's about showing that you are, you're confident and therefore there will be confidence in you to be able to take the business to its next piece. Even if you don't hang around, remember the sale process, it's not about necessarily you sticking around for the next three to five years. It's convincing the person who's buying your business that everything you've made decisions to Date are going to be transferable to them. And certainly for the immediate period of time, everything's going to kind of work. So super important.

Right?

Cool. Any other ones that. Any glaring other ones we've missed? Dan, I want to make sure we have a complete conversation.

There's a lot we could talk about. This could be like 10 hours. But, yeah, red flags. I mean, obviously massive legal. I mean. Okay, let me ask you this question because I think it is a big red flag that I've seen legal. Any litigation, any case. Right. That the, you know, could be all sorts of different things. Buying out partners. It could be, you know, a customer has an issue with an order that's escalated. How much clear water do you need before that case is dealt with and put to bed before you would go to market? Or is it okay to kind of sell the business with some litigation going on? Or again, does it depend on what that level of. Of risk is on that?

I think it just depends on what is the nature of the litigation or the, you know, and what is the magnitude of the risk. I have sold businesses before. I've been on the, I've been on the sell side of deals where we had ongoing regulatory or legal issues.

That we follow the same playbook of. Let's, let's address those on our front foot.

Let's try the best we can to get those things sealed up before we take the business to market. But that, that doesn't always. That's not always possible. And so let's address those on our front foot. Let's articulate our plan for getting these wrapped up, if not pre closing, post closing. So I think it is a bit situational, depending on the magnitude of the risk that some sort of litigation presents. But, but I think it's. It's possible to sell a business even.

Yeah. Particularly if everything else is great. Right. Like, you know, there's a piece here where if you've, if you've. I mean, there's a. I talk about the 15 different things that a private equity firm would look at, and that's a simplified version of it. But it's kind of the big things, and we've touched on a few of them. And I often say that, like, you know, you can sell a business if you've got 80% of these green.

Right.

Meaning they're kind of optimized and there's a few that, in fact, it kind of looks more credible sometimes when you show up and say, this is where we're awesome. Right. And we can prove it and we can show you. We can show you the track record through metrics, optics, all those things. Here are the areas that we're working on, and here are some opportunities of what we would do with. With a different partner and different investment. And that kind of balanced view of the business is actually, again, back to the point we said about a more credible positioning. It makes you look honest and real. That's a really. I like to frame an exit process or the start of an exit process with that type of narrative, and it works.

I love, I love that. I love the 80% rule of thumb. That's a great way to. A great, simple way to think about it. And furthermore, having some things about your business that are under optimized, if not weaknesses.

Yep.

Also, it also can help accomplish something that I think is important psychologically in the sale process, which is to make the. The buyer, make them feel like they have the potential to be a hero.

Yeah, I love that.

I love this next chapter's journey to the extent that they. These are issues they've seen before. Not only would that make them a worthy partner, they can help you to button up some of these things that you don't know how to button up or haven't yet gotten to, but it also psychologically makes them feel a sense of worth in the sale process.

Hey, well, it gives them a win.

As well into this deal.

It gives them a quick win. And, you know, there's a thing here where if you're going through the process and you say, listen, we've tried to tackle this, but we haven't, we have some ideas, and, you know, the potential buyer goes, yeah, well, listen, we've done that. We know how to do it. You know, remember, at the end of the day, the new buyer wants to kind of get that return on their investment as quickly as they can. So if they get a quick win in the first 12 months of an acquisition, because it's been clearly identified, it's been clearly assessed and can be worked on and fixed, that's going to, again, make the business more attractive. So these are good points, I think, Dan, because sometimes people kind of look at it at a surface level and they go, oh, I've got to tick the boxes. Right. You know, whatever it is. And this is where I think some of that we talked about the Exit Planning Institute and others. It's. It's great in terms of it gets people awareness, but it doesn't go to the level sometimes. And that's why you have to. I often say the first part of selling your company successfully is be getting educated on the game. Right. Just learn it, right? Read the books. Read your book. I've got my book coming out soon. Learn the game and that's going to make it so much better for you when you go through the process for sure. Bingo.

And that was a big. That was a. I'm sure this is the same for you as you write your book, but that was a big guiding principle for me in writing this book is I got clear on who my audience was, which was a combination of private equity investors and portfolio company operators. And for the latter group, one of the big objectives of the book was to go back to the first part of our conversation, demystify private equity so that operators, whether private equity operators or founders that are considering selling to private equity, understand the mental model that private equity uses to evaluate businesses and create value in businesses post closing that allows you to then speak their language, overcome this language gap and language barrier that often exists in a. These exit processes. It allows you to better position your story, your exit story to the mental model that is already pinned to the brains of these private equity folks. So I think, I think that, that the point you made cannot be. Is just. Is so key.

Good fun. Well, that's.

What is your book going to be about? Are you allowed to say, yeah, I can.

Yeah. It's. Writing a book is an army, isn't it? Or they say it takes a village to write a book. Oh my God. It's two years in the making. It's called Exit for Millions. And it's the byline, if you like, is the private equity blueprint for scaling and selling your business for maximum value. So what I go through is my experience of how a private equity firm, you know, you know, buys a company but then goes through the value expansion exercise with the premise that if you learn this in advance, a lot of it we've talked about, so there'll be some, definitely some symmetry between your book and mine is if you know that in advance and you can prepare in advance, A, you're going to have a better outcome, but you're going to enjoy the process a lot more. So, yeah, it's a, it's a comprehensive guide, my friend.

I can't wait.

I'll make sure you get a copy when it comes out. If we've got a couple of minutes, you've got a couple of minutes to finish. I think we should finish with this last piece, if you're okay. You posed this question last night before. Obviously we got onto this today and I thought it was a really interesting one. And it was, you know, how investing, right, makes you a better operator and how operating makes you a better investor. So I think why don't you answer that and answer, you know, just articulate what you mean by that and then I'll answer from my side and I think that's a nice way to wrap up our conversation today.

Well, what I meant by that was I had a realization.

Somewhere in the middle to most recent innings of my private equity journey that despite the fact that I sort of stumbled into both private equity investing and operating within a private equity environment, I've realized the incredible power, the 1 +1 equals 3 power of having experience across both of those domains, investing in small mid sized companies and operating within small mid sized companies.

And so, you know, things that you get as an operator that, that I got as an operator that helped me as an investor, number one, operator, empathy. An understanding of how things really look and feel, what the day in the life is on the shop floor. You of course understand that and experience that sometimes in challenging ways as an operator. But then, you know, going back to an investor context, just for background, I have done a lot of in and out of a private equity. From a private equity firm to an operating role, I've probably gone in and out.

That's great experience that. I think that is rare as well. Like I came in purely as an operator. Right. So I had to have a, an appreciation, I think of what I call the spreadsheet jockeys is what I used to call them as a joke. But the fact that you've done both, right, that is not, that's not a common thing. I mean, maybe it's becoming more common, but I certainly in my days it wasn't.

Yeah, yeah, totally, totally. It just gives me. The first thing that it gave me was, the first thing that operating gave me as an investor was operator empathy. You show up at the board meeting. After I had had operating roles, I would show up at board meetings for companies that I was on the board of and a CEO would say, hey, you know, we have, in a very stoic way, we have experienced a challenging, you know, challenging loss of a key team member, management member. Here's what, here's the state of current state of play, here's what we're doing about it. Sort of the classic sort of board level report out prior to having operating experience. I would have, I would have looked at that, at its, at its face and said, okay, like what are we doing about it? What's next? How are we Going to get shored up post, having operating experience, having dealt with the pain that can sometimes come when you lose a key member of management. The first place my mind goes is, man, that must suck.

Yeah. Are you okay?

I understand you're pulling double duty, Mr. Mrs. CEO right now. Like you doing okay? Are you like your stress under control? Do you feel like you can see the light at the end of the tunnel? Are you doing okay? And if yes, then proceed to okay. What are we doing about it? What do you think is the right time frame for getting that role backfilled, etc. And that's what I mean by operator empathy. Yeah, that's one thing it gives you. I mean the other thing that being an operator has given me as an investor is just an understanding of how to actually drive change in a, in a mid market business where the only way to achieve our returns is to orchestrate change from the ivory tower. What I used to think is, and I'm oversimplifying for dramatic effect here a bit, but what I used to think is you create the model, you show, you know, we need this margin expansion to hit our returns or we need this revenue growth and you just add sprinkle pixie dust on it and it magically comes true. What I realized on the shop floor in an operating business is in order to achieve those sorts of changes that will drive revenue growth or margin expansion, you actually have to get people to do shit that they haven't done before. And that's not always easy. It's really, it can be very challenging, especially in businesses that are used to being founder owned, maybe are less progressive, less growth oriented. So it just gave me a real understanding for not only the importance of driving change, which I know is an overused cliche in the space, but the importance of driving change and a playbook for how do you actually tap into the hearts and minds of people, help them understand what's in it for me and get them to lean into a new way to new way of operating or get new people on the bus who have the ability to.

What you're talking about in the most, I suppose, simplest way of articulating it is strategy versus execution. Right. And to answer the question, and just for context, as I mentioned, I was very much the operator, right. So I was not coming in from the financial background per se. My background was sales and marketing and I was a CEO multiple times. So I came from that lens. Where it really hit me was at Getty Images, now Getty Images, I've talked about a Lot on the show, you know, massive buy and build kind of strategy, like multiple, multiple acquisitions, you know, into, into the billions of valuation. But there was a guy from the private equity firm who acquired us was who was from the firm, put on the investment. And what normally happens is obviously there's a board, you have key members of the management team from the business that's been acquired and you'll have a number of people from the private equity firm and there's usually a chairman put on there and all these things, but there's usually a lead person from the private equity firm. And we had this guy who had like, you know, the Harvard MBA, probably 28, maybe 30 years of age. And everyone else was kind of more seasoned. I was young at that point in time too. But like certainly the, the founders of Getty were, you know, in their sort of probably 40s or whatever. And it was a bit of a joke. This guy turns up, right? But oh my God, if there is a unicorn that exists in private equity, it was this dude. This guy came from a blue chip financial background, but he could win people over on execution like you've never seen. And by the end of it he was like almost running the business and he'd never run a business before.

Right.

And the point, the point I make here about investment versus operation, right, is there is, and I think you articulated really well, Dan. There's this kind of interesting middle ground, right, where you know, strategy is super important, right? But it can't be created in a silo, right. Strategy has to be translated into execution and it has to be then obviously deployed with rigor, with precision, with focus. And for me, I think if you understand the financial lens and the strategy lens, but then you understand how it needs to be delivered, hearts, minds, execution, all the things we spoke about, that's where the magic exists, right? Absolutely. And that the people I find that work really well in private equity understand that point. That's, that, that's probably the summation of I think what I learned in over a decade in that world.

Yeah, it's a great case study. And it's not an either or. When you get into these sort of heady discussions about what's more important, strategy or execution. There's all sorts of clever quotes out there that make the case for one or the other. I know both are, both are important. Both are important business leaders within a private equity backed business or any sort of business that's aspiring to do big things and growth and create equity value. You need to have a clear sense for I like to boil these things down to just some really simple, clearly articulated questions that business leaders need to be able to answer. You need to, you need to know where you're going. Call it your vision, call it your B head, call it your whatever. You need to know where you're going. You need to know, how are we going to get there? Call it your strategy, your value creation plan, whatever.

What are the steps that we're going to take, the strategies that we're going to employ to get to that vision? What needs to happen next? Okay, so we know, we know the vision, we know the strategy. What needs to happen next? What's the next, you know, 10, 10 yards of the, of the race. What needs to happen next quarter, next year to move in that direction? Number four, who do we need? A board. So business leaders. I don't know that one of those is more important or less important than the other, despite what some, you know, thought leaders may try to, to build a case for. But there's a cascade there and sort of a building exercise to where you need to be able to answer all four of those questions to build a durable, scalable, growth, focused organization.

Agreed. And I think that's a great place to finish up.

Very good. So Dan, this has been great, mate. We could have gone on for hours. I knew that would be the case. Did we cover everything that you wanted to cover? Because I know, I know you've got your book, which is fantastic. And again I'm going to recommend that people go out there and buy that if they want to learn a little bit more about what we've talked about. It's called Winning moves, which is great. And just give us a minute of what you're doing now and where people can kind of reach you and kind of what your focus is, that sort of thing.

Yeah, what I'm doing now is I spun out of a full time fund level role a couple of years ago to start an advisory business. Basically taking a lot of the things I was doing as an investor in operations or that have impact in productizing those and bringing those to other private equity groups and in their portfolio companies, all aimed at driving this thing I call people powered value creation.

Nice.

And so specifically the things that we do are pre closing organizational due diligence, which we referenced earlier in the conversation. Post closing. I do a lot of work with leadership teams, their boards, their investors, getting everybody aligned on really these four questions we just put on the table and then downstream of that do a lot of work on how do you marry talent using talent strategies.

People practices that you embed in these businesses. How do you marry talent back to that value creation plan such that you have the right people in the right roles, focused on the right things to enable your value creation agenda to come true. So that's a lot of what I'm doing right now. I post a lot on LinkedIn, the things I'm learning out there in the space and so link up with me there and, and be able to look out for probably another book in the next couple years.

There you go. When, when you get the appetite back for it. Yeah. Dan Pub posts some fantastic content on LinkedIn. That's how we kind of connected in our crazy world of private equity, actually. So I wanted to have him on the show because there's a lot of value that he's putting out there every single day. So definitely connect with Dan on LinkedIn and I'm sure, sir, our paths will cross in this, this world may maybe from me in the process of getting a business ready for private equity and then it transitions nicely to you working with them with the, the port companies that go into your private equity world. That'd be a nice baton pass for sure.

One, two punch. The one, two punch. Thanks so much for having me, man. I love what you're doing in the world. There's such a need. I've seen it from the private equity side. There's such a need for the work that you're doing. So keep at it.

Yeah, I appreciate that very much. Well, thank you very much for coming on the show today, Dan. It's been really, really great content for everyone here and yeah, I appreciate that very much.

Thanks.

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