Blueprint for Private Equity Success with Kit Lisle

Hello and welcome to Mastermind Mastery, the podcast for professionals who want to create and run successful peer advisory councils, or as we call them, PACs for short, or they're also known as peer groups or business mastermind groups. I'm your host, Tina Corner Stolz, founder of Elixir Council, where I've been in the industry running groups since 2005 and now help those like you with education, certification, and support wanting to do the same. At one time, I ran 10 groups, nearly 100 members, and sold my groups For a Good Multiple and recently released my second book, Your Seat at the Table: How to Create and Run Your Own Peer Advisory Councils, published by Forbes and grateful to you that it's an Amazon bestseller. I invite you to join each week where we share strategies and techniques to successfully launch and become a master of running your PACs. You'll hear insights, perspectives, dos and don'ts, learn from my and my guests' mistakes, successes, and get the inside track to key takeaways. Each time we have a guest, we'll be having a bit of fun. So are you ready?

Hello everyone, and welcome to another episode of Mastermind Mastery. I am Tina Corner Stolz, your host. Today we have a guest. The guest is Kit Lyle, and welcome Kit to the show.

Thank you, Tina. Thanks for having me on.

Of course.

And today's topic, no one is going to be prepared for. I know it is a new concept. About, and I believe it's new because I just do not see this out there, um, at all. And I'm so excited that I know that you do this. I do believe that today's episode for all of you listening is going to open up your mind about not only a different type of group that exists out there. There's so many niche groups, and I love this particular concept of a particular niche group. But also the synergies that can exist between multiple groups that really amp up the value that the members receive. So in today's episode, Kit's going to talk about the really the whole overlying arching of private equity groups and what does that really mean and in that space and that he's really evolved and come up with this on his own. So Kit, first, would you tell the audience one, where, where are you in the world? And second, before we dive quickly into the type of groups that you do, but a little bit about your background, because I think in this case it's very important the audience to understand it because it's really an evolution of how you got to the type of groups you do today and where your passion lies, right?

Yeah. Well, I think the easy one first. Everybody knows roughly where Myrtle Beach, South Carolina is, and roughly northeast of there where Wilmington is. So I'm halfway in between those two on the water, looking out the window now at the Intracoastal Waterway. Bald Head Island is just beyond. So it's a really picturesque spot, a little historic fishing town called Southport, North Carolina. Um, the, the more complicated question is, you know, a little bit about my background. So almost 25 years ago, as hard as that is to believe, I founded a growth strategy consulting firm called Eclairo Growth Partners. And I can remember drawing a bullseye when I, when I started the company in the basement. Center of the bullseye was private equity-backed executives. So C-level executives running portfolio companies. And what I wanted to do was decision support growth strategy consulting. And in some ways, the, the, the founding of that new business was a success because here we are 25 years later and it still exists. In some ways, it was a dismal failure. A failure because I never really accomplished that objective of working directly with private equity-backed executives. The traction was with private equity deal teams doing what's now called commercial due diligence, and then later something called sell side market studies. And I only mentioned that because 20% of revenue in the beginning was this work with the operators, private equity-backed executives, and 20%, 25 years later, is still, you know, the same. So despite interest, commitment, focus, strategy, passion, it just never really took off. But that's fine. Um, 2 years ago, I hired a CEO and COO to take over running the business, maybe 3 years ago.

And time flies.

That freed me up. And I still have this admiration and respect and, you know, interest in the work that these operators do. I view them as the professional athletes of the business world. And so they're working under really tight timelines. Under a lot of pressure with private equity guys, and they get the deal, they get the work done, and they grow businesses rapidly, and then they move on to the next one. And so the answer to your question of backstory and how did I get started here with this focus— so I had the experience with private equity as a consultant, the interest with the, the guys running the portfolio companies, who I call the operators, And so I started reaching out to them on LinkedIn one at a time with some naive questions. You know, why is it that there's no association or society or group or club or community? Wouldn't it make sense for you to collaborate, commiserate, share best practices, ideate, help one another out, network? I can't find anything like that. Maybe, maybe you don't want it, maybe you don't need it, maybe it already exists and I can't find it. And one after another, I got responses that said, no, no, no, no, no, it does not exist. We do want it. We do need it. Thanks for stepping up to the plate. This is a great idea. And so then, because most of my career is spent analyzing data, I needed to do my research. So I spent about 125 Zoom chats asking, okay, so if a community of operators were to exist, How would it create value for you? And the number one response by far was career transition support. Because most people don't realize this, but about every 36 months, operators are basically out of work and looking for their next role. The second request, uh, led to what became Strategic Growth Council. So the ability to bounce real live issues that they're facing in their portfolio companies off of one another for strategic decision support. So I'll pause there. That's the, that's how I got to this point.

Well, I want to point out a couple of things. I commend you on a little bit of research, right? And 125 Zoom calls, if I heard that correctly.

Well, it seems silly looking back on it, but yeah, I really did.

Yeah, but that's a great large sampling. It wasn't like you called 5 people.

And talk to 5.

And the, the insight you got of surprising of, hmm, career transition, which I know makes sense to you now, uh, but was— is something that I put out there to the audience, is that when you're thinking about like a very specific niche group, doing some research first can mean a great deal to the outcome of success, obviously, for you. So now here you got all of that. And then what happened? Because what did you start with? What group did you start with first? And kind of a little bit about that and the format. Yeah.

Yeah. Well, technically, the Career Transition Council did not have its own name, but that was truly the first group because that was the number one area of interest was help me network with and find and gain introductions to private equity groups that I wouldn't otherwise have a chance to meet. So thinking about it from my perspective as a consultant with, you know, a lot of experience selling to private equity guys, it's like, all right, well, this is my world. You know, I know these people, I can make these introductions happen. So it was easy, but I didn't have the format yet. I didn't have the process or the— I didn't have the LX Council formula for success just yet. So We baked in a number of elements of that into the career transition and into what became the Career Transition Council and then started the Strategic Growth Council, which is even more focused on solving, again, strategic growth dilemmas. And then the next group, you know, learning from a peer in the LX Council community who started reaching out to trusted advisors, I realized Well, wait a second, we have in private equity an ecosystem. In other words, there are private equity deal guys, there are independent sponsors that don't have funds, there are family offices, there are lenders, but you also have the operators that I had been focusing on. And then you have service providers, trusted advisors that are selling consulting services, for example, into private equity groups. And they're all sort of having a— they all, each of them have their own set of needs and interests, obviously. And so one word of wisdom that I would share right off the bat is to think about a common core challenge or dilemma. And in private equity, one of the reasons that private equity makes so much sense to me to start peer groups around is that it's complicated, it's challenging, it's stressful. There's a lot of vernacular that people don't understand. Just the process of creating value, new value in a short period of time, 3 years is really tough. And so people have baked into what they're doing a lot of uncertainty, a lot of risk, a lot of challenges, and they understand the dilemmas that each other is facing. So we, you know, when we talk about business executives meeting, peer groups or roundtables. Um, why? Well, number one, it's lonely at the top. But when you think about it from the standpoint of private equity, those operators running portfolio companies face the lonely at the top syndrome, plus in many cases private equity culture shock, plus in a lot of cases it's even imposter syndrome because they may have been super successful in a private family business, or they might have been super successful at GE or Dell or Microsoft or Google, and they got recruited into a private equity group and they're working in a portfolio company and it's just different. It's just a different structure, different processes, different investments that have been made, different people. So that complexity is, is one of the reasons that it makes sense to have peer groups to support this, this what I call ecosystem.

Absolutely. Because not only is it complex and different, it is, to your point, very focused on a result that needs to happen in a certain time frame, which is stressful. And to your point, is why everybody's always in career transition, et cetera, right? Yeah.

And, and I'll, you know, I'll give you an example of what we're talking about here. So in my Strategic Growth Council, one of my members describes himself really well. Like we, we talk about having a, a personal brand and he does a great job of saying, I am a COO for companies that are in crisis, for companies that are basically in turnaround situations. It's like very succinct. Specifically service-based businesses. Okay, that's very clear. So he came to the group with a case, what we call a case, a COP, a challenge, an opportunity, a problem, an idea, an up-at-night dilemma. And his was, hey, I was recruited into this company along with the CEO to turn it around, to fix the mistakes that the founder had made. And what we were told is that the founder of the business would be leaving soon. And he said, guys, by any definition of soon, they either misrepresented themselves or were confused on what that definition of soon really means. Because here we are and we're fixing his mistakes in real time and they just keep amplifying. He's still here, he's still communicating, he's still making decisions, and we're still kind of cleaning up after him and trying to get ahead of the game. And it's just So what should we do? What should we say? What should we ask for with the board to enable us to do the job that we were hired to do with this founder still involved? So you don't necessarily see a case like that or a COBE like that in non-private equity scenarios.

Oh, absolutely. That's so true.

And another quick example, CEO said, I came to this, this is a different example. The CEO came in and said, I love the culture of my organization. It's why I joined this company. I've never seen any organizational dynamic just like this. It's wonderful. So guys, here's my case. How can I not screw this up? We're gonna be making 4 to 6 add-on acquisitions in 3 years. So to think about it, he said different geographies, different employees, different channels, different types of customers. We have one amazing culture and now we're gonna have to bolt on 4 or 5 or 6 companies that are gonna have totally different cultures. So how do I not screw this up? So that was a great discussion as well. And again, something unique to private equity. You don't see that in every, in every corporate scenario.

No, you don't. And it's, and all of the challenges that are brought up, you won't have seen because it has the element of private equity in it. Which is another complication. And it's in many times like family firms, the element there is family. And you don't, you know, and that doesn't cross over to organizations that don't have that. And you just have to take those things into consideration because they're unique, they're real, and they exist and they're important, right? And so when you, I'm listening to you and some of these are extremely strategic, challenges that don't get solved overnight at all. Right. And so I suspect, so maybe share with the audience that while you have a conversation around like one of those, you know, those two that you talked about, how do you go about and do the follow-up and do they come back around and they give an update and now they might have another layer to it?

Yeah. It's, it's so timely because just this morning we had a meeting of the third group, which is the middle market M&A ecosystem. Council. So these are, again, trusted advisors that serve this ecosystem. And so just this morning, we spent probably the first 20 minutes hearing updates from the members of that group on the cases, the COPIs that they had processed in prior months, in the 1 or 2 prior months. And it was fascinating. I mean, the development, the pace, the speed, the just— I even remember saying to one woman, You know, your body language, your eyes, the way you're talking, it's different. You have a different look. You don't see it because you're in it, but your level of confidence is so different today, you know, than it was a month ago. And one of the reasons for that is at the end of each meeting we have, not only do we ask for, you know, your commitment, you know, what are you going to do differently over the course of the next month? But also, you know, what's your takeaway from today's meeting? And it makes it easy as a moderator to, you know, follow up with them the next month. But when you have a very specific set of tangible takeaways, action steps, things I'm going to do differently, things I'm going to stop doing, it's comforting for those members to know, okay, I now have a plan.

Yes.

Yeah. Because they come in with these meetings in many cases like, You can just see it on their face. I do have a case today and I'm a little concerned. And when they leave, it's like, I know what I'm going to do next. I'm looking forward to diving in, getting started.

Well, they have their energy now, right? And their path on what to do, which is actually an efficiency thing too.

I often talk about We're enabling people to make strategic decisions more effectively and more efficiently.

Absolutely.

Save time. Yeah.

Yes. So I think we talked about 3 groups, didn't we? Already?

We've talked about 3 so far. So the 4th is the Independent Sponsors Council. So for those of us that are living and breathing in the private equity ecosystem, We all get it, but for 99.9% of listeners, it wouldn't be clear. So private equity professionals, private equity investors, by definition, are investing in and/or acquiring privately held companies. And they're doing things to them to make them more valuable, and then they're selling them off. Independent sponsors are exactly the same. With one slight exception. There's one slight difference, and that is they do not have any money, so, or have very little money. So independent sponsors is now a catch-all phrase for terms that were a little bit less, maybe a little bit more pejorative in the past. So they used to be called things like fundless sponsors, search funds, pledge funds, So they would find opportunities to invest, find companies that might be willing to be acquired and get them to sign a letter of intent to be acquired. And then they'd go out and pass the hat and say, who wants in? Yeah, who wants to participate? So those independent sponsors in many cases are former private equity professionals that had a fund. Or they're former investment bankers or they're former accountants or attorneys. And what they understand is 1 or 2 or 3 or 5 elements of success, elements of what it takes to be a successful private equity investor, which is awesome. But they're missing 5 or 6 or whatever of the other elements of what it takes to be successful as a private equity investor. And they usually— independent sponsors usually operate as 1 or 2 or 3-man bands. And so they don't have enough scale to make up for the gaps or the lack of experience or the lack of knowledge, lack of best practice. And so when you bring them together into one peer group, light bulbs go off all over the place because it's like, I need that, or I have a problem that I can't solve on my own.

How did you do that?

That's easy.

Absolutely.

So it's wonderful.

Yeah.

And they probably can act like a big team together because they can fill the gap of, to your point, what they don't have on their— Right.

Not to mention co-investing. You know, we've had— this is not something I ever would've dreamed of or thought of, but when I brought the group together, they said, look, this is the best sounding board you could possibly have. It's like, here's the deal that I'm thinking about doing. Would you guys do this deal? Yes or no? And if not, why not? And if so, hey, would you like to co-invest with me. So it's led to some opportunities that I never would have dreamed of.

Of course. So could you remind, just reiterate one more time for the audience, the 4 different groups and then tie in a little bit about how they've all sort of, you know, been interwoven together and how that's, what that's meant to you because there are synergies among all of them.

Sure.

Yeah.

Let's take them in reverse order. So the Independent Sponsors Council, What one of the things that they're looking for, you know, if we talk about, we identified, I think it's 15 critical elements of success. So what it takes to be a successful private equity investor. And one of them is the ability to find new deals. Another one, as an example, is having a dugout of either experts or a network of really knowledgeable contacts. And one of those examples would be industry contacts. Therefore, and I mentioned that because one of the ways they can find new deals and learn about industries is by interacting with private equity-backed executives that are working actively today in a weird, obscure niche little industry segment. So when they found out, wait a second, Kit, you're also running groups of operators. Wow, that's really cool. We want to meet them. Again, going in reverse order. So the next group would be the middle market M&A ecosystem. So these are consultants, executive recruiters, IT professionals, attorneys, people that are in this ecosystem of service providing private equity and portfolio companies. So you can imagine when they found out, wait a second, you're working with independent sponsors now. How do I get to meet them? Or, you know, I want to meet some of these guys in transition because when— if I can just get to know them, they're going to land in the next job and they'll need me then. So then the next group is the Strategic Growth Council. Strategic Growth Council is really interesting because they have live dilemmas that sometimes relate to an area of expertise that exists in another group. And I'll give you a simple example. And I mentioned this one to you, Tina, because I thought, oh no, I'm touching the third rail, this is awful. And we navigated our way through it. So it's October, it's middle of October 2023, and something just happened in international news. It's the war in Gaza. So one of our members was doing business in Palestine and said, you know, we probably need to communicate something. How do we do this? We need to get the word out of where we stand in this situation. And so we discussed it as a group and what we decided as laypeople, not as an expert, but we decided we need something to say internally to our employees. We need something to say externally to our clients. And then if necessary, we might need something to say to the world just generally. But we said also, in addition to that, we said, but we don't really know what we're talking about. We're not crisis management decision makers. So you introduced me to a friend of yours who wrote a book called The Art of Crisis Management Leadership. So he's our guest speaker next month. And, you know, I bring that up because One of the members of the group that's in my Middle Market Ecosystem Council is a PR executive. So he runs communication and marketing and public relations programs within private equity groups as well. So he's attending that meeting. So anyway, cross-pollination is the word of the day for me because these groups truly feed off of one another. And I think, you know, for me, the summary is that when you can find either an industry or, you know, something that relates to a big broad problem and you can bring people together that see the problem the same way or have similar problems, but they're coming at it and tackling the problems slightly differently from different, either, you know, vertically or horizontally, it creates opportunities for them to feed off of one another. So anyway, long-winded way of saying these groups feed off of one another and it's really cool to see it happen.

It is. And it also, it can help you proactively populate them correctly. And, and, but it amps up the value you're delivering that can only exist with the whole fact of, I always call it being a resource connector, but you're, you're connecting them with these resources and relationships you've already made that otherwise just wouldn't exist for them. Right. And with that, yeah, I— with looking at, you know, here we're coming up to the end of the show. Always ask what one piece of advice, words of wisdom would you give the audience regardless of the fact of the topic we've talked about? But what comes to mind, Kit, for the audience with your experience in running groups that you would love to share? That would probably help somebody out there?

Yeah, I mean, for me, knowing that I was moving to a small town, fairly rural area, I couldn't do my groups in person. I knew it needed to be virtual. And so if you're in that same scenario and you might want to do groups virtually, you know, my suggestion is you think about a common bond and then embrace those people that might be a fit for you. Bring them together. So one of the ways that I did that is through my LinkedIn groups. So before forming my peer council, I created a LinkedIn group. Again, the first one became the Career Transition Council. The second one became the Strategic Growth Council. But there's 750 people in the private equity-backed executives group on LinkedIn that I formed. And they're there because— why are they there? Is it because of Kit Lyle? No. They're there because I simply invited them and said, I want you to be a part of this group. And here's what happens inside this group on LinkedIn. We share articles, we share best practices, we ask for help, we ask for advice, we provide introductions, we provide networking opportunities. And all of that's true. And then once they're in that group on LinkedIn and they see the benefit of peers coming together with like interests and like mind and like concerns, Then I say, hey, maybe you want to do this more formally. And so I invite them to the group. So what percentage of people in a LinkedIn group, you know, as an example, might want to join a small, a true formal peer group? It's a small percentage. But the point is you're embracing people that are in your target that have a common need or interest or concern or challenge. and you're just asking them, hey, maybe you'd like to be a part of something more formally. So that's my advice. And the reason that I know it's effective is not only the growth of members in these 4 different groups, but just in the last 2 days— and this is probably a little bit of an aberration— but in the last 2 days I've had 3 different people email me and say, hey, here's somebody I want you to meet. Hey, here's somebody that you meet. And they don't necessarily know which group they're going to go into. They're just saying here's somebody that would be relevant to this ecosystem. Why don't you guys talk? And so it's, it's great.

It's excellent. And, and, and really, I love the, the idea of the LinkedIn groups, and you start there because what you're doing is you're starting with relationship and you're building relationship and trust, and then the rest will surface about those that want more, which is then going into one of these options for you. Well, so, Kit, thank you so much for sharing the concept to the audience. And really our goal is hopefully that it's opened up your minds about where it is that maybe you have passion and knowledge to that you can actually have a very niche groups very successfully done that could spin up more groups if you do want them. And so, Kit, for the audience, if they wanted to get in touch with you, how would they do that?

Sure. The best way is My first name, we'll take email. So kit@theoperators.pe. So the email address is my first name, K-I-T, kit@theoperators.pe, as in private equity.

Excellent. Okay, well, that's another episode wrapped up today for you all in the community. And thank you so much for listening. And we look forward to having you back next week to listen to another episode of Mastermind Mastery. And until then, have a great rest of the week and go make it happen.

Hey, moderators of groups, thank you so much for listening to today's podcast. To get access to today's show notes and exclusive content and resources, visit TinaCornerStolz.com/podcast or LXcounsel.com, where you can also become part of an exclusive online community, attend our Academy, or get free resources, templates, checklists, and more. And you can even contact me there as well. So if this episode resonated with you and you know someone who can also benefit from listening, please share with them by taking a screenshot and even posting on your social media. I also love reviews and appreciate hearing from each of you, those actually doing this wonderful work. Please tune in next week for another episode of Mastermind Mastery. And I'll close by sharing something my mentor did after every learning moment. He shared a shiny pebble from his pocket with anyone he passed knowledge to and asked them to forward that pebble—knowledge—on. So now I encourage you to go pass on a pebble, the takeaways you learned today to either your existing groups or fellow peers. Now, go make it a great one.