August 28, 2025 • 45 mins
Shiv interviews Michael Wilkins, Partner at Shamrock Capital, to explore the opportunities PE firms can unlock through deep expertise in sectors including media, entertainment and sports.
Michael explains how industry focus and long-term networks translate into proprietary deal flow, why value creation plans need to be tailored to each company rather than run from a single playbook, and how to balance partnership with hands-on support. He also shares how firms can approach AI in practical, incremental ways—turning it from a perceived threat into a tool for margin expansion and growth.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
To oversimplify, there's sort oflike, you know, three types of
investors. I feel like out in the pre world
today, there's like the guy, thedog in the truck with the
checkbook who's like, hey, you know, here's the check.
I'll see you at the quarterly board meeting.
Don't screw it up, right? There's the opposite end of the
spectrum where you've got somebody who has got a small
(00:21):
army of people that are, you know, represent their value
creation team and the deal closes.
You got, you know, 40 people in three piece suits and and you
know, 3 ring binders camped out in your kitchen telling you how
to run your business. And then there's like this happy
place in between. Welcome to the Private Equity
Value Creation Podcast where we interview leading investors,
(00:42):
operators, bankers, and advisorsto help you answer one question.
How do we increase the enterprise value of our
companies? My name is Shiva Narayanan and
each episode I will dive deep with a guest to help you become
a better value creator and capital allocator.
So with that said, let's jump right in and let's get started
(01:03):
with today's episode. My guest today is Mike Wilkins
and he is a partner at Shamrock Capital.
And what's really different about Shamrock is the types of
industries and companies that they invest in.
They deploy capital into companies and media and
entertainment, content, sports, and a bunch of different
industries where I would say traditional private equity just
(01:25):
doesn't focus as much. And what I really enjoyed about
that conversation is that I often feel like PE overlooks a
large set of assets or companiessimply because that's not in
their thesis or that's not how they raise money from Alps.
Meanwhile, there are all these quality assets out there that
can drive a ton of alpha for their fund, for their investors,
(01:46):
but they're kind of handcuffed or they just never went that
way. And what's really great about
Michael is that he has a ton of industry expertise and the farm
itself has over 40 years of experience in this space that
they kind of bring to the table.And they've been part of some
major transactions, major companies.
And on their content side, they've worked with major
artists and different, differentfirms as well.
(02:08):
So I thought it was a really great conversation and Michael
had a really great perspective on how they drive enterprise
value, how they source companies, how they
differentiate themselves in the marketplace.
And I think as you're listening to it as a PE firm, I think it's
a good way to kind of think about how to really specialize
and differentiate yourself in a marketplace for more deal flow
and to drive more enterprise value for your company.
(02:30):
So with that said, I'll leave you to it.
Enjoy the episode. All right, Michael, welcome to
the show. How's it going?
It's going great shape. Thanks for having me appreciate
what you do in the content that you've put out.
It's been fun looking at some ofthe, you know, the previous work
(02:51):
and seeing a lot of familiar faces and, and listening to some
of those folks share their wisdom.
So I really appreciate the opportunity.
Yeah. And we were just talking about
how the private equity world is just so small and everybody kind
of knows everyone. So why don't we start with your
background and Shamrock and let's take it from there.
Yeah, sure. So I'm a partner over at
Shamrock in our within our private equity fund.
(03:12):
I also said in our executive committee, I've been a Shamrock
for about 5 years. And prior to Shamrock, I spent
25 years as an investment banker.
I started at Goldman Sachs back in the mid 90s and spent kind of
the first half of my career in the balls bracket and then moved
to the mid market. And for almost a decade, I ran
the technology, media and telecom effort in the middle
(03:34):
market investment bank called Harris Williams and then had the
good fortune to join my friends and longtime client Shamrock.
Like I said, almost five years ago and it's been great.
Shamrock, just maybe some background on the firm.
It's a interesting kind of back story, the first been around
(03:56):
since 1978. We were part of the Disney
family office. So we were the private equity
arm of a multi strategy family investment office.
And between 1978 and 2011, that was sort of the mandate.
In 2011 with Shamrock Three, we bought Disney out of the
management company and stood up the firm as a completely
(04:18):
standalone entity with our own MLP base.
So if you Fast forward to today,we're about $7 billion of assets
under management and we invest through two strategies.
We have our private equity strategy, which is where I sit
and I'll come back to that in a second.
And we have our content strategy.
The content strategy invests in intellectual property and media
(04:41):
rights across film, TV, music, sports and gaming and has some
really iconic assets, some of which you maybe have read about
the news recently. And on the private equity side,
we have two funds. We have our flagship fund, which
is about 1.3 billion in size. That's currently our fund 6.
(05:03):
And then we have our Clover fund, which is a little over
$300 million. Both of the funds invest were
sector focused investors. So both of the funds focus on 6
sectors, Media, entertainment, sports, communications,
marketing and advertising and then education.
And the difference between the two funds is really the check
(05:25):
size. So our Clover fund, which is our
small cap fund focuses on checksof call it, you know, 15 up to
about 50 million in size. And then our flagship fund
focuses on checks between 50 and250 million.
And honestly, JIV is long as it's focused within those six
sectors, we're sort of indifferent as to whether it's
(05:45):
majority minority growth or buyout.
It's really can we leverage our sector expertise, you know, to
help drive an outcome and createoutsized returns for our
investors. Yeah.
And that's one thing that has really jumped out in the private
equity world over the last few years is, you know, historically
PE has been associated with, I'dsay, more legacy companies or
(06:07):
turnarounds. And then the last decade, really
software and technology companies have become a big
focus. And the new trend that has been,
I'd say apparent for the last few years and is really
expanding is in this world of sports and media and content,
because private equity is starting to see these assets as
(06:27):
being incredibly valuable. And we've seen that with in
terms of big transactions with sales of professional sports
teams like the Lakers or, or, orthe Celtics.
But then at the same time on thecontent side, you know, just,
it's something you don't hear about as much, but it is a, it's
a huge asset class that has recurring revenue, quote UN
(06:47):
quote, and a ton of ton of enterprise value that's
sometimes overlooked by other private equity firms.
So why don't you talk about thatand how you guys are trying to
capitalize on that opportunity? Yeah.
I mean, given our heritage, right, that's where we grew up.
And so we've always used that asa competitive differentiator.
I mean, you're talking about 50 close to 50 years of sector
(07:08):
experience. I think part of the part of the
reason why private equity for a long time, except for a very
small group of folks stayed awaywas that even though that's a
big industry, it's like a small world, it's a small network.
And there is real nuance to understanding this business
models, what's going to create value pattern recognition
(07:31):
becomes really important understanding kind of, you know,
the value of of assets. You're looking at different
metrics than most businesses andmost private equity firms are
looking at to assess things, everything from valuation to,
you know, how to drive a value creation plan, you name it.
(07:52):
So there's, there's real nuance that creates that
differentiation. You know, getting back to us, we
spent, like I said, almost 50 years in those sectors.
And so with that becomes this really deep connectivity to the
sector. And when I say connectivity,
that comes in the form of, you know, network.
And that could be, you know, to the studios, that could be to
(08:15):
various sports teams and the, you know, the, the ecosystem
that serves those businesses. It's the CEO's who have grown up
there, network executives, consultancies that play in the
space, bankers who live there. And so even though I go back to
what I said before, even though it's a big industry, it's sort
of a small world, being hyper connected in that space has been
(08:37):
a differentiator for us. And so that approach is sort of
set us up for, you know, a situation where we're seeing a
lot more proprietary looks than,you know, just participating in
bank processes. And even in those bank processes
that know how and network allowsus to create differentiated
angles to say, look, we're goingto show up, we're going to be
(08:59):
different. We're gonna be able to stretch
on value maybe in a way or be able to, you know, endear
ourselves to the founders to say, hey, we can help with value
creation and drive, you know, growth in a way that maybe
somebody who hasn't grown up here can.
And so all of that is really important.
I think for the broader market though, people are wading in
(09:20):
because they do see the opportunity and so many of these
other sub sectors are picked over, but that that network and
know how matters. Yeah.
Can you walk through that a little bit?
And just as an example, for the audience, notable transaction
that Shamrock recently did is you sold a bunch of Taylor
Swift's previous albums or 6 albums or something like that.
So talk about in situations likethat, how do you look at
(09:40):
valuation? How do you look at value
creation? Which metrics are you looking
at? Because we're looking at like a
traditional SAS company, It's straightforward, like you look
at your revenue growth, your EBITDA margins, your rule of 40.
There's a bunch of metrics that you kind of can use your net
revenue retention that kind of tells you is this a healthy
company to kind of acquire? But in these different assets,
(10:02):
what are some of those KPIs or or ways of measurement that
you're looking at to figure out?Is this the type of thing that
you want to deploy capital into?And then how do you also
forecast out the exit plan or how you going to actually get
liquidity on that investment overtime?
Yeah, I mean the the transactionthat you referenced was done out
of our content fund, which you know I'm as part of the firm,
(10:26):
but you know, it wasn't a transaction that I was
personally involved in. But I can't you know share some
colour on, you know, in situations like that, you know,
our content fund has proprietarydata feeds which help look at
the streaming volume of various artists.
And so to your point about looking at different metrics in
(10:46):
a very different metrics, right?And you know, without having
that deep connectivity into, youknow, some of these data sources
that can help provide an understanding of, you know, what
is the market saying about, you know, the long term potential of
a particular asset. And in this case, you know, you
know, music streaming, it's pretty hard to come up with sort
(11:10):
of a, you know, a predictable, you know, underwrite.
But because of that, you know, sector knowledge and know how,
because because of those proprietary data feeds, you can
create more of what for us wouldbe a more traditional approach
to evaluation and thinking about, you know, the ultimate
exit. If I think about how we do that
(11:31):
on the private equity side across those sectors, again, it
comes back to having that proprietary network and in some
cases data and in other cases just connectivity to executives
who have grown up in that space that could help you see around
corners. And so we're trying to take a
(11:51):
more holistic approach than justsaying, hey, I received some
data from the company that is selling.
I've, I've gone through the typical paces of process
specific to analyzing that data from like a, you know,
traditional PE model. And that suggests that the
underwrite should be ex. We're trying to say what is
(12:12):
previous experience in this space allow you know or certain
say dictate in terms of where weshould go spend our time either
engaging with other firms that have played there or with
executives that grew up with there that can provide insights
to saying are those assumptions that we're applying to you know,
(12:32):
whatever data we're getting fromthe selling company?
How realistic are they? How strongly do we feel that
there? Could we see it from a different
angle that maybe somebody else didn't and then overlay our
value creation plans to then drive outsized growth above what
you know somebody who maybe didn't grow up in a particular
sector has? Yeah.
And and on the PC side, like some of the other types of
(12:52):
companies that you're working onor have invested in also have a
similar, the, the similar challenge, right, Because it's
not built the same way that a more traditional technology
business would be. So talk about that, the value
creation piece there. Like how are you diving deeper
into those companies and figuring out where those levers
are and how you kind of are going to grow it to the next
(13:12):
level before you have to potentially exit those
companies? Yeah.
I mean, I think the one of the biggest differentiators is
getting our value creation team involved early.
And as an investor, there's onlyso much, you know, I can look at
the business and I've grown up in particular sectors and I can
say like I think this is high value AD, but how do we set
(13:36):
ourselves up early for the exit and do we think that this is a
particular asset that we can drive an outsized outcome?
A lot of that has to do with that partnership with the value
creation plan saying, you know, if we dig under the hood here,
if, if, if this aligns with one of our theses, right?
If we dig under the hood or the things that we can do to help
(13:57):
amplify either the growth, profitability or you know,
market status of a particular business.
One of the first deals that I did when I came over to Shamrock
was a virtual lab and assessmentsoftware business called
Scalable. And Scalable was basically a
(14:17):
category creator in a world where, you know, there's a lot
of companies out there that are providing a certificate that
said that, hey, I have a certainset of skills in the land of
professional learning, Scalable was correct.
Providing a platform for, for example, enterprise software
companies to say, um, what have we trained our people or hired
(14:39):
on the basis of validated skills.
So put them in a virtual environment, allow them to
demonstrate that they have the skills to do a job and then hire
them on a much more informed basis.
So they had done a masterful jobof creating technology to allow
for that, but they hadn't reallycommercialized it at all.
It was brilliant technology withlimited go to market.
(15:02):
And so we worked very early on with the value creation plan to
say, how do we take a brilliant piece of technology, amplify
this category creation opportunity and really, you
know, stand this business up in a way that is, you know,
driving, you know, growth, not just because it's got great
(15:24):
tech, but because, you know, theworld knows about it and feels
like it needs it. And so we worked in that case
with our value creation plan to,or with our value creation team
to relaunch the brand of the business, you know, the name,
logo, the website. We augmented the team to be more
(15:46):
commercially oriented. So instead of having the, the
founder decided, look, I'm a brilliant technologist and
educator, but I'm going to step back and hand off, you know, the
business to someone who's kind of been there, done it before.
And we ended up hiring some justphenomenal, you know,
executives. We hired a CEO, CRO, CRO, CMO
(16:07):
and a lot of that was around thecommercialization of again, some
really fantastic technology. And we worked with those new
executives and their value creation team to come up with go
to market plans, including, you know, ABM campaigns, demand Gen.
you name it. And between you know, when we a
year after we made the investment to today, you know,
(16:31):
our kegger on the AR has been, you know, close to 100%.
And so it's been really staggering results.
You do it right and you know youcould drive the outsized
outcomes. Is, is team the main lever that
you look at on the on the value creation side or given the
nature of these companies, obviously team is always
(16:51):
important regardless of the typeof business, but given the
nature of these companies, what are some of the main value
creation levers that you're looking at outside of the people
side as well? It's unique to the business,
right, and every business. And that's why we love to get
the value creation team early in, early because there's a
obvious conversation to say, areyou seeing what we're seeing?
(17:11):
Like we're looking at it throughthe investment lands and the
value creation team is looking at it through more forensic, on
a more forensic level to say what are the things that either
can be improved upon or they're not even doing today.
And so we have a value creation framework where there's
something like 7 or 8, you know,functional areas that we focus
(17:33):
on. One is just, you know, overall
strategy. We spend a lot of time in sales
and marketing on product, on finance and business
intelligence. I feel like I'm missing some
systems and operations, M&A. And then the last and probably
most important, you nailed it man is people, right?
(17:56):
You know, if you find the right executive to help drive the
business or there's an acute need within the business you
take, I'll go back to that scalable example before, you
know, it was screaming to us that you have this great piece
of technology, but it hasn't been commercialized.
Let's get out rock star CRO and to really drive the sales
(18:17):
infrastructure and the go to market plan.
And if you do that, like you should be able to, you know,
swing for the fences from a a, you know, deployment and sales
perspective. So long winded way of saying the
value, the value creation framework is multifaceted.
You know, we get in and try to look and figure out what's going
(18:37):
to have the most impact early onand then prioritize the value
creation plan around that. Yeah.
I guess in a lot of private equity firms that maybe have a
sector focus or they're focused on vertical software, let's say
health tech, fintech, etcetera, there are these repeatable
playbooks that can be brought topretty much every business that
(18:59):
you're deploying capital into. And there's some economies of
scale or process driven efficiencies or even just a team
like being able to kind of rinseand repeat a playbook.
But inside Shamrock, it feels like there's so many different
types of companies, especially when you are in this sports and
digital and content and entertainment like you would the
like you're saying the playbook or to drive value inside these
(19:22):
companies will look very different on a company to
company basis. So how do you guys manage that
internally as a firm and find some of those efficiencies so
that you're not kind of stretched thin and also actually
getting the most out of the companies that you're deploying
capital into? Yeah.
So it's an interesting matrix type approach.
And so you're touching on something that I think is
(19:42):
important to our success, which is while all of the partners are
pretty facile across our six sectors, we do have majors and
minors, right? And so there is functional
expertise from a subject, from an end market subject matter
perspective at the partner level.
And so we're able to leverage our experience in those
particular sectors. I, for example, have spent a ton
(20:04):
of time in the education market.So, you know, if you think about
majors and minors, education is where I spend a lot of my time.
I have a network there. I've done close to 100
transactions. You know, in the education space
and so I could you know, bring in resource or you know, assess
different business plans or callon former, you know, founders,
(20:25):
clients, CEO's to help assess a certain opportunity or business
situation. So I guess one piece of it is
starts at the partner level. There's the investment
professional that has certain subject matter expertise.
Within our value creation team. We have kind of two approaches.
Some of our value creation professionals do have, you know,
(20:50):
particular sub sector expertise.You know, for example, there is
a, a member of our team that used to be a senior finance
professional at Activision Blizzard.
And so we obviously whenever we're looking at something in
online gaming, we want his view on, you know, how do we see
around that corner? What is, what are, you know,
(21:13):
parts of his network that we cantap into to assess, you know, a
particular business in that space during diligence, but we
also have functional spikes. So in partnership with the value
creation team, we'll look at a particular business and I'll go
back to the skillet for example.And we'll say, look, the most
acute need here is we they have great technology we need that go
(21:35):
to market motion. So what can we do on the go to
market side, that combination ofsales and marketing that's going
to help drive an outsized outcome and we'll work on that.
The other thing aside from the investment professionals and the
value creation team is that we often will call on our network
of industry advisors and we will, you know, partner with an
(21:57):
industry advisor to go attack a particular sub sector where
that's all they've done. Maybe they've founded several
companies, maybe they've exited those companies, maybe they've
been a CEO of a large publicly traded entity.
Some of those people have forgotten more about a
particular sub sector than will know from a nuanced like
operator perspective. Being able to tap into their
(22:20):
knowledge and know how is reallypowerful and it creates a
network effect that only expandswhat we're already doing between
the investment team, the value creation team and their network.
So it's again, it's sort of a matrix approach, you know to the
deal depending on the sub segment.
It feels a bit more active than some of the other firms that
(22:41):
we've interacted with that are more sector focused or let's say
business model focused. Because in some ways when you
can kind of rinse and repeat theplaybook, there's less, I would
say, I don't want to say less innovation, but it's almost, you
have to be less creative becauseyou know what works and you can
kind of repeat that. In this case, it feels like not
(23:02):
just your value creation team, but even the investment team
really needs to be thinking about what are all the ways that
or that you can drive value for this business and be more
actively involved with your investments.
Is that fair? I think it's totally fair.
And you know what, it gets back to where we started the
conversation about, you know, Shamrock being sector focused.
Part of the beauty of only focusing on those six sectors is
(23:27):
that you can think dynamically about the different themes that
are affecting that sector. So we spend a lot of time
thinking about well, this particular issue is impacting an
industry in a certain way. So how do we play that from an
investment perspective and then Marshall resource around that.
(23:48):
So to your point, it is an active approach, but it's always
theme and sector based. And so, you know, I think about
some of the stuff that, you know, we've been working on in
the education space where I think there's a lot, there's a
lot of hand wringing out there. You see the current
administration in Washington going after the higher Ed
universe. And we have to sit back and
(24:10):
think about, well, how will thatA, impact the companies that we
already own and B, impact our investment strategy on a go
forward basis? And are there certain themes
that we would abandon because you know, the Department of
Education just got blown up and the administration is going
after higher Ed institutions. Sure.
But are there opportunities to then go and invest that will
(24:33):
capitalize on that dislocation? Absolutely.
And that's where we're where I think a lot of that subject
matter expertise and that theme based approach to investing, you
know, pays dividends. It allows us to be nimble to
come up with that next new themeand then chase it from an
investment perspective and augment that approach with what
(24:55):
our value creation team does. How are you guys sourcing these
deals and differentiating yourself from other capital
that's chasing similar assets inin these sectors?
Because yeah, definitely this ismore of a unique approach that
I've seen out there, but there'sstill other firms that are
actively investing in these types of industries.
So how do you really distinguishdistinguish yourself for the
(25:17):
deal flow side of the business? Yeah.
So again, I hate to keep harpingthis because I feel like I'm
beating the drum a little bit, but that sector focus, I mean,
50 years playing in those, you know, media, entertainment,
sports, coms that if you do it right, you, you know, at least
for us, we've had the good fortune of the reputation that
(25:38):
goes along with that, that, you know, we really do understand
those sectors inside now cold and our network is truly
differentiated. And you know, I'd like to say
we're good human beings. People want to do business with
us. If you look at sort of the
executives that we've had the privilege of working with,
they've come back to work with us again and same with sort of,
(25:59):
you know, other firms that we'vepartnered with.
So from a sourcing perspective, that theme work drives a lot of
sourcing, but more importantly, our connectivity to those themes
is differentiated because of thenetwork that we have by growing
up in those sectors over 50 years.
And, and, and so, you know, I said earlier that part of the
(26:23):
benefit of being having that sector focus is we get a lot of
proprietary looks. Those proprietary looks are
because we've known, you know, aparticular founder or an
executive or a, you know, a, a consultant or banker or, you
know, industry exec for in some cases decades.
(26:45):
And when they get that phone call to say, hey, I'm finally
thinking about doing something with my business.
Is there anybody that I should talk to?
If it's in one of our sectors, 9times out of 10, we're getting
that call and we can have an adult conversation with them
about why we might be the right partner and maybe running a
process isn't the right thing todo.
Maybe we can help achieve whatever goals, you know, they
(27:07):
have without having to go out the sort of the broader market.
And we've, I mean, I look back over our last several funds,
particularly since you know, I've been here and a majority of
our deals are proprietary or youknow, what I would call semi
proprietary where they're only talking to, you know, a small
handful of people. You can count them on one hand
and not all the fingers. Now, that doesn't mean to say
(27:28):
that we're not playing in bank processes, but even in those
that connectivity to the sector pays big dividends because
that's the way that we differentiate ourselves.
We show up, we speak the same language, we talk about, you
know, proactively what can we dofor your business?
Well, let me tell you what that network can deliver to you, what
doors that we can open that willadd value and help amplify
(27:49):
growth or profitability depending on what the goals are
of that particular founder, management team or shareholder
base. I are you pitching this the part
about your investment team beingactively involved more
operationally than most? Because I look at your value
creation team and there's about eight people there, but you have
a large investment team that hasthe sector expertise in the
(28:11):
background and all of that. That I would imagine is getting
involved with these companies aswell.
Is that a big part of the pitch to these companies as well?
Yeah, I think it's a balancing act.
I do. And I say that because to
oversimplify, there's sort of like, you know, three types of
investors. I feel like out in the pre world
today, there's like the guy, thedog in the truck with the
(28:31):
checkbook who's like, hey, you know, here's the check.
I'll see you at the quarterly board meeting.
Don't screw it up, right? There's the opposite end of the
spectrum where you've got somebody who has got a small
army of people that are, you know, represent their value
creation team and the deal closes.
You got, you know, 40 people in three piece suits and and you
(28:54):
know, 3 ring binders camped out in your kitchen telling you how
to run your business. And then there's like this happy
place in between. And I think we're one of those
business or we're one of those firms that lives in between
where we're leveraging our themebased approach to investing and
our sector knowledge for patternrecognition.
I'm not going into a business and telling you, hey, you're not
(29:16):
doing a good job or you need to run your business differently.
We're leveraging close to 50 years of pattern recognition to
say, hey, based on the investments that we've made in
the past, based on our network knowledge and know how pattern
recognition would suggest that you can do these things to help
amplify the growth of your business.
And it's a partnership At the end of the day.
(29:37):
We take more of a partnership approach of saying how does that
pattern recognition going to impact or help you go or grow
faster? I'm not going to show up and you
know, try to reinvent the business.
So long winded way of saying, I think our approach is about
partnership and balance, not about walking in and telling
people that, hey, we're going to, you know, put the surgical
(30:00):
gloves on and get in the weeds with you.
If we need to, we will. And the value creation team
does, you know, go forensic, butmore on a partnership driven
basis where we've identified a particular issue that we want
to, you know, get our hands dirty on and we'll go work on it
together. Right.
So it's more, it's more coming in cases where that is a unique
value that you can bring. But in general, letting the
(30:22):
company still operate because they're running a good business.
Yeah, for sure. And look, we're also we're more
growth investors. And so I think there are value
creation teams out there. And I'm sure, you know, I know
that you've talked to some of these folks before that that's
how they add their value is, youknow, they get in there and they
kind of decode and rebuild a business to drive value.
(30:45):
I think our value creation efforts because we're growth
investors are often more about how do you go and grow faster.
And I think that's a little bit of a different exercise.
There is nuance to those two different, you know, business
models. Yeah.
What about in terms of sourcing LP's and that side of the
(31:06):
business, because you're investing in these types of
different companies and different sexual focus.
Are you sourcing capital from different types of LP's or
people that really understand this space?
Because I would imagine that there's some differences between
Shamrock and other firms that are investing in more
traditional companies. Yeah, I think that in recent
(31:27):
years at least our fundraising would suggest that in a sea of
private equity firms, subject matter expertise matters.
People are looking for. When I see people, I mean LP's
are looking for, you know, firmsthat have some sort of
differentiated approach for us that sector focus and theme
(31:48):
based approach to investing has served us well.
And it's funny, when I was a banker, I used to do a lot of
calls with LP's that were diligence in funds to say, you
know, hey, what makes them you know, different or special.
And I'd say that now sitting on the buy side and talking to our
LP's, there is an affinity and abelief that that subject matter
(32:13):
expertise matters. You show up differently in
processes, you have more proprietary conversations.
And those LP's aren't just investing in a pool of capital
that's going after, you know, either a general industries
approach or, you know, a massivesub sector.
They want to understand that there's true differentiation.
(32:33):
And so, you know, from a investor perspective, not all of
our LP's I'd say are you know, experts in this space, but
that's why they're interested inus.
They wanna come, you know, work with or back subject matter
experts and and take they're taking that feed based approach
to investing and feel like that will drive differentiated
(32:53):
results. In terms of the types of
investments that you're making and the types of LP so you're
working with, how are you setting expectations for
returns? Like when you think about just
fund strategy overall, some of these assets that you're
investing into, I would imagine the horizon looks different, How
you're going to grow these companies looks different.
So how do you manage those typesof expectations and also finding
(33:16):
liquidity for LP's, especially in the current macroeconomic
environment? Yeah.
I mean candidly, even though we are taking a different approach,
I don't think that the goal is any different in terms of IRR,
(33:36):
DPI expectations of a, you know,a great top quartile private
equity firm. You know, we're marching to that
same beat. And I think that our historical
performance, you know, would suggest that our approach has
driven those sorts of, you know,outsized, you know, outcomes in
(33:57):
returns. But when it comes to sort of
that more macro question of likeare we coming at the world, you
know, differently in terms of like are are we more, you know,
patient capital or are we underwriting to sort of a non
traditional PE model? The answer is, you know, no RLP
is expect the same, you know, great outcomes of you know, any
(34:21):
top performing private equity firm.
And I think we've done a good job of you know, delivering on
that. I will say that as it relates
to, you know, situations that are maybe you know, more unique
or take more time that given ourheritage, we grew out of a
family office, this notion of exercising patience to deliver
(34:45):
an outcome is something that forthe right opportunity, you know,
we certainly will pursue that strategy.
And I think that our LP's appreciate and understand that
being sector focused and given our heritage, there may be
situations that could lead to, you know, a better outcome if
we're more creative or we take adifferent approach.
(35:06):
And there are, you know, investments both in previous
funds and in current funds that you know are are, you know, good
examples of, you know, somethingthat may be slightly less
traditional than what you'd see in private other private equity
firms. But our subject matter expertise
and theme based approach allowedus to go there.
How has technology and the AI side and all these advancements
(35:29):
that are coming, how is that adjusted your investment
strategy or how you're thinking about value creation and
specifically in the sectors thatyou're looking at, even though
you're in like games and film and like a lot of these
industries that I would say are have an offline component in
some ways, Like how do you look at that in in a world where now
AI is becoming a more and more prominent part of it?
(35:52):
Well, it's a, it is an inescapable issue that we face
and we're coming at it from sortof multiple directions.
Um, we for several years now have worked with an AI
consultancy both to think about revenue opportunities across the
(36:13):
portfolio as well as cost savinginitiatives, right?
So, you know, I can help one kind of both sides of the
Ledger, but the way that they'reimpacting companies depends on
the business and, you know, the go to market.
And so that those AI consultancyor that AI consultancy, you
(36:34):
know, helps think about that on a company by company basis
inside of the fund and the valuecreation team.
We've recently named a head of innovation that is helping drive
more a more proactive approach to leveraging AI tools for
everything from, you know, sourcing to research to
(36:55):
analysis, to even decisioning, not decisioning like on deals,
but you know, where we kind of spend our time and bring in
additional third party resourcesto dig deeper.
And I think that that's just thebeginning of a much deeper dive
(37:17):
that not just, you know, Shamrock, but really every in
any private equity firm will, ifthey're smart will have to be
undertaking. I think AI, if we use these
tools appropriately, they're going to allow us to, you know,
do our homework faster, arrive to decisions with greater
conviction. And within the portfolio,
(37:40):
ultimately, Dr. Value, like I said, from both the revenue and
cost perspective, I mean, it wasn't that long ago that I
think most private equity firms,you know, weren't necessarily
assessing both the opportunitiesand risks associated with AI.
I know it's Shamrock in every single investment committee that
is 100% part of the conversationnow.
(38:03):
And also when we do our quarterly portfolio reviews
talking about how our portfolio companies are either using AI or
what the potential threat of AI is that and how do we play both
offence and defence. I think that's table stakes now,
man, I really do. Yeah, I was going to ask about
that. Like how do you, how do you look
at risk and, and the threat of AI?
(38:25):
Because in the media content, sports, this entertainment space
in general, there are a bunch ofrisks associated with content or
AI generated content and, and things like that.
And there's a lot more that if we can kind of dive into.
Just curious like how do you perceive that as your
underwriting investments or thinking about value creation
plans or what a reasonable expectation would be in terms of
(38:47):
growth trajectory for these companies?
Will tell you what we're trying not to do right.
We're trying not to see ghosts read every turn, right?
Because I think that AI, for better, for worse, has become a
little bit of this boogeyman that, you know, people are
freaked out about. And instead, what we're trying
to do is take a more rational and thoughtful approach to, you
(39:09):
know, working with both our external and internal resources
that, you know, are responsible for understanding how to
leverage AI, how to play both offence and defence and use it.
I mean, quite frankly, there's an education process right now.
For example, we're working on a recapitalization of one of our
(39:30):
businesses. And a lot of the questions that
we're getting from perspective investors are about the threat
of AI to this business. And what we've had to do is
spend a lot of time putting our arm around those prospective
investors and being like, we're actually super fired up for AI.
Here are the reasons why. Here are the AI tools that we're
using inside of our business that are helping, you know,
(39:52):
create efficiencies could also drive revenue growth.
Here is the AI opportunity. This particular business plays,
you know, in and around the education market.
And so the one of the topics that this business helps train
on is AI and that's a huge growth driver once you start to
educate people that hey. Does not that ghost or that
(40:16):
boogeyman, but it's an opportunity and we're addressing
the risk associated with it by not sitting still and waiting
for things to happen, but proactively incorporating AI
tools or, you know, thinking about, you know, how to address
the issue proactively. That temperature kind of goes
down and some of that fear subsides, but you know, I don't
(40:38):
want to downplay it either. We're looking at in every
potential new investment and every existing investment, we
are assessing that risk both internally and through our third
parties. Yeah.
I think the big opportunity is to expand margins more so than
the threat of it kind of displacing a core business.
I think that may be further out in a lot of cases.
(41:00):
So finding some of those margin expansion opportunities can be
huge by leveraging AI. So I think that's great.
As we come up on a close here, Mike, as you think about your
companies and and what investorsare kind of thinking about, any
advice for private equity firms that are listening, especially
in terms of how you approach things that Shamrock and what's
really work well for you? Yeah, I'd see two things. 1 is
(41:23):
where we just left off, which isAI.
And I think private equity firmsare getting smarter about, you
know, leveraging AI and pushing kind of the AI conversation down
to the companies. But one of the things in talking
to some of my peers that seems to be the impediment to, you
know, just moving forward is that it doesn't have to be this
(41:45):
like, you know, this, you don't have to solve everything at one
time, right? I think the hardest part is
taking that first step and embracing the idea that, yeah,
look, I know we have to address I.
So let's start somewhere. We're running workshops, for
example, with CXO across our companies talking about what is
that first step that you can take inside of your company?
(42:06):
What are some of the tools on the AI front that should help
address thinking, if nothing else, just thinking about how
you can use it for both revenue optimization, but also for cost
efficiencies. And so, you know, I guess one
piece of advice for, you know, some of those peers that aren't,
you know, taking those steps, isit it doesn't have to be this
(42:27):
monumental kind of, you know, you know, epic thing.
It can be more bite sized. You just gotta take that first
step. I'd say the second piece is, and
again, far be it for me, I'm notknocking anybody success because
there's been no shortage of firms that are generalists out
there that have crushed it. But I do think that vertical
(42:49):
specialization expertise and that theme driven approach
matters. And particularly in a world
where capital is a commodity, you know, taking approach where
you are deep on, you know, themes and sectors is a is a
good way to to differentiate. Not everybody can do the same
things. And so figuring out what that
means to, you know, your firm, Ithink it is a key
(43:13):
differentiator. And it's only getting louder as
as time goes on. And there's just a ton of
capital out there. That is those are two great
takeaways, Mike. So thanks for sharing those.
And I completely agree specialization is, is the way to
kind of break through the noise and get deal flow and generate
more returns and and all of that.
So appreciate you sharing those.And last but not least, as
(43:34):
before we close off what's if somebody wants to get ahold of
you, what's the best way to reach you or Shamrock?
Yeah, sure. I mean, you can go to our
website, whichisshamrockcap.com.You feel free to also send an
e-mail. It's just M Wilkins at Shamrock
Cap dot com and we're typically super responsive.
(43:56):
Awesome. Yeah.
And Mike, before we close, I just want to say thanks for
coming on and sharing your wisdom.
I think this is a very interesting approach and the
types of companies you're investing in is different than a
lot of the private equity investors that we've had on the
podcast. So appreciate you coming on and
sharing your approach and perspective and and how you look
at value creation. I think it'd be super insightful
for a lot of people that listen to the podcast.
(44:17):
So make sure you're doing this. Yeah.
Thanks for having me, Shiv. Really fun and I appreciate the
opportunity. Thanks for listening to today's
episode. Before you take off, just a few
requests from our side #1 if youhaven't done so already, please
subscribe to the podcast on iTunes or Spotify or YouTube or
wherever you go to listen to your podcasts #2 If you're in
(44:39):
the market for due diligence services, strategy consulting,
or fractional CMO services, please get in touch with us at
www.hassas.com. And 3rd, please buy a copy of my
new book, Exit Ready Marketing. It covers a ton of concepts that
we take our customers through private equity investors, B
company CEO's, operating partners and marketers.
(45:03):
And there's a ton of great valuein there that expands on my
previous book, Post Acquisition Marketing as well.
So with that said, I hope you enjoyed today's content and
we'll see you on the next episode.
To oversimplify, there's sort oflike, you know, three types of
investors. I feel like out in the pre world
today, there's like the guy, thedog in the truck with the
checkbook who's like, hey, you know, here's the check.
I'll see you at the quarterly board meeting.
Don't screw it up, right? There's the opposite end of the
spectrum where you've got somebody who has got a small
(00:21):
army of people that are, you know, represent their value
creation team and the deal closes.
You got, you know, 40 people in three piece suits and and you
know, 3 ring binders camped out in your kitchen telling you how
to run your business. And then there's like this happy
place in between. Welcome to the Private Equity
Value Creation Podcast where we interview leading investors,
(00:42):
operators, bankers, and advisorsto help you answer one question.
How do we increase the enterprise value of our
companies? My name is Shiva Narayanan and
each episode I will dive deep with a guest to help you become
a better value creator and capital allocator.
So with that said, let's jump right in and let's get started
(01:03):
with today's episode. My guest today is Mike Wilkins
and he is a partner at Shamrock Capital.
And what's really different about Shamrock is the types of
industries and companies that they invest in.
They deploy capital into companies and media and
entertainment, content, sports, and a bunch of different
industries where I would say traditional private equity just
(01:25):
doesn't focus as much. And what I really enjoyed about
that conversation is that I often feel like PE overlooks a
large set of assets or companiessimply because that's not in
their thesis or that's not how they raise money from Alps.
Meanwhile, there are all these quality assets out there that
can drive a ton of alpha for their fund, for their investors,
(01:46):
but they're kind of handcuffed or they just never went that
way. And what's really great about
Michael is that he has a ton of industry expertise and the farm
itself has over 40 years of experience in this space that
they kind of bring to the table.And they've been part of some
major transactions, major companies.
And on their content side, they've worked with major
artists and different, differentfirms as well.
(02:08):
So I thought it was a really great conversation and Michael
had a really great perspective on how they drive enterprise
value, how they source companies, how they
differentiate themselves in the marketplace.
And I think as you're listening to it as a PE firm, I think it's
a good way to kind of think about how to really specialize
and differentiate yourself in a marketplace for more deal flow
and to drive more enterprise value for your company.
(02:30):
So with that said, I'll leave you to it.
Enjoy the episode. All right, Michael, welcome to
the show. How's it going?
It's going great shape. Thanks for having me appreciate
what you do in the content that you've put out.
It's been fun looking at some ofthe, you know, the previous work
(02:51):
and seeing a lot of familiar faces and, and listening to some
of those folks share their wisdom.
So I really appreciate the opportunity.
Yeah. And we were just talking about
how the private equity world is just so small and everybody kind
of knows everyone. So why don't we start with your
background and Shamrock and let's take it from there.
Yeah, sure. So I'm a partner over at
Shamrock in our within our private equity fund.
(03:12):
I also said in our executive committee, I've been a Shamrock
for about 5 years. And prior to Shamrock, I spent
25 years as an investment banker.
I started at Goldman Sachs back in the mid 90s and spent kind of
the first half of my career in the balls bracket and then moved
to the mid market. And for almost a decade, I ran
the technology, media and telecom effort in the middle
(03:34):
market investment bank called Harris Williams and then had the
good fortune to join my friends and longtime client Shamrock.
Like I said, almost five years ago and it's been great.
Shamrock, just maybe some background on the firm.
It's a interesting kind of back story, the first been around
(03:56):
since 1978. We were part of the Disney
family office. So we were the private equity
arm of a multi strategy family investment office.
And between 1978 and 2011, that was sort of the mandate.
In 2011 with Shamrock Three, we bought Disney out of the
management company and stood up the firm as a completely
(04:18):
standalone entity with our own MLP base.
So if you Fast forward to today,we're about $7 billion of assets
under management and we invest through two strategies.
We have our private equity strategy, which is where I sit
and I'll come back to that in a second.
And we have our content strategy.
The content strategy invests in intellectual property and media
(04:41):
rights across film, TV, music, sports and gaming and has some
really iconic assets, some of which you maybe have read about
the news recently. And on the private equity side,
we have two funds. We have our flagship fund, which
is about 1.3 billion in size. That's currently our fund 6.
(05:03):
And then we have our Clover fund, which is a little over
$300 million. Both of the funds invest were
sector focused investors. So both of the funds focus on 6
sectors, Media, entertainment, sports, communications,
marketing and advertising and then education.
And the difference between the two funds is really the check
(05:25):
size. So our Clover fund, which is our
small cap fund focuses on checksof call it, you know, 15 up to
about 50 million in size. And then our flagship fund
focuses on checks between 50 and250 million.
And honestly, JIV is long as it's focused within those six
sectors, we're sort of indifferent as to whether it's
(05:45):
majority minority growth or buyout.
It's really can we leverage our sector expertise, you know, to
help drive an outcome and createoutsized returns for our
investors. Yeah.
And that's one thing that has really jumped out in the private
equity world over the last few years is, you know, historically
PE has been associated with, I'dsay, more legacy companies or
(06:07):
turnarounds. And then the last decade, really
software and technology companies have become a big
focus. And the new trend that has been,
I'd say apparent for the last few years and is really
expanding is in this world of sports and media and content,
because private equity is starting to see these assets as
(06:27):
being incredibly valuable. And we've seen that with in
terms of big transactions with sales of professional sports
teams like the Lakers or, or, orthe Celtics.
But then at the same time on thecontent side, you know, just,
it's something you don't hear about as much, but it is a, it's
a huge asset class that has recurring revenue, quote UN
(06:47):
quote, and a ton of ton of enterprise value that's
sometimes overlooked by other private equity firms.
So why don't you talk about thatand how you guys are trying to
capitalize on that opportunity? Yeah.
I mean, given our heritage, right, that's where we grew up.
And so we've always used that asa competitive differentiator.
I mean, you're talking about 50 close to 50 years of sector
(07:08):
experience. I think part of the part of the
reason why private equity for a long time, except for a very
small group of folks stayed awaywas that even though that's a
big industry, it's like a small world, it's a small network.
And there is real nuance to understanding this business
models, what's going to create value pattern recognition
(07:31):
becomes really important understanding kind of, you know,
the value of of assets. You're looking at different
metrics than most businesses andmost private equity firms are
looking at to assess things, everything from valuation to,
you know, how to drive a value creation plan, you name it.
(07:52):
So there's, there's real nuance that creates that
differentiation. You know, getting back to us, we
spent, like I said, almost 50 years in those sectors.
And so with that becomes this really deep connectivity to the
sector. And when I say connectivity,
that comes in the form of, you know, network.
And that could be, you know, to the studios, that could be to
(08:15):
various sports teams and the, you know, the, the ecosystem
that serves those businesses. It's the CEO's who have grown up
there, network executives, consultancies that play in the
space, bankers who live there. And so even though I go back to
what I said before, even though it's a big industry, it's sort
of a small world, being hyper connected in that space has been
(08:37):
a differentiator for us. And so that approach is sort of
set us up for, you know, a situation where we're seeing a
lot more proprietary looks than,you know, just participating in
bank processes. And even in those bank processes
that know how and network allowsus to create differentiated
angles to say, look, we're goingto show up, we're going to be
(08:59):
different. We're gonna be able to stretch
on value maybe in a way or be able to, you know, endear
ourselves to the founders to say, hey, we can help with value
creation and drive, you know, growth in a way that maybe
somebody who hasn't grown up here can.
And so all of that is really important.
I think for the broader market though, people are wading in
(09:20):
because they do see the opportunity and so many of these
other sub sectors are picked over, but that that network and
know how matters. Yeah.
Can you walk through that a little bit?
And just as an example, for the audience, notable transaction
that Shamrock recently did is you sold a bunch of Taylor
Swift's previous albums or 6 albums or something like that.
So talk about in situations likethat, how do you look at
(09:40):
valuation? How do you look at value
creation? Which metrics are you looking
at? Because we're looking at like a
traditional SAS company, It's straightforward, like you look
at your revenue growth, your EBITDA margins, your rule of 40.
There's a bunch of metrics that you kind of can use your net
revenue retention that kind of tells you is this a healthy
company to kind of acquire? But in these different assets,
(10:02):
what are some of those KPIs or or ways of measurement that
you're looking at to figure out?Is this the type of thing that
you want to deploy capital into?And then how do you also
forecast out the exit plan or how you going to actually get
liquidity on that investment overtime?
Yeah, I mean the the transactionthat you referenced was done out
of our content fund, which you know I'm as part of the firm,
(10:26):
but you know, it wasn't a transaction that I was
personally involved in. But I can't you know share some
colour on, you know, in situations like that, you know,
our content fund has proprietarydata feeds which help look at
the streaming volume of various artists.
And so to your point about looking at different metrics in
(10:46):
a very different metrics, right?And you know, without having
that deep connectivity into, youknow, some of these data sources
that can help provide an understanding of, you know, what
is the market saying about, you know, the long term potential of
a particular asset. And in this case, you know, you
know, music streaming, it's pretty hard to come up with sort
(11:10):
of a, you know, a predictable, you know, underwrite.
But because of that, you know, sector knowledge and know how,
because because of those proprietary data feeds, you can
create more of what for us wouldbe a more traditional approach
to evaluation and thinking about, you know, the ultimate
exit. If I think about how we do that
(11:31):
on the private equity side across those sectors, again, it
comes back to having that proprietary network and in some
cases data and in other cases just connectivity to executives
who have grown up in that space that could help you see around
corners. And so we're trying to take a
(11:51):
more holistic approach than justsaying, hey, I received some
data from the company that is selling.
I've, I've gone through the typical paces of process
specific to analyzing that data from like a, you know,
traditional PE model. And that suggests that the
underwrite should be ex. We're trying to say what is
(12:12):
previous experience in this space allow you know or certain
say dictate in terms of where weshould go spend our time either
engaging with other firms that have played there or with
executives that grew up with there that can provide insights
to saying are those assumptions that we're applying to you know,
(12:32):
whatever data we're getting fromthe selling company?
How realistic are they? How strongly do we feel that
there? Could we see it from a different
angle that maybe somebody else didn't and then overlay our
value creation plans to then drive outsized growth above what
you know somebody who maybe didn't grow up in a particular
sector has? Yeah.
And and on the PC side, like some of the other types of
(12:52):
companies that you're working onor have invested in also have a
similar, the, the similar challenge, right, Because it's
not built the same way that a more traditional technology
business would be. So talk about that, the value
creation piece there. Like how are you diving deeper
into those companies and figuring out where those levers
are and how you kind of are going to grow it to the next
(13:12):
level before you have to potentially exit those
companies? Yeah.
I mean, I think the one of the biggest differentiators is
getting our value creation team involved early.
And as an investor, there's onlyso much, you know, I can look at
the business and I've grown up in particular sectors and I can
say like I think this is high value AD, but how do we set
(13:36):
ourselves up early for the exit and do we think that this is a
particular asset that we can drive an outsized outcome?
A lot of that has to do with that partnership with the value
creation plan saying, you know, if we dig under the hood here,
if, if, if this aligns with one of our theses, right?
If we dig under the hood or the things that we can do to help
(13:57):
amplify either the growth, profitability or you know,
market status of a particular business.
One of the first deals that I did when I came over to Shamrock
was a virtual lab and assessmentsoftware business called
Scalable. And Scalable was basically a
(14:17):
category creator in a world where, you know, there's a lot
of companies out there that are providing a certificate that
said that, hey, I have a certainset of skills in the land of
professional learning, Scalable was correct.
Providing a platform for, for example, enterprise software
companies to say, um, what have we trained our people or hired
(14:39):
on the basis of validated skills.
So put them in a virtual environment, allow them to
demonstrate that they have the skills to do a job and then hire
them on a much more informed basis.
So they had done a masterful jobof creating technology to allow
for that, but they hadn't reallycommercialized it at all.
It was brilliant technology withlimited go to market.
(15:02):
And so we worked very early on with the value creation plan to
say, how do we take a brilliant piece of technology, amplify
this category creation opportunity and really, you
know, stand this business up in a way that is, you know,
driving, you know, growth, not just because it's got great
(15:24):
tech, but because, you know, theworld knows about it and feels
like it needs it. And so we worked in that case
with our value creation plan to,or with our value creation team
to relaunch the brand of the business, you know, the name,
logo, the website. We augmented the team to be more
(15:46):
commercially oriented. So instead of having the, the
founder decided, look, I'm a brilliant technologist and
educator, but I'm going to step back and hand off, you know, the
business to someone who's kind of been there, done it before.
And we ended up hiring some justphenomenal, you know,
executives. We hired a CEO, CRO, CRO, CMO
(16:07):
and a lot of that was around thecommercialization of again, some
really fantastic technology. And we worked with those new
executives and their value creation team to come up with go
to market plans, including, you know, ABM campaigns, demand Gen.
you name it. And between you know, when we a
year after we made the investment to today, you know,
(16:31):
our kegger on the AR has been, you know, close to 100%.
And so it's been really staggering results.
You do it right and you know youcould drive the outsized
outcomes. Is, is team the main lever that
you look at on the on the value creation side or given the
nature of these companies, obviously team is always
(16:51):
important regardless of the typeof business, but given the
nature of these companies, what are some of the main value
creation levers that you're looking at outside of the people
side as well? It's unique to the business,
right, and every business. And that's why we love to get
the value creation team early in, early because there's a
obvious conversation to say, areyou seeing what we're seeing?
(17:11):
Like we're looking at it throughthe investment lands and the
value creation team is looking at it through more forensic, on
a more forensic level to say what are the things that either
can be improved upon or they're not even doing today.
And so we have a value creation framework where there's
something like 7 or 8, you know,functional areas that we focus
(17:33):
on. One is just, you know, overall
strategy. We spend a lot of time in sales
and marketing on product, on finance and business
intelligence. I feel like I'm missing some
systems and operations, M&A. And then the last and probably
most important, you nailed it man is people, right?
(17:56):
You know, if you find the right executive to help drive the
business or there's an acute need within the business you
take, I'll go back to that scalable example before, you
know, it was screaming to us that you have this great piece
of technology, but it hasn't been commercialized.
Let's get out rock star CRO and to really drive the sales
(18:17):
infrastructure and the go to market plan.
And if you do that, like you should be able to, you know,
swing for the fences from a a, you know, deployment and sales
perspective. So long winded way of saying the
value, the value creation framework is multifaceted.
You know, we get in and try to look and figure out what's going
(18:37):
to have the most impact early onand then prioritize the value
creation plan around that. Yeah.
I guess in a lot of private equity firms that maybe have a
sector focus or they're focused on vertical software, let's say
health tech, fintech, etcetera, there are these repeatable
playbooks that can be brought topretty much every business that
(18:59):
you're deploying capital into. And there's some economies of
scale or process driven efficiencies or even just a team
like being able to kind of rinseand repeat a playbook.
But inside Shamrock, it feels like there's so many different
types of companies, especially when you are in this sports and
digital and content and entertainment like you would the
like you're saying the playbook or to drive value inside these
(19:22):
companies will look very different on a company to
company basis. So how do you guys manage that
internally as a firm and find some of those efficiencies so
that you're not kind of stretched thin and also actually
getting the most out of the companies that you're deploying
capital into? Yeah.
So it's an interesting matrix type approach.
And so you're touching on something that I think is
(19:42):
important to our success, which is while all of the partners are
pretty facile across our six sectors, we do have majors and
minors, right? And so there is functional
expertise from a subject, from an end market subject matter
perspective at the partner level.
And so we're able to leverage our experience in those
particular sectors. I, for example, have spent a ton
(20:04):
of time in the education market.So, you know, if you think about
majors and minors, education is where I spend a lot of my time.
I have a network there. I've done close to 100
transactions. You know, in the education space
and so I could you know, bring in resource or you know, assess
different business plans or callon former, you know, founders,
(20:25):
clients, CEO's to help assess a certain opportunity or business
situation. So I guess one piece of it is
starts at the partner level. There's the investment
professional that has certain subject matter expertise.
Within our value creation team. We have kind of two approaches.
Some of our value creation professionals do have, you know,
(20:50):
particular sub sector expertise.You know, for example, there is
a, a member of our team that used to be a senior finance
professional at Activision Blizzard.
And so we obviously whenever we're looking at something in
online gaming, we want his view on, you know, how do we see
around that corner? What is, what are, you know,
(21:13):
parts of his network that we cantap into to assess, you know, a
particular business in that space during diligence, but we
also have functional spikes. So in partnership with the value
creation team, we'll look at a particular business and I'll go
back to the skillet for example.And we'll say, look, the most
acute need here is we they have great technology we need that go
(21:35):
to market motion. So what can we do on the go to
market side, that combination ofsales and marketing that's going
to help drive an outsized outcome and we'll work on that.
The other thing aside from the investment professionals and the
value creation team is that we often will call on our network
of industry advisors and we will, you know, partner with an
(21:57):
industry advisor to go attack a particular sub sector where
that's all they've done. Maybe they've founded several
companies, maybe they've exited those companies, maybe they've
been a CEO of a large publicly traded entity.
Some of those people have forgotten more about a
particular sub sector than will know from a nuanced like
operator perspective. Being able to tap into their
(22:20):
knowledge and know how is reallypowerful and it creates a
network effect that only expandswhat we're already doing between
the investment team, the value creation team and their network.
So it's again, it's sort of a matrix approach, you know to the
deal depending on the sub segment.
It feels a bit more active than some of the other firms that
(22:41):
we've interacted with that are more sector focused or let's say
business model focused. Because in some ways when you
can kind of rinse and repeat theplaybook, there's less, I would
say, I don't want to say less innovation, but it's almost, you
have to be less creative becauseyou know what works and you can
kind of repeat that. In this case, it feels like not
(23:02):
just your value creation team, but even the investment team
really needs to be thinking about what are all the ways that
or that you can drive value for this business and be more
actively involved with your investments.
Is that fair? I think it's totally fair.
And you know what, it gets back to where we started the
conversation about, you know, Shamrock being sector focused.
Part of the beauty of only focusing on those six sectors is
(23:27):
that you can think dynamically about the different themes that
are affecting that sector. So we spend a lot of time
thinking about well, this particular issue is impacting an
industry in a certain way. So how do we play that from an
investment perspective and then Marshall resource around that.
(23:48):
So to your point, it is an active approach, but it's always
theme and sector based. And so, you know, I think about
some of the stuff that, you know, we've been working on in
the education space where I think there's a lot, there's a
lot of hand wringing out there. You see the current
administration in Washington going after the higher Ed
universe. And we have to sit back and
(24:10):
think about, well, how will thatA, impact the companies that we
already own and B, impact our investment strategy on a go
forward basis? And are there certain themes
that we would abandon because you know, the Department of
Education just got blown up and the administration is going
after higher Ed institutions. Sure.
But are there opportunities to then go and invest that will
(24:33):
capitalize on that dislocation? Absolutely.
And that's where we're where I think a lot of that subject
matter expertise and that theme based approach to investing, you
know, pays dividends. It allows us to be nimble to
come up with that next new themeand then chase it from an
investment perspective and augment that approach with what
(24:55):
our value creation team does. How are you guys sourcing these
deals and differentiating yourself from other capital
that's chasing similar assets inin these sectors?
Because yeah, definitely this ismore of a unique approach that
I've seen out there, but there'sstill other firms that are
actively investing in these types of industries.
So how do you really distinguishdistinguish yourself for the
(25:17):
deal flow side of the business? Yeah.
So again, I hate to keep harpingthis because I feel like I'm
beating the drum a little bit, but that sector focus, I mean,
50 years playing in those, you know, media, entertainment,
sports, coms that if you do it right, you, you know, at least
for us, we've had the good fortune of the reputation that
(25:38):
goes along with that, that, you know, we really do understand
those sectors inside now cold and our network is truly
differentiated. And you know, I'd like to say
we're good human beings. People want to do business with
us. If you look at sort of the
executives that we've had the privilege of working with,
they've come back to work with us again and same with sort of,
(25:59):
you know, other firms that we'vepartnered with.
So from a sourcing perspective, that theme work drives a lot of
sourcing, but more importantly, our connectivity to those themes
is differentiated because of thenetwork that we have by growing
up in those sectors over 50 years.
And, and, and so, you know, I said earlier that part of the
(26:23):
benefit of being having that sector focus is we get a lot of
proprietary looks. Those proprietary looks are
because we've known, you know, aparticular founder or an
executive or a, you know, a, a consultant or banker or, you
know, industry exec for in some cases decades.
(26:45):
And when they get that phone call to say, hey, I'm finally
thinking about doing something with my business.
Is there anybody that I should talk to?
If it's in one of our sectors, 9times out of 10, we're getting
that call and we can have an adult conversation with them
about why we might be the right partner and maybe running a
process isn't the right thing todo.
Maybe we can help achieve whatever goals, you know, they
(27:07):
have without having to go out the sort of the broader market.
And we've, I mean, I look back over our last several funds,
particularly since you know, I've been here and a majority of
our deals are proprietary or youknow, what I would call semi
proprietary where they're only talking to, you know, a small
handful of people. You can count them on one hand
and not all the fingers. Now, that doesn't mean to say
(27:28):
that we're not playing in bank processes, but even in those
that connectivity to the sector pays big dividends because
that's the way that we differentiate ourselves.
We show up, we speak the same language, we talk about, you
know, proactively what can we dofor your business?
Well, let me tell you what that network can deliver to you, what
doors that we can open that willadd value and help amplify
(27:49):
growth or profitability depending on what the goals are
of that particular founder, management team or shareholder
base. I are you pitching this the part
about your investment team beingactively involved more
operationally than most? Because I look at your value
creation team and there's about eight people there, but you have
a large investment team that hasthe sector expertise in the
(28:11):
background and all of that. That I would imagine is getting
involved with these companies aswell.
Is that a big part of the pitch to these companies as well?
Yeah, I think it's a balancing act.
I do. And I say that because to
oversimplify, there's sort of like, you know, three types of
investors. I feel like out in the pre world
today, there's like the guy, thedog in the truck with the
(28:31):
checkbook who's like, hey, you know, here's the check.
I'll see you at the quarterly board meeting.
Don't screw it up, right? There's the opposite end of the
spectrum where you've got somebody who has got a small
army of people that are, you know, represent their value
creation team and the deal closes.
You got, you know, 40 people in three piece suits and and you
(28:54):
know, 3 ring binders camped out in your kitchen telling you how
to run your business. And then there's like this happy
place in between. And I think we're one of those
business or we're one of those firms that lives in between
where we're leveraging our themebased approach to investing and
our sector knowledge for patternrecognition.
I'm not going into a business and telling you, hey, you're not
(29:16):
doing a good job or you need to run your business differently.
We're leveraging close to 50 years of pattern recognition to
say, hey, based on the investments that we've made in
the past, based on our network knowledge and know how pattern
recognition would suggest that you can do these things to help
amplify the growth of your business.
And it's a partnership At the end of the day.
(29:37):
We take more of a partnership approach of saying how does that
pattern recognition going to impact or help you go or grow
faster? I'm not going to show up and you
know, try to reinvent the business.
So long winded way of saying, I think our approach is about
partnership and balance, not about walking in and telling
people that, hey, we're going to, you know, put the surgical
(30:00):
gloves on and get in the weeds with you.
If we need to, we will. And the value creation team
does, you know, go forensic, butmore on a partnership driven
basis where we've identified a particular issue that we want
to, you know, get our hands dirty on and we'll go work on it
together. Right.
So it's more, it's more coming in cases where that is a unique
value that you can bring. But in general, letting the
(30:22):
company still operate because they're running a good business.
Yeah, for sure. And look, we're also we're more
growth investors. And so I think there are value
creation teams out there. And I'm sure, you know, I know
that you've talked to some of these folks before that that's
how they add their value is, youknow, they get in there and they
kind of decode and rebuild a business to drive value.
(30:45):
I think our value creation efforts because we're growth
investors are often more about how do you go and grow faster.
And I think that's a little bit of a different exercise.
There is nuance to those two different, you know, business
models. Yeah.
What about in terms of sourcing LP's and that side of the
(31:06):
business, because you're investing in these types of
different companies and different sexual focus.
Are you sourcing capital from different types of LP's or
people that really understand this space?
Because I would imagine that there's some differences between
Shamrock and other firms that are investing in more
traditional companies. Yeah, I think that in recent
(31:27):
years at least our fundraising would suggest that in a sea of
private equity firms, subject matter expertise matters.
People are looking for. When I see people, I mean LP's
are looking for, you know, firmsthat have some sort of
differentiated approach for us that sector focus and theme
(31:48):
based approach to investing has served us well.
And it's funny, when I was a banker, I used to do a lot of
calls with LP's that were diligence in funds to say, you
know, hey, what makes them you know, different or special.
And I'd say that now sitting on the buy side and talking to our
LP's, there is an affinity and abelief that that subject matter
(32:13):
expertise matters. You show up differently in
processes, you have more proprietary conversations.
And those LP's aren't just investing in a pool of capital
that's going after, you know, either a general industries
approach or, you know, a massivesub sector.
They want to understand that there's true differentiation.
(32:33):
And so, you know, from a investor perspective, not all of
our LP's I'd say are you know, experts in this space, but
that's why they're interested inus.
They wanna come, you know, work with or back subject matter
experts and and take they're taking that feed based approach
to investing and feel like that will drive differentiated
(32:53):
results. In terms of the types of
investments that you're making and the types of LP so you're
working with, how are you setting expectations for
returns? Like when you think about just
fund strategy overall, some of these assets that you're
investing into, I would imagine the horizon looks different, How
you're going to grow these companies looks different.
So how do you manage those typesof expectations and also finding
(33:16):
liquidity for LP's, especially in the current macroeconomic
environment? Yeah.
I mean candidly, even though we are taking a different approach,
I don't think that the goal is any different in terms of IRR,
(33:36):
DPI expectations of a, you know,a great top quartile private
equity firm. You know, we're marching to that
same beat. And I think that our historical
performance, you know, would suggest that our approach has
driven those sorts of, you know,outsized, you know, outcomes in
(33:57):
returns. But when it comes to sort of
that more macro question of likeare we coming at the world, you
know, differently in terms of like are are we more, you know,
patient capital or are we underwriting to sort of a non
traditional PE model? The answer is, you know, no RLP
is expect the same, you know, great outcomes of you know, any
(34:21):
top performing private equity firm.
And I think we've done a good job of you know, delivering on
that. I will say that as it relates
to, you know, situations that are maybe you know, more unique
or take more time that given ourheritage, we grew out of a
family office, this notion of exercising patience to deliver
(34:45):
an outcome is something that forthe right opportunity, you know,
we certainly will pursue that strategy.
And I think that our LP's appreciate and understand that
being sector focused and given our heritage, there may be
situations that could lead to, you know, a better outcome if
we're more creative or we take adifferent approach.
(35:06):
And there are, you know, investments both in previous
funds and in current funds that you know are are, you know, good
examples of, you know, somethingthat may be slightly less
traditional than what you'd see in private other private equity
firms. But our subject matter expertise
and theme based approach allowedus to go there.
How has technology and the AI side and all these advancements
(35:29):
that are coming, how is that adjusted your investment
strategy or how you're thinking about value creation and
specifically in the sectors thatyou're looking at, even though
you're in like games and film and like a lot of these
industries that I would say are have an offline component in
some ways, Like how do you look at that in in a world where now
AI is becoming a more and more prominent part of it?
(35:52):
Well, it's a, it is an inescapable issue that we face
and we're coming at it from sortof multiple directions.
Um, we for several years now have worked with an AI
consultancy both to think about revenue opportunities across the
(36:13):
portfolio as well as cost savinginitiatives, right?
So, you know, I can help one kind of both sides of the
Ledger, but the way that they'reimpacting companies depends on
the business and, you know, the go to market.
And so that those AI consultancyor that AI consultancy, you
(36:34):
know, helps think about that on a company by company basis
inside of the fund and the valuecreation team.
We've recently named a head of innovation that is helping drive
more a more proactive approach to leveraging AI tools for
everything from, you know, sourcing to research to
(36:55):
analysis, to even decisioning, not decisioning like on deals,
but you know, where we kind of spend our time and bring in
additional third party resourcesto dig deeper.
And I think that that's just thebeginning of a much deeper dive
(37:17):
that not just, you know, Shamrock, but really every in
any private equity firm will, ifthey're smart will have to be
undertaking. I think AI, if we use these
tools appropriately, they're going to allow us to, you know,
do our homework faster, arrive to decisions with greater
conviction. And within the portfolio,
(37:40):
ultimately, Dr. Value, like I said, from both the revenue and
cost perspective, I mean, it wasn't that long ago that I
think most private equity firms,you know, weren't necessarily
assessing both the opportunitiesand risks associated with AI.
I know it's Shamrock in every single investment committee that
is 100% part of the conversationnow.
(38:03):
And also when we do our quarterly portfolio reviews
talking about how our portfolio companies are either using AI or
what the potential threat of AI is that and how do we play both
offence and defence. I think that's table stakes now,
man, I really do. Yeah, I was going to ask about
that. Like how do you, how do you look
at risk and, and the threat of AI?
(38:25):
Because in the media content, sports, this entertainment space
in general, there are a bunch ofrisks associated with content or
AI generated content and, and things like that.
And there's a lot more that if we can kind of dive into.
Just curious like how do you perceive that as your
underwriting investments or thinking about value creation
plans or what a reasonable expectation would be in terms of
(38:47):
growth trajectory for these companies?
Will tell you what we're trying not to do right.
We're trying not to see ghosts read every turn, right?
Because I think that AI, for better, for worse, has become a
little bit of this boogeyman that, you know, people are
freaked out about. And instead, what we're trying
to do is take a more rational and thoughtful approach to, you
(39:09):
know, working with both our external and internal resources
that, you know, are responsible for understanding how to
leverage AI, how to play both offence and defence and use it.
I mean, quite frankly, there's an education process right now.
For example, we're working on a recapitalization of one of our
(39:30):
businesses. And a lot of the questions that
we're getting from perspective investors are about the threat
of AI to this business. And what we've had to do is
spend a lot of time putting our arm around those prospective
investors and being like, we're actually super fired up for AI.
Here are the reasons why. Here are the AI tools that we're
using inside of our business that are helping, you know,
(39:52):
create efficiencies could also drive revenue growth.
Here is the AI opportunity. This particular business plays,
you know, in and around the education market.
And so the one of the topics that this business helps train
on is AI and that's a huge growth driver once you start to
educate people that hey. Does not that ghost or that
(40:16):
boogeyman, but it's an opportunity and we're addressing
the risk associated with it by not sitting still and waiting
for things to happen, but proactively incorporating AI
tools or, you know, thinking about, you know, how to address
the issue proactively. That temperature kind of goes
down and some of that fear subsides, but you know, I don't
(40:38):
want to downplay it either. We're looking at in every
potential new investment and every existing investment, we
are assessing that risk both internally and through our third
parties. Yeah.
I think the big opportunity is to expand margins more so than
the threat of it kind of displacing a core business.
I think that may be further out in a lot of cases.
(41:00):
So finding some of those margin expansion opportunities can be
huge by leveraging AI. So I think that's great.
As we come up on a close here, Mike, as you think about your
companies and and what investorsare kind of thinking about, any
advice for private equity firms that are listening, especially
in terms of how you approach things that Shamrock and what's
really work well for you? Yeah, I'd see two things. 1 is
(41:23):
where we just left off, which isAI.
And I think private equity firmsare getting smarter about, you
know, leveraging AI and pushing kind of the AI conversation down
to the companies. But one of the things in talking
to some of my peers that seems to be the impediment to, you
know, just moving forward is that it doesn't have to be this
(41:45):
like, you know, this, you don't have to solve everything at one
time, right? I think the hardest part is
taking that first step and embracing the idea that, yeah,
look, I know we have to address I.
So let's start somewhere. We're running workshops, for
example, with CXO across our companies talking about what is
that first step that you can take inside of your company?
(42:06):
What are some of the tools on the AI front that should help
address thinking, if nothing else, just thinking about how
you can use it for both revenue optimization, but also for cost
efficiencies. And so, you know, I guess one
piece of advice for, you know, some of those peers that aren't,
you know, taking those steps, isit it doesn't have to be this
(42:27):
monumental kind of, you know, you know, epic thing.
It can be more bite sized. You just gotta take that first
step. I'd say the second piece is, and
again, far be it for me, I'm notknocking anybody success because
there's been no shortage of firms that are generalists out
there that have crushed it. But I do think that vertical
(42:49):
specialization expertise and that theme driven approach
matters. And particularly in a world
where capital is a commodity, you know, taking approach where
you are deep on, you know, themes and sectors is a is a
good way to to differentiate. Not everybody can do the same
things. And so figuring out what that
means to, you know, your firm, Ithink it is a key
(43:13):
differentiator. And it's only getting louder as
as time goes on. And there's just a ton of
capital out there. That is those are two great
takeaways, Mike. So thanks for sharing those.
And I completely agree specialization is, is the way to
kind of break through the noise and get deal flow and generate
more returns and and all of that.
So appreciate you sharing those.And last but not least, as
(43:34):
before we close off what's if somebody wants to get ahold of
you, what's the best way to reach you or Shamrock?
Yeah, sure. I mean, you can go to our
website, whichisshamrockcap.com.You feel free to also send an
e-mail. It's just M Wilkins at Shamrock
Cap dot com and we're typically super responsive.
(43:56):
Awesome. Yeah.
And Mike, before we close, I just want to say thanks for
coming on and sharing your wisdom.
I think this is a very interesting approach and the
types of companies you're investing in is different than a
lot of the private equity investors that we've had on the
podcast. So appreciate you coming on and
sharing your approach and perspective and and how you look
at value creation. I think it'd be super insightful
for a lot of people that listen to the podcast.
(44:17):
So make sure you're doing this. Yeah.
Thanks for having me, Shiv. Really fun and I appreciate the
opportunity. Thanks for listening to today's
episode. Before you take off, just a few
requests from our side #1 if youhaven't done so already, please
subscribe to the podcast on iTunes or Spotify or YouTube or
wherever you go to listen to your podcasts #2 If you're in
(44:39):
the market for due diligence services, strategy consulting,
or fractional CMO services, please get in touch with us at
www.hassas.com. And 3rd, please buy a copy of my
new book, Exit Ready Marketing. It covers a ton of concepts that
we take our customers through private equity investors, B
company CEO's, operating partners and marketers.
(45:03):
And there's a ton of great valuein there that expands on my
previous book, Post Acquisition Marketing as well.
So with that said, I hope you enjoyed today's content and
we'll see you on the next episode.
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