On this episode Shiv interviews Eliot Kerlin, Co-Founder of Broadwing Capital, to explore how PE firms can create value in the lower middle market by combining a systematic playbook with deep operational resources.
Eliot explains Broadwing’s five-part framework—from fortifying the foundation and scaling for growth to talent development, stakeholder impact, and exit preparation—and how their ops team works side by side with management to implement change.
He also shares how to prioritize initiatives when resources are limited, why investing in human capital is critical to execution, and how building long-term relationships creates lasting advantages in private equity.
The information contained in this podcast is not intended to constitute, and should not be construed as, investment advice.
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Episode Transcript
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(00:00):
But we're also very willing to invest in the team and that can
take the form of training the team.
It can also take the form of adding to the team.
A lot of times companies in the lower middle market may be
running very lean. And there's there's a couple
risks from that, right? It's not just what's their
(00:20):
capacity, it's also burnout. You know are we going to lose
great folks when we ask them to do even more?
Welcome to the Private Equity Value Creation Podcast where we
interview leading investors, operators, bankers, and advisors
to help you answer one question.How do we increase the
enterprise value of our companies?
(00:42):
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. With today's episode, my guest
today is Elliot Curlin, and he is the cofounder and Managing
Partner at Broadwing Capital. And what I really liked about
(01:05):
this conversation with Elliot isthat they have a very
intentional approach around their operating partners and how
they work closely with their portfolio companies.
And this is a bit of a hot button topic right now in the
private equity world because we've seen some of our PE
partners really expand their OPSteams and add in more resources
to support their portfolio companies.
(01:25):
And then we've seen other PE firms shrink props teams and
rely more on external vendors and, and not have the fixed cost
of having all that talent in house.
So really interesting type of conversation.
And Elliott's perspective is in bringing a ton of industry
expertise and operational experts that really understand
the types of companies that they're investing in so that
(01:46):
they can create as much enterprise value as possible.
And we've seen that model work alot inside PE firms, especially
those that are vertically focused or industry focused.
And there's a lot of overlap in the types of companies that
they're investing in. So Elliott shares a lot of
wisdom in terms of how they're implementing this inside their
portfolio companies. And I think if you're thinking
about doing the same, there's a lot to learn from his approach
(02:08):
and how Broadwing is approachingthis conversation internally as
well. So with that said, I'll leave
you to it. Enjoy the episode.
Alright Elliott, welcome to the show.
How's it going? Great.
Thanks for having me. Yeah, excited to have you on.
So why don't we start with your background and Broadway, and
(02:30):
let's take it from. There, I'm from Fort Worth, TX,
grew up here in Texas and went to college at Texas A&M.
Was a finance major with a heavyconcentration of science hours.
Thought for for a while there that I might want to go into
medicine. And when when I got into my
upper level finance classes at Texas A&M, actually that was the
(02:51):
first time I ever went to New York City, learned about
investment thinking, thought that sounded like a great
challenge and decided to start the career there on Wall Street
with Merrill Lynch doing telecominvestment banking was there for
a couple of years and you know worked with such large
companies, AT&T, Belts, S Media One, Capital markets and M&A.
(03:14):
It felt like sometimes we were we were not impacting day-to-day
operations and strategy, right. We were doing a lot more kind of
financial accounting type, capital markets engineering and
I really wanted to work with thethe heart and soul of an
organization. So I joined.
I didn't know what it was calledat the time, but this was a
middle market private equity. I joined a private equity firm
(03:37):
in Midtown Manhattan. We're investing out of a couple
of 300 million, $350 million funds in manufacturing, services
and distribution. And that was in 2000.
And I've spent my career in the lower middle market in those
industries ever since, working with management teams and
seeking to to improve their companies by being on site with
(03:59):
them and really getting deep into the operations of their
other companies. And is that what led to the
foundation behind Broadway itself?
In fact, to to kind of map from the Northeast back to Texas.
I'm based in Dallas now, Broad Wings based in Dallas, and just
about all of our team is here. Went on to grad school and at
(04:21):
that time coming back to lookingto get back to Texas at some
point private equity was very much either from family offices,
energy, real estate, kind of specialist firms, but it wasn't
a very robust market at that point in Texas.
There were definitely firms here, but but it was it was a
handful, right And there was a new firm starting that I joined
(04:46):
that had a rich background from Bain and company and used the
Bane toolkit to improve operations with Ethan Special
Situations. I was at that firm for 17 years
and really, really love that approach, working side by side
with management to help stabilize a company and chart
growth. And my partner Andrew Boisseau
and I, we started Broadwing to build on that approach.
(05:11):
But but to re angle it a little bit, we use deep operational
resources in a lot of cases operators that we've worked with
before, prior portfolio companies.
So they understand, they understand our approach to value
creation, the pace at which we like to move.
We speak the same language so tospeak.
And so that's our OPS team and we could talk a little bit more
(05:32):
about that, but it's an integralpart of our approach to creating
value in the lower middle market.
And we focus on stable and growing companies.
We're platform builders and using that operational
investment background, we started Broadwing in the fall of
22 to to pursue this strategy with deep operational resources.
(05:54):
Yes, talk about that. Like how are you bringing that
expertise and how are you fortifying the foundation?
Like just walk through this framework that you're bringing
to these companies and what kindof companies are you focusing
on? Because I would imagine that you
have some core expertise in certain industries.
That a lot of ground to cover there.
That's that's as the fulsome question.
(06:15):
So let me let me start, let me break down a couple parts.
We have a very systematic playbook and and it starts with
our playbook, which is our approach to value creation, but
trying to do it in a codified way where it's relatively
systematic, where we can have consistency and approach across
different investments. Not everything in our playbook
(06:38):
is going to apply to every company or every industry or to
every business model. But this way we can make sure
we're at least thinking through all the best practices that
we've developed over the course of our careers to stabilize and
grow, stabilize and scale companies in lower middle
market. And there's five parts to our
playbook that we that we really embark on after we acquire a
(07:01):
company. But the first part is called
Fortify the Foundation. That's our 120 day plan.
We have a 10 day hot list where we're very focused on the post
closing conversion tasks that have to happen for cache
control, for reporting, for riskmanagement.
(07:23):
And then over the next 120 days we're implementing that fortify
the foundation approach with management and with our OPS
team. So we have our investment team,
our OPS team and management working towards a a solid
foundation that ensures best practices for risk management
(07:44):
and governance, initial KPI reporting, filling out any gaps
there are on the team and starting to lay the groundwork
for the rest of the rest of our value creation.
As we move into out of that kindof 456, not everything gets done
in 120 days, but we can start itright.
We launch it and we get through all the important stuff and a
lot of it. But with that stable base, with
(08:06):
the firm foundation, then we canscale for growth and that's
focused on growth acceleration. We look at multiple ways to grow
revenue, grow with customers, grow into new geographies and
potentially grow by M&A. Just to give you a sense, since
we launched the firm three yearsago, we've really been investing
(08:27):
after some foundation building ourselves.
We've really been investing our last two years and we've
consummated 11 investments. So an opportunity to see the
playbook at work, 11 investmentsin three platform companies.
So we we focus on growth acceleration that that includes
obviously MNA operations optimization.
(08:49):
We have a number of things we doto look at productivity,
throughput, efficiency of how a company provides its services or
manufacturers its goods. We also look at talent,
technology that's ongoing. We're always thinking about how
do we attract, train and retain the the best folks we can for
(09:10):
our team at all levels of the team.
And a lot of times we train and create an inhale recruitment
engine. And so in addition to, you know,
growth, acceleration, OPS, up talent, technology, we spent a
fair amount of time on stakeholder impact up front.
Even during our diligence, we'rethinking through not only how do
we build a company, but how do we improve the culture at the
(09:32):
company, employees lives and their presence in the community,
How can they give back to the communities where they operate.
And so that's kind of the the 4th pillar.
And then our fifth is asset monetization and exit aim.
What are we aiming for? We're always aiming for value
increase, sustainable equity value increase by exit.
(09:54):
And so we train our management teams on what that means and how
to think like that. And then also monitor and
measure the, the necessary elements along the whole period
so that by the time we're eitherapproached about an exit or
we're ready to exit, everybody's, everybody's ready,
right? We have the right mindset, we
(10:15):
have the right data and we can we can engage on a on a timely
exit. So, so let's expand on that.
Let's start with the foundation piece.
When you say fortify the foundation, what do you mean by
that? Jerk.
So a lot of the companies that we work with are very, very good
at what they do, and they've been doing it for decades,
(10:35):
right? A founder may still be involved,
a family. They know their job, they know
their industry and their customers better than than we
ever will. But they may not have all of the
best practices that you would expect to see at a larger
company, maybe at a public company, right?
A company that's been had institutional capital had
(10:57):
professional managements teams work on it for a number of
years. And some of this stuff takes a
while to develop. A lot of it is as much a habit
and a mentality as it is a capability.
So we want to provide our companies with the capabilities
right the the instruction aroundthese best practices and then
(11:20):
equip them with the tools they need.
And a lot of times that will be laying a foundation for new
technology, working through everything from customer
inventory management, enterpriseresource planning technology,
financial software and services.There's different estimating
project management, tying that all together, training them into
(11:42):
it and then spreading it throughout the entire
organization, all the locations,all the acquisitions.
Technology is a big piece of that.
But to really get technology right, you have to understand
your own processes and systems. And a lot of times in companies
in the lower middle market, their processes and their
systems are more innate. It's just what they've been
doing. And they, they can do it by
(12:05):
road, right? They, they can do it in the
dark. They don't need the lights on to
know how they do what they do well, but without writing it
down, without providing it in a systematic way, it's hard to
repeat it. It's hard for new employees to
adopt it. It's hard to scale that and
multiply it at other locations. And so we spend a fair amount of
time up front as well crystallizing what are the
(12:29):
things we do really well, what makes U.S. special as a company,
writing those down and then being able to build technology
or internal processes around that.
Once we get those stable, then we're able to think about, can
we do this in another location, right?
Can we expand our own capacity internally so that we can double
in size where we are in the samegeography today?
(12:53):
Yeah, that's that's the foundation for scale.
Yeah, there's a great book aboutthis.
It's called Profit from the Coreand it talks about like a
three-step process, which is first you define the core and
you identify your sources of market differentiation and
power. Then you strengthen the core by
figuring out where do you need to double down and really what
(13:13):
helps you expand your mode or oryour market positioning.
And only then should you kind ofexpand the core.
And it sounds like this is fairly similar, like really
understanding where you're deploying your capital and
understanding the strengths of the business and investing into
those key areas because that's going to set that organization
up for success. They disagree.
Way to think about it. And there's there's a number of
(13:37):
instructional things we'll do with management as well.
I haven't, I'm not familiar withthat book, but it sounds like
one I would enjoy and should check out.
What we also provide and spend alot of time with management on
site helping chart is we provideresources to do this as well,
(13:57):
right. So it's it's one thing to know
it, it's one thing to know what to do.
It's another thing to have a team like the Broadwing team
help you do it, help you implement the tools, right, the
processes, the ideas that you might read about in that book or
that we have in our playbook. And so our our Broadwing
resource group, we call it is really the second piece to that.
(14:20):
We have an investment team forcing opportunities,
structuring, thinking about diligence, right, kind of tip of
the spear on, on leading the investment charge.
And then we have a resource group that's our operations team
that's that works with management teams across our
portfolio and we've organized itin a very effective way.
(14:41):
We think it's somewhat unique certainly for a from our size,
but an effective way where we have operators with deep, deep
operational experience having sat before in the seat of the
CEO, the CFO, the CEO, but they're not looking to do that
full time at this company. They're they're there to be an
(15:03):
advisor, but also to be an implementer.
So they will own specific value creation initiatives.
They have, you know, as we trackthis internally multiple lines,
there's usually a company owner as well as a broad wing owner or
champion right to help do it. And a lot of times Broadway is
(15:23):
trying to carry the ball, the heavy water so that management
can focus on the rest of runningtheir business.
So we're providing resources, boots on the ground, people side
by side with management who haveexperience, who knows what
they're going through and who also know what the end result
looks like. They know the end state that
we're going to and can advise, can coach, can be in the game
(15:46):
playing, so to speak, to use thesports metaphor, player coaches
that that can actually help implement all these ideas we
have about how to strengthen a company.
And so we have a matrix resourcegroup.
We have folks that stay with an investment for the life of the
investment. And then we have folks that are
deep functional expertise as well.
(16:06):
How do you prioritize that? Like obviously every business
has all kinds of levers and operationally you're going to
have to make some trade-offs. And then on top of that, you
have your own experts and advisors that you're bringing
into these companies. So how are you determining where
to deploy your limited resourcesbecause there's only so many
things that a business can really focus on in a given
(16:28):
quarter or a given year. You're absolutely right.
It's easy to come up with a lot of great ideas right at the
strategy session. They all can sound good and
management can even say, we agree these are fantastic.
But we only have so many human capital resources to deploy
against them in any given period.
And we can help broaden that, right.
(16:48):
We, we make the the possibility set larger based upon our own.
But again, we also have limited resources too.
So at a high level, it's a collaborative approach between
Broadwing, analyzing, saying what, what has the biggest
impact profit margin, sales potential and what has the
(17:11):
highest likelihood of succeedingin a given timeframe.
How long does this take? What's the capital investment
behind it? You know, to the extent there's
capital investment or J curve from a business plan or a new
new location startup, that's an investment, right?
And so we have to think about that whether it's an expense or
not, we have to think about it in terms of limited resources
(17:31):
and where is this particular company going to be be getting
the highest return from this type of investment.
And then we have to stack and prioritize those with
management. So it is a collaborative
process. We obviously have our thoughts.
We've seen what's worked at a number of different companies
and industries, but they know their company, their employees,
their customers, their stakeholders and in a much more
(17:53):
intimate way than we ever will. So we compare those, force rank
them and then start to try and do as many as we can at once.
And the construct is always when, when we we have too much,
feel free to raise your hand andsay, OK, this is too much.
We need to back off on a couple of these initiatives.
Not that we shouldn't do them, but let's, let's delay them,
(18:15):
right? Let's give ourselves some more
time. How much of that work is
depending on the talent? Because as you're building these
operational plans, like you actually need the right people.
And when we find we're working with private equity investors,
we're making these recommendations.
Oftentimes it also requires a transformation on the team
because maybe there's not the right marketing leadership or
(18:38):
there's a new CRO required. Sometimes even the CEO's
changed. So talk about the talent side,
because that feels like a huge throttle on making some of these
action items of reality. So we found that, well, to your
point, talent is critical, right?
We have to have the right folks on the team, and the right folks
(19:01):
don't always have the skills that they're being asked to use
for the next set of initiatives.But they're the right folks if
they want to learn those, if they're open to new ideas, if
they're willing to try it, if they're willing to learn from
others, maybe in our portfolio or on our team who have seen it
happen before and can help coachthem through that.
(19:22):
So we're looking for folks that are learners, folks that have
fire in the belly and want to win, want to succeed.
Enter Open to trying something new, even if it's hard or
challenging. And and so we love working with
with whoever is already at the company, right.
That's where we always want to start is with employees, owners,
(19:47):
folks that have tenure with the customers, suppliers and the
products and services of that company.
But we're also very willing to invest in the team and that can
take the form of training the team.
It can also take the form of adding to the team.
A lot of times companies in the lower middle market may be
(20:09):
running very lean and there's there's a couple risks from
that, right. It's not just what's their
capacity, it's also burnout. You know, are we going to lose
great folks when we ask them to do even more or in a different
way and to do some new stuff in addition to what they have been
doing. And we don't want to lose folks.
So we will invest in the team. We very much believe that human
(20:33):
capital is an investment, it's an asset.
Our people are an asset. And so we invest in them and we
invest to to find more great people to add to the company.
Our folks are there to help. Again, it's, it's we're not full
time in the business and so we're a compliment, not a
(20:57):
substitute for management. Generally we want to augment,
not not be doing it instead of, but it allows us to get even
more done because we've we've increased that talent pool by
using our own operations team. Yeah, talk about that piece,
because operations teams are something that a lot of private
(21:17):
equity firms have either invested into or they maybe have
one operating partner, Some havelarge OPS teams like Vista or
Insight and there's a bunch of firms in between there.
So talk about the economics of that because in some ways you're
kind of building an in house OPSteam, but then they constantly
have to get involved with these companies even though they're
(21:38):
not part of those companies. How does how do you make that
work as a private equity firm tohave so many folks that are
getting deep with your investments and helping them at
an operational level? Well, we've we've found that
there's real power in focus. There's focus and there's
communication. It's hard to stay, it's hard to
(22:00):
stay up on everything going on and and be be in true
communication about it. Not just prioritization, but
where do things stand? Where can we use help, what's
effective and where we moving onto the next initiative because
something's been finished. So we try and over communicate
both with our portfolio companies and their in their
management teams and internally we use technology ourselves to
(22:24):
track everything going on. At any point in time, there
could be over 100 initiatives that we are assisting with
across various companies. Not all of them are urgent, not
all of them are a massive priority.
Some are longer term, others aremore imminent, but we're trying
to keep up with those. And then our OPS team has their
own cadence internally to work through those.
(22:46):
We don't want to get in each other's way.
We don't want to have too much in our place where we can't get
anything done. So we're big on prioritized or
prioritization, of course, but we also can't do everything in,
in sequence, right? We, we can't do everything in
series. We have to be working in
parallel if we're going to try and create the type of change
and value appreciation that we're looking for here.
(23:09):
And by the way, management and the sellers and the former
owners are all incentivized generally to help think like
owners and and build that that equity value over time.
So, so we're all pulling in the same direction, but we, we don't
want to over meeting people to death.
And, and I think that's the big,yeah, the big challenge is how
(23:30):
do we hold people accountable, make sure we're all prioritizing
our, our time and what we're working on, but not doing it in
a way where we're, we're over communicating and, and, and
that's a challenge. That's that's a balance.
How are you allocating operations or operating people
to portfolio companies? Is there like a ratio 3 to 1/2
(23:50):
to 1/1 to 1? Like how do you approach
approach that side of it? Because in some ways, like a CEO
doesn't always want an operatingpartner telling them what to do.
They kind of want to use them almost as like an advisor, but
then still want to run their ownbusiness.
So how do you approach that? We try and have a similar
approach, but we're willing to be malleable and we're willing
(24:12):
to tailor it for that company. Even over time the the needs of
that company might shift. And so we, if you think of it
both kind of horizontally as well as vertically, we have
operating partners that travel with a portfolio company during
our partnership period. And we actually don't call it a
(24:35):
whole period because we're not passive holders.
We call it a partnership period because we are active partners
with management and we are active during that entire
partnership period, which which obviously can be over multiple
years. So the, the 1st is the
horizontal relationship, which is usually one, maybe two of our
(24:56):
resource partners that will travel with that company for
the, for the entire partnership period.
That means they could be board members.
Sometimes it's helpful to have that title and to be able to
speak into the board level strategy, even as they're also
working on tactical items with the company.
And they may not be on the boardthat it may be more of a trusted
(25:19):
advisor, CEO advisor, but they they will do everything from
walk plants for new locations tosupplier meetings as as we're
building supplier relationships or working with customers on new
sales initiative. They are very much a sponsor
representative. They are a face of of broadwing
(25:42):
the equity owners and can help that management team think
through, but then also execute on growth and cost initiatives,
right. And so that's the horizontal
benefit. And then the vertical is the
deep vertical expertise that we have in, in various areas like
procurement, ERP implementations, technology
(26:03):
implementations, lean implementation and lean
manufacturing practices, FP and A.
And so we have members on our team and that's growing, right.
We're a young firm, but we, we expect to continue growing that
where we will have deep functional expertise that can go
on site across the portfolio at different companies based upon
(26:25):
the needs of that business to help assist the management team
on more temporal initiatives, right?
Shorter term or more discrete initiatives, right?
So that's how we try and balanceit, right?
It's kind of both. It's you, you know the company,
you know the team, you go with them.
And then other kind of the otherpart of our group goes deep on
(26:46):
certain initiatives. They might be multi month
initiatives, but the ones that allowed them to to work across
multiple companies in the portfolio.
Right. And then what about the company
specifics like as you're kind ofthere's all these nuances inside
businesses, right. So are you building, I'm sure
every, every P form has a playbook, right.
(27:06):
And given your, the types of companies you're investing in,
maybe you could touch on that like how does that affect the
company specific plan you're building and how much of it is
like a, a repetitive playbook oror like something that is just
more standard for you versus more specific to the reality of
the business? I would say it shifts overtime
(27:27):
and you know, up front we have afairly a fairly standardized
playbook and I, I wouldn't even think of it almost more in terms
of diagnostic and then in the prescription, right.
So we, we have front can go through a number of diagnostics
on everything from stakeholder impact, ESG, risk management and
(27:50):
governance, safety and employee benefit.
And this is we do this during diligence, but we also will
update these on an ongoing basisas as a check in, right to, to
see how we're doing. And those diagnostics didn't
help inform here's the standard prescriptions that we'll have
for these, right. If it's, if it's governance, we
(28:11):
have certain things that we liketo see and how we how we are
board members of a of a company and how we organize risk
management and authority matrix and things like this.
And so those are fairly standard, but once we get past
that, we tailor to the to a specific company, the strategic
plan. And it's kind of like if, if you
(28:34):
have a playbook of plays, then what are what are the actual
plays that we're applying to this specific company?
And and to your point that will differ between manufacturing
companies, distribution companies and true commercial
industrial services businesses, they're different business
models and so they have different needs.
They also oftentimes different capital requirements, different
(28:57):
growth constraints and differentgrowth investments required.
And so it does require tailoring.
And we have a a cadence obviously during when we're
performing due diligence. We try and spend as much time as
we can with the management team.We want to get to know him.
We also want to paint the visiontogether that we all buy into
(29:18):
and then think about the strategies and the tactics we'll
use to pursue that vision. But post closing, we also need
to be in communication and it's easy to get in the weeds.
It's easy to get too far down inthe details, but we try and
communicate on a on a weekly basis.
On a monthly basis we have more in depth finance officer
(29:39):
reviews. On a quarterly basis, we add in
more strategic elements, perhapssome management instruction even
you know, from a from on the legal side or the market side
and that'll be every quarter. And then at least once a year,
oftentimes more frequently, which we try and have a
strategic retreat. And that can be more than just
(30:00):
the C-Suite. It might be the entire senior
leadership team or the executiveteam where we can get away and
think about the business with them.
And we probably have to have a little fun might include a
cornhole tournament or game showcompetitions.
Or we recently went curling overa couple of hours at one company
(30:21):
and believe it or not, you, you probably spent some time curling
up in Toronto. This was actually a Nashville
where we had, where we went curling pretty hot curling
scene. And in Nashville, it sounds
like, but we so well, you know, we'll have some fun.
We'll, we'll break some bread and have some food together and
share some meals. But really it's trying to think
through what are the different pieces of the business that we
(30:44):
can work on that are strategic and critical to the success of
the investment. And so it's, it's usually
involving sales, it's new prod products, it could be expansion
projects, it's a different piece, it's a functional areas
of the business and how are we think in three, 5-10 years out
about those. So we'll pull up a little bit,
(31:04):
get a big view and then and thengo back into the details of the
business on a more regular basis.
Yeah, I think, I think that is really insightful.
I especially like the part you mentioned about diligence and
walk us through that a little bit more.
So when you're in a diligence phase, is your OPS team actively
involved in that process and areyou already building the that
(31:26):
operational plan and to how how much detail is going into the
plan at that stage? So and that's also where we
start to prioritize right at that stage in diligence.
We are working on the plan, we're dealing with limited
information and with with limited mind share of the folks
(31:47):
that are able to provide the information, right?
So sometimes it's limited information.
They might just be part of the team, right?
It's often the finance organization of the company, the
owners, maybe maybe some HR, maybe some select OPS folks.
They're most sellers don't want to distract their, their, their
business, distract their employees from their business
(32:09):
too much. So we're dealing with partial
information, a limited amount ofpeople to interact with and
there's time constraints, right?Because we're doing a lot during
diligence, aiming towards a close, but also trying to, to
lay that groundwork. So we do involve our operating
team. They're generally working on
building up the game plan on theon the sales operations side,
(32:33):
they're going through some of these multi page diagnostics.
We have to assess the business, but it's not just a grade, it's
not just a balance sheet assessment point in time, it's
then prescriptive. So what are we going to do and
what order and who's going to own that right?
Is that something that the the company runs with the ball?
We recognize when we come in to a business, a lot of times our
(32:57):
ideas may not at least for fortify the foundation.
Half of them probably do not seem like they're actually
critical to the operations of the business, but they are
critical to the well-being of the company overtime and they
will be appreciated by buyers. They'll be, they'll be helpful
(33:18):
overtime and softer ways, more subjective ways like
communication and employee retention, quality and safety,
things that again, they may already be good at.
But by quantifying it, by systematizing it, by starting to
keep a record of it, we can be continuously improving and we
can share that with future buyers.
So it's a little bit of a different way sometimes to think
(33:41):
about how to run the business. And it takes time to roll that
out. Part of this planning for that
is during diligence with our OPSpartners and outside
consultants. Implementing it is with our OPS
partners and management post close.
Yeah, that's that's really insightful.
Unfortunately, coming up on timehere, but Elliot, before we
close off, like as you're thinking about other PE firms
(34:04):
and the the work that you've done and the lessons that you've
learned, what advice would you have for them is they're
thinking about building an operations practice like you?
Have. It's interesting.
I've always valued relationshipsand business.
To me, private equity in business in general is all about
people. It's all about personal
relationships. And so even when and at other
(34:26):
points in my career when we weren't working with an
operational model using operating partners, it was still
those relationships I was building with the managers and
executives of those portfolio companies that we're using now
that we're using now in a different approach in private
equity. And so there's there's value in
relationships across your entirecareer.
(34:49):
You never know who you meet thatcould be a future competitor, A
colleague, somebody that you work with at your company or a
source of capital. And so I, my advice is value
human relationships, buying cultivate them and, and, and
then work with them. When you can work with great
(35:10):
people, there's, there's no replacing being able to, to look
at somebody and say, you remember when we remember when
we did this project 10 years ago, or you remember when, when
we did this during the Great Recession?
You, you can't manufacture that type of longevity together, But
it really speaks volumes if you've had those types of
relationships throughout your career where folks want to keep
(35:32):
working with you. Yeah, that's that's really great
advice. And Elliot, thanks for sharing
that. And before we close off, if
people want to get a hold of youor Broadway, what's the best way
to get in touch? Yeah, we'd, we'd love to
connect. You can reach out through our
website, whichisbroadwingcap.comand those those messages come
(35:54):
straight to us. I'd be happy to chat with
anyone. Awesome.
I'll be sure to include that in the show notes and everything
else as well. And with that's at Elliot.
Thanks for coming on and sharingyour wisdom.
I think there's a lot of PE investors that are wrestling
with this idea of building and operations arm or how much they
should invest in it and I think you should a lot of light into
that. So appreciate you doing this.
Oh great. Thanks for having me on.
(36:15):
I really appreciate it. Thanks for listening to today's
episode. Before you take off, just a few.
Requests from Our side #1 If youenjoyed today's content and want
more of it, please subscribe to the podcast on your favorite pod
catcher #2. If you are in the market for
marketing strategy consulting services, due diligence
services, or fractional CMO services, please visit our
(36:36):
website at www.howdessas.com andschedule consult today.
And #3 If you haven't already, grab a copy of my book Post
Acquisition Marketing. It's available on Apple Books on
Amazon and any bookstore that you can find online.
Get a copy because it walks through the framework that we
take all of our clients through and it'll definitely add value
to your business. And that's it for today.
(36:57):
We'll see you guys next time.
But we're also very willing to invest in the team and that can
take the form of training the team.
It can also take the form of adding to the team.
A lot of times companies in the lower middle market may be
running very lean. And there's there's a couple
risks from that, right? It's not just what's their
(00:20):
capacity, it's also burnout. You know are we going to lose
great folks when we ask them to do even more?
Welcome to the Private Equity Value Creation Podcast where we
interview leading investors, operators, bankers, and advisors
to help you answer one question.How do we increase the
enterprise value of our companies?
(00:42):
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. With today's episode, my guest
today is Elliot Curlin, and he is the cofounder and Managing
Partner at Broadwing Capital. And what I really liked about
(01:05):
this conversation with Elliot isthat they have a very
intentional approach around their operating partners and how
they work closely with their portfolio companies.
And this is a bit of a hot button topic right now in the
private equity world because we've seen some of our PE
partners really expand their OPSteams and add in more resources
to support their portfolio companies.
(01:25):
And then we've seen other PE firms shrink props teams and
rely more on external vendors and, and not have the fixed cost
of having all that talent in house.
So really interesting type of conversation.
And Elliott's perspective is in bringing a ton of industry
expertise and operational experts that really understand
the types of companies that they're investing in so that
(01:46):
they can create as much enterprise value as possible.
And we've seen that model work alot inside PE firms, especially
those that are vertically focused or industry focused.
And there's a lot of overlap in the types of companies that
they're investing in. So Elliott shares a lot of
wisdom in terms of how they're implementing this inside their
portfolio companies. And I think if you're thinking
about doing the same, there's a lot to learn from his approach
(02:08):
and how Broadwing is approachingthis conversation internally as
well. So with that said, I'll leave
you to it. Enjoy the episode.
Alright Elliott, welcome to the show.
How's it going? Great.
Thanks for having me. Yeah, excited to have you on.
So why don't we start with your background and Broadway, and
(02:30):
let's take it from. There, I'm from Fort Worth, TX,
grew up here in Texas and went to college at Texas A&M.
Was a finance major with a heavyconcentration of science hours.
Thought for for a while there that I might want to go into
medicine. And when when I got into my
upper level finance classes at Texas A&M, actually that was the
(02:51):
first time I ever went to New York City, learned about
investment thinking, thought that sounded like a great
challenge and decided to start the career there on Wall Street
with Merrill Lynch doing telecominvestment banking was there for
a couple of years and you know worked with such large
companies, AT&T, Belts, S Media One, Capital markets and M&A.
(03:14):
It felt like sometimes we were we were not impacting day-to-day
operations and strategy, right. We were doing a lot more kind of
financial accounting type, capital markets engineering and
I really wanted to work with thethe heart and soul of an
organization. So I joined.
I didn't know what it was calledat the time, but this was a
middle market private equity. I joined a private equity firm
(03:37):
in Midtown Manhattan. We're investing out of a couple
of 300 million, $350 million funds in manufacturing, services
and distribution. And that was in 2000.
And I've spent my career in the lower middle market in those
industries ever since, working with management teams and
seeking to to improve their companies by being on site with
(03:59):
them and really getting deep into the operations of their
other companies. And is that what led to the
foundation behind Broadway itself?
In fact, to to kind of map from the Northeast back to Texas.
I'm based in Dallas now, Broad Wings based in Dallas, and just
about all of our team is here. Went on to grad school and at
(04:21):
that time coming back to lookingto get back to Texas at some
point private equity was very much either from family offices,
energy, real estate, kind of specialist firms, but it wasn't
a very robust market at that point in Texas.
There were definitely firms here, but but it was it was a
handful, right And there was a new firm starting that I joined
(04:46):
that had a rich background from Bain and company and used the
Bane toolkit to improve operations with Ethan Special
Situations. I was at that firm for 17 years
and really, really love that approach, working side by side
with management to help stabilize a company and chart
growth. And my partner Andrew Boisseau
and I, we started Broadwing to build on that approach.
(05:11):
But but to re angle it a little bit, we use deep operational
resources in a lot of cases operators that we've worked with
before, prior portfolio companies.
So they understand, they understand our approach to value
creation, the pace at which we like to move.
We speak the same language so tospeak.
And so that's our OPS team and we could talk a little bit more
(05:32):
about that, but it's an integralpart of our approach to creating
value in the lower middle market.
And we focus on stable and growing companies.
We're platform builders and using that operational
investment background, we started Broadwing in the fall of
22 to to pursue this strategy with deep operational resources.
(05:54):
Yes, talk about that. Like how are you bringing that
expertise and how are you fortifying the foundation?
Like just walk through this framework that you're bringing
to these companies and what kindof companies are you focusing
on? Because I would imagine that you
have some core expertise in certain industries.
That a lot of ground to cover there.
That's that's as the fulsome question.
(06:15):
So let me let me start, let me break down a couple parts.
We have a very systematic playbook and and it starts with
our playbook, which is our approach to value creation, but
trying to do it in a codified way where it's relatively
systematic, where we can have consistency and approach across
different investments. Not everything in our playbook
(06:38):
is going to apply to every company or every industry or to
every business model. But this way we can make sure
we're at least thinking through all the best practices that
we've developed over the course of our careers to stabilize and
grow, stabilize and scale companies in lower middle
market. And there's five parts to our
playbook that we that we really embark on after we acquire a
(07:01):
company. But the first part is called
Fortify the Foundation. That's our 120 day plan.
We have a 10 day hot list where we're very focused on the post
closing conversion tasks that have to happen for cache
control, for reporting, for riskmanagement.
(07:23):
And then over the next 120 days we're implementing that fortify
the foundation approach with management and with our OPS
team. So we have our investment team,
our OPS team and management working towards a a solid
foundation that ensures best practices for risk management
(07:44):
and governance, initial KPI reporting, filling out any gaps
there are on the team and starting to lay the groundwork
for the rest of the rest of our value creation.
As we move into out of that kindof 456, not everything gets done
in 120 days, but we can start itright.
We launch it and we get through all the important stuff and a
lot of it. But with that stable base, with
(08:06):
the firm foundation, then we canscale for growth and that's
focused on growth acceleration. We look at multiple ways to grow
revenue, grow with customers, grow into new geographies and
potentially grow by M&A. Just to give you a sense, since
we launched the firm three yearsago, we've really been investing
(08:27):
after some foundation building ourselves.
We've really been investing our last two years and we've
consummated 11 investments. So an opportunity to see the
playbook at work, 11 investmentsin three platform companies.
So we we focus on growth acceleration that that includes
obviously MNA operations optimization.
(08:49):
We have a number of things we doto look at productivity,
throughput, efficiency of how a company provides its services or
manufacturers its goods. We also look at talent,
technology that's ongoing. We're always thinking about how
do we attract, train and retain the the best folks we can for
(09:10):
our team at all levels of the team.
And a lot of times we train and create an inhale recruitment
engine. And so in addition to, you know,
growth, acceleration, OPS, up talent, technology, we spent a
fair amount of time on stakeholder impact up front.
Even during our diligence, we'rethinking through not only how do
we build a company, but how do we improve the culture at the
(09:32):
company, employees lives and their presence in the community,
How can they give back to the communities where they operate.
And so that's kind of the the 4th pillar.
And then our fifth is asset monetization and exit aim.
What are we aiming for? We're always aiming for value
increase, sustainable equity value increase by exit.
(09:54):
And so we train our management teams on what that means and how
to think like that. And then also monitor and
measure the, the necessary elements along the whole period
so that by the time we're eitherapproached about an exit or
we're ready to exit, everybody's, everybody's ready,
right? We have the right mindset, we
(10:15):
have the right data and we can we can engage on a on a timely
exit. So, so let's expand on that.
Let's start with the foundation piece.
When you say fortify the foundation, what do you mean by
that? Jerk.
So a lot of the companies that we work with are very, very good
at what they do, and they've been doing it for decades,
(10:35):
right? A founder may still be involved,
a family. They know their job, they know
their industry and their customers better than than we
ever will. But they may not have all of the
best practices that you would expect to see at a larger
company, maybe at a public company, right?
A company that's been had institutional capital had
(10:57):
professional managements teams work on it for a number of
years. And some of this stuff takes a
while to develop. A lot of it is as much a habit
and a mentality as it is a capability.
So we want to provide our companies with the capabilities
right the the instruction aroundthese best practices and then
(11:20):
equip them with the tools they need.
And a lot of times that will be laying a foundation for new
technology, working through everything from customer
inventory management, enterpriseresource planning technology,
financial software and services.There's different estimating
project management, tying that all together, training them into
(11:42):
it and then spreading it throughout the entire
organization, all the locations,all the acquisitions.
Technology is a big piece of that.
But to really get technology right, you have to understand
your own processes and systems. And a lot of times in companies
in the lower middle market, their processes and their
systems are more innate. It's just what they've been
doing. And they, they can do it by
(12:05):
road, right? They, they can do it in the
dark. They don't need the lights on to
know how they do what they do well, but without writing it
down, without providing it in a systematic way, it's hard to
repeat it. It's hard for new employees to
adopt it. It's hard to scale that and
multiply it at other locations. And so we spend a fair amount of
time up front as well crystallizing what are the
(12:29):
things we do really well, what makes U.S. special as a company,
writing those down and then being able to build technology
or internal processes around that.
Once we get those stable, then we're able to think about, can
we do this in another location, right?
Can we expand our own capacity internally so that we can double
in size where we are in the samegeography today?
(12:53):
Yeah, that's that's the foundation for scale.
Yeah, there's a great book aboutthis.
It's called Profit from the Coreand it talks about like a
three-step process, which is first you define the core and
you identify your sources of market differentiation and
power. Then you strengthen the core by
figuring out where do you need to double down and really what
(13:13):
helps you expand your mode or oryour market positioning.
And only then should you kind ofexpand the core.
And it sounds like this is fairly similar, like really
understanding where you're deploying your capital and
understanding the strengths of the business and investing into
those key areas because that's going to set that organization
up for success. They disagree.
Way to think about it. And there's there's a number of
(13:37):
instructional things we'll do with management as well.
I haven't, I'm not familiar withthat book, but it sounds like
one I would enjoy and should check out.
What we also provide and spend alot of time with management on
site helping chart is we provideresources to do this as well,
(13:57):
right. So it's it's one thing to know
it, it's one thing to know what to do.
It's another thing to have a team like the Broadwing team
help you do it, help you implement the tools, right, the
processes, the ideas that you might read about in that book or
that we have in our playbook. And so our our Broadwing
resource group, we call it is really the second piece to that.
(14:20):
We have an investment team forcing opportunities,
structuring, thinking about diligence, right, kind of tip of
the spear on, on leading the investment charge.
And then we have a resource group that's our operations team
that's that works with management teams across our
portfolio and we've organized itin a very effective way.
(14:41):
We think it's somewhat unique certainly for a from our size,
but an effective way where we have operators with deep, deep
operational experience having sat before in the seat of the
CEO, the CFO, the CEO, but they're not looking to do that
full time at this company. They're they're there to be an
(15:03):
advisor, but also to be an implementer.
So they will own specific value creation initiatives.
They have, you know, as we trackthis internally multiple lines,
there's usually a company owner as well as a broad wing owner or
champion right to help do it. And a lot of times Broadway is
(15:23):
trying to carry the ball, the heavy water so that management
can focus on the rest of runningtheir business.
So we're providing resources, boots on the ground, people side
by side with management who haveexperience, who knows what
they're going through and who also know what the end result
looks like. They know the end state that
we're going to and can advise, can coach, can be in the game
(15:46):
playing, so to speak, to use thesports metaphor, player coaches
that that can actually help implement all these ideas we
have about how to strengthen a company.
And so we have a matrix resourcegroup.
We have folks that stay with an investment for the life of the
investment. And then we have folks that are
deep functional expertise as well.
(16:06):
How do you prioritize that? Like obviously every business
has all kinds of levers and operationally you're going to
have to make some trade-offs. And then on top of that, you
have your own experts and advisors that you're bringing
into these companies. So how are you determining where
to deploy your limited resourcesbecause there's only so many
things that a business can really focus on in a given
(16:28):
quarter or a given year. You're absolutely right.
It's easy to come up with a lot of great ideas right at the
strategy session. They all can sound good and
management can even say, we agree these are fantastic.
But we only have so many human capital resources to deploy
against them in any given period.
And we can help broaden that, right.
(16:48):
We, we make the the possibility set larger based upon our own.
But again, we also have limited resources too.
So at a high level, it's a collaborative approach between
Broadwing, analyzing, saying what, what has the biggest
impact profit margin, sales potential and what has the
(17:11):
highest likelihood of succeedingin a given timeframe.
How long does this take? What's the capital investment
behind it? You know, to the extent there's
capital investment or J curve from a business plan or a new
new location startup, that's an investment, right?
And so we have to think about that whether it's an expense or
not, we have to think about it in terms of limited resources
(17:31):
and where is this particular company going to be be getting
the highest return from this type of investment.
And then we have to stack and prioritize those with
management. So it is a collaborative
process. We obviously have our thoughts.
We've seen what's worked at a number of different companies
and industries, but they know their company, their employees,
their customers, their stakeholders and in a much more
(17:53):
intimate way than we ever will. So we compare those, force rank
them and then start to try and do as many as we can at once.
And the construct is always when, when we we have too much,
feel free to raise your hand andsay, OK, this is too much.
We need to back off on a couple of these initiatives.
Not that we shouldn't do them, but let's, let's delay them,
(18:15):
right? Let's give ourselves some more
time. How much of that work is
depending on the talent? Because as you're building these
operational plans, like you actually need the right people.
And when we find we're working with private equity investors,
we're making these recommendations.
Oftentimes it also requires a transformation on the team
because maybe there's not the right marketing leadership or
(18:38):
there's a new CRO required. Sometimes even the CEO's
changed. So talk about the talent side,
because that feels like a huge throttle on making some of these
action items of reality. So we found that, well, to your
point, talent is critical, right?
We have to have the right folks on the team, and the right folks
(19:01):
don't always have the skills that they're being asked to use
for the next set of initiatives.But they're the right folks if
they want to learn those, if they're open to new ideas, if
they're willing to try it, if they're willing to learn from
others, maybe in our portfolio or on our team who have seen it
happen before and can help coachthem through that.
(19:22):
So we're looking for folks that are learners, folks that have
fire in the belly and want to win, want to succeed.
Enter Open to trying something new, even if it's hard or
challenging. And and so we love working with
with whoever is already at the company, right.
That's where we always want to start is with employees, owners,
(19:47):
folks that have tenure with the customers, suppliers and the
products and services of that company.
But we're also very willing to invest in the team and that can
take the form of training the team.
It can also take the form of adding to the team.
A lot of times companies in the lower middle market may be
(20:09):
running very lean and there's there's a couple risks from
that, right. It's not just what's their
capacity, it's also burnout. You know, are we going to lose
great folks when we ask them to do even more or in a different
way and to do some new stuff in addition to what they have been
doing. And we don't want to lose folks.
So we will invest in the team. We very much believe that human
(20:33):
capital is an investment, it's an asset.
Our people are an asset. And so we invest in them and we
invest to to find more great people to add to the company.
Our folks are there to help. Again, it's, it's we're not full
time in the business and so we're a compliment, not a
(20:57):
substitute for management. Generally we want to augment,
not not be doing it instead of, but it allows us to get even
more done because we've we've increased that talent pool by
using our own operations team. Yeah, talk about that piece,
because operations teams are something that a lot of private
(21:17):
equity firms have either invested into or they maybe have
one operating partner, Some havelarge OPS teams like Vista or
Insight and there's a bunch of firms in between there.
So talk about the economics of that because in some ways you're
kind of building an in house OPSteam, but then they constantly
have to get involved with these companies even though they're
(21:38):
not part of those companies. How does how do you make that
work as a private equity firm tohave so many folks that are
getting deep with your investments and helping them at
an operational level? Well, we've we've found that
there's real power in focus. There's focus and there's
communication. It's hard to stay, it's hard to
(22:00):
stay up on everything going on and and be be in true
communication about it. Not just prioritization, but
where do things stand? Where can we use help, what's
effective and where we moving onto the next initiative because
something's been finished. So we try and over communicate
both with our portfolio companies and their in their
management teams and internally we use technology ourselves to
(22:24):
track everything going on. At any point in time, there
could be over 100 initiatives that we are assisting with
across various companies. Not all of them are urgent, not
all of them are a massive priority.
Some are longer term, others aremore imminent, but we're trying
to keep up with those. And then our OPS team has their
own cadence internally to work through those.
(22:46):
We don't want to get in each other's way.
We don't want to have too much in our place where we can't get
anything done. So we're big on prioritized or
prioritization, of course, but we also can't do everything in,
in sequence, right? We, we can't do everything in
series. We have to be working in
parallel if we're going to try and create the type of change
and value appreciation that we're looking for here.
(23:09):
And by the way, management and the sellers and the former
owners are all incentivized generally to help think like
owners and and build that that equity value over time.
So, so we're all pulling in the same direction, but we, we don't
want to over meeting people to death.
And, and I think that's the big,yeah, the big challenge is how
(23:30):
do we hold people accountable, make sure we're all prioritizing
our, our time and what we're working on, but not doing it in
a way where we're, we're over communicating and, and, and
that's a challenge. That's that's a balance.
How are you allocating operations or operating people
to portfolio companies? Is there like a ratio 3 to 1/2
(23:50):
to 1/1 to 1? Like how do you approach
approach that side of it? Because in some ways, like a CEO
doesn't always want an operatingpartner telling them what to do.
They kind of want to use them almost as like an advisor, but
then still want to run their ownbusiness.
So how do you approach that? We try and have a similar
approach, but we're willing to be malleable and we're willing
(24:12):
to tailor it for that company. Even over time the the needs of
that company might shift. And so we, if you think of it
both kind of horizontally as well as vertically, we have
operating partners that travel with a portfolio company during
our partnership period. And we actually don't call it a
(24:35):
whole period because we're not passive holders.
We call it a partnership period because we are active partners
with management and we are active during that entire
partnership period, which which obviously can be over multiple
years. So the, the 1st is the
horizontal relationship, which is usually one, maybe two of our
(24:56):
resource partners that will travel with that company for
the, for the entire partnership period.
That means they could be board members.
Sometimes it's helpful to have that title and to be able to
speak into the board level strategy, even as they're also
working on tactical items with the company.
And they may not be on the boardthat it may be more of a trusted
(25:19):
advisor, CEO advisor, but they they will do everything from
walk plants for new locations tosupplier meetings as as we're
building supplier relationships or working with customers on new
sales initiative. They are very much a sponsor
representative. They are a face of of broadwing
(25:42):
the equity owners and can help that management team think
through, but then also execute on growth and cost initiatives,
right. And so that's the horizontal
benefit. And then the vertical is the
deep vertical expertise that we have in, in various areas like
procurement, ERP implementations, technology
(26:03):
implementations, lean implementation and lean
manufacturing practices, FP and A.
And so we have members on our team and that's growing, right.
We're a young firm, but we, we expect to continue growing that
where we will have deep functional expertise that can go
on site across the portfolio at different companies based upon
(26:25):
the needs of that business to help assist the management team
on more temporal initiatives, right?
Shorter term or more discrete initiatives, right?
So that's how we try and balanceit, right?
It's kind of both. It's you, you know the company,
you know the team, you go with them.
And then other kind of the otherpart of our group goes deep on
(26:46):
certain initiatives. They might be multi month
initiatives, but the ones that allowed them to to work across
multiple companies in the portfolio.
Right. And then what about the company
specifics like as you're kind ofthere's all these nuances inside
businesses, right. So are you building, I'm sure
every, every P form has a playbook, right.
(27:06):
And given your, the types of companies you're investing in,
maybe you could touch on that like how does that affect the
company specific plan you're building and how much of it is
like a, a repetitive playbook oror like something that is just
more standard for you versus more specific to the reality of
the business? I would say it shifts overtime
(27:27):
and you know, up front we have afairly a fairly standardized
playbook and I, I wouldn't even think of it almost more in terms
of diagnostic and then in the prescription, right.
So we, we have front can go through a number of diagnostics
on everything from stakeholder impact, ESG, risk management and
(27:50):
governance, safety and employee benefit.
And this is we do this during diligence, but we also will
update these on an ongoing basisas as a check in, right to, to
see how we're doing. And those diagnostics didn't
help inform here's the standard prescriptions that we'll have
for these, right. If it's, if it's governance, we
(28:11):
have certain things that we liketo see and how we how we are
board members of a of a company and how we organize risk
management and authority matrix and things like this.
And so those are fairly standard, but once we get past
that, we tailor to the to a specific company, the strategic
plan. And it's kind of like if, if you
(28:34):
have a playbook of plays, then what are what are the actual
plays that we're applying to this specific company?
And and to your point that will differ between manufacturing
companies, distribution companies and true commercial
industrial services businesses, they're different business
models and so they have different needs.
They also oftentimes different capital requirements, different
(28:57):
growth constraints and differentgrowth investments required.
And so it does require tailoring.
And we have a a cadence obviously during when we're
performing due diligence. We try and spend as much time as
we can with the management team.We want to get to know him.
We also want to paint the visiontogether that we all buy into
(29:18):
and then think about the strategies and the tactics we'll
use to pursue that vision. But post closing, we also need
to be in communication and it's easy to get in the weeds.
It's easy to get too far down inthe details, but we try and
communicate on a on a weekly basis.
On a monthly basis we have more in depth finance officer
(29:39):
reviews. On a quarterly basis, we add in
more strategic elements, perhapssome management instruction even
you know, from a from on the legal side or the market side
and that'll be every quarter. And then at least once a year,
oftentimes more frequently, which we try and have a
strategic retreat. And that can be more than just
(30:00):
the C-Suite. It might be the entire senior
leadership team or the executiveteam where we can get away and
think about the business with them.
And we probably have to have a little fun might include a
cornhole tournament or game showcompetitions.
Or we recently went curling overa couple of hours at one company
(30:21):
and believe it or not, you, you probably spent some time curling
up in Toronto. This was actually a Nashville
where we had, where we went curling pretty hot curling
scene. And in Nashville, it sounds
like, but we so well, you know, we'll have some fun.
We'll, we'll break some bread and have some food together and
share some meals. But really it's trying to think
through what are the different pieces of the business that we
(30:44):
can work on that are strategic and critical to the success of
the investment. And so it's, it's usually
involving sales, it's new prod products, it could be expansion
projects, it's a different piece, it's a functional areas
of the business and how are we think in three, 5-10 years out
about those. So we'll pull up a little bit,
(31:04):
get a big view and then and thengo back into the details of the
business on a more regular basis.
Yeah, I think, I think that is really insightful.
I especially like the part you mentioned about diligence and
walk us through that a little bit more.
So when you're in a diligence phase, is your OPS team actively
involved in that process and areyou already building the that
(31:26):
operational plan and to how how much detail is going into the
plan at that stage? So and that's also where we
start to prioritize right at that stage in diligence.
We are working on the plan, we're dealing with limited
information and with with limited mind share of the folks
(31:47):
that are able to provide the information, right?
So sometimes it's limited information.
They might just be part of the team, right?
It's often the finance organization of the company, the
owners, maybe maybe some HR, maybe some select OPS folks.
They're most sellers don't want to distract their, their, their
business, distract their employees from their business
(32:09):
too much. So we're dealing with partial
information, a limited amount ofpeople to interact with and
there's time constraints, right?Because we're doing a lot during
diligence, aiming towards a close, but also trying to, to
lay that groundwork. So we do involve our operating
team. They're generally working on
building up the game plan on theon the sales operations side,
(32:33):
they're going through some of these multi page diagnostics.
We have to assess the business, but it's not just a grade, it's
not just a balance sheet assessment point in time, it's
then prescriptive. So what are we going to do and
what order and who's going to own that right?
Is that something that the the company runs with the ball?
We recognize when we come in to a business, a lot of times our
(32:57):
ideas may not at least for fortify the foundation.
Half of them probably do not seem like they're actually
critical to the operations of the business, but they are
critical to the well-being of the company overtime and they
will be appreciated by buyers. They'll be, they'll be helpful
(33:18):
overtime and softer ways, more subjective ways like
communication and employee retention, quality and safety,
things that again, they may already be good at.
But by quantifying it, by systematizing it, by starting to
keep a record of it, we can be continuously improving and we
can share that with future buyers.
So it's a little bit of a different way sometimes to think
(33:41):
about how to run the business. And it takes time to roll that
out. Part of this planning for that
is during diligence with our OPSpartners and outside
consultants. Implementing it is with our OPS
partners and management post close.
Yeah, that's that's really insightful.
Unfortunately, coming up on timehere, but Elliot, before we
close off, like as you're thinking about other PE firms
(34:04):
and the the work that you've done and the lessons that you've
learned, what advice would you have for them is they're
thinking about building an operations practice like you?
Have. It's interesting.
I've always valued relationshipsand business.
To me, private equity in business in general is all about
people. It's all about personal
relationships. And so even when and at other
(34:26):
points in my career when we weren't working with an
operational model using operating partners, it was still
those relationships I was building with the managers and
executives of those portfolio companies that we're using now
that we're using now in a different approach in private
equity. And so there's there's value in
relationships across your entirecareer.
(34:49):
You never know who you meet thatcould be a future competitor, A
colleague, somebody that you work with at your company or a
source of capital. And so I, my advice is value
human relationships, buying cultivate them and, and, and
then work with them. When you can work with great
(35:10):
people, there's, there's no replacing being able to, to look
at somebody and say, you remember when we remember when
we did this project 10 years ago, or you remember when, when
we did this during the Great Recession?
You, you can't manufacture that type of longevity together, But
it really speaks volumes if you've had those types of
relationships throughout your career where folks want to keep
(35:32):
working with you. Yeah, that's that's really great
advice. And Elliot, thanks for sharing
that. And before we close off, if
people want to get a hold of youor Broadway, what's the best way
to get in touch? Yeah, we'd, we'd love to
connect. You can reach out through our
website, whichisbroadwingcap.comand those those messages come
(35:54):
straight to us. I'd be happy to chat with
anyone. Awesome.
I'll be sure to include that in the show notes and everything
else as well. And with that's at Elliot.
Thanks for coming on and sharingyour wisdom.
I think there's a lot of PE investors that are wrestling
with this idea of building and operations arm or how much they
should invest in it and I think you should a lot of light into
that. So appreciate you doing this.
Oh great. Thanks for having me on.
(36:15):
I really appreciate it. Thanks for listening to today's
episode. Before you take off, just a few.
Requests from Our side #1 If youenjoyed today's content and want
more of it, please subscribe to the podcast on your favorite pod
catcher #2. If you are in the market for
marketing strategy consulting services, due diligence
services, or fractional CMO services, please visit our
(36:36):
website at www.howdessas.com andschedule consult today.
And #3 If you haven't already, grab a copy of my book Post
Acquisition Marketing. It's available on Apple Books on
Amazon and any bookstore that you can find online.
Get a copy because it walks through the framework that we
take all of our clients through and it'll definitely add value
to your business. And that's it for today.
(36:57):
We'll see you guys next time.
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