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Steven Klinsky on Building Businesses · Masters in Business

0:02
Speaker 1: This is mesters in Business with very Results on Bloombird
0:06
Speaker 1: Radio this weekend. On the podcast, I have an extra
0:11
Speaker 1: special guest. His name is Steve Klinsky and he has
0:14
Speaker 1: an absolutely storied history in the field of private equity.
0:20
Speaker 1: He is the person who essentially stood up the lb
0:23
Speaker 1: O department at Goldman Sachs when essentially there were half
0:28
Speaker 1: a dozen or so private equity firms in the country.
0:31
Speaker 1: He eventually goes to a Forceman Little where he's one
0:34
Speaker 1: of the first five founding partners. They grew a business
0:39
Speaker 1: where they eschewed junk debt. They very often were the
0:43
Speaker 1: white knight fighting against the so called barbarians at the gate.
0:48
Speaker 1: They believed in building businesses and far less focused on
0:52
Speaker 1: financial engineering. Eventually, Steve takes his experience and knowledge and
0:58
Speaker 1: stands up his own firm, New Mountain Capital, which is
1:01
Speaker 1: one of the largest private equity shops in the world.
1:05
Speaker 1: They have thirty seven billion dollars in clients and their
1:09
Speaker 1: own funds, which they have invested across a variety of
1:13
Speaker 1: disciplines from credit to strategic capital, as well as taking
1:19
Speaker 1: companies private and helping them grow into something more substantial
1:24
Speaker 1: than they've been in the past. I thought this was
1:27
Speaker 1: a master class in how private equity works from somebody
1:31
Speaker 1: who was there at the beginning, from Goldman to Forceman
1:34
Speaker 1: Little to his own firm, and has pretty much seen
1:37
Speaker 1: and done everything. I found this conversation to be fascinating,
1:41
Speaker 1: and I think you will also with no further ado,
1:45
Speaker 1: my conversation with New Mountain Capitals founder and CEO Steve Klinsky.
1:50
Speaker 1: So let's talk a little bit about that. M B
1:52
Speaker 1: A j D. That's quite a combination. What made you
1:56
Speaker 1: pursue that? I come from the Detroit Er Mission and
2:00
Speaker 1: I was a public school kid, went to university in
2:02
Speaker 1: Michigan and studied both economics and philosophy. Sorry about the
2:06
Speaker 1: theft of that last touch, and well, thank you, thanks
2:10
Speaker 1: for the condolences. Uh and uh. You know, my family
2:14
Speaker 1: had a business. My grandfather and grandmother had a store
2:17
Speaker 1: for thirty years in Detroit called Alberts where they sold
2:20
Speaker 1: women's clothes. And my we had been built into a
2:23
Speaker 1: chain by my dad and my uncle. So I was
2:26
Speaker 1: the youngest of five brothers and cousins, and they wanted
2:28
Speaker 1: to go into the business. And I also had a
2:30
Speaker 1: real love for constitutional law and political philosophy, so I
2:34
Speaker 1: actually went to both, you know, kind of the business
2:37
Speaker 1: school to kind of do a family obligation and the
2:40
Speaker 1: law school because I really love constitutional law at that
2:43
Speaker 1: point really interesting. Have you found one or the other
2:47
Speaker 1: more interesting in your career in Pe? I'm a big
2:50
Speaker 1: fan of both of them, and a big fan of
2:52
Speaker 1: the j d NBA program, and I'm about with both
2:54
Speaker 1: schools still today. You know. I thought the law school
2:57
Speaker 1: is much more traditionally academic, so I thought I was
3:00
Speaker 1: learning a lot there the business school. I was only
3:02
Speaker 1: twenty one years old. I was like the age of
3:04
Speaker 1: a college senior, and I didn't think I was learning anything.
3:07
Speaker 1: In hindsight, I learned a ton of the business school
3:09
Speaker 1: and at the law school both. I'm a big fan
3:12
Speaker 1: of multidisciplinary, you know, approaches, so they've both been great
3:15
Speaker 1: for me. So you do a senior thesis about what
3:18
Speaker 1: was then the newly emerging field of private equity. Which
3:21
Speaker 1: school did you do the thesis for? You do a thesis,
3:24
Speaker 1: especially for the j D NBA program. You get it.
3:26
Speaker 1: You get admitted into each school individually, but you've finished
3:30
Speaker 1: in four years instead of five, and you write a
3:32
Speaker 1: special thesis at j d NB A thesis that has
3:35
Speaker 1: long business And what was interesting was the first leverage
3:38
Speaker 1: by out of a public company happened when I was
3:41
Speaker 1: in graduate school. KKR took a a stock exchange company
3:45
Speaker 1: called Who Die Private and it was the first time
3:50
Speaker 1: it was the first leverage by out of a public company,
3:54
Speaker 1: and so it was a whole new idea. I found
3:56
Speaker 1: it very interesting. You know, I had no work experience
3:58
Speaker 1: in anything, so I thought, what an interesting idea and
4:01
Speaker 1: a potent. We had sold the family business, maybe buy
4:03
Speaker 1: another family business one day through a leverage buyout. So
4:06
Speaker 1: I did my thesis on how leverage buyouts work from
4:09
Speaker 1: the legal in the business side. And I might have
4:11
Speaker 1: been the first person coming out of graduate school saying
4:14
Speaker 1: I want to be a private equity specialists. So right place,
4:18
Speaker 1: right time, and the right insight into what was then
4:21
Speaker 1: a very novel field. So is that what ultimately leads
4:25
Speaker 1: you to starting at Goldman Sachs Well, I decided I
4:28
Speaker 1: thought about corporate law. I wanted to be a Supreme
4:31
Speaker 1: Court justice, and then I realized John Roberts, who was
4:33
Speaker 1: a year ahead of me, was the guy was gonna
4:35
Speaker 1: Yeah he was one year You know, there were some
4:37
Speaker 1: pretty smart dudes at Harvard Law School. So you see John,
4:41
Speaker 1: and you say, right now, he was one year older
4:43
Speaker 1: than me. So if I see John, I would say, hello,
4:45
Speaker 1: Mr Justice Roberts, you don't know me, That's what I
4:46
Speaker 1: would say to Mr Justice. But in school, but he
4:49
Speaker 1: was one year I had. I'm just saying, you know,
4:51
Speaker 1: I realized, you know, I had a picture of Oliver
4:54
Speaker 1: Wendell Holmes above my desk, and I was incredibly earnest
4:57
Speaker 1: and intent, and I said, well, you know, I'm alright,
4:59
Speaker 1: but there's some really it's probably not gonna be me
5:01
Speaker 1: as the Supreme Court justice. So I thought about, and
5:05
Speaker 1: I did work for Larry Tribe and Kind Law for
5:07
Speaker 1: really yeah, it was between corporate law and investment banking.
5:11
Speaker 1: And I decided, if I was gonna be in corporate,
5:14
Speaker 1: I'd rather be the client than the lawyer. And so
5:18
Speaker 1: I joined Goldman in there. It was a twelve person
5:20
Speaker 1: merger department and they were just in the days when
5:23
Speaker 1: the the takeover wars were very hot, and Goldman was
5:27
Speaker 1: the firm defending everyone against raids and Morgan Stanley was
5:30
Speaker 1: doing the raids. So I joined Goldman in their merger department,
5:33
Speaker 1: but said I'd like to be your lb O guy.
5:35
Speaker 1: They said, we've never done it. Le they said, we've
5:38
Speaker 1: never done one. You could be the LBL guy, as
5:40
Speaker 1: like saying I want to be the wheat farmer on
5:42
Speaker 1: the moon. There was no competition go ahead and uh so,
5:46
Speaker 1: uh so there there was no LBO that had ever
5:49
Speaker 1: been done at Goldman Sachs when I joined it. And
5:51
Speaker 1: I came in with the idea because I had been
5:53
Speaker 1: studying it as a student. So you stood up the
5:56
Speaker 1: LBO division at Goldman. Essentially I helped bring it in
5:59
Speaker 1: the idea. They were starting to get topical, and they
6:02
Speaker 1: set up a two person group with a guy named
6:05
Speaker 1: Fred Eckert as a vice president and me as the associate.
6:07
Speaker 1: So we we were the original LBO group of Goldman Sachs.
6:11
Speaker 1: And uh We're supposed to do three million of revenue.
6:15
Speaker 1: We did thirty million. It just took off very fast,
6:17
Speaker 1: you know. And what we were doing was basically advising
6:20
Speaker 1: Goldman clients how to take their own family businesses back
6:23
Speaker 1: off the stock market. We were more we weren't owning
6:25
Speaker 1: businesses as much as we were advising families and stuff.
6:28
Speaker 1: We I did work on the very first principal investment
6:31
Speaker 1: that Goldman ever did. And Goldman was the size of
6:33
Speaker 1: a law firm back that people forget how much the partnership.
6:37
Speaker 1: We all fit in one room for the Christmas photo
6:40
Speaker 1: every year, and I mean it was literally like the
6:42
Speaker 1: size of a of a law from not a giant
6:44
Speaker 1: global institution. And the first deal they ever did with
6:47
Speaker 1: the partners own money was a company called Trinity paper Bag.
6:51
Speaker 1: It was a twelve million dollar paper and plastic bag
6:54
Speaker 1: company that the guy said, you know the bag and
6:56
Speaker 1: Tootsie with the ice cream, that was my bag. He was,
6:58
Speaker 1: you know, he's a great entrepreneur. And it was a
7:00
Speaker 1: half a million dollar investment from the firm and I
7:03
Speaker 1: worked on it, and the two CEO's of the firm
7:05
Speaker 1: watched over me, the head of mergers and everyone watched
7:09
Speaker 1: over me. There. Everyone was very concerned with this deal
7:11
Speaker 1: because there was a half a million, half a million
7:13
Speaker 1: of the partner's money. So it was very early days
7:16
Speaker 1: and all this stuff. So it was a good time too.
7:18
Speaker 1: It's like going to Silicon Valley the day transistors were
7:20
Speaker 1: invented or something. That's very good time. So how long
7:23
Speaker 1: does it take for the LBO group at Goldman to
7:27
Speaker 1: build into something fairly hefty. Yeah, I started a Goldman
7:30
Speaker 1: in a one doing you know, mostly raid work and
7:34
Speaker 1: traditional merger and seller work. The LBO group was probably
7:37
Speaker 1: started in eight two and it was already a big
7:40
Speaker 1: success in eighty four when I got quartered away by
7:43
Speaker 1: force a little they poached me away. So tell us
7:45
Speaker 1: a little bit about that. You're effectively amongst the first
7:49
Speaker 1: five founding partners. Is that a fair stay? Well, there
7:52
Speaker 1: were only twenty private equity firms in the world in
7:56
Speaker 1: four They are now over five thousand. I also just
7:58
Speaker 1: finished being the chairman of the price of an equity industry,
8:00
Speaker 1: something called the American Investment Council. But there used to
8:03
Speaker 1: only be twenty private equity firms. KKR was the biggest,
8:07
Speaker 1: with four dred million of assets and eight people, and
8:11
Speaker 1: Forest my little was the second biggest, with two hundred
8:14
Speaker 1: million of assets and four professionals. And they hired me
8:17
Speaker 1: and as the fifth professional. And by nineties two guys
8:22
Speaker 1: had left, so it was the two Forceman brothers, and
8:24
Speaker 1: I was the most senior guy, you know in the nineties.
8:26
Speaker 1: But it was you know, very small, very new, and uh,
8:30
Speaker 1: you know, obviously a great time to enter. So even
8:34
Speaker 1: back then when it was the size that you could
8:37
Speaker 1: take a Christmas picture with everybody in one room. At
8:40
Speaker 1: Goldman they're still doing investment banking, they're trading, their advising clients,
8:45
Speaker 1: They're involved in a lot of different things. How is
8:49
Speaker 1: it different when you moved to a shop with a
8:51
Speaker 1: singular focus on private equity and LBO. Well, the the
8:55
Speaker 1: key thing to me was the thing about being in
8:58
Speaker 1: a private equity shop versus investment bank is that you
9:02
Speaker 1: are the owner of the company. I mean, even when
9:04
Speaker 1: I was at Goldman Sachs doing private equity work, it's
9:07
Speaker 1: more equivalent or merger work. It's much more equivalent to
9:09
Speaker 1: being a house broker than owning the house. So you
9:13
Speaker 1: sell a lot of houses and you get commission on
9:15
Speaker 1: what you sell. But when you're in private equity, you
9:18
Speaker 1: own the business, you control it, you're responsible for it,
9:22
Speaker 1: you have real ownership in it. As a member of
9:25
Speaker 1: forcement Little I had true ownership in that company that
9:28
Speaker 1: I never had as an investment banker Goldman Sachs. So
9:31
Speaker 1: that was the attraction to how does the private equity said,
9:34
Speaker 1: how does that affect your psychology? At what deals you consider,
9:38
Speaker 1: what you skip? How does that change how you view them. Well, again,
9:42
Speaker 1: it gives you an owner's mentality. A really good investment
9:46
Speaker 1: banker has that mentality anyways because they just want to
9:48
Speaker 1: give great, you know, wise advice. A bad investment banker
9:52
Speaker 1: just wants to get deals done and doesn't care much.
9:55
Speaker 1: But as a private equity owner, again, first of all,
9:58
Speaker 1: you do invest heavily of your own money in the transactions.
10:01
Speaker 1: Plus you have additional ownership through the you know, the
10:04
Speaker 1: carried interests, the profits interests, and so I come from
10:08
Speaker 1: a family business background, and private equity really is a
10:12
Speaker 1: common if you do it right, as a combination of
10:14
Speaker 1: the family business mentality of a small group of people
10:17
Speaker 1: who own the business, but also the best aspects of
10:20
Speaker 1: a big company where today we have tremendous resources that
10:23
Speaker 1: a family could never have. But you do have that
10:25
Speaker 1: family business mentality when you own a business, if you're
10:28
Speaker 1: a good private equity firm, So you leave Goldman, you
10:30
Speaker 1: end up Enforcement. How long did you stay at Enforcement?
10:33
Speaker 1: Little and what sort of deals were you working on? Yeah?
10:36
Speaker 1: So I joined in eighty four as a as a
10:39
Speaker 1: younger version of a partner. I made as an associate partner,
10:42
Speaker 1: I made full general partner by eighty six, and uh,
10:46
Speaker 1: so I was there for their glory years of the
10:49
Speaker 1: eighties and the nineties. I was there from eighty four
10:52
Speaker 1: to ninety nine in their best best years, and so
10:55
Speaker 1: I did live through things like Barbarians at the Gate.
10:57
Speaker 1: I was a partner for that. I have online in
11:00
Speaker 1: the book where I say Ross Johnson is totally insane
11:03
Speaker 1: and leave the book. I actually spent about four months
11:05
Speaker 1: night and day working on it. But I'm I'm happy.
11:07
Speaker 1: My line was not pay anything, borrow anything. I'm very
11:10
Speaker 1: happy with my line um on page two fifty nine
11:13
Speaker 1: if your listeners want to check it out. And uh
11:16
Speaker 1: we were also the uh the white Night. We were
11:18
Speaker 1: the kind of the anti milk and junk bond guys.
11:21
Speaker 1: So we were the white Knight on Revlon. We had
11:23
Speaker 1: some great success in the eighties and the nineties were
11:25
Speaker 1: even better. So I can talk more about that. But
11:29
Speaker 1: so I was there for fifteen years. So let's talk
11:31
Speaker 1: a little bit about l b O s in the
11:33
Speaker 1: eighties and nineties. You mentioned the first l B O
11:36
Speaker 1: of a publicly traded company took place in ninety nine,
11:39
Speaker 1: and that led to your j D n b A
11:42
Speaker 1: thesis about it tell us a little bit about what
11:45
Speaker 1: the eighties and nineties were like when junk bonds and
11:50
Speaker 1: lb os first began to ramp up and become popular. Well,
11:53
Speaker 1: so just to give a little historical perspective on how
11:56
Speaker 1: much things have changed, and there is an economic backdrop
11:59
Speaker 1: to all of this up. So, my first day at
12:01
Speaker 1: work was October one one at Goldman Sachs. The highest
12:06
Speaker 1: interest rates in US history were literally the day before
12:09
Speaker 1: I started work, September, I think the tenure treasury was
12:14
Speaker 1: fifteen point eight four. So when we're you know, third
12:17
Speaker 1: three point seven percent tenure treasuries, it is nowhere near
12:21
Speaker 1: kind of the situation. There had been stag inflation where
12:24
Speaker 1: the stock market was lower in eighty one than it
12:26
Speaker 1: had been in nineteen sixty eight, and you know, incredibly
12:30
Speaker 1: depressed market, super high interest rates. So the initial idea
12:34
Speaker 1: of leverage biout's very high inflation was really was financial engineering, truthfully,
12:40
Speaker 1: back in those days, because if you had ninety five
12:43
Speaker 1: parts debt and five parts equity and ten percent inflation,
12:47
Speaker 1: you know, you could triple your equity with no unit
12:49
Speaker 1: growth at all. And interest rates were coming down after
12:52
Speaker 1: Vulka and Reagan broke you know, inflation and the stock
12:56
Speaker 1: market was going up. So that's where private equity start
13:00
Speaker 1: did as it really was for investment bankers as a room,
13:03
Speaker 1: having the nerve to borrow money when other people had
13:06
Speaker 1: been kind of beaten down for thirteen years. Forcement Little started,
13:11
Speaker 1: you know, around a little bit few years before then,
13:14
Speaker 1: and they started without junk bonds. It used to be
13:16
Speaker 1: the commercial banks would lend the senior debt and the
13:19
Speaker 1: insurance companies like Credential would lend what was called the
13:22
Speaker 1: mezzanine debt. There was no junk debt available in the market,
13:26
Speaker 1: and Forcement Little created instead of going to insurance companies,
13:29
Speaker 1: raised its own fund for the mezzanine debt that they
13:32
Speaker 1: could have the banks themselves and then force some little equity.
13:36
Speaker 1: So that's how it all started. The initial deals were
13:39
Speaker 1: small in dollars, but incredibly high returns. Like we owned
13:42
Speaker 1: a company called tops Chewing Gum back in the baseball
13:45
Speaker 1: card craze, eighty million dollar deal with ten million of
13:49
Speaker 1: equity that went up to eight hundred million of value.
13:52
Speaker 1: So ten million became eight hundred million. It's eighty times
13:55
Speaker 1: your money, which is not bad. It's not the five
13:58
Speaker 1: trillion of gains. Private equity makes the day, but it
14:00
Speaker 1: was very eye opening. Or William, you know there was
14:03
Speaker 1: a very famous deal Gibson greeting cards where like a
14:06
Speaker 1: half a million of equity went to forty million. I mean,
14:09
Speaker 1: those were the that's what got people all excited. Numbers,
14:12
Speaker 1: well that is it was kind of venture capital numbers
14:15
Speaker 1: because the dollars were so small, so it was a
14:18
Speaker 1: tiny compared to what private equity is today, but very
14:21
Speaker 1: high returns. So that started everyone going into the field.
14:24
Speaker 1: After the initial twenty firms, you know, Carlisle started, Blackstone started,
14:29
Speaker 1: and they're very transparent. They saw the success of these
14:32
Speaker 1: other firms and said, why can't we do that too,
14:34
Speaker 1: So in the mid eighties lots of people started to
14:36
Speaker 1: enter a new firms that became great and kept growing
14:40
Speaker 1: milk and started junk bonds around the mid eighties saying hey,
14:44
Speaker 1: and he had done I think serious academic work that
14:47
Speaker 1: the credit ratings were too conservative and if you just
14:51
Speaker 1: only went into triple as, you were giving up return.
14:54
Speaker 1: And so he was creating that market and he both
14:58
Speaker 1: lent to great companies like you uh, the cable companies
15:01
Speaker 1: that grew to be giants, and to some people who
15:03
Speaker 1: were kind of more questionable character who you know, gave
15:06
Speaker 1: business a bad name. So, uh, that was the alternative.
15:09
Speaker 1: And then for some little didn't use We were the
15:11
Speaker 1: one from that didn't use milk, and we had our
15:13
Speaker 1: own fund and so we were kind of the white
15:16
Speaker 1: shoe alternative to milking and all those Let's get a
15:18
Speaker 1: little granular, and you're the right person to dive into
15:21
Speaker 1: this with both a j D and an n B A.
15:24
Speaker 1: When we're talking about a structure of a financing and
15:27
Speaker 1: the senior mezzanine and junk, essentially that's the payout order
15:33
Speaker 1: in the event of a bankruptcy. Tell us a little
15:35
Speaker 1: bit about why it's structured that way, the advantages of
15:39
Speaker 1: each and the risks of each. Yeah, I mean, the
15:42
Speaker 1: best way to understand private equity is just to think
15:44
Speaker 1: about if you're buying a house. It's really using the
15:47
Speaker 1: principles everyone used in real estate over in the corporate world.
15:51
Speaker 1: So if you know, if you're a real estate guy
15:53
Speaker 1: and you're buying a building, you would have a mortgage
15:55
Speaker 1: and then put up your own money, or maybe you
15:57
Speaker 1: would have a first mortgage and then a second mortgage
16:00
Speaker 1: so you could put up less money, and if you're
16:02
Speaker 1: really good at improving the building or you just get lucky,
16:05
Speaker 1: that inflation raises the value of the building. You know,
16:08
Speaker 1: by having used debt, all the gain goes to that
16:10
Speaker 1: thin strip that is the equity. But of course if
16:13
Speaker 1: the value drops, the first thing that gets lost is
16:15
Speaker 1: the equity. So the senior debt is the safest thing
16:19
Speaker 1: because let's say it's sixty cents out of a hundred,
16:21
Speaker 1: until forty cents is lost, the senior debt is safe.
16:25
Speaker 1: Then the junk debt or mezzanine debt maybe the next
16:27
Speaker 1: twenty cents in the old days, and so if it's
16:30
Speaker 1: worth eighty cents on the dollar, they're safe, and then
16:33
Speaker 1: the equity is the bottom twenty. But if it goes
16:35
Speaker 1: up to two dollars, they've made a dollar on twenty cents.
16:38
Speaker 1: So it's just like real estate, but it was done
16:40
Speaker 1: in the in the corporate world, and there's just different
16:43
Speaker 1: risks and return possibilities. You know. The thing with debt
16:46
Speaker 1: is you can only make your interest rate. With equity,
16:49
Speaker 1: you're unlimited on how much you can make, but you're
16:51
Speaker 1: the first person to lose money if you do a
16:53
Speaker 1: bad that's a perfect explanation of that. So in the
16:57
Speaker 1: nineties you have more companies entering the space ace. You
17:00
Speaker 1: mentioned there were twenty pe firms back then. Uh, now
17:04
Speaker 1: there's five thousand. How competitive was it to source steals?
17:09
Speaker 1: Was there, you know, overwhelming luxury of choices or were
17:13
Speaker 1: people scratching to get into the best deals. The truth
17:17
Speaker 1: is it always feels competitive, no matter where you are
17:19
Speaker 1: in history or any given time. It never feels that
17:22
Speaker 1: easier or that. It's only in hindsight you realize how
17:26
Speaker 1: wonderful or terrible the conditions were. And bad news usually
17:30
Speaker 1: leads to good opportunities, and good news usually leads to problems.
17:33
Speaker 1: I mean, so you just have to live through all
17:35
Speaker 1: this stuff. I will say. When there were a fewer firms,
17:37
Speaker 1: so I was effectively there had Ted and Nick Forceman,
17:40
Speaker 1: Brian Little had retired from the firm. I was the
17:43
Speaker 1: next senior. So for years I was kind of like
17:46
Speaker 1: the Turkish merchant in the sock where the sellers would
17:49
Speaker 1: come and lay all their goods out in front and
17:50
Speaker 1: say you can look at this company and this company
17:52
Speaker 1: and this company, and I say no, no, no, bring
17:54
Speaker 1: them show me another company. Today, private equity is so
17:58
Speaker 1: much more professional. And my firm, which is not as
18:00
Speaker 1: famous as for us a little bit, but it's much
18:02
Speaker 1: bigger in the industry, is much bigger. You know, we
18:04
Speaker 1: have two hundred people were proactively super deep in specific
18:08
Speaker 1: industries like life science supplies, where were incredibly knowledgeable. And
18:12
Speaker 1: it's gone from kind of the small generalists to really
18:16
Speaker 1: sophisticated business building organizations who use frankly, much less debt
18:20
Speaker 1: as a percentage of the capital structure. Now you might
18:23
Speaker 1: have six equity and debt not And how long did
18:28
Speaker 1: that transition takes, because that's a very different structure. Obviously
18:32
Speaker 1: interest rates have an impact, will get to that. I
18:35
Speaker 1: think that transition has been steadily happening for the forty year.
18:38
Speaker 1: I've been in private equity for forty years now, and
18:41
Speaker 1: one thing I try to say is that private equity
18:43
Speaker 1: has evolved from a form of finance into a form
18:47
Speaker 1: of business. So in when interest rates were there and
18:52
Speaker 1: everything was started, it was about you know, and I
18:55
Speaker 1: was one of the four, for example, four investment bankers
18:57
Speaker 1: having a lot of hood spun and saying let's borrow
18:59
Speaker 1: some my and go for it. Today it's extremely differently.
19:04
Speaker 1: My organization owns companies that employ I think sixty people,
19:09
Speaker 1: we would be roughly eighty three and the Fortune five
19:11
Speaker 1: if we were one entity. We use all that knowledge
19:14
Speaker 1: to buy the next fairly small company and build it.
19:17
Speaker 1: So it is so different from where I was with
19:20
Speaker 1: Forceman Little, or where I was even when I started
19:22
Speaker 1: my firm by myself, I didn't have the you know,
19:25
Speaker 1: the strength. The key is to build. Think of private
19:27
Speaker 1: equity as a business that builds businesses and make that
19:30
Speaker 1: business engine stronger and stronger. And that's it's a better
19:34
Speaker 1: form of governance because you're like a family business. Since
19:36
Speaker 1: you don't have nine reporting, you don't have to worry
19:39
Speaker 1: about third parties. You can be very rational, but you're
19:42
Speaker 1: no longer constrained to just a few investment bankers. You
19:45
Speaker 1: can now be a very strong operation. And that's been
19:47
Speaker 1: a fourty year transition. So we're gonna talk about New
19:50
Speaker 1: Mountain Capital and a bit. I want to stay in
19:52
Speaker 1: the nine nineties. What sort of sectors and what sort
19:56
Speaker 1: of industries were the hot memes back then? What did
20:00
Speaker 1: you focus? Yeah, so the big long term story with
20:03
Speaker 1: Force some Little as investors, and it was a great firm.
20:05
Speaker 1: We were the second biggest firm, but I think we
20:07
Speaker 1: had the highest returns was you know, in the eighties,
20:11
Speaker 1: it was about kind of any company that looked cheap
20:14
Speaker 1: with a lot of debt. You know, obviously there was
20:17
Speaker 1: seven crash of the stock market, but there was a
20:20
Speaker 1: recession in where what we could see was our high
20:24
Speaker 1: quality companies that were market leaders did fine, and the
20:27
Speaker 1: number three auto parts elastomer company lost all market share
20:31
Speaker 1: to the number one guy and did terrible. And no
20:33
Speaker 1: matter how little you had paid for it, you had
20:35
Speaker 1: paid too much. So as a firm, force little set look,
20:40
Speaker 1: let's evolve into higher quality growth companies, not just by
20:44
Speaker 1: things because they're low EBA D, but really picked companies
20:47
Speaker 1: that can be great growth leaders. And the transaction that
20:51
Speaker 1: I'm most proud of in the nineties was a company
20:54
Speaker 1: called General Instrument that, you know, when we found it
20:58
Speaker 1: was a very messed up can go armor at doing racetrack,
21:01
Speaker 1: toe boards and defense electronics, but buried within it was
21:05
Speaker 1: the best cable and satellite television equipment business in the world.
21:09
Speaker 1: And people thought the Japanese were over going to destroy
21:12
Speaker 1: all American electronics. We had a different opinion that I
21:15
Speaker 1: can tell you why, that we could fight back, and
21:18
Speaker 1: it went from about a billion of value to twenty
21:20
Speaker 1: billion of value over the course of the nineties. And
21:23
Speaker 1: that was what I worked closest on over the nineties,
21:26
Speaker 1: and so the other great deals we did in the nineties, though,
21:29
Speaker 1: Gulf Stream Jet, which Ted you know, personally loved and lead,
21:34
Speaker 1: went through some tough times and being a huge success.
21:37
Speaker 1: We had Ziff Davis Magazines that we sold to Mr
21:40
Speaker 1: Sun and started massiocis Son's career. He bought it because
21:43
Speaker 1: he had spotted it and got him kind of into
21:45
Speaker 1: the Internet and all that through through us. Well he's
21:50
Speaker 1: not fine, he's done. He did very well with it.
21:52
Speaker 1: And uh so we had a lot of great We
21:55
Speaker 1: had Department fifty six Christmas ornaments, We had all sorts
21:57
Speaker 1: of deals. So it wasn't one specific end street, but
22:00
Speaker 1: we went from kind of junkie cheap companies too. I
22:04
Speaker 1: viewed the general instrument being the model for what force
22:08
Speaker 1: model was about what's kind of interesting is you mentioned
22:11
Speaker 1: a couple of times about what happens when you're in
22:17
Speaker 1: the number three and number four company and they're getting
22:19
Speaker 1: their lunch eaten by the number one in all of
22:22
Speaker 1: these sectors. Is it very much a winner take all
22:26
Speaker 1: where you really want to be in the top maybe
22:29
Speaker 1: second company, but not much further beyond that. Well, what
22:32
Speaker 1: I can say, and this is getting maybe ahead of
22:33
Speaker 1: it to get into new mountain strategy. But when I
22:36
Speaker 1: broke off to start a new mountain, it was really
22:38
Speaker 1: based on two principles defensive growth and business building. And
22:42
Speaker 1: what offensive offensive growth? This is like a defensive growth
22:46
Speaker 1: in business building. What I mean by that even more
22:48
Speaker 1: important than number one versus number three. There are some
22:52
Speaker 1: industries that have the wind at their back, that have
22:56
Speaker 1: secular growth for the next ten years, and there are
22:59
Speaker 1: some into strees that are inherently subject to changing conditions.
23:03
Speaker 1: Oil prices go up or down. Uh you know, fashion
23:07
Speaker 1: retail goes in and out, unlike for example, selling an
23:11
Speaker 1: ingredient for pharmaceuticals where they need the ingredient and your
23:15
Speaker 1: spect in by the f d A and you know
23:17
Speaker 1: they're so I mean, there are good industries and bad
23:20
Speaker 1: industries that from the point of view of safety and growth,
23:23
Speaker 1: and the biggest mistakes in private equity in my forty
23:27
Speaker 1: years observation is when the industry melts underneath you. So,
23:31
Speaker 1: for example, there were giant disasters. After I left for
23:35
Speaker 1: some little forcement was doing great when I left. After
23:37
Speaker 1: I left, they changed their strategy and went into what
23:41
Speaker 1: we're called selex, these alternative telephone companies that were supposed
23:45
Speaker 1: to That was a super hot theme in the year
23:50
Speaker 1: and two thousand and so after I left to start
23:52
Speaker 1: a new mountain, they migrated into that, and that whole
23:56
Speaker 1: industry was very hot, and then blew up the idea
24:00
Speaker 1: George Gilder telecosm. It was the idea that you could
24:05
Speaker 1: go in against. There. There had been a regulatory change
24:07
Speaker 1: that said the big Bell telephone monopoly is going to
24:10
Speaker 1: share its equipment with the nice new entrant and be
24:12
Speaker 1: very friendly and let the new entrant use its equipment.
24:15
Speaker 1: And that sounded great. Let's go into the new entrant
24:17
Speaker 1: and then lo and behold. For some reason, the equipment
24:19
Speaker 1: didn't work for the new entrant as well as they
24:22
Speaker 1: had expected, and so these things went from fifteen billion
24:25
Speaker 1: to zero. There was exo communication and anyway, that was
24:29
Speaker 1: because the industry, and once you've gone into that space,
24:32
Speaker 1: there was no way to save it. Or the initial
24:35
Speaker 1: Internet boom where if you own coffee cups dot com
24:39
Speaker 1: as a name, you were worth a billion dollars and
24:42
Speaker 1: you had no earnings and no revenue. Though I mean
24:44
Speaker 1: there were things that just go away. I mean bitcoin,
24:47
Speaker 1: and you know, a crypto could totally vanish, and if
24:50
Speaker 1: you put your money in there, it's not how well
24:52
Speaker 1: you manage your business, you're just in the wrong space.
24:54
Speaker 1: So the idea of New Mountain was, and this is
24:57
Speaker 1: kind of evolving from Force a little, was pick the
25:02
Speaker 1: sectors that at least for ten years ahead, have clear, stable,
25:06
Speaker 1: secular growth, and then buying at a reasonable price so
25:11
Speaker 1: we don't use that much debt. My firm has never
25:13
Speaker 1: had a bankruptcy, never missed an interest payment. In the
25:15
Speaker 1: history of our private equity effort. We've generated over seventy
25:18
Speaker 1: billion of enterprise value gains without one missed interest payment
25:22
Speaker 1: and added over sixty one jobs about one missed interest payment.
25:25
Speaker 1: So if you start safe, the question is how high
25:28
Speaker 1: you can build it, how big a mountain you can build,
25:31
Speaker 1: And that gets to operational skills. So it's those two things.
25:34
Speaker 1: So the concept to make the parallel to real estate.
25:37
Speaker 1: You're better off with the worst house in a great
25:41
Speaker 1: neighborhood than a great house and a not so good name. Yeah,
25:44
Speaker 1: I mean you know, if you go off. I guess,
25:47
Speaker 1: I guess the equivalent would be instead of saying, I'm
25:49
Speaker 1: going to go into the middle of the desert and
25:51
Speaker 1: build a building and hope people come around me, which
25:56
Speaker 1: may or may not work. If you're in a neighborhood
25:58
Speaker 1: you know as rising values, and you search for the
26:02
Speaker 1: right value and then you improve that house and you
26:04
Speaker 1: and you know, you fix the plumbing and you painted
26:06
Speaker 1: and you clean it up. You know, it's safer than
26:08
Speaker 1: taking the speculation on whether people are going to move
26:12
Speaker 1: to the jungle and create you know, the village in
26:14
Speaker 1: the jungle or not really interested that. That's what we're
26:17
Speaker 1: based on. So let's talk a little bit about your
26:20
Speaker 1: experience enforcement little during the R j R And Nibisco takeover.
26:25
Speaker 1: Tell us a little bit about that experience. What was
26:28
Speaker 1: that like? Yeah, it was an amazing time. And just
26:31
Speaker 1: to give some context to it, it was part of
26:33
Speaker 1: a bigger, longer term battle, which was there was the
26:38
Speaker 1: whole junk bond world building behind Mike Milk and who
26:41
Speaker 1: I now like in respect and I think he's become
26:43
Speaker 1: a great philanthropist. At the time, my firm was just
26:46
Speaker 1: dead set opposed to anything doing battle with him, not
26:51
Speaker 1: using his money. And you know, it was a famous editorial.
26:53
Speaker 1: Ted Forceman wrote that I helped, you know, right, the
26:56
Speaker 1: first draft of for him and all that. So uh,
26:59
Speaker 1: And it was we had fought against junk bonds in
27:01
Speaker 1: the Revlon situation. We had fought against junk bonds and
27:05
Speaker 1: lear Siegler situation, and we were the alternative to junk
27:08
Speaker 1: bonds as a firm. And Ted, who was a very colorful,
27:12
Speaker 1: glamorous guy dating lady died bigger than life. Also was
27:16
Speaker 1: kind of had grown up in a very white shoe
27:18
Speaker 1: preppy way in Connecticut, and I think it was just
27:20
Speaker 1: kind of offended by the whole junk bond world and
27:23
Speaker 1: just opposed it. Didn't like it. They're barbarians, They're they're barbarians.
27:27
Speaker 1: He's the one who said the barbarians at the gate
27:30
Speaker 1: and some people. That was his line, you know, is
27:33
Speaker 1: his line. And the book, by the way, is quite accurate.
27:36
Speaker 1: The movie is a total joke. So the movie says
27:39
Speaker 1: based on a true story, but it was written by
27:41
Speaker 1: the guy comedy right who wrote mash And they have
27:43
Speaker 1: Ted and Nick dressed up as Indians and with cowboys,
27:46
Speaker 1: and you know, KKRE and so that was none of
27:48
Speaker 1: that happened, but the book was quite accurate. And anyways,
27:52
Speaker 1: Our j Are itself, you know, was going to be
27:55
Speaker 1: a deal where kak Are was working with Ross Johnson,
27:58
Speaker 1: the CEO of Our Jeri. Because the stock had fallen
28:00
Speaker 1: so much. Then Ross Johnson decided not to go with
28:04
Speaker 1: kke Are and he teamed up with Lehman Brothers and
28:06
Speaker 1: Solomon Brothers, who had a giant a chance for four
28:09
Speaker 1: millions of fees by doing the deal, which was astounding
28:12
Speaker 1: amount of fees for Wall Street in the eighties, and
28:15
Speaker 1: KKR felt, well that was a break of a word.
28:19
Speaker 1: They that they were entitled to still go after the
28:21
Speaker 1: company and it was very cheap by a lot of
28:23
Speaker 1: measures when the whole thing started. And then Ross Johnson
28:27
Speaker 1: and his investment bankers didn't have enough money in the
28:29
Speaker 1: world to do the deal, and so they came to
28:32
Speaker 1: force Himan Little as the second biggest firm after kke Are,
28:36
Speaker 1: and said would you back us because we need your
28:39
Speaker 1: capital to get the deal done. And this is why
28:43
Speaker 1: you know, again in the book, there's a meeting where
28:46
Speaker 1: Ross Johnson comes in to meet Ted. I'm a partner,
28:48
Speaker 1: so Ted and I sit with him, and he says,
28:51
Speaker 1: I wanted to the deal. I don't want to do
28:52
Speaker 1: the deal. It makes sense it's to And Ted says
28:55
Speaker 1: to me, after, what do you think of him? And
28:56
Speaker 1: I say, I think he's totally insane? And again I
28:59
Speaker 1: was and quoted again in the book. But we actually
29:01
Speaker 1: spent you know, night and day for weeks working. You know,
29:05
Speaker 1: we thought we should study it. I mean, it's a
29:07
Speaker 1: huge opportunity. We should, you know, it's our job to
29:10
Speaker 1: study as a good deal or not. We spent weeks,
29:13
Speaker 1: night and day studying it. Decided it wasn't a good deal,
29:16
Speaker 1: decided not to bid, which UM fine with. And then
29:19
Speaker 1: when we decided not to bid at ninety, it eventually
29:22
Speaker 1: went up to you know, a hundred and eleven or
29:25
Speaker 1: something like that. But was interesting was the size of it.
29:28
Speaker 1: I think it was with all the debt, like a
29:29
Speaker 1: thirty five billion dollar deal, and at the time it
29:33
Speaker 1: was the nineteenth largest company in the in the fortune
29:35
Speaker 1: five hundred I think at the time, so it's it's
29:38
Speaker 1: it would be like a three hundred billion dollar deal today.
29:40
Speaker 1: It was just huge for the time. And I remember
29:43
Speaker 1: literally sitting with the bankers at Manny Hanny, and we
29:46
Speaker 1: went through every lending bank in the world. Every major
29:50
Speaker 1: bank has said if they lend their full legal limit,
29:53
Speaker 1: could we raise enough debt. It's like, we need twenty
29:56
Speaker 1: billion of debt and if you know, Bank Santander will
29:59
Speaker 1: lend three it. And And you know, we tried to total
30:01
Speaker 1: it up and it barely got to the It was
30:03
Speaker 1: just an astoundingly big thing. There's no way to do
30:06
Speaker 1: this without junk bonds. There's no way to do it
30:08
Speaker 1: without junk bonds. And they eventually used, you know, and
30:12
Speaker 1: again they used something called reset notes, which said, well,
30:15
Speaker 1: if the bonds aren't doing well, we'll pay you a
30:17
Speaker 1: higher interest rate, which means, of course you're killing the
30:20
Speaker 1: company even further, which so it's like a vicious cycle
30:23
Speaker 1: of destruction. And it almost destroyed KKE Care. Kke Care
30:26
Speaker 1: and to buying it, and it was kind of a
30:28
Speaker 1: pyric victory because it was a very tough deal for them.
30:32
Speaker 1: They've they've done grated getting through it and they're you know,
30:35
Speaker 1: they're a wonderful firm today. But I would I don't
30:37
Speaker 1: think it was a happy experience from KKE Care to
30:39
Speaker 1: have bought it. And uh, you know, so We looked
30:42
Speaker 1: at it very hard decided not to bid. So I'm
30:44
Speaker 1: proud of our role in it. I mean, we we
30:46
Speaker 1: gave it a hard study and said no. But it
30:49
Speaker 1: was a wild time. And and the investment bankers at
30:51
Speaker 1: the time, we're just every time we went to a
30:54
Speaker 1: meeting on do Dillon side? Is this a good company
30:56
Speaker 1: or not? All they wanted to do was talk about
30:58
Speaker 1: the feet splits. Well, there's four hundred a fee. This
31:00
Speaker 1: is what we said. No, we don't want to talk
31:01
Speaker 1: about that. We're trying to fire out what are the
31:03
Speaker 1: earnings of the business. You know that. Well, you guys
31:06
Speaker 1: put your own capital. We look a little different. It's
31:10
Speaker 1: totally calculus less about you have more r O I
31:14
Speaker 1: than hey, what are the feast we didn't you have?
31:15
Speaker 1: The fees were irrelevant to us. We were all about
31:18
Speaker 1: we would have been investing our fund in a huge way.
31:20
Speaker 1: And we couldn't get anybody even to like focus on
31:23
Speaker 1: the business itself. Everybody was so focused on the you know,
31:27
Speaker 1: the the arrangements around it. It was. It was. It
31:30
Speaker 1: was a wild time. And so that obviously raises the question,
31:34
Speaker 1: all right, right off the bat, junk bonds shift the
31:38
Speaker 1: focus from hey, I'm risking my own capital and I
31:41
Speaker 1: want it back to how big a fee can we
31:44
Speaker 1: spin up? What are some of the other problems that
31:47
Speaker 1: you run into when junk bonds allow you to engage
31:50
Speaker 1: in that behavior? Well, I mean they can get out
31:53
Speaker 1: of hand. So I mean in oh seven and oh eight, Uh,
31:56
Speaker 1: you know what killed economy seven right where mortgages going down.
32:00
Speaker 1: But those were even levels and levels on that. But
32:06
Speaker 1: you know, lending was getting very effusive in oh seven
32:10
Speaker 1: and O eight and again banks, whether junk bond or not,
32:13
Speaker 1: we're saying, well, we're not even lending, we're syndicating, so
32:15
Speaker 1: we don't have to worry about it. I would say today,
32:19
Speaker 1: you know it is it is a much different environment.
32:22
Speaker 1: Even though the so called junk bond markets are strong
32:25
Speaker 1: and high yield is strong. Uh, there is much more
32:29
Speaker 1: equity in companies than there used to be. From the
32:31
Speaker 1: private equity firm. We have a lending arm at my
32:34
Speaker 1: firm as well. We have you know, we have both
32:36
Speaker 1: a public version called New Mountain Finance Company at private
32:39
Speaker 1: versions and when we're lending to other people's deals were
32:42
Speaker 1: usually undert loan to value, uh, you know, not to value,
32:48
Speaker 1: which is what it was. That's pretty safe. You have
32:52
Speaker 1: of losses etiot, right, and we think it's a good
32:54
Speaker 1: company that we've studied, you know, we use our private
32:57
Speaker 1: equity people to study the credit. So we say, look,
32:59
Speaker 1: it's in a tofensive growth industry. It's a very good company,
33:02
Speaker 1: it's a very good sponsor, and we're almost always under
33:06
Speaker 1: of the value. So we've we've had a very good
33:09
Speaker 1: safety record there. But it's a different mindset than the eighties.
33:12
Speaker 1: I mean, it was a it was a much wilder
33:14
Speaker 1: debt market in the eighties than it is today. It's
33:17
Speaker 1: a very different industry and a lot of the political
33:20
Speaker 1: criticism about private equity, I think is a holdover of
33:23
Speaker 1: the eighties where you had you know, Michael Douglas on
33:25
Speaker 1: the giant cell phone in Wall Street and stuff and people.
33:28
Speaker 1: That's what people think private equity is today and it
33:31
Speaker 1: just isn't anymore. So back then you had high rates
33:35
Speaker 1: that were falling. Today we have still relatively low rates
33:40
Speaker 1: that a rising. How does the various interest rate regimes
33:45
Speaker 1: affect what structures of deal look like, especially if there's
33:49
Speaker 1: a lot of debt involved. Yeah, well, absolutely absolutely, they
33:51
Speaker 1: absolutely do affect it. So again, the reason leverage biouts
33:55
Speaker 1: took off and became a wild stallion in the eighties
33:59
Speaker 1: was because you at interest rates going down for the decade,
34:02
Speaker 1: you had the stock market going up for the decade.
34:05
Speaker 1: I was walking Goldman's floor when the market broke a thousand,
34:09
Speaker 1: you know, the market was didn't get over a thousand,
34:12
Speaker 1: util like one or eighty two, and now it's thirty thousand.
34:15
Speaker 1: So I mean, I tell people I had to, I
34:16
Speaker 1: show him the curve of the stock market. I had
34:18
Speaker 1: a pretty good career, right, I mean, because my timing
34:21
Speaker 1: was quite good pleasant. You know, I'm trying to I'm
34:23
Speaker 1: trying to be good at what I do as well.
34:25
Speaker 1: So that is what led to the use of high debt,
34:29
Speaker 1: to all the enthusiasm for the field. I truly believe
34:33
Speaker 1: things have evolved. When we get to a current day.
34:37
Speaker 1: It you know, unit growth didn't matter because of inflation
34:40
Speaker 1: and rising markets. I would say for any good firm today,
34:44
Speaker 1: for the last ten years, is really about unit growth,
34:47
Speaker 1: business improvement, making the business better, because you can't just
34:51
Speaker 1: count on rising stock markets and falling interest rates anymore.
34:55
Speaker 1: If you do, you're you're really bad. Private equity firms
34:58
Speaker 1: so that's a giant end at everybody's back for three
35:02
Speaker 1: or four decades falling rates? Was it eighty two two?
35:07
Speaker 1: That's a pretty good run of the general trend is lower,
35:12
Speaker 1: and you have equity markets from eighty to at least
35:16
Speaker 1: through twenty one rising pretty substantially. Even with the two
35:20
Speaker 1: thousand's being a pretty it's probably been a forty year
35:23
Speaker 1: secular bullmarket after thirteen years of stagflation from sixty to
35:28
Speaker 1: eighty one, it's been, you know, forty good years from
35:31
Speaker 1: eight one to today. I'm glad you brought up that
35:34
Speaker 1: term because I'm old enough to remember the seventies as
35:40
Speaker 1: a kid going to get gas to mow the lawn
35:43
Speaker 1: and having the guy the attendant asked me, do you
35:46
Speaker 1: have an even number or odd number license plate? My
35:49
Speaker 1: my answer was, I'm eleven. I don't have a license plate.
35:54
Speaker 1: Just give the kid as down a guess. But whenever
35:57
Speaker 1: people talk about, oh, today we have stag inflation, you've
36:01
Speaker 1: experienced both. How do you compare this series to the
36:03
Speaker 1: seven Well, this is this is what I tried to say.
36:06
Speaker 1: My first day at work into ten year treasuries were
36:09
Speaker 1: fifteen point eight percent versus three point seven at a
36:13
Speaker 1: house mortgage could be people paying of the house mortgages,
36:17
Speaker 1: and the stock market was I think six times net
36:21
Speaker 1: income when I used to sit in the Goldman you know,
36:23
Speaker 1: h merger department on like what we could sell the
36:26
Speaker 1: company for, and we'd all sit around the table. I mean,
36:28
Speaker 1: if we really stretched ten times net income, I think,
36:32
Speaker 1: if we find the hot buyer, we can get the
36:34
Speaker 1: ten times you know, with no adjustments, no trickery, after
36:37
Speaker 1: tax net income. That would be a great price for
36:39
Speaker 1: most businesses. Or I remember reading a book when I
36:42
Speaker 1: was in graduate business school. Never pay more than tangible
36:45
Speaker 1: book value for any business. I mean, if you did
36:47
Speaker 1: that Amazon, you know, I mean, Google would be worth
36:50
Speaker 1: the penny. Or so why would I want to sell
36:52
Speaker 1: something for tangible? Why would I pay more than the
36:58
Speaker 1: value of the accounts receivable? There's no So that's and
37:01
Speaker 1: so it is totally different today. But also the skill
37:05
Speaker 1: sets you know what what I again, when we get
37:07
Speaker 1: into more new mountain. There are eight billion people in
37:10
Speaker 1: the world who get up every morning trying to make
37:13
Speaker 1: their life better, make the world better. And there are
37:15
Speaker 1: pockets of innovation all at all times, including now where
37:20
Speaker 1: things are getting better, cheaper, better, ways to do things.
37:23
Speaker 1: And if you're part of those trends and you accelerate
37:27
Speaker 1: those trends and improve those businesses, there's wonderful opportunities at
37:30
Speaker 1: all time. But it isn't just a general be dumb,
37:34
Speaker 1: lever things up, wait for things to rise. That is
37:36
Speaker 1: like dumb private equity that's been isn't around anymore. I
37:40
Speaker 1: think if it is, it's going to be bottom Quartel.
37:42
Speaker 1: Let's talk a little bit about why you launched New
37:45
Speaker 1: Mountain Capital. You were having fun at Enforcement Little. Why
37:50
Speaker 1: set out and stand up your own shop? Yeah, you know,
37:53
Speaker 1: I had had a great twenty years working with Goldman
37:58
Speaker 1: Sachs enforce some little Force Mi Little is a top,
38:00
Speaker 1: top performing place. It was a very quirky place. We
38:03
Speaker 1: had eight professionals at the firm and more people flying
38:07
Speaker 1: the jets and the helicopters and the working at the firm.
38:09
Speaker 1: And and Ted was kind of a very large who
38:12
Speaker 1: was a great mentor to me in a lot of ways.
38:14
Speaker 1: Was also known, you know, he's passed away, was known
38:17
Speaker 1: to be a somewhat difficult personality and uh life dating
38:22
Speaker 1: lady Die, you know, flying in the Gulf streams and
38:24
Speaker 1: all that. But it was always kind of a It
38:27
Speaker 1: was not a calm, happy place inside. So I broke
38:30
Speaker 1: off to start a new mountain, and uh, you know,
38:34
Speaker 1: it's gone better than ever would have expected. And it's
38:36
Speaker 1: been a great experience. Yes, So when you leave forceman
38:40
Speaker 1: a little, are you thinking I'm going to just do
38:43
Speaker 1: the same thing. Are you thinking I have a lot
38:45
Speaker 1: of ideas that wouldn't have worked there that I want
38:48
Speaker 1: to try out on my own. You know, I had
38:52
Speaker 1: really enjoyed the General Instrument experience where we took it
38:56
Speaker 1: from a billion of value to twenty billion, and had
38:58
Speaker 1: we had I can imagine why it enjoy well. And
39:00
Speaker 1: besides that the value went up. We had been the
39:04
Speaker 1: first company in the world to propose an all digital
39:07
Speaker 1: television standard. We helped pioneer cable modems, We created the
39:11
Speaker 1: thousand channel cable systems on demand. It was really a
39:14
Speaker 1: great experience for nine years just really building a business,
39:17
Speaker 1: not just putting passive capital rock and it was it
39:21
Speaker 1: was considered one of the first great kind of technological deals.
39:24
Speaker 1: I used to go out to Kleiner Perkins and have
39:26
Speaker 1: a regulation with them, so I mean it was a
39:27
Speaker 1: really kind of a cutting edge deal. And other deals
39:30
Speaker 1: were similar at FORCEM a little so the idea of
39:33
Speaker 1: safety but growth, really growing businesses. The whole name New
39:37
Speaker 1: Mountain comes to the idea of building new mountains and
39:39
Speaker 1: industries where we invest and protect the downside first and
39:43
Speaker 1: then really build something instead of levering things or risking
39:47
Speaker 1: things was very attractive. And and the fact to build
39:50
Speaker 1: a culture that was kind of more of a Goldman
39:52
Speaker 1: Sachs family business culture. Plus that those approaches, you know,
39:58
Speaker 1: we're compelling. So talk about building new mountains in You
40:03
Speaker 1: executed a four billion dollar i p O for your
40:07
Speaker 1: Avantur Life Sciences company, the largest healthcare related I p
40:12
Speaker 1: O I think in history. Is that is that? Yeah,
40:14
Speaker 1: we've had we've had some good I p O successes
40:16
Speaker 1: and you know, and I'm only gonna tell you what's
40:18
Speaker 1: in the public record because I don't want to try to,
40:20
Speaker 1: you know, give returns or anything. We had bought a
40:23
Speaker 1: business that was called JT. Baker for two million dollars
40:27
Speaker 1: when it was going to be discontinued by Malan Kratt.
40:29
Speaker 1: We renamed it avant Or change the management, change the strategy,
40:33
Speaker 1: and built in from two nine million to twenty billion
40:35
Speaker 1: plus and not fortunate, not to shabby, and it's now
40:39
Speaker 1: you know, with Thermo Fisher, one of the two leaders
40:42
Speaker 1: in lab equipment and life science supplies around the world.
40:45
Speaker 1: We had another business like that called Signify, which is
40:49
Speaker 1: in contract to be sold to CVS. What Signify is
40:54
Speaker 1: the leader and sending doctors and nurses into the homes
40:57
Speaker 1: for medical checks. And we took it from two fifty
41:01
Speaker 1: thousand home visits a year to two and a half
41:03
Speaker 1: million home visits a year and then CVS, if they
41:06
Speaker 1: own it, could really do even better and save lives.
41:08
Speaker 1: By combining CBS with what the doctor visits do, it
41:11
Speaker 1: could be really a great thing for society if the
41:14
Speaker 1: you know, if they buy it. So, uh, you know,
41:17
Speaker 1: those are just some examples. We've had a bunch of
41:19
Speaker 1: good successes. So this isn't pouring money into startups like
41:23
Speaker 1: ventured does you look at existing companies that are either
41:27
Speaker 1: undervalued or maybe misvalued is a better way to describe it.
41:31
Speaker 1: But what we do is, uh, we have a whole
41:34
Speaker 1: very formal, top down process for twenty years where we
41:37
Speaker 1: choose the sectors that we think can grow with secular
41:40
Speaker 1: growth for the next ten years. Those are defensive growth
41:42
Speaker 1: sectors and we really become the best. We try to
41:46
Speaker 1: become the best there is anywhere in those sectors. So
41:49
Speaker 1: life science supplies healthcare, I T managing wind and solar farms,
41:54
Speaker 1: uh niche software and consumer different things like that. We
41:58
Speaker 1: buy a business that's already safe and stable but hasn't
42:03
Speaker 1: figured all the ways to grow itself yet, and then
42:06
Speaker 1: we grow it in every possible way. So we buy
42:09
Speaker 1: businesses from you know, one million on up and we
42:12
Speaker 1: add venture capital upside, but to a safe base. We
42:15
Speaker 1: don't want to have the one big winner and a
42:18
Speaker 1: bunch of losers. We we've never had a business again
42:21
Speaker 1: go out of business or not paying interest payment, And
42:23
Speaker 1: the question is, uh, you know how high we can do.
42:26
Speaker 1: So it's different math than I need one winner vers yeah,
42:32
Speaker 1: I don't have Coming from a family business, we say
42:34
Speaker 1: we don't have portfolio theory. We have family business theory.
42:38
Speaker 1: When we go into a company, we want to preserve
42:40
Speaker 1: and protect it. We're responsible for it. If there's a problem,
42:43
Speaker 1: we worked twice as hard to fix it. On the
42:45
Speaker 1: other hand, a lot of these businesses, you know, the
42:48
Speaker 1: entrepreneur had built it up to a certain size, had
42:50
Speaker 1: never done an acquisition, had never built the sales force,
42:53
Speaker 1: had never made technology investments in the full way, had
42:58
Speaker 1: never gone international. So we take the business and then
43:02
Speaker 1: take it up to the next level of growth. What
43:05
Speaker 1: other lines of investment do you focus on? Do you
43:08
Speaker 1: do credit, you do distress, that set real estate? Tell
43:11
Speaker 1: us where else you focus. So the way we think
43:14
Speaker 1: about it in these defensive growth sectors, our first choice
43:17
Speaker 1: is to buy majority control and build the business. That's
43:20
Speaker 1: our private equity fund. If the founder says, I love
43:24
Speaker 1: you guys, you can add a lot of value. I
43:25
Speaker 1: don't want to sell control. We have a non control
43:28
Speaker 1: fund called strategic Equity to buy the same sort of
43:31
Speaker 1: business as we just don't have control, but we're very
43:33
Speaker 1: involved in building the business. If equities not for sale,
43:37
Speaker 1: but we think it's a great, safe business, like a
43:39
Speaker 1: great software business that someone else bought, we can lend
43:43
Speaker 1: to them that we that's our credit arm which trades
43:45
Speaker 1: publicly as New Mountain Finance Company, and we have private
43:48
Speaker 1: versions and uh, you know, and since we've been so
43:52
Speaker 1: safe at the equity level, we've been very very safe
43:54
Speaker 1: at the debt level. And if they don't need a loan,
43:57
Speaker 1: we can lease them their own building back in and
43:59
Speaker 1: at least and have both the credit of the company
44:02
Speaker 1: and the real estate is collateral. And that's like to us,
44:05
Speaker 1: a very another high version of that. That was a
44:07
Speaker 1: huge business for a while. The net least bacs is
44:11
Speaker 1: that still as popular as it once was. It's always
44:14
Speaker 1: been niche within real estate. There was one guy who
44:17
Speaker 1: did it very aggressively, who bought every restaurant chain and stuff,
44:21
Speaker 1: who overstepped the people have been doing. The long term,
44:24
Speaker 1: it's been an extremely safe asset class and it's actually
44:27
Speaker 1: I think kind of an undiscovered asset class. And uh,
44:32
Speaker 1: you know, we had a very good run of it
44:33
Speaker 1: so far. And a lot of private equity has been
44:36
Speaker 1: focusing on private credit. What does New Mountain Capital do
44:40
Speaker 1: in the space of private credit if anything? Yeah, so
44:44
Speaker 1: that is our our private credit. We run about ten
44:46
Speaker 1: billion of private credit. We have one of the largest
44:49
Speaker 1: and oldest of the what's called the b DC, these
44:52
Speaker 1: publicly traded credit arms. What's great about them is it's
44:55
Speaker 1: floating rate debt, so as the interest rates have gone
44:59
Speaker 1: up with inflation, and it's actually better for this type
45:01
Speaker 1: of lending. It's not like owning a long term fixed
45:04
Speaker 1: rate bond, you get all the advantages of inflation and
45:07
Speaker 1: the higher interest rates. The key is to avoid defaults,
45:10
Speaker 1: and we do that by focusing on the safe industries
45:14
Speaker 1: and really knowing the businesses and being able to fix
45:16
Speaker 1: them if we need to go in and fix them. Uh.
45:18
Speaker 1: And net least is similar where what's nice about it
45:21
Speaker 1: is you have rent escalators for twenty years that more
45:25
Speaker 1: than cover inflation, and you have both the credit of
45:28
Speaker 1: the business and the real estate if you need the
45:30
Speaker 1: real estate. And so that we do the credit in
45:33
Speaker 1: the net least for good, steady yield, and we do
45:36
Speaker 1: private equity and strategic equity for you know, big returns.
45:40
Speaker 1: So I know we're not going to talk about performance
45:42
Speaker 1: and returns because of the normal compliance headaches. Do you
45:46
Speaker 1: target specific returns for different types of investment? Credit, real estate,
45:51
Speaker 1: business turnarounds? How do you think about those in terms
45:54
Speaker 1: of what that can generate. Yeah, So an investment committee
45:57
Speaker 1: for private equity or strategic equity, we have two questions.
46:01
Speaker 1: Is it safe on the downside even if the world
46:03
Speaker 1: goes bad, And do we think we have a fighting
46:05
Speaker 1: chance to make thirty percent gross returns on the investment
46:08
Speaker 1: or better? That's our over about a four year period,
46:12
Speaker 1: so we're not annually were you know, compound over four years,
46:16
Speaker 1: which is like a three or four bagger on investment.
46:19
Speaker 1: That's kind of and again we've had better and we've
46:21
Speaker 1: had worse, but you know we've that's kind of our
46:24
Speaker 1: standard target in private equity and strategic equity, and then
46:28
Speaker 1: in the credit and net least funds were trying to
46:31
Speaker 1: have a current yield. It used to be it's about
46:34
Speaker 1: eight hundred bases points over the base rates, so it
46:38
Speaker 1: used to be kind of a ten percent type target.
46:41
Speaker 1: And as rates have moved up, that target moves up
46:43
Speaker 1: as well. So and that's supposed to be current yield.
46:46
Speaker 1: Every you know paid out every quarter live war plus six. Yeah,
46:52
Speaker 1: people do use live more so and again I'm not
46:55
Speaker 1: talking about us specifically, but you know you might see
46:57
Speaker 1: a thirteen percent type return on loans where you to
47:00
Speaker 1: be last year, I mean, and and the interest rates
47:03
Speaker 1: are still going through, working through because as the interest
47:07
Speaker 1: rates reset from the borrowers. So I'm setting higher at
47:10
Speaker 1: the moment. I've noticed some of the publicly traded private
47:13
Speaker 1: equity firms UM have a tendency to say we're gonna
47:17
Speaker 1: offer are all strategy funds, which is each of our
47:23
Speaker 1: five strategies. Do you guys do anything We haven't. I mean,
47:27
Speaker 1: it's not a bad idea to do that. We you know,
47:29
Speaker 1: we want to let each limited partner choose just what
47:32
Speaker 1: they want for themselves. We haven't done, you know, the
47:35
Speaker 1: umbrella fund, but people can be We do have people
47:38
Speaker 1: who are on multiple funds, but we've done it. Cart
47:42
Speaker 1: and you mentioned your LPs. Who are your clients, meaning
47:46
Speaker 1: what sort of investors in the private equity fund and
47:49
Speaker 1: strategic equity fund. It's the big pension funds in the US,
47:53
Speaker 1: it's the big Canadian asset plans. It's the sovereign funds
47:57
Speaker 1: around the world in Europe and Asia, and in our
48:00
Speaker 1: credit funds. On the public one, it's some institutions and
48:04
Speaker 1: retail investors, just high net worth investors who are looking
48:07
Speaker 1: for double digit yields. Also in net lease. That's kind
48:11
Speaker 1: of the breakdown, really interesting. Before we get to our
48:15
Speaker 1: favorite questions, I have a couple of curveballs to throw you,
48:19
Speaker 1: and the first is you set up the Modern States
48:23
Speaker 1: Education Alliance to look for solutions to the high cost
48:27
Speaker 1: of college education. Tell us what that is, what motivated
48:32
Speaker 1: you to do that and how's it going. Yeah, thanks
48:34
Speaker 1: thanks for asking about that. That's a cause that's very
48:37
Speaker 1: near and dear to my heart. So you know, I'm
48:39
Speaker 1: proud of what New Mountain does in the way we
48:40
Speaker 1: build companies. I'm also trying to do philanthropy alongside a
48:44
Speaker 1: New Mountain. I've been very involved in education reform for
48:47
Speaker 1: many years and after school centers I set up set
48:49
Speaker 1: up the first charter school in New York State. I'm
48:52
Speaker 1: the chair of Harvard's Public Education Policy Group. I succeeded
48:56
Speaker 1: Jeb Bush there. And the cost of college has gotten
48:59
Speaker 1: incredible expensive. The average college even at a state school
49:03
Speaker 1: is thirty thousand a year all in there are And
49:06
Speaker 1: so what we did at Modern States, and it was
49:08
Speaker 1: an idea I had that we're now doing, is we
49:10
Speaker 1: hired the best professors we could find in the country,
49:13
Speaker 1: like Johns Hopkins math professors, to teach the basic freshman
49:17
Speaker 1: courses online as a top quality online course. But instead
49:22
Speaker 1: of charging which everybody does, we just give them away
49:25
Speaker 1: for free. There like a library of free courses with
49:28
Speaker 1: practice questions. They qualify you to take the College Board,
49:33
Speaker 1: which does the s A T exams in advanced Placement
49:36
Speaker 1: has a set of exams called the Clip exams that
49:38
Speaker 1: anyone can take at any age, and if you pass
49:41
Speaker 1: those exams, you get credit at almost any state school,
49:45
Speaker 1: any community college. Almost you don't get it at Harvard
49:48
Speaker 1: and Yale, but Michigan State, Penn State, Ohio State, you know, sowards.
49:53
Speaker 1: You could do a year school essentially totally for free,
49:56
Speaker 1: and we also pay the exam fees for you. So anybody,
50:00
Speaker 1: if you were the poorest person in the world and
50:02
Speaker 1: you have ambition, go to Modern States dot com or
50:06
Speaker 1: dot org Modern States dot org. You'll see all the
50:09
Speaker 1: courses laid out. All you gotta do is download them
50:12
Speaker 1: like you would a Netflix movie. Well, when you pass
50:15
Speaker 1: the course, we give you the voucher to pay for
50:17
Speaker 1: the exam, and when you have those exams passed, every
50:21
Speaker 1: admissions catalog will tell you which Clip exams I'll take
50:24
Speaker 1: for credit. So we have over three thousand users. We've saved,
50:28
Speaker 1: you know, tens and tens of millions of dollars for
50:30
Speaker 1: people already, and it is so efficient because you know,
50:33
Speaker 1: I spent we spent some millions to prepare the courses.
50:36
Speaker 1: But it's like if you do The Godfather on Netflix,
50:39
Speaker 1: and you have to do the Godfather every time. I
50:41
Speaker 1: mean once it's on the site, it's on the site.
50:44
Speaker 1: So if a million people use it, they can all
50:46
Speaker 1: see the same course. It doesn't cost us anymore, and
50:49
Speaker 1: we are paying the exam fees for as far as
50:51
Speaker 1: we can keep affording it. It's just a great way
50:53
Speaker 1: to save money. So like Perdue has made it a
50:56
Speaker 1: key program at Perdue, they call it Perdue Fast Start.
50:59
Speaker 1: They're encouraging every poor kid in Indiana to take these
51:02
Speaker 1: courses and enter Produe as a sophomore. We're working with
51:05
Speaker 1: all sorts of people. So it's my major charity cause
51:09
Speaker 1: that's really intriguing. And then another curve ball. Your wife,
51:13
Speaker 1: a former bear Stearns banker, published a book in Opening
51:19
Speaker 1: Bell spelled with an Eon Bell, which is a fictionalized
51:23
Speaker 1: accountable woman navigating the financial crisis here at Wall Street.
51:28
Speaker 1: Tell us a little bit about that. I'm very blessed.
51:32
Speaker 1: I have a beautiful, brilliant wife who was a managing
51:34
Speaker 1: director at bear Stearns, lived through, you know, all the
51:38
Speaker 1: me too movement before there was at me too movement,
51:41
Speaker 1: got her masters in in Fine arts at Columbia, wrote
51:44
Speaker 1: both a great book that's in a lot of school
51:46
Speaker 1: libraries called Walls within Walls for like Harry Potter readers,
51:50
Speaker 1: and wrote a bestseller called Opening Bell for adults, which
51:53
Speaker 1: is about a woman named Bell who is uh working
51:57
Speaker 1: through Wall Street as the breadwinner with a husban and
52:00
Speaker 1: who's like an audio visual guy. So everybody thinks it's
52:02
Speaker 1: that I'm an audio visual guy who's lost his job.
52:05
Speaker 1: But otherwise it's a very accurate book, and it's a
52:08
Speaker 1: great book, and it was gonna be a Reese Witherspoon
52:10
Speaker 1: movie and it's still kind of out there, and so
52:12
Speaker 1: uh it was. I recommend anyone who wants to know
52:16
Speaker 1: what it's like to be a woman on Walster. All Right,
52:18
Speaker 1: I only have you for a limited amount of time,
52:20
Speaker 1: so let's jump to our favorite questions. And since you
52:23
Speaker 1: mentioned Netflix, let's start there. Tell us what you were
52:28
Speaker 1: watching during the lockdown? What kept you entertained well during
52:31
Speaker 1: during the lockdown? We of course had to watch Tiger
52:35
Speaker 1: King and when I was when we were stuck for
52:38
Speaker 1: months aging crazy at home with are We have young
52:42
Speaker 1: adult kids now who had their you know, significant others over.
52:45
Speaker 1: We once had a Tiger King dinner party where we
52:48
Speaker 1: all dressed up, and we were going so crazy under
52:50
Speaker 1: COVID that everybody said, look, let's all come down and
52:52
Speaker 1: have dinner as a tiger king. Characters that got us
52:55
Speaker 1: through COVID. These days though, uh, and I'm gonna not
52:58
Speaker 1: have to be locked down anymore these is it's uh.
53:00
Speaker 1: I love White Lotus too, and I love Succession. I'm
53:04
Speaker 1: waiting for a Succession to come back. So those would
53:06
Speaker 1: be the shows today. Um, I'm gonna give you a
53:09
Speaker 1: recommendation because I think this might intrigue you. We just
53:13
Speaker 1: started Kaleidoscope, which is like um, Money Heist, only it's
53:19
Speaker 1: I think it's limited to eight episodes and apparently you
53:25
Speaker 1: can watch them in any order. There's no chronology. Well
53:29
Speaker 1: that's very interesting. That's that's the thought process. Tell us
53:32
Speaker 1: a little bit about your mentors who helped shape your career. Yeah. Look,
53:36
Speaker 1: the biggest mentor in my life was my father and
53:40
Speaker 1: incredibly influential to me and a wonderful man. I read
53:44
Speaker 1: a ton of history, so every time I read a
53:46
Speaker 1: history book, whether they failed or succeeded, they're kind of
53:50
Speaker 1: a mentor. For Like, I'm just finishing a book now
53:52
Speaker 1: about Emperor Maximilian and Carlott in Mexico ended up getting
53:56
Speaker 1: you know, shot by our firing squad. And but you
53:58
Speaker 1: learn a lot and everything. And uh as far as
54:01
Speaker 1: investment mentors, I was very influenced by Goldman Sachs and
54:04
Speaker 1: its culture. Uh Ted Forceman and the Forcemen little guys
54:08
Speaker 1: were incredibly good investors and very thoughtful. And so I
54:12
Speaker 1: mean everybody's a mentor. I'm reading everything I can and
54:15
Speaker 1: I read a lot of nonfiction and Nitralia, let's talk
54:17
Speaker 1: about about what you're reading. Tell us what you're currently
54:20
Speaker 1: finishing up, and what are some of your favorites. Well,
54:23
Speaker 1: I mean some of the things I'm finishing up. Like
54:25
Speaker 1: I said, I'm finishing up this book about Maximilian and Carlotta,
54:28
Speaker 1: which is an old history book that I came across.
54:31
Speaker 1: I just I read Ship Wars, you know, which I
54:34
Speaker 1: thought was very good. About Ship Wars, It's about the
54:36
Speaker 1: semiconductor industry, is a great book. So I read a
54:40
Speaker 1: lot of nonfiction, and the best nonfiction I've read is
54:45
Speaker 1: Ron Turno has some great biographies. I love the Grant biography.
54:48
Speaker 1: I love the biography of Vanderbilt. I'm a big fan
54:51
Speaker 1: of George Washington and Winston Churchill and Lincoln and guys
54:55
Speaker 1: like this, a Churchill biography out that some people have
54:58
Speaker 1: been talking about. I just it's splendid in the vile
55:01
Speaker 1: like six months ago. And obviously the whole Manchester series
55:06
Speaker 1: was great. And so uh uh. You know, so I
55:09
Speaker 1: read a lot of I read mostly nonfiction. What sort
55:12
Speaker 1: of advice would you give to a recent college grad
55:14
Speaker 1: who was interested in a career in either private equity
55:18
Speaker 1: or investing. You know, I am a big fan of
55:22
Speaker 1: private equity. I don't think at all that it's too
55:24
Speaker 1: late or the golden days are done, because you know, again,
55:27
Speaker 1: the advantage of one of the great advantages of private
55:29
Speaker 1: equity is you can always move into the industry that's
55:33
Speaker 1: emerging for the next ten years. I don't have to
55:35
Speaker 1: be in my grandfather's store selling coats. I can be
55:39
Speaker 1: moving into you know, d N a sample preparation. I
55:43
Speaker 1: can be moving into proteomics or whatever, wind farms, whatever.
55:47
Speaker 1: So private equity is a great field. You should think
55:49
Speaker 1: of it as building businesses, not levering businesses. And if
55:53
Speaker 1: you think about it that way, it's a wonderful place
55:55
Speaker 1: to be. Uh and uh, I'm not a fan of
55:59
Speaker 1: stock market investing. I just find a two day difficult
56:02
Speaker 1: and arbitrary. I am a big fan of private equity
56:05
Speaker 1: and credit investing. And a final question, what do you
56:08
Speaker 1: know about the world of investing today? You wish you
56:12
Speaker 1: knew thirty or forty years ago when you were first
56:14
Speaker 1: getting started. Well, I didn't know anything about the world
56:17
Speaker 1: of investing thirty or forty years ago. I can tell
56:20
Speaker 1: you more about Supreme Court decisions than I knew about investing.
56:23
Speaker 1: And again, what I've learned, or I'm trying to get
56:27
Speaker 1: people to accept, is that good investing is owning and
56:32
Speaker 1: building businesses, not You're not the bookie in the stands.
56:36
Speaker 1: You're the player on the field and you're the coaching player.
56:39
Speaker 1: You control the play, you play better, and you can
56:41
Speaker 1: make money either gambling on the team or being the team.
56:45
Speaker 1: I think, you know, I think the best results and
56:48
Speaker 1: kind of the most fun is actually being the team
56:51
Speaker 1: owning the business, building the business, rather than betting from
56:54
Speaker 1: the outside on the business. And that's what I think
56:56
Speaker 1: that private equity is really quite fascinating. Steve, thank you
56:59
Speaker 1: for being so generous with your time. This has been
57:02
Speaker 1: absolutely fascinating. We have been speaking with Steve Klinsky. He
57:07
Speaker 1: is the founder and CEO of private equity firm New
57:11
Speaker 1: Mountain Capital. If you enjoy this conversation, well, be sure
57:15
Speaker 1: and check out all of our previous podcasts. You can
57:18
Speaker 1: find those at iTunes, Spotify, YouTube, wherever you get your
57:22
Speaker 1: favorite podcast from. Sign up from my daily reading list
57:27
Speaker 1: at Ridhalts dot com. Follow me on Twitter at Ridhults.
57:30
Speaker 1: You can follow all of the Bloomberg Family of podcasts
57:34
Speaker 1: at Podcasts on Twitter. I would be remiss if I
57:38
Speaker 1: did not thank the crack team that helps put these
57:41
Speaker 1: conversations together each week. Paris Wald is my producer. Steve
57:45
Speaker 1: Russo is my head of research. Batica val Bron is
57:48
Speaker 1: our project manager. Justin Milner is my audio engineer. I'm
57:53
Speaker 1: Barry Rihults. You've been listening to Masters in Business n
57:57
Speaker 1: Bloomberg Radio four