hello everybody this is gerald o'dwyer with mike lorelli from another broadcast on on private equity where we interview uh private equity firms executives and private equity firms designed to give you insight of how do you break through how do you become top of mind uh today we have michael lorelli and i'm going to get to introduce him in in a moment but in the meeting uh in a uh what i'd like to do to get started i'm going to give you a little bit overview of blackmore um in the meantime before the before that even i want you to start thinking about questions you might have for mike we sent you the list of slides uh a slide deck from mike uh for this presentation so that you have those by email also there's handouts inside the box okay there's a chat box and there's a handout box so everything is here for you that you need if you're going to download the slides you need to do that now i want to remind you uh this uh this program is brought to you by blackmore partners inc blackmore partners inc was started in 2005 for to help executives like you on the phone to help you monetize your background in to an actual deal we get paid by the our funder to do this and you end up running a company and getting paid between 250 and a million depends on size you get uh bonuses based on ebitda typically minimum five percent equity with without putting money in now think about it right now with inflation i don't believe the government they say it's eight percent i believe it's 25 30 percent actual inflation about what people are gas education food how is your current job going to pay you 20 25 a year jerome powell the fed guy says this is going to go on for years and they're probably who knows what the if that's even something to believe and could go on longer it is not transitory it's going to keep on going how is your company going to keep paying you it's not the real opportunity is put together your own deal own a piece of the back end through equity and that's what i'm here for you to do so if you haven't met with me if you're an executive with a p l north of 50 million you've been there done that i'm here to help you do that so that's what blackmore partners inc does along the way we started a talent group that was in 207 and the talent does group does hundreds of searches for private equity in our group uh you're in their database there's no getting a hold of them the reason is they work for the client and they have no time to talk to you unless the client meeting the pe firm wants to talk to you and they do ceos ceos general managers basically about 25 different titles anything over 150k and above and if you are an executive you need talent for your group get a hold of me i'll make an introduction perhaps they can do work for your your firm that you're currently at our third group was started uh called blackmore connects it's an educational and networking organization to help executives understand the voice of the customer and that's private equity the average executive that is on this in this meeting you maybe had five meetings with private equity and probably was not in-depth about how they think how they work they were probably at the most 15 minutes this organization gives you access to a deep dive into the private equity mindset how they think how they buy how they hire how to survive mike will talk about today 67 percent of you if you do go to work for private equity have a chance of being uh fired and we'll talk about why and blackmore connects can help you reduce um reduce that uh possibility so there are some benefits of blackboard connect so you can go to um the blackmore connects page uh a lot of great stuff here we also have an faq page you can go to and we have upcoming conferences they typically all sell out because they're they're they're boutique very small uh august 24th is next and then october 26 and uh december 14th i sent a note out to all of you mentioning that i was asked by blackboard connects to recommend people cr to chris melton potential guest slot for the virtual upcoming august and october if you're interested send a note to chris melton his email is in there his schedule is in there you gotta use his scheduling link and he'll go over the requirements it's not for everyone uh it is a very rigorous process and uh they don't take everyone so with it is uh please get to him uh right away now a lot of execs uh uh wonder about what does it take you know for a blackmore uh uh conference group chris melton and his team to get people to have private equity firms at a conference they have anywhere from 12 to 15. it is we go to conferences i go to acg axial ama we we get private equity firms that way we host webinars with uh private equity firms we do networking events we do linkedin connections we have all our social media platforms we have a database with 9 000 private equity firms that's just in the us alone a private equity then there's family offices and there's growth funds and that probably adds another 10 or 20 000 to that we have pe contact list we have email campaigns that campaigns that we do almost every week um you know we call we also have infusionsoft this is the kind of networking that it takes to do 10 to 15 firms what do you think you can do without that kind of effort and this is no kidding private equity they're busy we're going to establish the contacts here with mike clarelli mike are you there i'm i'm loud and clear with you here gerald thank you okay mike i'm going to give you i'm going to hand over uh the um [Music] the presenter to you and then after i do that i'm going to introduce you here so let me first do that i'm going to make mike the uh panelist presenter tell me if you see anything show up did it give you the uh control mike no i'll make you presenter there we go okay i just you see it i don't hear you there we go i can see your screen let me give you a little background and mike mike and i have known each other for over 20 years i believe it was right at the time i started blackmore in 2005. so we go way back and what's interesting about mike is there are a few private equity guys that have run as many portfolio companies mike has done five portfolio companies as a ceo that certainly gives him great insight to the private equity mindset of what works and doesn't work for the executives that here are on the call he is also a highly experienced uh board of directors so many of you are wondering gosh i would love to land private equity board of director roles well mike's an executive coach in that area he's a great person to consult he's also on the board of three companies and he served on seven private equity and three public company boards i've never heard anything like that and how mike has a program like us he constantly builds his relationships with the private private equity community you can't hope to have about a handful of private equity firms and then and land boards you've got to have a funnel approach you've got to work it consistently you've got to have a long-term game to do this michael is also a master's level of credit at both the american college of corporate directors and the national association of corporate directors mike you know as i mentioned he's been a fan and we're a fan of his for over 20 years mike welcome your voice is muted you're muted okay you're still muted mike i i cannot unmute you i cannot hear you mike mike you got on mu well while we're waiting for mike to unmute uh you know once again i want to remind you there is a question area and uh if you would please um uh okay mike i am immuted to you go ahead mike all right good i need the slides back okay go ahead and put the slides back and i can see them i see where have all the public companies gone and again as mike's uh backing up a little bit please put your questions as they come come up to you i will do my best to stop mike and ask him all right good we're ready to go good good okay uh you've got me now right number two all right and you have my audio right oh you're five by five mike excellent good so and gerald by the way i could listen to that introduction that you do of private equity in blackboard time and time again and i'm amazed because every time you do it you've added one more dimension to the tentacles that you do use to reach into the private equity community so that they can be available uh to all of blackboard uh partners uh participants so that's pretty cool now i always enjoy oh and by the way i want to thank esme and chris for their help behind the scenes in putting this uh webinar together they're just terrific people so i like uh kicking off these presentations with this article terrific article i'll never forget it november 17th of 2017 written by a gentleman who heads the research group at carlisle terrific private equity firm as most of you know and when most people saw this article that talked about i shouldn't say article this was an op-ed in the wall street journal where he talked about how the number of public companies in the u.s has shrunk from 3 600 from four thousand and five thousand six thousand seven thousand down to thirty six hundred because of four decades of m a activity and when most people read this article they said that can't be it's gotta be a typo the number is still gotta be ten thousand well guess what it wasn't a typo the number in the article was accurate now i save this uh and i enjoy it and one of these days i'm gonna pick up the phone and call him and invite him to lunch and i'm dying to compliment him on such a terrific piece but at the end probably over dessert i'm going to say them you know i wish you would have ended the article with a couple of sentences talking about during that same four decades when the public company arena has shrunk private equity has exploded quietly to the point where there are over sixteen thousand eight hundred private equity portfolio companies out there now the reason why i like starting off presentations and webinars with this fact is just to keep people's mind organized around the relative size of those two buckets if you stop the average person in the street who's pretty business savvy and ask that person how big is private equity versus the public company arena they would probably give you proportions that are exactly the opposite of what is the case today so for everyone on this call today all the blackmoore participants be mindful the fact that private equity is a wonderful place uh to be spending your time and the rest of your career that was one of the articles that espaye pushed all right cheryl now let me just make sure i can page forward and here we go we've got a full agenda esbay pushed out the slides so i'm not going to walk through slides there's nothing worse than a presenter that to you a slide that you've already read so i'm just going to give you the headline on each and it's my recommendation that what you do is find the time after the after we're done with the webinar today and paste through the slides that a little more leisurely uh equipped and take in the content there i am not going to be talking about venture capital today that's another world i confess that i'm not a big fan of it i won't go into the reasons why today's exclusively on private equity now one of the first points i want to get across is that people think that private equity people speak english now they are wrong we in private equity do not speak english i want to make that point very very loud and very very clear we speak time that is our language our language is time everything is about time so this is something to be very mindful of because when you get invited in to spend time with a private equity firm and usually the ice-breaking question is something like so chris tell me a little bit about yourself and you're tempted to puff your chest up very rightly and say something like well i'm an action-oriented exec that's got 21 years leadership experience with allied chemical and that's true and that's your resume and you should be proud of that unfortunately the private equity person that just heard that who does not speak english he speaks time he's going to interpret that as 21 years thug we want to exit in four year four year seven max get this rift van winkle out of my sight he probably takes 10 years to figure out what a black mark connects person could do in three so you can't make this mistake now that same person same resume if he had responded i'm a fortune trained leader that's made a step change in the ebitda kagger in every assignment same person same resume same pride if you said this instead the private equity person their interpretation because again they don't speak english they speak time their interpretation is here comes my bonus congress please don't tax carried interest this is our guy so keep this in mind when you're meeting with private equity people do not speak the way you normally speak put your foot and your mouth you know in their shoes and think about your answers uh in the context of time so by the way private equity most people think it's been around forever and that's not the case it was only as recently i say recently showing my age a little bit as 1977 when colebrook kravis and roberts left first at bear stearns started kkr a year later uh there were 80 leveraged buyout groups in the us that's what we used to call ourselves after a few years we decided we didn't like that name it sounded uh you know a little too much like a tiger so we changed it to private equity we since have decided we don't like that title either but we've concluded we're not going to change it every decade so we're sticking with private equity but over 3 000 around the world gerald personally is on a first-name basis probably with about four or five hundred of them he is maybe three and mike yeah twenty seven hundred uh guess what according to pitch book just in uh just regular private equity firms there's nine thousand now and then um with independent sponsors some say that could be an uh double that now so and then you have family offices it is exploding from uh the latest estimates we've gotten so um the point here that we're both making uh for the people on the webinar is this is a terrific space to be spending some time one of the arc articles that esme pushed out was an article that i wrote that sooner or later everybody is going to be working in private equity if you have a chance to do it sooner why not get started then in any event so let's talk about the reasons why the limited partners give us money uh and they do give us money and they come back year after year well these people aren't stupid they're looking for returns i think this graph that pretty well demonstrates the advantage that private equity returns have over the other two key asset classes the s p or the russell 3000 and you couple this with the miracle of compounding boy that three or two or three or four point advantage goes a long way some terminology the people who give us money to invest these are our limited partners or lts we'll talk about who they are the fund manager that's somebody like myself they refer to me as the gp or a private equity firm now who are these lps there's a terrible misconception that there are a bunch of cigar smoking guys in the corner of a dimly lit room not the case in fact it's exactly the opposite who are the providers of the capital the lps well guess what their public pension funds their company pension funds it's by pepsico retirement all these corporate pension funds are pretty well funded but but the public pension funds certainly aren't the state's municipalities cities etc and they try to close the gap in their lifetime by putting more and more into private equity every year well guess what they're never going to give they're never going to close that gap shame on politicians but i give them credit for the tribe for trying you know every four years when they're re-elected and the reason why they give us these these monies to invest now there are many ways to segment that number the 1700 330 000 the 9000 that pitch book uses to the two key ways or by size of transaction and size of assets under management or by sector specialty we're going to talk in a couple of slides but many of you do have a sector especially specialty you may be a qsr person you may be a healthcare person certainly there are firms that specialize in that many of them happen to be category agnostic i'm going to come back to this in a couple of a couple of slides but regardless of what sector you tend to be in or if you specialize and spend a portion of your career a good portion in a particular sector the good news is pe is everywhere you know we invest in all sectors so uh regardless of what sector you may be in don't worry about it you're gonna have a lot of pes who would be interested in talking to you through the right channel like blackboard connects now as fast as i say that i want to turn the table around and say don't unnecessarily limit where you could play i'm going to use myself as an example here when people look at my background i was blessed to have been a pepsi president was also president of pizza hut and ceo of five companies but when they see the pepsi and the pizza they think i'm a consumer products person now i don't mind that that's not a bad label it's actually flattering but the truth of the matter is the first three companies after i left those two fortune companies the first three companies that i ran you know were not consumer product companies they were b2bs i ran a latex phone company i ran the world's largest industrial burn care products company for riverside very well-known private equity firm now the world's largest industrial burn care products company is about as far from pepperoni and diet pepsi as you can get but that didn't matter the private equity firm god bless them all said you know what we're going to bet on the jockey you know these businesses aren't rocket science mike will probably get it figured out by tuesday uh lunchtime or bet on mike let's put them in place now that's happened to me many many times so i say to myself and i say to all of you don't unnecessarily put the blinders on where you could play let some anal retentive recruiter tell you you can't play in that space because you don't have 43 years of unblemished experience working for the post office and mind you there are those anal retentive people out there i jokingly say it takes about 30 seconds on the phone to figure out if someone is open-minded and bets on the jockey which most bees do or if they're closed-minded and anal and insist on you're having 43 years unblemished category experience in the furniture business i tell candidates when i'm coaching them when you come across someone who is the latter the person that doesn't have an open mind the best thing you could do for your mental health is to get out of that conversation as quickly and courteously as you can because it'd be easier for you to make that person change and undergo a sex change operation than to get that person to change their mind and be a little more open-minded about your ability to take on a new sector enough said some most recent data here software was a really really big year last year very very big year particularly the sas side of software um the lbo model these are my two favorite slides most of you know this but just for the sake of comprehension here i want to include it so i found this ncbnc company i'm making this story up 90 million an ebitda it's broken i'm gonna pay only seven times ebitda so my purchase price is 630 million i'm going to put 270 million in cash from my limited partners my lp's the rest i'm going to go to my favorite lender it used to be ge capital it might be a bank that i work with a lot so that's how the model gets constructed now let's fast forward five years i've turned this company around i've got the revenue line growing i've improved the gross margin i've top graded the team i've put in the new it system so this is now a heck of a lot healthier the next group it could be another private equity firm is willing to pay me a higher multiple they're willing to pay me 8x now remember i bought it for 7x so i'm making money right here on the multiple the change in multiple from 7x to 8x but that's compounded by the fact obviously that i've improved the ebitda from 90 to 141 so my sale price is a billion one i paid down a little bit of debt not a heck of a lot i'm never in a hurry uh 360 down to 320. but look at this beauty here cash return here i remember i put 270 in the balance was for my lps i put 270 and cash in i'm getting 810 back that is a honey of a transaction what we refer to as a three times cash on cash return this is excellent i'll show you the other measures in a couple of slides so the second slide of my two favorites is how the whole private equity fund works so this is how a particular portfolio transaction might look but how does the total portfolio look well it might look might look like this i jokingly refer to it as the pelosi fund so nancy says i'm going to raise a billion dollars and she's successful she does you know as an aside her husband is a private equity person so she's raised a billion dollars and she says you know i'm going to go out and she's going to buy 10 consumer products companies that's going to be her sector maybe she'll include restaurants as well qsrs they're often very very close over roughly a 10-year time span so let's find let's let's just track along you know how nancy's done so she went off and she bought company a there's the outlay of cash she bought company b looks like that was a bigger company three months later she bought smaller companies c she bought the mid-sized company she bought this larger company in her world company e now look at this she sold company c after only about 18 months that's probably premature earlier than she expected but maybe another pe firm came along and said you know what we own another company in the space the synergies are tremendous why don't we cut your time span uh by three and a half years uh we're willing to pay you more than this thing is worth because we really got to have it so to speak and the limited part the partners at the firm at the pe firm say you know what let's just take our money and run even though it's only a single it's not so bad after 18 months those kinds of things happen but let's continue watching nancy so she bought f tiny company that may have been a bolt-on acquisition for one of these platforms she sold company b for a bath nancy this stuff happens you know we're not going to count this against you but it looks like she really took a beating there i'll show you the stats on that and a couple of slides she bought g sold a that's a pretty nice return that looks like that might have been two and a half x i'm just guessing by the length of the bars bought h so d nice profit that was about a three x now what i want to talk to you about though is the left portion of the slide is what gerald and i would refer to as the invest period where we're doing the buying and the building the right side is what we refer to as the harvest period where i'm doing more of the selling now this is important because if you are a candidate to go into a private equity firm as a ceo cio cfo whatever the role might be or maybe even one of the board members one of the first questions you want to ask is where is it in the whole period now if they tell you it's a year it's in month 18 well that's not a surprise at all now this would be typical when a private equity firm buys from a founder owner entrepreneur and the private equity may conclude that he's not up to the stretch where the pe firm wants to take the company or maybe the founder owner who who sold it you know wants to take his money cash out go to the top of the rockies and smoke marijuana i mean that happens too riverside will tell you and half the times they buy a company they change the ceo at the outset it would not be unusual for him to stay around for a year to a pe firm get their gets their arms around it but if you're recruited that early on that would that would be uh that would be very very usual if they tell you boy it's in your five six or seven where there are lots of red flags going up you want to drill down and ask yourself why all right um checking along the performance measures we talked about that example where it was a 3x there's nothing wrong with the 2x and there's nothing certainly wrong with the 5x that happens not too often in my life i know gerald man you had an a and x with i think it was uh human addicts 11x yeah and you had an eleven eleven x that's correct yep i i i mean you want to just give us the secret sauce in 30 seconds again because those aren't those are really great executives and buying at the right price wow uh so i hope you all remember that that language great great success stories uh you're just really pushing the envelope there so where are the private equity firms well it's not surprising new york la san francisco chicago dallas fort worth et cetera that's not a surprise to anybody where are the portfolio companies the surprise here is california seemingly uh with an 18.8 percent of the portfolio companies now the reason for that is there that is the startup capital of the world even though the track record is that one in 43 startups make it one in 43 and that's one of the reasons why i am a little shy about vc i mentioned at the outset i'm not a big fan of vc because they either go bust or you make a gazillion dollars uh but in any event even with that 1 in 43 odds given that they are the startup capital of the world you know they they eventually become adult companies so to speak uh and then attract private equity money that's the reason why that big number in california so who are the top fund managers well everybody knows these names i mean these are the ones making the wall street journal i don't encourage people to go after these firms they are the well-known ones they do the huge size transactions you know um and it's like cerberus buying you know general motors and you know buying a bond et cetera et cetera but they don't do as many transactions so if they're not doing as many transactions that means they use riverside model but not hiring as many ceos and for those on the call interest in board seats they're not interested in creating many many new boards they don't have to what i like to talk about more is the ones doing the most deals i'm not going to go through this now you can refer to this in your handout autox who i proudly work for for a year i ran a company for them in austin texas in the food service business they owned 87 companies now that is a boat road in one year they bought 36 36 which meant in that one year they probably changed out 18 ceos boy that's a lot of opportunity but people on this call as well as the fact that in that one year they certainly had to hire a boatload of board members so that's kind of interesting so far this year this is what the slate looks like off to a pretty good start slightly different cast of characters than made the the all-star list last year now i talked about the couple of black eyes the average private equity fund owns 10 businesses now this would be the track record this is the average truck record a couple out of the park although i use gerald's two examples i don't see many gerald certainly in the same private equity firm like you've got back to back you know with that uh 5x and that 8x not even a couple out of the park like you've done lots of base sets bases matter even singles and two the bank took the car keys now what does this mean this means that i get a phone call from ge capital uh and and and the call might go like this hey mike i see you've owned readers now uh for for three or four years but more importantly you've been a violation of the loan covenants now for the last three quarters and the loan agreement says if you've been in the violation of the loan covenant for two consecutive quarters we can take possession of the company i'm giving you warning mike we are taking possession of the company monday i'm giving you this heads up i'd like to do it on a friendly basis first thing we're doing is terminating your ceo second thing we've done which we've already uh penciled and penned is we've hired alvarez and marcel to go in and fire sell the body parts try to get us as many of our 100 cents on the dollar back this stuff happens in private equity it is not unusual to have two black guys now hopefully the triples double singles uh make up for it a couple out of the park certainly don't hurt uh and you know if it weren't for these base hits here you know we we shouldn't and wouldn't uh be in business a little bit more on terminology teasers that's the the one page document put together by the investment banker basically summarizing the deal a typical private equity firm would look at 300 visas teasers in the course of the year they'll sign the confidentiality agreement ask to read ask to see the book in a hundred out of the 300 one-third they'll go into meetings with management 20 times out of those 100 out of the 300 sign seven letters of intent diligence on two to get one over the finish line that is a boatload of work 300 teasers to get one over the finish line this is what the life in a private equity firm looks like now the reason why that's relevant is if you're shooting emails uh into a private equity firm and not getting responses it's because they're busy you know i'm busy looking at 300 i mean this is my life you know i'm reading 300 teasers i'm doing 100 books a book for me is before i read these are a lot of work if you shoot an email in that says my name is harry james i've been 27 years you know and the ingredients uh professional ingredients category if you have anything well i've got no time for you that's somebody with a handout so the worst thing you could do is position yourself as a job seeker you do not want to do that if you are in transition worst position horseplay the next best thing you could do though is to offer yourself as a deal source maybe you've got experience they've just bought an industrial valve company and you've got experience in industrial valves okay you could be a deal resource you might offer them insight into the sim the confidential information memorandum that they don't have that's very very valuable to the private equity firm so that's something that you might do that's certainly better than being a job shaker next best is you have a deal driven thesis i'm not going to go into what this means listen to gerald they'll explain that certainly the best of all worlds is if you're a target driven deal executive you've got a company in mind that's not well run it's broken or there are a few things wrong with it that you know that you could fix if you were installed as the ceo now if anybody on this call has got such a company in mind i've had several like this in my lifetime you will have no trouble getting a private equity audience but you want to steer in to the right private equity companies private equity firms i should say that are a good match for that target as well as a good match for you that's where gerald and blackmore are absolutely priceless gerald knows at least several hundred of these pe firms extraordinarily well if you've got a target he can be that matchmaker for you charlie you worth your weight in gold in that regard now there's a myth out there i'm sorry gerald i cut you off you're spot on gold you know having those connections speed is critical yeah i know i said earl you know we in pe return your phone goals because you're valuable to us you bring us the overflow nothing better than you know deal flow that hasn't been it hasn't been shot so we we uh our hats are up to you joe and what you do with blackmore anyway there's a myth that says you had to have been in p.e not true this slide kind of uh sheds light uh on that now that's the good news the bad news is um now keep in mind riverside made the comment that half the time they changed the ceo at the outset for one of the two reasons that i gave now that's the good news because that means there's a lot of opportunity for ceos to go into those slots the bad news is for whatever reason by the exit time 73 of those ceos who are recruited aren't standing now forget about who was right and who was wrong doesn't matter i'm just showing you the raw arithmetic the good news is that doesn't blackball you these people come and come right back into the private equity space space god bless america a little bit on compensation i will tell you that i never made as a ceo in private equity for the five companies that i ran i never made as a ceo what i made as a pepsi president my bonus was also well short what i made as a pepsi president but i sure as heck didn't have five percent of pepsico stock but in private equity particularly if it's a small cap deal it would be typical for the ceo to have five percent the rest of the numbers are in the slide uh that was pushed out to you earlier uh you could slow down and take a look at this later let's talk about compensation for the private equity firm when i buy a company um and i've got all of these pledges from these limited partners i start billing those lps two percent of their pledge and that's called the managed capital that goes toward paying salaries rent keeping the lights on nothing more than that but when i sell that company release italian ice as an example first thing i have to do is pay back the lps 100 cents on the dollar this gets them whole after i've got them whole they have made money but they're whole i next take the 20 of the profit that's sitting on the table that's what's called profit uh carried interest that goes in my pocket me as the private equity sponsor and then the balance of profit that's on the table and the sure better be a lot that goes back to the lt's in proportion to how much they paid in and hopefully it was a nice cash on cash return this is a slide that i know you can't read so you look at it as your leisure but as gerald alluded to you can make a lot of money doing this kind of transaction here is an example this is a company i tried to buy in the vital nutrition space and without showing names here this bottom left excel sheet here shows how i was going to set up the the the balance sheet and the cap table and i was carving out 15 points of equity for management of what six points were going to me 2.6 points of the 15 were going to my cfo and further down the line now for my three years worth of work that would have been an 11 million dollar gain for me my cfo 5 million gain not too shabby i'm not going to go back and talk again about the importance of time in the private equity space you've got this as well from the two articles that has made pushed out a couple of articles that show you what's going on in the news these days boy private equity hordes a trillion dollars in cash uh i mean that's the reason why these bidding awards are absolutely going on and on and on i don't think they're ever going to come down in my lifetime this is money pledged by the limited partners they're just waiting for me to buy companies to get this money engaged because as long as it's pledged but only sitting on the shelf not put the use nobody's making money i'm not making money as a pe the lp uh are not making money either that's what's referred to as dry powder money's sitting on the shelf i love this comment by kelpers calpers we need more of it every year they push the needle and put more and more of their pie chart so to speak in their private equity let's talk about the trades these are the magazines we all read m a mergers and acquisitions published by acg terrific publication or if they pride the subscription price for uh for acg just to get the magazine private equity analyst is where i pull a lot of my tables from published by dow jones another very interesting magazine m a is kind of like the business week in our world uh pe analyst is a little more thoughtful more like the forbes or the fortune and then there's the deal insider which is the daily which is electronic only i want to talk about linkedin here for a second very important that you have a killer linkedin profile when i talk to people in my coaching practice a new candidate i always ask how good do you think your resume is and how good you think your linkedin profile the answer to the first question is always i think it's terrific and i say how much time does it spend on it oh 30 hours i say you know well done i think it's terrific too and then i ask how good is your linkedin profile nice that's so so i know i got to get around to it and fix it someday i say how much times you put in it ah four or five hours well guess what two thumbs down when private equity people the operating partner has a need to fill a senior role in one of their portfolio companies if not the ceo or they're trying to fill out the newly created board of directors the first thing we do is we go to linkedin and i'll get the keywords that i think are appropriate to one of the newly minted mbas and i'll say go do a search bring me back page 1 of 20 linkedin profiles people you think are good i'm going to page through those 20 i'm going to hand them back three and then say go telephone screen these three people tell me which one or two we should fly in that's how positions are filled 60 of the time so i counsel you know my candidates and say if you were lazy i would tell you close your home office door fix your linkedin profile take the next 29 days of the month off you'd be better off than sending out lots of resumes linkedin is the platform it is taking over the search profession bit by bit the people at hydra corn prairie spencer stewart aegon zender they wake up every morning i know the bites been taken out of the apple there's nothing they could do about it they wonder what could they do about it there's nothing they can do about it the best thing they could do is to get another copy of who moved my cheese so i use this chopped off pyramid to just demonstrate that out of 720 million members that's how many members there are globally on linkedin and they're all business people if you're not in the top band you are completely invisible if you're feeling good that you've got an excellent very good profile you know i got some bad news for you that means you're one in 700. in the eyes of someone doing a query you might as well not have ever been born you simply can't be found so i'm going to give you my two or three quick tips on linkedin give me one second here number one is optimize your headline take a close look at mine here mike lorelli is a ceo interim ceo outside director private equity operating partner board coach notice that i don't populate it with the title of my present day job pod because the only person who's going to do a do a query and put in my present day job is my mother so so that's not really relevant here you want to populate it with keywords that someone doing a query is likely to use that person might be an operating partner with a private equity firm it may be one of the newly minted mbas that may be a recruiter and maybe a vp of hr and a portfolio company populated first with the keywords that you want to be used for the kinds of searches you'd like to be found for make sure your punctuation is correct separating them with these spike bars also known as pipes and then your about section a good format that i found over the years looks like this very short tight opening elevator speech followed by three or four subheads and in each of the subheads you're going to go prove what you said in that subhead so as an example one of my sub heads is accredited outside director and independent director and then i go on in the language under that subhead which i'm blowing up on this slide and it says mike's track record there's a main attractive board he brings fortune 50 with the leadership of small cap environments as general commented mike's leadership certified at the nacd as well as the american college he's chaired three public company com committees so a recruiter trying to fill a board search you know first of all he's going to trip all over me because i get good traction from my headline i've got board director in here i've got board coach in here those are good keywords to get traction now in my about section uh i go on and i use i drip in those keywords several more times and then in my about section i got it as a headline and then i repeat it as often as i can in the evidence i'm giving under the subject so those are kind of the keys to doing an effective uh private equity i'm sorry an effective linkedin profile makes all the difference in the world again trust me you do not want to be in the middle of this pyramid most people are content to be there it's death an example cover letter might look like this i'm not going to go through it you can look at this at your leisure in the push out that esme did but i want you to make note of the headline this was a client of mine and his headline the subject line read fourth industrial revolution independent director and entrepreneur now i gotta tell you when i saw that as a subject line this was from the client in my coaching practice i swallowed the hook i swallowed the bait man i was a fish on the line here i mean that was such a catchy line you know if i was looking to fill out a board or to bring in a someone with a good um a good metric orientation a good operating background and i saw a headline like that with 100 odds i'm going to open that person's email so my point is it doesn't hurt to give some thought to the subject line because after all the subject line is your gatekeeper i want to talk about boards here for a couple of slides and then we'll go back and turn it over to q a some basics here uh it is amazing there are many board members in the private equity space as there are in the public arena even though the typical board for a public company has seven outside directors for a pe company it's only got two in spite of that smaller number of outside directors given a huge number of portfolio companies uh the universe is just about the same as it is for the public companies some demographics are here and you don't have to be a sitting ceo or a sitting cfo or sitting ceo as this chart says that should be comfort to many people on the phone here's what the typical pe board would look like very small that would be the ceo for sure three people from the private equity firm those would be people typically who are on the deal team the operating partner the vp or principal the person in the middle the analyst the poor grunt at the bottom the new event to the nba and then two sometimes three outside directors the magic of two is if you don't have outside directors on the audit committee and the com committee where you don't have good governance so that's the reason why pes typically have two and they stop there you know we're pennywise you know we don't want to spend more more money than we have to but sometimes there will be three and we might reach out to people who do have industry knowledge because frequently uh they can offer us a lot of contacts i want to offer a tool here called the skills map this is very powerful if you're going in and interviewing through a board seat take the time to do a skills map the skills map is your cross-section of their present board and where they might have deficiencies that you could fill so what you want to do is read the bios and the linkedin profiles of everybody who's on the board and everybody at the vp level then take a stab at the skills you think that company needs in this particular example marketing was the number one skills in my opinion they needed sales ops further down online i plugged in people first names only either vps or board members michael who was their vp of sales he had marketing in space randy who was on their board came out of png obviously he had marketing up the kazoo sales they had pretty well populated but i noticed in one of the press releases the chairman mentioned someday he wanted to go beyond being only an internet company he wanted to go retail but i said to myself you know what so far i can't find a person on the board that's ever called on a retailer sim same with international where he wanted to go but nobody on the board had any experience uh in international so what i did was i showed the private equity from in this particular case mike l as me where i could either be redundant or i could help in the case of marketing they did maybe i'd be redundant they had the base covered in the case of sales where they wanted to go retail well when i was the vp of pepsi that was my job description i called on all the retailers i could be very additive here hence the big yellow box phil filled in uh by michael yours truly similarly international where the chairman someday wanted to expand beyond the u.s borders but nobody on the board nobody at the vp level had any international experience whatsoever whereas when pepsico owned the restaurants in the 90s pepsico own pizza taco bell kfc i'm the guy who built pizza it's an international division i could add a lot of value here so what i was doing with the skills map was painting a picture of their present board noting gaps that mike l might feel worked very effectively i've had a lot of clients use this as a handout very powerful tool i want to give two cents to a very powerful person in my life my personal and professional life her name is karen kerpin any of you out there who think your resume needs a tune up karen is your go-to person you need a terrific bio karen is your go-to person you need a powerpoint presentation done or tuned up or you want to go all of a sudden and add your own personal website very good tool uh to go off and do karen kerbin i absolutely cannot say enough for a fine work she does all this and and a lot more her contact information is here the last point i want to make gerald is i'm going to tell everybody on this call send me a linkedin invite put blackboard partners in the subject line i will accept anybody that does that today and i will tell you simply being connected with me raises you in the rankings i'm what linkedin refers to as a super connector i've got 10 000 connections simply being connected with me raises you in there in the rankings so by all means shoot me a linkedin invite the invite i will accept it today you've got my email address here and joel i turn it back to you yeah great really great mike we're going to continue to open it up to questions uh here so if you would all put some questions in the meantime mike i i just hit 29 29 900 uh [Music] first connections and 45 000 followers on our our blackmore partners inc uh company page and so we're we're really going through the roof at blackboard i want to just acknowledge my great team that makes it happen but we're having to get rid of private uh um uh get uh take people off the list because i keep bumping up um to that 30 000 and once you get 30 000 you can't have any more there's a limit to that so am i a super super user well you're you you definitely are a super connector uh space uh but i need to confess that i am one of your i am one of the 45 followers so 45 000 followers yeah it's really great so i want to ask you all on the call is to put out questions i also want to mention to you you know again private equity there is nothing uh easy about it it's for the executives who start early and just keep on the pace of building relationship understanding voice of the customer it's critical um you know uh i go to you know a dozen plus sometimes more in some years 25 conferences a year and it is not things easy about about getting to private equity and i have what they want i often bring deals with me and that's still not enough so they're just uh uh and they're just have very very thin thin thin thin number of people to do it and you gotta have uh connections and i encourage you to use our blackmore connects uh group to help you my deal group i wanna work with you if you uh if you want to go after becoming a deal person we have a measurable step-by-step group my group it's free that's the deal side blackboard partners inc and we have a process called the backable exec process we're in five hours a week uh anywhere from six months to 24 months you will be in an uh in your own deal getting salary bonus and equity uh with us having led the process with you it's slow you got it there's actions that you have to take you got to be willing to come up with niches you got to be willing to talk with owners which we have the list of owners we have databases of private companies but the that's the key but the great thing it is it's uh there's no cost to you it just takes a long time um okay let's go to some of the questions uh they're coming in furiously mike how to find companies for sale in order to prepare the pitch for b firms well that is jan jan i have that list uh there you don't know if they're for sale okay the only way you know something's for sale if it's through an investment bank and a broker that's a different types of process and the brokers the or the investment bankers are going to go who's who's where's your money and if you say well i just want to buy a company they're going to not even bother to talk to you mike any comment on that no no you hit the spot spot on okay mike can you talk about a little bit about board certification process uh what do you recommend in getting a board well there are several groups that offer the certification uh process uh nacd being the most prominent american college being another one private directors association being a third so these are all good organizations to take a look at many people say do you need the certification and i say no it's not it's not mandatory by any means uh it's not something that you've got to have you know i guess i would put that in the same category as an mba is it a nice to have certainly is and most of the people in this call would have it do you have to have it uh no but i encourage people to do it you know not just for the certification but because of your own personal learning and and making sure you understand good governance okay next question is how many verticals should be looking at creating your first early stage steel thesis you know what i encourage executives do is look at any niches you know a niche so if you're in like qsr what aspect of qsr you know fish uh meat you know there's so many different niches within niches each niche should have a deal they say to you michael yeah yeah i think i think that's that's a good that's a good round number um the more the niches the better you know i refer to myself by the way as category agnostic even though i started off as a consumer person and there probably are many people on this call you know as well that would want to think that way as opposed to uh uh narrowing themselves too unnecessarily okay next one is it productive to approach a p firm with with the deal thesis and uh let's see the it's so uh small here is it productive to pre uh approach a p from what the deal thesis and a target driven deal exec to be a resource or use one as a pitch and go from there my answer uh is both what we tell executives is the minimal you need to have just be actionable is you have a niche deal thesis the next thing is you have a list of targets the next thing is you're you're you've uh you've qualified the targets that they're in the ballpark they're privately held they're three million ebitda or more uh and then the next level is you're on the phone with them the next level is you're getting call backs next level is you're doing ndas and then it goes to eoi loi you know all of that the blackmore connects group the private equity firms are coming to meet executives with express explicitly with deal thesis uh they're looking to build benches uh so my group is we work with you to build the whole you know all the way out to a war we get an loi done and then we go get uh all the pe firms for you it's just a longer road to hall blackmore connects is instant mike to you yeah no i think that's uh that's very good and by the way uh to all of our uh listeners today uh on the screen you've got my uh the website for my coaching business festival and because you'll find additional tips for interviewing uh and uh credentialing yourself you know on my on my website uh another question uh non-funded funds unfunded sponsors independent sponsors is the name from them uh this is for max are they worth even looking at it uh yes max max the unfunded sponsor independent sponsors and we've done 11 deals in our group uh are is the biggest asset class uh that private equity is working we have no problem getting uh dry powder for deals and in fact we have more flexibility in who we go to get money mike yeah no no no unfunded non-funded whatever term you know you use for it you know it's where i've seen a lot of transactions happen with uh because of people like uh the people who have registered for this callier very very popular you know option and i know gerald you always find the funding so that's pretty neat gerald i bless you and it could be that my connection is uh is gone oh sorry what do you think of the energy space of the time edward the energy space is a great space unfortunately debt is hard we've had some great deals in the space the esg crazies and other people in the biden administration i have no opinion here um this is uh are crushing this market it uh however the money that is being made for those that are daredevil enough to go against the crowd are making oodles of money uh right now so the biggest challenge is that we like midstream we like anything to do with widgets or services as long as there's a plenty of uh plenty of different customers if it has high customer concentration it becomes a problem but we like energy not drilling that's good for public companies mike to you nope nope i think we're at the top of the hour so i i won't add to what you said okay guys this has been another great event i want to thank you for being here if you again if you want to be a guest at one of the conferences you have to apply um and it's not for everyone there are uh requirements you gotta get with the gentleman named chris melton i put his name into the chat i sent you an email on this thank you all for being here bye-bye