72 hours in New York City

Buyers and Builders,

It has been an eye-opening week in the mecca of finance, New York City.

I attended the Serial Acquirers event - excellent work by Edwin from Road to Carry, and Alex and Helen from RollUpEurope. The event featured a great deal of high-quality networking and four strong panels:

-Bryan Rand on acquiring eight companies and building a portfolio with $400 million in revenue;

-Cameron Perkins on back-to-back 10-baggers and the evolution of Shore Capital’s search fund strategy;

-Reef Pass co-founders Dan and Robert on applying lessons from the long/short Tiger Cub hedge fund world to backing serial acquisition platforms;

-Frankie Costa on building the next successful platform - his previous light mechanical and commercial HVAC platform reportedly surpassed $1B in top-line revenue.

I will share the key takeaways, notes, and broader reflections very soon.

Meanwhile, what may be a little different, were the two meetings I had the day before the conference:

One with an investor at a $1B+ AUM long/short equity hedge fund, and another with the managing partner of a $1B+ AUM wealth management firm.

These are people operating at the top of their game and craft.

The hedge fund, for example, runs from a single floor with a team of more than 30 people and executes over $30B in annual trading volume.

The wealth management firm has many offices across the United States and is growing more than 20% YoY, versus an industry growth rate that I was told is closer to 3%.

A few observations stood out - ideas that I believe are directly applicable to anyone acquiring, operating, and building companies in the $1-15M EBITDA range:

1.  Think bigger; there’s so much opportunity. The hedge fund trades many billions per year. It’s just one floor out of all the towers you see in Midtown. (Go for a bigger deal; do more than you think you can handle.)

2.  People work extreme hours. And there might be periods when they were working crazy-extreme hours; say, the gentleman who manages a wealth management firm, during the period of Covid-19, there wasn’t a day when he would not do research by calling hospitals for recent data and then write about the markets - all weekdays, as well as weekends.

It’s a long game, so you’d better have your family (your wife, your partner, your kids) involved. One spends too much time at work; life is better if they’re involved in some way, shape, or form.

3.  Decades of mastery. The gentleman who runs the wealth management firm reads and writes all the time. Every single week, he writes 3,000, 5,000, sometimes 15,000 words. He has never missed a week during the past two decades.

4.  Be likable. I can see why people want to work with them, for them, and also trust their capital with them, whether individual UNHW investors or endowment funds.

(I’d add trust, competence, and (silent) confidence. They don’t say they’re confident or competent; however, after 5-10 minutes of talking to them, you’ll see that. The aura is there. They’ve read it all, and they’ve experienced and seen it all. Nothing is an accident.)

5.  There are those who are rainmakers and those who are not. It’s better to be one. While the industry average growth in the wealth management space is 3%, this firm does 20%+ YoY growth organically while managing many billions. Again, better to be a rainmaker.

Being a rainmaker I mean being great at business development. Everything is about sales. We talk about selling to attract top talent, selling to build secure funding, selling to building a functional ecosystem of vendors and partners. Quoting Ken Griffin of Citadel: "If we're all going to eat, someone has to sell.”

6.  Wasted opportunities in life. I heard stories where they knew people who were smart, like world-class smart, and even had everything ready, but never launched, never attacked. Now they’re older and not enough time is the enemy. Big lesson there.

7.   Be or get lucky. They all had moments where great things weren’t planned but somehow happened. Although, listening to the process they all follow day in and day out, you could say they were prepared for those “lucky” moments.

8.  You know this last one. These are competitive fields. After spending a couple of hours combined with these individuals, one thing is certainly clear - you better want this, define your niche and edge, and be ready to compete everyday. Otherwise, perhaps think of other pursuits.

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On Monday, we go live on Buyers & Builders with an episode featuring a gentleman who built a portfolio of ten companies across eight countries and three regions.

The portfolio generates so much free cash flow that he went on to launch his own fund-of-funds investment firm, focused on investing in global long-only and long/short equity managers.

Follow along so you get notified once we go live: Apple Podcasts, Spotify, YouTube.

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Last but not least, after spending 72 hours in New York City and having around 20 meetings and conversations, one thing became very clear to me: the people running the very top firms are normal people with abnormal goals, ambition, and work ethic (!).

What also stood out is that there is no single “right” industry to build in. The more important variables are focus, self-awareness, understanding your strengths, and building the right team around those strengths.

No one does it alone. The best operators and investors all have exceptional people around them. Those people are driven, looking at the hours they work, aligned around a clear vision, and incentivized to do great work.

Another lesson: the people who build exceptional firms are usually the ones who “attacked” when the moment felt right. I’m sure there was still uncertainty. There were still reasons to wait. But they moved anyway.

Strategic thinking matters. A lot! But there is a point where too much thinking becomes a form of avoidance. At some stage, you have to trust yourself, start moving, and figure things out as you go.

That’s all for today, the next newsletter will be all about takeaways from the panel discussions on the Serial Acquirers conference.

Talk to you very soon.

Best,
Mike Markus / PrivateEquityGuy