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Deal Talk with 7MA - 7 Mile Advisors EPISODE 25, 22nd December 2020
The Key Components of an Attractive, Successful Company
00:00:00 00:44:19

The Key Components of an Attractive, Successful Company

Glenn Youngkin didn’t plan on becoming the Co-CEO of one of the world's largest private capital firms. He was shooting for the moon — and wherever else NASA would be sending astronauts by the time he graduated.

“I went to college with this ridiculous ambition to be in the space program,” Glenn says. “And I guess no one really told me that when you're 6’6” and weigh 220 pounds, they're not going to let you into a rocket ship.”

He studied engineering at Rice University in Houston to be closer to NASA, but it was his additional focus on managerial studies that led him down a different path. After receiving his Master of Business Administration from Harvard Business School, Glenn landed in the world of private equity, alternative asset management and financial services, and the vast majority of his experience — 25 years — was at The Carlyle Group.

In this episode of Deal Talk with 7MA, Glenn discusses what he learned at The Carlyle Group, which includes how to adapt to the increasingly technology-driven world, the importance of ESG components in every business plan and the key components of every good business that attract investors.

“If an investor is looking at a management team and evaluating their company, it just is a lot more fun when it's a good business,” he says. “And it's a lot more challenging if the business is either running into headwinds, or candidly just isn't that great a business model. … just do everything you can to build robust business models.”


💡 Featured Guest 💡

Name: Glenn Youngkin

What he does: As the Co-Founder and Chairman of the Virginia Ready Initiative, Glenn works with his wife with the goal of helping Virginians experiencing employment disruption due to COVID-19. Through the initiative, the pair rewards those who pursue training for in-demand jobs.

Organization: Virginia Ready Initiative

Words of wisdom: “You’ve got to go where the opportunities are, first and foremost.”

Connect: LinkedIn

 

🗝️ Key Points 🗝️

Top takeaways from this episode

★    Tech dominates, so get onboard. One of the biggest evolutions in private capital over the last 10 years, Glenn argues, is the rising number of private equity firms investing in predominantly technology-driven industries such as software or healthcare. And if you’re looking to enter the business field in general right now, he adds that you better have tech skills.

★    Quality leadership makes a good company. Glenn believes there are four key components to a good business — sustainability, preparation, leadership and culture — but if you don’t have skilled, effective management, the other three won’t matter.

★    No business plan is complete without a strong Environmental, Social, and Corporate Governance (ESG) component. Every single investment Carlyle makes has a meaningful ESG component, Glenn says, so he suggests companies take a hard look at their non-financial factors when preparing to be evaluated by potential investors.

★    During a pandemic in particular, you have to adapt or you’ll fail. Glenn recognizes that many companies might have been preparing for the next recession before COVID-19 even came into existence, but responding to it and its lasting effects isn’t the same as responding to a traditional recession. Take a look at what’s changed (such as more virtual meetings) and get used to it.

 

⚡ Episode Insights ⚡

[5:36] Getting started in the business world: Glenn planned on going into engineering, not finance, but his first job out of college led him down a different path.

[10:59] As technology improves, private equity firms evolve: Over the last 10 years, technology has been the underlying distinguishing characteristic of a business. Glenn says that’s why private equity firms are investing in predominantly technology-driven industries such as software and healthcare.

[14:21] Building a good business is key: Glenn says it’s a lot easier (and a lot more fun) to evaluate a company when it’s a successful one, but beyond that a company needs to be sustainable, have done its homework (to prepare for investors), have quality leadership and maintain a good work culture.

[19:13] Looking back to help others move forward: Glenn reflects on his 25-year career with The Carlyle Group and offers advice for anyone interested in going down a similar path.

[23:10] Adaptation is the name of the game in a pandemic: When he and his wife saw the record unemployment numbers in the spring, Glenn asked a pivotal question: “How do we not have a jobs program, but in fact, incentivize targeted retraining for people to get into high-growth, in-demand jobs?”

[33:09] To understand the current recession, think pre-pandemic: Glenn says recessions, or economic dips in general, are generally caused by confidence waning as opposed to economic expansion dying of old age.

[38:34] The more technology expertise, the easier it’ll be for job seekers: Glenn offers several pieces of advice for those entering the job market, and explains how to ensure they’ll stick out during a time of mass unemployment.

 

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Deal Talk with 7MA, a bi-weekly podcast by 7 Mile Advisors that aims to give listeners a look behind the curtain of the middle-market Mergers & Acquisitions world. 7 Mile Advisors is a middle-market M&A firm based out of Charlotte, NC, that provides investment Banking services and advise on mergers, acquisitions, and private capital transactions around the globe.