On this episode of Deal by Deal, co-hosts Jason Griffith and Trey Andrews welcome Jonny Miller and Mario Burstein of Platt Park Capital Partners to discuss their emergence into independent sponsorship.

Tune in as Jonny and Mario discuss how Platt Park came to be, how they secured their first deal, and how they can apply what they learned in their first deal to future deals. Jonny and Mario talk about managing seller expectations, focusing on the process instead of aiming for perfection, and how to make the transition from an acquisition to running the day-to-day operations of an acquired company.

Connect and Learn More

☑️ Jonny Miller | LinkedIn

☑️ Mario Burstein | LinkedIn

☑️ Platt Park Capital Partners

☑️ McGuireWoods | LinkedIn | Facebook | Instagram |  Twitter/X

☑️ Subscribe Apple Podcasts | Spotify | Amazon Music

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

You are listening to Deal-by-Deal, a McGuireWoods podcast. Deal-by-Deal invites you to conversations with experienced independent sponsors and other private equity professionals. Join McGuireWoods partners, Greg Hawver and Jeff Brooker as they explore middle market private equity M&A to provide you with timely insights and relevant takeaways.

Hello everyone and welcome to Deal-by-Deal, a podcast by McGuireWoods sitting in today. I am Jason Griffith out of our Chicago office, joined by Trey Andrews out of California. Say hi, Trey.

Hello all.

That's all you get. Trey will be done for the rest of the podcast. Just kidding. Trey, happy to be speaking to you today. Trey's in our healthcare group, we partner together on transactions a lot. Trey, can you say a few more words about your practice? Introduce yourself.

Sure. Yeah. I'm a partner at McGuireWoods in our healthcare practice. I sit in the Los Angeles office more specifically than just California as a whole, Jason. I work with investors, both private equity funds and independent sponsors along with family offices that focus on investing in the healthcare sector. And yeah, looking forward to having a conversation today.

Great. And most importantly, today we're joined by Johnny and Mario from Platt Park Capital. We were able to partner with them as they closed their first transaction at the end of 2023. We asked them to join us today to share a couple of war stories from that first transaction, and so we all might a little bit smarter and benefit from their experience. Johnny, Mario, thank you so much for joining us today. Can I turn it over to you to introduce yourselves and Platt Park?

Yeah, absolutely. Thanks, Jason. Thanks, Trey. Happy to be here. I'll start. This is Johnny Miller. Platt Park Capital is a Denver-based independent sponsor formed just over a year ago in April of 2023. We focus on partnering with entrepreneurs and founder owned businesses to really build industry leading companies. We take a firm belief in our partnership approach to investing and also believe that we, along with our entrepreneur partners can build long-term lasting relationships, but also value creation. Through that effort, Mario and I bring diversified backgrounds, myself more on the private equity side and Mario on the management consulting side. With that, I'll turn it over to Mario to give a little bit of his background.

Thanks, Johnny. Yeah, my background is almost exclusively in management consulting, kind of everything from commercial diligence to financial diligence to post-close value creation and got to meet Johnny in a client-consultant relationship and after a few years it kind of blossoming into Platt Park capital, which has been a much needed change of pace.

Well, you guys are some of our favorite cadence of clients, so we had a chance to meet you when you were first thinking about forming the platform and then while you were chasing your first LOIs, signed the LOI that ultimately led to the first closing. Can you tell us that story a little bit in as much detail or as little on each step of it as you want, but why the independent sponsor space? And then what about this transaction? How did you find it? And I think the question that you'll hear us ask a lot about is around the relationships. How did you build a relationship with the sellers so that they would pick you, a first time independent sponsor, to trust to be their partner in their business?

Yeah, thanks. I'll start here. I think early on after launching it was really all about getting the name out there. We put together the traditional one pager as well as a mini deck that gave an overview of who we are and what we were focused on, and with that we emailed and called every intermediary we frankly could just to broaden our visibility in the market. Through one of those conversations, tailoring our focus on the sectors that we are targeting merged that a broker had a relationship with an outsourced CFO firm that actually he made the introduction to that firm who had a client that ended up being the target. From there, the outsourced CFO firm just speaking with us and vetting us and hearing our background set up a call with the sellers, the sellers and us got on, we shared our background, what we're looking to do. At our core, as I mentioned, is partnering with entrepreneurs and really being a value added partner in that quest for breaking through and scaling the business.

We were following up out of that call, it was signed an NDA, got some information and we moved quickly, did our work in less than a week, frankly, and came back to them with an LOI. I think what was really telling for us is we negotiated the LOI a bit as far as the terms, but what they really wanted to do and what I think formed the foundation of our relationship with the sellers was jump back on a call with us, which we scheduled I think 60 minutes and I think it went for two hours, really just kind of hearing our vision for the business in specifics where we were going to play as part of the broader extension of the management team, if you will, and what our vision for the company could really be in the next five years. Coming out of that conversation, we signed the deal up and started marching down the formal due diligence path.

And Johnny, the cadence you mentioned for the amount of intermediaries you contacted and the timing from launching Plat Park to getting to this point, what do you think the work went in for the amount of people you had to contact to find that deal and the timing component that went along with that?

Yeah, it's funny because it's only just over a year ago, but it feels longer, so I'm trying to think back, but I think the only thing we had to do in those early days, I'm thinking April, it was a very stacked calendars with calls. It was a lot of work, frankly, when that was the only real focus and energy at the time. It didn't feel like our days were as busy as they are now. Mario, what do you think?

Yeah, I actually felt like it was less work than you're describing, but it basically entailed blasting, setting up a Google workflow to blast 140 emails. I think we got a bit of luck and one of the responses was what Johnny described asking, "Hey, I saw a med spa, I know a company, would you like an introduction?" And then honestly, I think it was about three weeks from that date we sent those emails is when the LOI got signed, so it was fast, but luck certainly played a part as well.

Well, I think that's a great story and maybe the timing of how things played out for you informed this decision, but one of the questions we get asked a lot is, should I wait until I have an LOI to really start making introductions and building relationships with capital providers? How did you guys think about that in the early days? You've got a new platform, you need to get introduced to people, you need to get your brand growing and your reputation growing, but at the same time, it's hard to really have a meaningful conversation with any of these capital providers if you don't have an LOI. But then once you have the LOI, you've got the exclusivity clock ticking and I think it's a chicken and the egg balance or question that people face a lot. How did you think about that?

Yeah, I would say I think again, early on it was get the name out, get the story and sectors of focus, targeting brokers, intermediaries out of the gate. I think had we not gotten it signed up within four or five weeks of, frankly, launching the next step would've been to try to do the same with capital providers, capital partners. We found ourselves in a situation where we had a deal in hand and naturally we would begin to have those conversations and educate them on Platt Park. We were already fundraising for a specific opportunity. I do think generally speaking, it is a chicken and the egg thing and certainly creates a more productive conversation or an easier conversation when you do have a deal in hand. Having said that, we've been intentional about keeping our relationships that we've built or formed, frankly, during that first process with semi-regular touch points and outreach even when we don't have a deal that we're actively raising capital for.

So we've got the LOI signed, you are starting to line up your advisors, you find terrific legal counsel to be your trusted partner and value added business relationship going forward.

Absolutely.

And then you guys staged it out the way that we advise a lot of clients to do, which is let's take care of our Q of E before we really turn up any of the legal spend. You did that, we get going on the underlying transaction, things are moving along quickly. We have a good cadence. The four of us are texting on a regular basis. We're knocking off issues pretty quickly. We know which bucket of responsibility with which person, and then we get our financing partners engaged and the dynamics are suddenly different. There's more people who we need to make sure have signed off on concepts. There's more voices that we need to make sure are heard and there's more people that we're bringing into the mix. All of a sudden we have these sellers that are used to dealing with us and now we've got other partners that we're bringing in and introducing to them. How do you manage that whole change and keep everything rolling at a quick pace and keep your sellers happy? Just how do you think about that whole dynamic and keeping tabs on that?

Yeah, I think you're definitely managing a lot of different parties at the table and even when you think about the individual parties, there's just several different touch points and keeping everyone in the boat and up to speed and marching towards the ultimate end goal is a lot of directing traffic. I would say we have always since launching felt like we wanted to be a partnership first approach to how we're doing this, and obviously that is paramount for our sellers and the partnership with the entrepreneurs, but we also think just as important is that being good partners with our third party capital providers, it's very important to us that we keep everyone in the boat and marching towards the end goal, but also understand and try to hear where their concerns are, what are their pain points, while not allowing that to derail things or be too big of a distraction. So kind of distilling down to the most important things and shrinking the issues list as often as you can is crucial.

One of the things that I was impressed with as we went through it is in most transactions, it feels to me like the sellers run out of patience first. They've been doing diligence the longest, they're ready to get paid. It never really felt like that here, which isn't to say that they weren't ready to move quickly, but it seems like you guys did a good job of managing that. Dynamic in particular I'm interested in is as the number of voices keeps going up and the number of diligence requests keeps going up and the document open stays up, how do you manage them and just keep their faith that you're moving forward and you will get it done? At some point, the issues will start to get smaller and less.

I think for us, some credit has to go to the sellers. We had phenomenal partners that were super patient. I think we kind of glossed over it, but we did a ton of diligence on our own beforehand, which kind of armed us with a lot of the documents and answers to questions that all the third party, our capital partners were asking, and it certainly alleviated the burden from the sellers in that regard because they had answered a lot of these questions for us and provided documents for us ahead of time and it was more just regurgitating it and passing on information given versus capital buyers having to go back to the sellers for more and more information. So I think it was a combination of a great partner and also some credit to Johnny and I for doing a lot of the prep work and anticipating the requests so there would not be too much redundancy and duplicative efforts certainly helps alleviate some of the pain for the seller.

And I would just add on that. I think that was absolutely crucial, but I think we were overly transparent throughout the process. It's always difficult to kind of navigate the transaction timeline is particular finding the capital, but also with a lot of these lower middle market deals in particular, if they don't have representation from a formal investment banker, a broker, it just takes time. Even if it was maybe a delay that their side was causing, we were very transparent with what that would do to the overall deal timeline and never kind of promising we would deliver X on a particular date if we didn't think we could or didn't know we could hit it. So I think it was just transparency and doing that work upfront that Mario mentioned.

All right guys, that's super helpful. I appreciate it. The other thing, that dynamic that you were figuring out was the one between the two of you, this is the first deal that you guys had done together under the PPC banner. I mean, I know you'd worked before together beforehand. How did that work and did you guys have any takeaways, any discussions that you wish you'd had earlier in the process so you didn't have to figure them out on the fly or we're all just living in Mario's world here?

I think everything was on the fly. As you're going through it very quickly, you're not sure what you should have asked. For me personally, we had a natural working relationship where the things that I hate to do, Johnny likes to do and thrives at them and vice versa, which I think we got lucky in that regard, but it kind of naturally fell in place. I think by the end of it, you really get to know what irks the other person and vice versa, which I'm not sure there's a question that you could ask ahead of time to reveal, but-

Yeah.

It's a fun learning process.

Yeah, obviously we had worked together for three or four years prior to launching, but in a very different context, so this was certainly, there's a learning curve for us to understand. It happened quickly and frankly we were surprised to find that there was never really a, let's have kind of a conversation around these sets of tasks. It was more of a, I would gravitate towards one area and Mario towards another and the work would get done and then we'd kind of come back together and have a conversation. So I do think that that was just our backgrounds, complementary skill sets, and frankly complementary personalities was great to balance each other out and kind of attack the litany of things that needs to get it done for a transaction to come together.

Well, there's certainly enough work to go around. I like that dynamic. So one of the things that always is interesting to me, we spend all this time and we have term sheets and then definitive documents that we negotiate and it's how are we all going to get along? It's governance terms with the sellers, it's governance terms with our lenders, it's governance terms with our equity investors, and then we close the transaction and I feel like a lot of that stuff is so big decision driven and high level blocking. As soon as you close, you still have to figure out how are we going to make decisions on a day-to-day basis. So we spent all this time trying to parse out how things are going to look big picture. Has it worked out the way you thought it would as we've closed and started the day-to-day business of building this thing and growing the investment?

So I think getting through that final stretch, closing the deal, it's always, especially again, with more kind of parties around the table that all have to sign off. It just creates for some level of complication, which should be expected, I think in any independent sponsor deal. I will say kind of post-close, the dynamic doesn't necessarily go away in that you still are working with folks and new capital providers and partners that you've never worked with before. And so there's that learning curve as we've learned how to work with them and what the appropriate cadence from a information flow reporting structure, et cetera. What I will say is we've had great partners on the post-close basis.

They've been very constructive with feedback and introductions, but also, and I think this is very important to Mario and I, have given us the freedom to really be the day-to-day, week-to-week sponsors of the transaction and we have helped direct a number of initiatives that we're working on and certainly they are kind of in the loop from an information flow perspective and having conversations on an as needed basis, but certainly have allowed us to kind of execute on our value creation plan, which has been great to see.

As you think about Platt Park deal number two and you think about going through this process again, looking for partners both in terms of the business you're going to buy and the equity and debt partners that you're going to bring in to help finance it, are there things you would make sure that you do again so that you get a replicable experience? Are there things that you would do differently to make sure you get a different experience? How do you think about the next deal based on what you've learned in the first one?

I think finding that second deal is challenging in and of itself and we try to keep a pretty narrow focus in what makes a Platt Park capital deal. And I think with that focus it weeds out a lot of opportunities that we see or hear or come across our desk, which I think first and foremost is essential from just a allocation of time. I think as far as the transaction dynamics come into play and certainly want Mario to chime in here, but I don't think there's any specific path that you can follow. There's no clear roadmap on getting a transaction done because every deal, every seller, every kind of processes is its own unique snowflake. And so I think we're obviously focused on what are those learnings from deal number one. And I think doing the right things, being transparent, having the relationships and communicating early and often with our capital providers is the key to success. Again, a clear roadmap to executing a transaction.

Is there any one thing that you took away from deal one where you would anticipate getting in front of it in deal two? Meaning that just something of navigating a relationship or beginning a process earlier. Is there anything that just stands out in your head, that take away knowledge from deal one that you would actually mechanically implement in deal two?

Working with McGuireWoods obviously.

And that's a great thought to end on. Thank you for... No, I'm sorry, go ahead.

I was going to say, I think that on the deal one we sweated like, hey, are the materials we're putting together good enough? Do they tell the story perfectly? All this, and we spend a ton of time refining small details where on deal two, I think it's be confident in the materials you're putting together. And I think as we realize, just because we see a phenomenal deal, others may not see it that way. You're just wasting time by adjusting these small little details to a certain degree.

Mario, before we move on, can I just drill down on that? That's a question we get a lot. Is it, should I repackage this in a better way? Should I polish it, get a shinier gloss on it, or should I just get it out? Should I just start talking to people? So when you say that, are you saying because now you're an established and you have a deal under, you want to move more quickly or are you saying as a general philosophical comment, you think getting into conversations and getting process going is more important than perfection?

It's the latter because if it's a good deal, people will see past how it looks to a certain... It's still got to look good, you have to be a professional, but getting the conversations going faster because as an independent sponsor you're going to hear a lot more nos than yeses just naturally is more important.

We feel like in particular on deal one and in general we try to be very thoughtful and see around the corners and answer all the questions, but there's no way you're going to have all the answers to all the questions that frankly, the broader capital provider universe is full of very smart people that are going to ask intelligent questions and you're not going to thought of all of them. So I think getting out earlier, to Mario's point, and hearing that feedback sharpens your approach and materials, certainly we incorporate only a handful, but a handful of slides and analysis based on feedback we had gotten from folks early on.

And Jason flipping the script on to you as well, because you do so much with independent sponsors. In my experience, inaction will be the paralysis of not getting the deal done and just simply not having to have everything perfect, but having enough to where you can begin the conversations is a very important step, which is clearly what Johnny and Mario did. But Jason, I'd love your thoughts on just generally how do you see the thought process of when to start versus when to get things absolutely fully buttoned up?

Yeah, I think that's right, Trey, and it's a slanted question with this group. I think we all are action biased and so I'm always of the mind of let's get out and talk to people. Mario, your point's well taken that we're assuming a baseline professionalism of very good work product. Johnny, not that we're going to have answers to every question, but we're going to have answers to almost every question. And once you're there, I do like the dynamic of getting out, talking to people, Johnny, getting the feedback and hearing smart people press on different points in the deal and just kind of getting out from behind the computer and seeing if you can make it happen. You guys obviously did, it was really exciting. I remember the first conversations, what should we name it? We got to get the website put together and then we've got LOIs that we're got one signed, we've got financing.

The deal is on Let's Race to get it closed and then having the success, the closing call, it was really a fun process. I mean, it's literally why Trey and I do this job. It's the highlight of what we do to get to partner with people like you. This was a really fun one for us and we thank you very much for your partnership and we thank you for coming on today. Hopefully this has been a session that people took something away from. I know I surely did. I really appreciate your time guys. Thank you very much.

Thank you, Jason. Thank you, Trey. It sure was a fun process and you reliving it there made me think of those final days where I think it was great that you're a Colorado guy and rehashed some John Elway drives as we were trying to push things, I guess metaphorically across the goal line.

Thank you for joining us on this episode of Deal-by-Deal, a McGuireWoods podcast. To learn more about today's discussion and our commitment to the independent sponsor community, please visit our website at mcguirewoods.com. We look forward to hearing from you. This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.