What guides your approach as a leader?
Private equity is a very competitive business. And it's becoming more competitive with each passing day. We need to buy well, build and execute durable value creation plans, and then exit well. Achieving those goals requires intense focus over years of work, and the facts and circumstances around what leads to success and failure are in constant flux.
With that backdrop, the good news for me is that I have the incredible privilege to work with some extraordinary people. They're talented, they're motivated, they're highly principled. I see my job as supporting their effort to capitalize on the many capabilities they bring to the table. I think of myself as a servant leader. What can I do to support and serve these very talented teams who in turn are serving our investments and portfolio companies? With that mindset, I focus on a few critical priorities that drive our investment success.
I think of myself as a servant leader. What can I do to support and serve these very talented teams who in turn are serving our investments and portfolio companies?”
The first is investment specialization. We have deliberately chosen not to be generalists, and we’re careful not to chase all the shiny new objects. We do everything we can to improve our odds of making good decisions. At THL, we’ve developed a form of sector specialization that allows us to go deeper in the three industry verticals on which we focus. We curate a handful of sub-sectors within each one of those industry verticals. We call these focus areas Identified Sector Opportunities, or ISOs. The approach requires extensive, specialized resources. We devote years to building deep relationships and credibility in each ISO. And we will not invest in a sub-sector outside of our ISOs.
Our second priority is deploying what we believe is one of the industry's largest and most established internal operations team, the Strategic Resource Group (SRG), to support our portfolio companies in pursuit of their growth initiatives. That’s where the bulk of SRG’s energy is focused. But we endeavor to succeed in all market environments, and frankly, not everything goes perfectly all the time. In difficult moments, SRG has been critical in defending capital and putting the train back on track. Fostering integration and alignment of SRG professionals within our investment framework has been an important goal for me, helping to serve the broader mission of doing what’s best for our portfolio companies.
Underpinning those priorities, my partners and I place a high premium on maintaining a culture of communication. I think about it this way: Take the amount of communication you believe is necessary — internally and externally — and then double it. And then, when you’ve done that, double it again. Now you're getting close to the amount of communication required to drive real productivity for an organization. We spend a lot of time reinforcing that internally, trying to be very clear about where the investment committee sees value — and even then, I suspect we still fall a little short.
Let’s overlay the market dynamics that have been happening and the unknown future on top of it. How do you have to alter your leadership style and how you communicate?
If I start with our mission as an investment firm, the pacing of capital deployment is a critical motion. There are times when the world is hot and it's very easy to complete transactions. In those overheated deal markets, reviewing potential pitfalls with our teams and resisting conventional thinking is unpopular, but important. My partners and I become the unwanted voice of reason. There are also times when the world feels riskier and it's harder to find interesting opportunities. In those environments, we once again need to avoid the herd mentality. Our motion is to seek out upside in new deals and remind our teams that not all is doom and gloom. There is some real cheerleading during those moments — whether we are good at it or not.
In all cases, an important part of our platform is having an organization large enough and a team with sufficient bandwidth to constantly make small recalibrations and maintain disciplined investment pacing across all market environments. Scale matters, even in middle market PE.
Obviously every portfolio company is going to have a different culture. But what do you do to ensure that the process of ownership under THL is consistent?
Driving consistent and superior results across the portfolio depends a great deal on our own culture as an investment firm. We have three words that we use to describe THL: smart, hungry and humble. Smart and hungry are table stakes in private equity, but I think humble — humility of intellect, humility of personality — is not as well represented, and can be incredibly valuable. You tend to listen more if you operate with humility. You also exhibit greater empathy, which is important in terms of building multi-year relationships with management teams.
Smart and hungry are table stakes in private equity, but I think humble — humility of intellect, humility of personality — is not as well represented, and can be incredibly valuable.”
We're also vigilant about holding ourselves accountable. Are we doing all of the right things? Do we have the right processes in place? We seek to avoid the “affliction of certainty,” and to the extent we can tolerate it, we challenge ourselves at every step. A mentality of continuous improvement is critical to investment success in private equity.
How are you utilizing AI? How do you think about it? How is it impacting your investment, both for your firm and your portfolio?
Within our Strategic Resource Group, we drive product and value creation initiatives that generate meaningful insights and opportunities for our portfolio companies — capabilities that many middle-market businesses don’t typically have. That work is ongoing. Sometimes it’s about using AI to accelerate product roadmaps or improve a core product offering. Sometimes it’s about driving better outcomes for a services business. We work hand in glove with our management team partners to evaluate new ways to drive growth including through AI adoption.
On the investment side, it's really fascinating. I would say that in the last few months, I have gotten comfortable using AI in real-time to help synthesize vast amounts of information — accounting reports, consultant materials, proprietary interviews, etc. That is making the process of getting up to speed on a given investment more efficient for every investment committee member.
At the end of the day, though, AI is still all about the inputs. If you feed substandard third-party reports and expert opinions into an AI tool, you’re simply going to arrive more quickly at the same wrong conclusions. While AI is democratizing how information is processed and packaged, the work that we do to collect the very best information and to leverage the people that we know, the relationships that we have built over many years — all of that is still tremendously critical and will remain the ultimate driver of value.
You’re clearly a very energetic person. How do you keep the energy? What gives you excitement and happiness day in, day out in your role as CEO?
Well, I do really embrace this notion of servant leadership. I love to see our people feel successful, such as when they're signing a deal or creating a great investment result. I also love watching our portfolio companies achieve better outcomes because of THL’s involvement. Working with a management team to create a faster-growing business that delights customers is meaningful work to me.
I’ve also made mistakes over my investing career. The consequences can be paralyzing. What’s critical is to keep moving forward, address one problem at a time and do what you can to best serve the investment and the portfolio company. Sharing that perspective can help our people move through their own difficult situations. Having that kind of positive impact on our people is probably the most rewarding thing I do.
On a personal level, what do you do to stay in shape, and maintain both your mental and physical health?
I'm a big believer in all kinds of exercise; it keeps you sane, and the routine is grounding. I'm also blessed by my wife and three amazing children, and numerous personal relationships from different walks of life.
Finding those causes I’m passionate about and working with people I care about — to me, that's always been the most rewarding part of life.”
I like to go deep on things. It might be a charitable cause, or my children’s interests and passions. Not only for the intellectual engagement, but also to be around the people to whom I feel closest.
One cause I've been involved with for a long time is searching for a cure for Type 1 diabetes. I myself am a Type 1 diabetic, so that's been a labor of love for me for 25 years. I've also been involved with some amazing women’s and girls’ educational institutions. I was a trustee for Wellesley College and am still on their investment committee. I’ve also supported a tuition-free all-girls school called Mother Caroline Academy. I love its mission, which is to provide a tuition-free education to middle school girls, many of whom will be the first in their family to go to college.
Finding those causes I’m passionate about and working with people I care about — to me, that's always been the most rewarding part of life.