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Chris Gordon

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56

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2023-08-28

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2023-08-28

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1

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1. “Gotten big enough to support a transaction like that, it was certainly not clear that that was going to be the case, but it seemed plausible. The equity fund size of private equity funds had not gotten to the point where they could support those types of transactions. Of course, today there are large pools of co-invest capital in lots of different ways you can build out quite large equity accounts. Most of that didn't really exist at the time. And so the way very large transactions would typically happen would be partnerships amongst multiple general partners, usually not more than two or three, but in some cases even larger groups than that. And so that was the timeframe we were in in 2006 when HCA came together. So let's talk about HCA. What was the company then and some of the history? It's got a really interesting history. So the company was founded back in the late 1960s by Tom Frist Sr. and his son Tom Frist Jr. And they would be able to do a much better”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Geographic scope, larger industry scope to be able to operate at larger scale. All of those things don't always move together, but they had been progressing along. And then that mid-2000s timeframe was a really interesting time because there had been buildout of some private equity platforms who had developed broader capability sets, larger teams, really big supportive groups to help drive change within companies, bigger geographic coverage as well. And then debt capital markets had also been really becoming more robust and accelerating. And all of that was coming together at a time there that could facilitate larger transactions, but still at the time nobody would have really believed, and frankly, we weren't even sure in that 2005-6 timeframe. Could you really do a deal as big as HCA, which was a $33 billion enterprise value transaction? And the other dynamic that was going on at the time, though, is as debt markets had maybe...”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source

3. “But they could be really helpful supporters. And so a key part of that has always been partnering with great teams. A lot has changed between the early 1980s and current. And part of that evolution along the way brings me to your question around so what was going on in that 2006 timeframe. And if I think about the evolution of the private equity industry, the idea of active hands-on transformation oriented value added investing has been a successful idea for a long time now. And as it was deployed, the scale of companies and just the scale of capital that you could deploy into those types of opportunities was growing over time. But there were a lot of different factors need to come together for that growth to happen. You need debt capital markets to support large transactions. You need the sizes of private equity funds to grow to support larger transactions. And then the team and the capability set needs to become increasingly sophisticated and larger bandwidth, larger”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source

4. “Private equity, but we've also got a very large credit business. So that's where we are now. If I rewind back to the very beginnings of bank capital, which was even before my 26 years, we started off in 1984, and it was a spin out of a group of consultants who came out of bank consulting under Mitt Romney with this core concept that if we think we're capable at understanding industries and understanding companies, let's deploy that skill set as investors rather than as advisors. So we wanted to really look to develop deep insights around sectors and businesses, use those insights to try to create and source investments, but then also use that capability set to partner with great management teams to try to drive value creation in our companies. And early on, we're smart enough to know that they weren't.”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source

5. “Exit of the investment and the implications of the deal on the firm and the industry. Please enjoy my conversation with Chris Gordon. Chris, thanks so much for joining me. Thanks for having me, Tud. Well, this is going to be a fun one to go back in time, and maybe we should start with what was being capital like and what was the environment for deals like leading up to the HCA purchase. This one is now, what, 16 or 17 years ago, so it's fun to do a bit of a walk back in time. Part of the way I might answer that, especially as to the bain capital part of it, is it might be helpful if I frame where we are now, go back to where we started, and then use that to lead into what that world was like then, because I've been at Bain Capital now since 1997, so 26 years now, and it's been a really interesting evolution to watch over time. The quick snapshot of where we are now, we're a global asset manager across a variety of different assets. We've got $165 billion under management, 24 offices around the world and about 1,600 employees. Our largest business, that's a little over half of that AUM is in progress.”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Private multi asset investing firms that oversees over $165 billion in assets. Seventeen years ago, Chris was a younger member of Bain Capital's HCA deal team. HCA is one of the nation's leading healthcare services providers, with over 182 hospitals and 2,300 sites of care in 20 states and the United Kingdom. Its origins date back to 1968 when it was one of the first hospital companies in the United States. Our conversation covers HCA's history, the private equity environment in the mid-2000s, and the impetus for the HCA buyout. We discussed the complexity of navigating a large-scale transaction, conducting due diligence discreetly, navigating the financial crisis, and what happened to the company after the deal. We turned to HCA's return to the public markets through an IPO in 2011, Bain Capitals eventual”

   2023-08-28 · Capital Allocators · Classic Deal: HCA – Chris Gordon, Bain Capital (EP.335) · IDENTIFIED FROM THE TRANSCRIPT · source