YouSaid · the spoken record

John Barber

lines on the record: 51
first: 2022-05-19
most recent: 2022-05-19
sittings or episodes: 1
sources: podcast

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“One is listen more and listen better. And the second one would be be more patient. I'm not a very patient person. I'll sort of add to that. You know, I have a saying that I talk to people about, which is that people's weaknesses are their strengths boiled over. And I think if you think about most people, you'll say, yeah, and some of the most successful people just know how to keep the heat exactly right. And it never bubbles over. And people who don't have strengths don't succeed. And so how do you balance your strengths with not overdoing your strengths? I would say that in my 20s, a lot of my strengths boiled over. And sometimes could get on the wrong side of people and the wrong side of situations a little bit more. And coming back to my carpenter telling me how to modulate at certain times. And then I just overall think being patient is a good thing. Like most people, I do a list in January of New Year's resolutions. And I think for 37 years in a row, be patient has been on the list, unfortunately.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's funny, I stated earlier that I had two obviously very, very smart parents. They weren't very pushy about teaching. Maybe they were also just tired out from my brothers and sisters. But I guess two things. One would be just search for knowledge, be inquisitive, be always learning. My dad, mom, spent most of their time reading. You know, they did hiking and some skiing and some other things and traveling. But even when they traveled, they were always learning. So always learning. And then I guess I'd also say be humble. They were very special people, but they had no airs, no arrogance.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Money out in 23, 24, 25, and 26, you know, that you've gotten some dollar cost averaging across a lot of different elements of values of markets, values of commodities, interest rates, all the different things that can help and impact and hurt an investment result.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mentioned we raised that very big co investment fund in early 2006. It was a boom time. The heyday, so to speak, of private equity LBOs, very big LBOs, multiple partner deals. And there was a lot of needed extra capital. And we were right in the middle of it and we had a big fund. And we put a ton of money out in 2006 and 2007. In retrospect, that was too quick. And we did get some of them right. We got some of them wrong. I'm proud to say that fund still ended up being about a one and a half and an eight, so not so bad. What it did lead me to learn from it was I do believe a key part of private equity is investing across time. And so we're very, very focused and cohesive that we'll invest over about a four-year period of time. And, you know, a lot of people in the public equity markets talk about dollar cost averaging. And if you think about private equity, it has a lot of benefits. One of the elements that people don't think a lot about is that private equity has a dollar cost averaging element to it, which is if you give somebody a commitment in 2023 and they put”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“The one I would say from a personal level is clearly Mike Carpenter, who I call my business dad. Mike was the CEO of Kidder P when I got there, I was 27. He was 43. By chance, we both left Kidder and he ended up at Traveler slash Citigroup as well. And he just taught me so much. He's very, very smart, very strategic.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“The number one is running after the hot dot. I just think some of the biggest mistakes in life, the growth telecom thing and the tech bubble in the 99, 2000 timeframe, I think there's going to be some real carnage that's come out of the most recent two, three years in some of the what I'll just call overall venture bubble because it's not just tech, et cetera. And then I guess I would also say just being closed-minded, not having it open-minded to think about things. Now people might say, well, John, you're being closed-minded because you don't think some of these new great ideas or great ideas. But when I see some big, big quote unquote venture firms doing what seems like almost a deal a day, a deal every other day just doesn't seem practical that's being done well. But I may be wrong.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess maybe there are two sort of things sort of related. One is people being late, and the other thing is people not calling back promptly. I don't think anybody's that busy that they can't call back.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Luckily, I get to mix my favorite hobby or activity outside of work with work and family, which is golf. I'm not a very good golfer, but there's nothing I like more than being on a beautiful day on a beautiful golf course with people I like. And God bless my wife plays, my son plays, my son's a lot better than me, but also it's a great way to meet people from work and get to know them in a different way. And I think you learn a lot about people on the golf course. I absolutely love golf. And it's one of my happy place.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what that tells me is they're in business. They have the hold capacity so that, unlike the banks, who at these times get very nervous because they're in the moving business, not the holding business. These private guys are in the mostly holding a little bit of moving business, which allows you to be more aggressive and more confident in these more turbulent times. So while it's been slower so far this year, partly because it was so busy last year due to people trying to sell things to beat the tax changes that never happened, I think it's been pretty clear that it's been slower the first three, four months of this year. There's still plenty of deals being done and aggressive deals being done with aggressive financings. I've never been good at a crystal ball, but I think you'll see a little less enthusiasm, but I still think you're going to see very active markets. But where the biggest bloom is going to be off the rose is, I think, in the venture, in the late stage venture, in some of the really early stage growth equity type stuff, because look at what happened in the public markets to a lot of those companies and their prices.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Annual recurring revenues at the time you did it, etc., and especially in the growth adventure world. It's been accentuated. I don't think it's been as bad in the LBO world, but I do think there's been some excesses. And so what you need to undo that is a little prick in the balloon. And with the pandemic, which actually in some ways accelerated things, but then with the super duper stimulus and now what seems like pretty scary inflation in many ways, we see it in our portfolio companies and raising interest rates and then energy shocks and geopolitical challenges and all kinds of things. I think it's taken a little shine off. Now, there's still just a ton of money out there and supply and demand, you can't beat supply and demand. And, you know, it's interesting. There was an $11 billion LBO done recently called Anna Plan by Toma Bravo. Interesting. That deal was financed by, I think it was four or five private debt firms. No bank involved. Unthinkable 15 years ago, an $11 billion LBO, all financed by private debt. That's pretty amazing.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it's a tricky world, and we've been doing this since 2011. And I think to be a good investor, you need to be a cynical optimist. We've clearly been in a pretty incredible time. The economy's done well, interest rates have been low, credit is everywhere, the cost of the credit is low, and the amount of the credit is high. You know, a lot of people say, oh, what happens if rates go up? You run an LBO model and you take rates from 6% to 8%. It does not matter. If you all of a sudden can only borrow four times versus five times, that changes the math. And by the way, the answer is simple. You just bid less. Right? Because we're all solving for one number. That's 20 to 25% IRR. And so we'll look what we think the company can do. The second part is just enthusiasm, right? We've had endless enthusiasm. And, you know, I do think there's been a bit too much enthusiasm, a bit too much willing to go too quickly, accept pro forma adjustments. 10 years ago, nobody even knew what ARR stood for, right? Annual recurring revenue. So now we're not only buying companies, certain companies, software companies off of revenues, we're buying them off of.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Introduced us. Jeff Solomon and ask him for some help. It's not Jeff who can help me. He knows somebody who can help me. That's a very important part. And we've had some very, very meaningful calls outside of the diligence process of the lead sponsor that have pushed us very much towards a deal and very much against doing a deal. So that's the hardest part for them. And then the last part is the stuff I talked about before. You need to be able to move quickly. You need to return phone calls. You need to turn NDAs quickly. You need to say no quickly. You need to be responsive. And I think some people have gotten that more. I also think some people have gotten that more in this bull market when it's sort of been easier and everything's been working. And we'll see what happens as we maybe go towards a little bit less of a ebulent market and some all of a sudden people realize that some of the deals they've done in the last three, four years aren't going to work as well. And they get a little more nervous about what amount of work they need to do or don't need to do to wave in this fee-free carry-free candy.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes you're that big because you really think you love it, even though none of us are smart enough to know it's going to be perfect. As it relates to just what could they do better, first is you got to do what we've done and what some of our better co-investor colleagues have done, which is you have to build the right team and the high quality team and the size of team. You have to have people who are direct investors and direct investors first and spend a lot of their time, if not all their time on that. And you have to have enough people to be able to react quickly and be responsive and work with a sponsor. I think the other thing, you know, we do a lot of is we don't just look at the deal from the sponsor and look at things. We have a whole secondary level of diligence we do. You know, we have a great what we call knowledge network, whether it be sometimes our investors, but we know bankers, we know traders, we know salespeople, we know hedge fund people, we know private debt people, we know people in industry, and we have some really illustrious people. We know people who can get us to other people. Very often, you know, it's not when I call the guy who”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, be careful that you invest to lower your fees. I know a lot of politicians and other people attack pension funds. Oh, look at all the fees they paid. Well, how about just looking at net returns? There is a correlation between getting good results and sometimes paying higher fees. That's one. Two, one of the things I think people do in co-investing sometimes is they get their sizes wrong. They get their portfolio screwed up. So let's say you're a private equity investor who puts 25 million into a fund. That means typically you're putting 2.5 million into a company. If you then go into the co-investment business and put five or seven and a half or ten million into co-investment, you're getting your portfolio out of whack because you're only doing one deal. And maybe that deal's bad. You shouldn't have all your positions from your funds as two and a half million dollar positions and a bunch of your co-investment positions as five, seven, half, and tens. And why would that happen? Well, because sometimes you need to be that big to get included. Sometimes you need to be that big to justify why you're bothering to do it.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Curious being in this market for a long time, there are a lot of the interesting co-investing. Looking to reduce their fees, increase their exposures. What have you learned that could help those people be better at what they do?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“They do, and let's try and unpack those things a bit. So very consensus oriented, very inclusive, very not hierarchical. If Stephen has a really good idea, our most junior guy, then God bless. And next week or a week after we have a new young woman starting as our first analyst, and I hope we take her opinion just as strongly as we take my opinion.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“From their biases that I've come to learn. One of the things we established, and an interesting thing I think about investing in private equity, was somebody came in as a fund. We were doing funds at city. They told us they didn't have a unanimous investment committee vote necessity. Really interesting because everybody always says we're all unanimous. I said, why not? And he said, well, if you have everybody unanimous, then no one wants to be negative during the process. And nobody wants to say, no, I don't like it. I don't like it. I don't like it. Okay, I'm good. So let somebody say they don't like it and say no. And I really thought that was genius. And so we don't have unanimous here, although it never really comes to a vote. But the idea is I want if someone wants to be negative, be negative. Try and test the people who like it more. Now, you may be negative to a nine and nobody else is more positive than a five than the conductor sort of going, think we should. If I got four people who are eight and a half and one person who's negative a five, then that's something we should be moving hard on, right? And then also the person who's a bit more negative, go test it with the person who's more positive. And let's talk about why you don't like it and why.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, one thing is everybody works as a team. One of the things I've never liked about private equity, and people say, well, they did that deal, or I'm doing this deal. It's we do these deals. And it might not work for everybody else, but when we get stuff in, everybody gets all the materials. Now, we have people who lead a little bit more and lead a little bit less on each deal, especially mid and lower levels. But there isn't a deal where everyone has read all the materials. If we have a crucial call, couple hour call with a sponsor to go through things, almost always all of us will be on it. When we have a call with management or not always if we go see management because that's a little more awkward. But, you know, we have a lot of people involved in that. And I'd like to say, you know, yes, I lead the firm as a firm, but from an investment standpoint, I view it as a democracy and as consensus and that I'm what I call the conductor of the orchestra. My job is to make sure everybody is talking, everybody has an opinion. What do those opinions sound like? Do they sound like they're educated or not? Do they have biases in them?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I don't do very much well. I'm not that smart. I'm not well trained in finance. You can find hundred thousands of guys who are better at tearing apart companies. But what I am good at is picking people. And then, interestingly, having them work well together and enjoy it and like it and stick together and work as a team.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or in an HVAC rollup, it seems like everybody's got one. So now all the sellers are laughing. They're rubbing their hands together going, hey, these five private equity guys are all bidding to buy my company. And what you thought you were going to buy at five or six times EBITDA, you're buying it seven or eight times EBITDA after you paid 11 times for the platform, right? You know, and so that can mix things up. And then, you know, maybe it just takes a little bit longer. I wouldn't say we're against that at all. It's just we haven't found ones we've exactly liked. So, you know, a little bit of motherhood and apple pie. We like high quality companies that have enough growth, that have a significant moat, that have a lot of free cash flow. Free cash flow is a beautiful thing, right? Every day you're in effect paying down the mortgage. And so even if you don't grow much, you're making money.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you have headwinds, executions harder. But execution, having that management team, making sure they're doing the right things is absolutely important. So we look at how hard the execution lift is. I think some people have done great at buy and builds. By chance, we just haven't done many of them. It's not that we don't like them, but we also will tell you that in the boom periods of the last two or three years, we sometimes saw people buying companies where if you didn't buy a lot of stuff at a very reasonable price and integrate it well, the deal was a 15, 15% IRR. And all the acquisitions would get to your 22-23. Now we get that, but you've got to buy it all. And how much had this company ever bought before? Now, if this company had been owned by two sponsors and had bought 15 companies each year for the last five years, that's one thing. The company's never really bought anything before. And now you're going to turn it into an acquisition vehicle. That sometimes makes us a little bit more nervous, maybe. And then also, you know, private equities are very competitive. So if you're in a vet roll-up,”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think we've decided that very commodity oriented cyclical businesses don't work in a private equity setting very well. It doesn't help that everybody also just hates oil and gas and you're better off in more nimble vehicles where you can get in at the right time, get out at the right time and have more flexibility, especially as a co-investor. As it relates to styles, I think we're pretty open to styles. One of the things I'd say is like, I have this saying strategy is nice and execution is king. If you look at where we've done poorly, it's because the management team slash the sponsor have executed poorly. You know, it's not too often that we just totally got the thesis wrong. It never happened to us, but you could buy a Yellow Pages company and the yellow pages go away. But that doesn't happen very often. Mostly it's been execution errors. And someone is also, I'm a golfer, so it's much easier to hit an eight iron than it is to hit a five iron, right? So if the wind's behind your back and you're hitting eight iron, the chance you put it on the green is higher than if the wind's blowing in your face. So obviously if you have tailwinds, you know, execution is easier.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Across those range of different companies and sectors that you won't do again. You mentioned a roll-up versus a just buy and grow the original business. What are your preferences and what do you think works best?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“50% of our deals less than a $250 million total enterprise value equity and debt. 70% of our deals less than 750. Those are really in today's world small to middle market, private equity deals. And one of the things I also think is interesting is if you have a portfolio and you think about the size of the companies you own in your public portfolio, you almost own no companies that size because public equity markets have gotten bigger and bigger unless you are a super growth, super techie company, you can't get public these days. And that's part of the boom of the private equity industry. The companies I took public as a 28 year old could not go public today. They can only be owned by”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Joke with the team, which is my favorite companies are there's a guy who lives next door to you and he has a really nice house and he has really nice cars and he goes on really nice vacations and he belongs to a lot of really good golf clubs and you have no idea what he does you want to buy that guy's company and an example of that is we bought a company from a 77 year old man in Port Washington Long Island called Dejana now called Outworks and his company plowed the snow and then melted that snow with proprietary melters at seven of the nine snowiest airports in America and he made at the time twenty five million dollars of EBITDA. That's a beautiful thing to buy. But when we talk about Sweet Spot, you know, for us, Sweet Spot is we do not do venture, so that's not in the sweet spot. We don't like venture. We have evolved to do more growth equity for us. Growth equity is a real company with real products, with real customers, with real revenues that we believe can be profitable in 18 to 24 months and doesn't need any more money to get there. What we are mostly doing is small to lower middle market private equity. And again,”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, first of all, overall sort of investment philosophy. Be curious, really focus on risk reward. I mean, that sounds sort of like motherhood and apple pie. Realize that there are great companies that aren't great investments. And sometimes there are not great companies that are great investments. You can't buy crappy companies. I don't think that works. But there are some companies that are fine, but at the right price and with the right professionalization and the right changes and the right this and some M&A can be really, really good investments. And one of the things I think that's good about going across a lot of sectors is we focus on a lot of sort of Porter's Five Forces type stuff. Does the company have a moat? Does the company have a lot of free cash flow? Is the company's margins defensible? What is the competitive dynamic? Where are they stand in that competitive dynamic? What are the changes that are coming that could disrupt or not disrupt? And we try to apply those to every company we look at in certain ways. I would also say, you know, again, we like things sometimes that are a little more boring.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Morgan Stanley, all rights reserved. And now back to the show. I'd love to hear a little more about the filtering that you'll do with these deals come in. So you mentioned stage, size, sector. What's your sweet spot?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“And he called me and said, You were right, I need you. And he had the opportunity to invest, he had a $350 million fund. He had the opportunity to invest $200 something million in a really, really good company. And he knew he needed more than just his LPs and stuff. And then we really got to work at it fast. We were the first ones done.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Private equity industry who's financing what levels of debt are being done, what's going on in some other industries, what are some companies you own? What's going on with some other firms? Who's increased from $400 million to $900 million? You know, today you know something about GP-led secondaries. You know about this or that. And frankly, nobody can see me here, but I have a lot of gray hair and I'm turning 61 next week. And so there's also just an element of having built a firm or been a bit older and had kids go through school or go to college or go to camp or this or that. I mean, you need to be able to engage with people. You need to build relationships with people. You know, we had a funny thing. There's a firm that we went to see a number of times. It's just a north of New York. And in April of 15, I was there. And the guy said, you know, John, we really love you coming. We always learn something. It's always intriguing. We really appreciate it. But starting to feel guilty because we're never going to do a deal with you. We don't do deals really that are too big for us very often. And when we do, we've got good LPs. I said, ah, don't worry about it. You know, someday you'll need me. And in August of 2015,”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Them. We don't want to tell them their baby's ugly. They're smart guys. They're thoughtful. It's not like we know more. Sometimes we just haven't been able to see it or maybe it's a real execution hurdle unless you're going to be able to spend days and days with the management team. You might not get it or this or everybody has different opinions in life, right? And we've certainly passed on some deals that have been successful, I'm sure, and I know. But at the end of the day, I think that's also important. Now, we do have some close relationships who will really push us. And like, why did you pass? And if we really like them and know them and know it can be, we can just give them a few thoughts and they appreciate that too. We've also found that some people have said, listen, we sit on boards probably about 35, 40% of the companies we're in. We sit on boards. We don't have control. We don't have any kind of negative vote, you know, or anything like that. But we've been able to add some value. And so I think it's about building relationships. It's about being persistent. One of the things you also find about private equity, guys, is especially in today's world, they're very, very focused on what they do, their industry, their firm, their thing. If you show up and know stuff about the private sector,”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our sourcing funnel, if you look at it, some of the answer is how do you say no? And that's where that either immediate pass and or quick no's is very, very beneficial. We've had one firm go unnamed, I think has shown us eight deals. We've said no to all of them. And you're like, why would they keep coming back? And they're a good firm. And the answer is they have situations that make sense for us and they feel like we've been very responsive to them very quickly and don't waste their time. And so that's a bit of an odd situation. I would tell you that if you say no to a firm three times or four times typically, you probably don't want to see any more deals from them. But a lot of it is making sure if you say no in a bad way, that will resonate. And what I mean by that is if you take too long or your answer is, you know, the company makes green bottles and you at the end of the day say, oh, we don't do green bottle deals. Well, you knew it was a green bottle deal at the very beginning. But, you know, we also, a little hint here or joke, which is we try when we say no, more often than not to make it about us, not about.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Curious how sort of in the beginning of that sourcing funnel, how you go about maintaining relationships with lots of firms when doing, as you said, a pace of four or five deals a year, there's going to be a lot more no's than yeses”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Every deal we saw was a deal that every co investor had passed on that wouldn't be a pretty interesting screen. We like complex deals. We like things that aren't”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do I feel like we're the second choice? If you're Clayton DuBalerian Rice, you have a $15 billion fund. You want to write billion-dollar checks. If you have to write a billion four checks, so be it. You're pretty sure and you have an enormous investor base because you're big. So let's say you have 300 LPs. Well, 100 are too busy, 100 don't like it, but 100 do. And so you're going to syndicate that 400. And by the way, you have a pretty good sized investor relations team that can take a lot of the weight off the investment team to get that all done. But if you run a $400 million fund and you need to write a $65 million check, you can't go naked and write a $65 million check. That's too dangerous. One, two, you don't have as many LPs. And some people have great and are very comfortable with their LP base and know that they can co-invest, but some firms don't have that same kind of LP base that really can co-invest. Sometimes a deal is ugly, dirty, hairy, and they don't want to go naked and hope their LPs like it. They want to get us involved early. I'd also say that I'm not sure that if...”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you ask sort of the second part of how the heck do you get deals without being an LP? And are you getting negatively selected? And first of all, some people believe that co-investment in its own right is negatively selection. I don't patently don't believe that because almost every single deal we do is because somebody needs more money. Never because like, oh, our normal equity check is 100, but we're only taking 70 here. 99% of the time, it's just too big an equity check for them. They need to reduce the risk. Depends on the firm, but most firms probably these days try to keep a position, especially the bigger firms, to seven or eight percent and some really smaller funds who want to be concentrated maybe get it up to 11 or 12 percent. And I'd say the norm is 9 or 10 percent. So around those numbers, you can be pretty sure that they're going to need more capital. And then sometimes it's a little smaller if it's really a buy and build and they know they're going to need more equity capital. But that's really as a percentage of the total. So I don't think there's negative selection and co-investment. Then as relates to us, I think the simple answer is if you look at how we get deals and the situations very, very rarely.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Piece you mentioned was that you don't pay the carry. So again, there's two ways of looking at 49 sponsors and 57 deals. One is diversification and another is the sponsors say, well, maybe you're not our favorite. We're not going to come back to you for another deal. So how does that play out?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've done 57 deals with 49 different sponsors. I think that's some level of proof that you can be a successful co-investor.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“We just did a deal with platinum equity. It's a $10 billion private equity firm, and we got into a deal. Ingram Micro. So people needed more money. And very frankly, it's much better today. But back then, certainly, co-investors weren't as good as not. And frankly, while we have some very good people like Step Stone or Hamilton Lane or Newberger or Harbor Vest or Adam Street who concentrate this and have real good teams, most of the people who co-invest still have teams that are forced to be smaller than they'd like, that are more focused on funds than on co-investment. So there's room in the world. Now, how scalable is this? If you said to me, Ted, I got a little surprised for you. I have a rich uncle and I got $2 billion is the best thing I've ever heard. I don't think we could put $2 billion to work in the way we do it. And I feel comfortable that we can find $17 to $25 deals over a four-year timeframe of the kind of deals we like and the funnel always seems to get bigger and bigger and we keep working that. So you put all those things together. Those were the things I'd learned at City. We're now in...”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I first started, there were some people who thought I was somewhere between crazy and stupid. I don't get it. Co-investments come as an LP. What I had learned at City was we weren't big LP investors there. You know, while City was a big place, we'd put 10 million, 20 million, 30 million in a fund for the most part. We did a lot of stuff with people we weren't LPs with. And we weren't getting it because we were city either. I mean, yes, we lent to companies, but lending was a competitive business. I believed that, again, if you put a high quality, good-sized team, treated them like clients, we're transparent, we're proactive, we're responsive, we're good partners, had knowledge at certain points, you know, we don't ever advertise that we add any value. I think that would be arrogant. But I do believe at times we do add value. We don't get favors. People need our money. They were doing a deal that's too big for them and they need more money. And so I knew from City that people always are doing deals that are too big, whether the firm is 150 million in size or 15 billion in size.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investors. They weren't people who had been in banking or had been in capital markets or really knew corporate finance. They'd come out of pension or consulting or this or that. Good smart people, but with a different focus. We put a team together that was all direct deal people who looked and smelled and felt like the people they would be interacting with at a lead private equity firm. And this was also what we did.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 1999 2000, I was helping run equity capital markets at City and I decided I don't want to do this anymore. I'm too old for this. It's a young man's game. I laugh now. I was 38 at the time. And so I went to the senior management of Citigroup and said, this was the top of the bubble early 2000 tech bubble, telecom bubble, et cetera. Jack Rubman, all kinds of names that'll bring back memories. And I said, you know, we're the only major investment bank or bank that doesn't have a program to invest in private equity. And I ironically went to a guy, Mike Carpenter, who had been my CEO at Kitter Peabody. And he said, what are you talking about? So I went through it all. And he said, okay, let me talk to Sandy. And surprisingly, Sandy said, I like that idea. So they gave me the path and we raised about a billion dollars from our employees to invest in private equity funds and in co-investment. And I put a whole team together. And the big thing there was most people who were doing private equity investing were investing in funds. They probably had 95% of their money in funds and 5% of their money may be in co-invests. And they also were funding.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Who had sold off most of their good MA clients over time, they were relying a little bit on G's balance sheet and a little bit on a fixed income division to sort of support the other ones. And then we hit the 94 times NJoJet and some other things. And I go over two. Second firm that went out of business. I mean, we technically sold to Painware, but we were really out of business. and then moved over to Smith Barney. And Smith Barney wasn't that different than Kidder, pretty sleepy. Sandy had bought the firm. He brought Lou Glucksman in. He'd brought Bob Greenhill in. It was a pretty bizarre whole situation going on, but got to help run equity capital markets there sit on the firm's commitment committee. We then bought Solomon. We then merged with City and all those kind of things changed and the firm morphed. But frankly, in my days of equity capital markets banking, et cetera, we were always the underdog. We were always the smaller firm. We were always the firm that had to try harder, put out more. And I think some of that ship on the shoulder element has informed how we go about things as co-investors to make sure that, so to speak, we're Avis, we're not hurts.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't know is not only did every lender to Drexel Burnham get all their money back, we as equity holders got all our money back at the end of the day. It was a short-term downturn in the high yield market with too much concentration, but you got to be able to live through the bottom and also learn that leverage works both ways. So I then went to Kidder Peabody. The only thing similar to Kidder Peabody to Rexel Burnham was, at least from an equity standpoint, we were the underdog. We are competing against Goldman, against Morgan, against Merrill, against other people and struggling. It was a neat firm, good people, a lot of really good people have come out of there too. I got a really great opportunity. I got to run equity capital markets at age 27. I always joke it was a little more about what they didn't know than what I did, but I got to be on the infirm's investment committee. I got to hire people for the first time. I again worked throughout the firm. And then I really got lucky the CEO was a guy named Mike Carpenter. Mike was very important and has been important in my life. And then Kidder was really not destined for success, very frankly, you know, GE had bought it. They'd been a good M&A for.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just tons and tons of amazing people there to get to know and to learn from. Now, to be honest with you, I was a little second class citizen. If you remember Michael Lewis's book, Liars Poker, what was the worst thing? Equities in Dallas at Salmon Brothers. That was where they sent the bad people. Well, it wasn't totally the case at Drexel, but if you were in banking slash M&A, that was elite. If you were in high yield and in Beverly Hills, that was elite. And if you were on the equity trading floor, you were probably a little less elite. But it was a great place to learn and to meet people. And it was a great place to also realize what doesn't go right at places and how cultures can get out of whack and how controls need to be in place. Sadly, we did go out of business. And some of that was when you do as well as you do, you put a target on your back. Some of it was you got to be cleaner than clean. And some of it was learning that, you know, you have to live through the bottom. One of the beauties of private equity is we build capital structures where we hopefully can hold on to these companies even if things go wrong in the company or wrong in the macro. And one of the things most people”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was at Drexel. As I said, it was sort of like landing on Mars. When I got there, it was good. And the people were pretty good. But then 84, 85, 86, 87. Obviously, it was just an amazing place to work when you look at all the people who ended up working at Drexel, some who were there. Have they gone into private equity? Have they gone into credit? Just unbelievably. And I don't really know how it happened, but it shows that culture and workplace and what's going to be done attracts people. It was attracting two kinds of people. Some people who were younger who had already worked at a Payne Weber or a Pru or a Sheerson or a this or that, very rarely from a Solomon or from a Goldman or from a Morgan. And then it was attracting people out of business school, Bennett Goodman, as an example. I remember him as a first-year associate and he was special when he was a first year associate. There were people there like Josh Friedman from Canyon, who's a legend and obviously Mark Rowan came and Josh Harris came and Leon was already there. And Allison Mass, Bomarito, who's been a legendary banker at Goldman Sachs covering the sponsor world.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Drexel had an interesting history from there through the late 80s, early 90s. You went from there to a couple other banks before a while back starting cohesive. What was different in the cultures of the various places you sat?”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“But I then got lucky. I had someone I knew who got me a job at Drexel Burnham. Where year was that? June of 1983, one week after college. And actually started $14,000 first job in the syndicate operations group. This person wasn't trying to help me a lot. They were just trying to help me a little.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment Bank, very well capitalized major bracket firm run by the Klingenstein family. And I would deliver the mail and I'd go into the corporate finance department and I'd go into the executive group and I'd go into the equity sales and trading group and I'd go into the fixed income group and I got to understand what different parts were a little bit in an investment bank but with not much education. And so that then spurred me on and I kept looking. I always joked I became quite friendly with a guy named Jay Fishman who was the CEO of Travelers who had worked at City with us. And I told him that I had applied to a job at Travelers insurance. It went down to Hartford, interviewed, and got turned down. I said, you know, Jay, if I'd gotten that job, I'd still be working for you. And he said, John, one thing I know is you definitely wouldn't still be working for me. You wouldn't have lasted much more than 18 months of the travelers insurance company in Hartford, Connecticut.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess I always had a desire to work more than to study and learn. I loved cars as a kid. I bought my first car at 14 years old. Started taking it apart. There was a Peugeot dealership in my hometown. I worked there after school. I worked there all summer. I worked almost every summer. And so I like to work and I like to do. I wasn't one of these kids who said, oh, I like the stock market or I read the Wall Street Journal or I understood finance. I just sort of thought I somehow liked business. as opposed to academia. Maybe, you know, you go in the opposite direction. So I went to Tufts University and I studied political science, but I took economics. But then there was a corporate finance class. There was a decision-making class. There was an industrial psychology class. And I tried to make my sort of own business degree. Nobody came to Tufts to recruit at all, but I was interested. I got a male job, a job in the mail room at Wertheim& Company for two different summers and actually learned quite a lot being in the mail room at Wertheim& Company. It was a small and”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, I grew up in a small town in Westchester County, Dobbs Ferry, New York. It was an interesting town. And it was a great place to grow up. I think a lot of my ability to interface and interrelate with people is from meeting a lot of different kinds of people as a kid. I had an interesting family life. I was the youngest of four children by a lot. My two sisters are 11 years older than me and my brother's eight years. So being a caboose sort of has the best of being both an only kid, but also having brothers and sisters. And then probably most amazing is I had two parents who were ridiculously smart and educated. I had a father who was a PhD from Harvard in sociology and taught at Columbia University for 35 years and probably much more amazingly I had a mother who was a PhD in Harvard in history and worked her whole life including 17 years of the Ford Foundation. So she was a real inspiration. And while I certainly went in a very different direction, what I learned from them was not what I do today. It was an interesting home life. It was different than a lot of sometimes when I think of some of my brethren in France.”
2022-05-19 · Capital Allocators · John Barber – The Art of Co-Investing at Cohesive Capital (Manager Meetings, EP.31) · IDENTIFIED FROM THE TRANSCRIPT · source