YouSaid · the spoken record

John Toomey

lines on the record: 80
first: 2021-12-27
most recent: 2021-12-27
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Our anchor is alignment with the manager, and that's true going in too. We want to align with what's their entry point, what's their entry value. Sometimes, though not often, there are some economics that exist within that market. And do the economics exist in a way that deviate enough from the alignment with the lead sponsor? That's something we evaluate closely. So if we get that alignment right, then for the most part, some managers will say, hey, it's like a limited partner, it's tied into the co-investment partnership. And the general partner, the lead sponsor, will decide. So in which case, we don't really have a choice. It's as if we're investing as a limited partner. When that doesn't exist, then we often, even though it's not structural, we often will align with the general partner around that. They want to know that they can deliver a clean solution to the next owner of the business, right? So they often will have a drag. We have no...”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Think about value proposition, have worked with those managers and say, look, we will underwrite the entire equity check, $200 million. Now you go and close your growth equity fund, you close your technology buyout fund, whatever it is, and then you have the right to call $100 or $150 from us for the next six or nine months and to see this as your first investment. And of course, if somehow the world goes upside down, we have the right to put some of that directly back to you so that we're not alone and that the manager is aligned and incented to review that. So when you do that, it creates this incredible affinity and depth of relationship with the managers. And in those cases, we may take a board seat. We may have more active rights around some approvals. It's really situation specific, size specific, and manager specific.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Does vary because if you're a $200 million investor alongside a sponsor who's led it with them and their other limited partners and a $4 billion equity check, then you're a very small investor and you have a relationship that is more akin to a limited partner. There's of course a separate agreement that governs minority investor rights and tags and drags and all of that, but it's more akin to investing as a limited partner. At the other end of the spectrum, the top 25 managers in the world actually have on average seven product lines. That's up from two 10 years ago and it's up from one, 20 years ago, right? And so what's been incredible of that evolution is managers who seemingly are able to attract lots of interest in their new products don't always line up the closing of the next fund or the new fund with the investable opportunities. And so we in many occasions”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“20 years, there's been secondary buyouts in this industry. That didn't exist before 2002, 2003. What's been actually remarkable is our vantage point or access to diligence is we actually can contact prior owners of companies or owners of companies in the same industry and get an off-list reference or insight that is enormously valuable to us in our evaluation of that. But you have to be quick. You have to be resource well. We've got a dedicated team of over 50 people. And of course, you need to have capital to be relevant to the managers as well.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's both. I would think of it as then. Look, we're not repeating all of the diligence that a manager is complaining. That's just not efficient. It doesn't make any sense to do that. We're reviewing that, of course, right? We get all access to all of that. So I would describe it as we're doing all the same underwriting that a lead sponsor will do from an evaluation of the market, of the company, of the management teams, of its products, industry structure, et cetera. Then on top of that, we will layer on our own perspective of the manager's appropriateness or alignment with that investment opportunity and all the way down to the individual level so that we can really pierce through the organization and look real close at who specifically is leading this deal. And the other thing that has been remarkable is our vantage point with hundreds of manager relationships around the world and the fact that the last”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“So we treat the general partners that way. We try to bring solutions to them. On the co-investment side, what we found they value the most is, frankly, a quick no is always better than an elongated no. And so we just have this commitment, you know, 24-hour period, we will get back to the manager with a quick read. Views on valuation, industry coverage, we're trying to understand the alignment between not just the firm and the investment that they're making, but who at the general partner is making that investment. And let's be clear, what's the individual person's track record on deals like this? And when they line up industry expert, they're just doing the same thing they've done four or five other times. They've all generated great returns. That completely lines up. So that's a big part of it is looking very closely at those dynamics.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a few things that I think have made our co-investment team as successful as they have been. And the first is a whole harbor vest. Think of general partners really as our clients. And remind you, it's harbor vest partners, right? It's not Harbor Vest Capital. It's not Harbor Vest Advisors. It's partners. And so our whole DNA, our whole mentality is we're here to serve. Of course, we're here to serve the...”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“When I've talked to more of the other, right? So a CIO who's managing a single pool of capital, so the relationship is going to filter all the way through the activities. You hear a bunch of different lenses and rationales of why NLP may want to co-invest. When you have so many different relationships and so many ideas, I'm kind of curious what you found works best.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Diligence. But we want dedicated co-investment teams who wake up every day and say of the 800 opportunities that we see this year on co-investments, of which 780 of them are actually going to happen, what are the best 50? And it may not always be from the same manager. They're good investments. We're glad they're in our primary portfolios, but it just isn't that enormously tight screen that exists on the co-investment side. And so that's how we've organized our teams.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“The way I would describe this, our firm is organized where we have dedicated people to each strategy. And that's a deliberate choice. The alternative would be to everyone has manager relationships and everything that comes from a manager, the new fund they're raising, a co-investment opportunity, secondary investment opportunities, you have the same person on point. From our vantage point, that presents a challenge. So the challenge is, guess what? The person who was in that point on the manager relationship, everything that that manager, this is the best set co-investment opportunity. We've got to buy this secondary at 105 because they're such a great manager. And so really from the beginning, we organized our teams around dedicated disciplines because we, of course, the person who is the manager relationship on the primary side has an important voice in the process, right? They may have even sourced the investment opportunity. They provide a perspective on.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Of our relationship. And I'm going to invest X into your fund. I'm going to pay one and a half and twenty. And on the co-investment side, I'm going to get lower cost economics, even no cost economics. And that allows me to buy down the total cost of investment for me overall.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Which means okay, now we're not investing $75, we're investing 50 each, and we're sharing governance, and now we've got to deal with that. Or who are the logical minority investors into private markets, people we have relationships with that we know and we trust, and there's just some familiarity with them who has the capital and the team able to evaluate and invest into a $20 or $25 million investment alongside us and they remain the lead GP. So in many ways the market that you see today actually started in very much the same identical way. There wasn't quite as much this notion of what I call the demand from the LP side, where the other reason the co-investment markets exist today is general partners know and limited partners demand that, hey, look, this is just part of”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“That market has really become a bona fide sub-asset class unto itself. That's really only a five or ten year development. In the 90s, it wasn't even a cottage industry. It was nascent. And it was, in many ways, the similar pattern that you see here today is why one of the reasons, because there's multiple, why a manager will actually access or utilize the co-investment market. And so in the late 90s, it was actually very similar. It was managers who had an opportunity where they needed to invest $100 million into a company and their fund size meant that they realistically could only invest $75. And so they have a choice. Do they partner with somebody with like a peer in the industry, another lead?”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“You started in the Coinvest side way back when, and that's clearly the activity in that space is a lot higher today than it was. What did it look like in terms of the opportunity flow back 24 years ago?”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“To verify that they did what they said they would do a year or two or three ago. And so then you bring into the analysis our secondary and our direct co-investment. And you can actually get an up close look at the underlying portfolios and the older funds and the guidance from the managers and what they intend to do with them and what type of return they expect to create. And then the fun part is then you measure it against actual outcomes. And what ends up happening is you end up developing relationships with the management team, the leaders of these organizations. And you actually begin to formulate a view of who's spot on, who's generally conservative with what they're telling you, and who might be always glass half full, which just means you have to be a little bit more cautious when you evaluate the next offering.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“To be clear, our diligence on a manager doesn't start the day they print the PPM. It just can. And the interesting part of the private markets is that the best managers in the world often are oversubscribed, even at an incredible size funds. Apollo at over $20 billion, oversubscribed. No one would have thought that before it happened. So it does happen because there's tremendous demand for the returns that exist in the private equity markets. So if you're showing up with the PPM as it's printed, you are late. You were at the back of the line. So what I give our teams a lot of credit for is they have a multi-year pipeline and map of the entire industry. And we are tracking returns every year, every quarter on every manager that we have access to and we have data on. For me, There's no greater way to measure or test a manager's credibility.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you process all that information? I'm imagining you're looking at a new fund. It could be an existing portfolio manager, a new portfolio manager, and you've got now reams of data from all of their past deals. Do you do with it”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“What did you see? How did you change? Was it revenue growth? Was it you were organizing the business in a more efficient way? Was it M&A add-on? You can actually quantify that. You go all the way down to EBITDA and cash flow and identify who does that. And those, what I call operational improvements, the identification and execution on market opportunities, where are the market size growing the fastest, the managers that have been able to do that consistently cycle in and cycle out in some ways insulate you a bit from the inevitable market cycles that come. As long as you're with the best managers of the world, you can generate attractive returns relative to all the other investable opportunities that exist in that time frame.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“You hear different managers talk about a playbook. And the translation between what I'd call the packaging of the playbook, like what do we do and how do we do it? Sometimes there's admittedly a little gloss packaging put on that by the managers, right? It's a little salesy. But then how does that translate when you look at actually, you know, we or our clients are committing a dollar and you're going to return two and a half dollars back to us over seven to ten years? How have you specifically done that historically? The industry has been many graded returns created by multiple arbitrage. You buy a business for eight times and you sell it for 12, that helps, right? That's a great way to create returns. In different cycles, it may not be as available to you as readily. So you really want to understand, you know, what did you specifically do with the companies? What was your strategy?”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Got to dive in a little bit on that data side and this primary investment. What have you found of all those different levers have been either the most successful investments or the ones that you've gravitated to, which may or may not be the same thing?”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“How does a manager create returns? Is it multiple arbitrage? Is it largely safe bets but cash flow pay down? Is it M&A? Are they good at that? Who's actually doing it within the organization? Is it really still the partners or is it someone else who's learning the business and do we really want to have somebody learning the business on our client's dime? And then I'd say the ODD, ESG and DNI, those are all new dimensions that are very important today that really weren't part of the consciousness of us or even the industry 20 years ago.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say it's changed in really five ways. Data, the benefit from secondaries and directs, and that gives you from a vantage point, ODD, operational due diligence, ESG, and DNI. If you think back to 1997, it was really just, it was a very relationship heavy. You largely had the data that was given to you by the manager. You had an analysis of the people. Do I think that these are good investors and do they have a strategy that's coherent with the market opportunity? Are they aligned? All of that is still the same. That's a constant. But I'd say that the depth of the data, both what managers give to you and make available to you in consideration of your investment, the data that we have, we didn't have 40 years of data back in 1997, but we do today. And so we just have this unbelievable set of data and analytics that go on top of that to really pierce and”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“But I just remember from that earliest of 1997, I remember that vividly. And that still persists today, right? We want to hear what people think. And so on the direct side, it was very similar to what you might see in any opportunity today, right, an evaluation of markets and company and products and management team and valuation forecasted returns and the analysis and evaluation of risk and reward. That was on the direct equity side. The primary side is probably where the diligence has evolved the most as an industry over the last 20 years.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“I grew up on the co-investment side, right? So that's really where it started. And I will tell you, this is one of the things that I think is a good example of our culture today. I mean, I remember it's probably there for a month, a 25-year-old analyst, and I had to write an investment committee memo. And I wrote it all up. I submitted it. It came in the investment committee meeting. And, you know, you're like adrenaline pumping through my body. I'm all excited. Like, oh, this is great. I just present this investment opportunity. I'll never forget I was sitting at the end of the table. It was like, you know, the typical classic long table. The two founders were sitting in the center of it facing each other. I couldn't even see one of them because you were that far in the corner. So you could kind of just only see one of them. And I'll never forget, you know, Ed Kane turned. He looked down my way at the table and he said, we don't pay you to make copies. We pay you because we want to hear what you think.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“It hadn't quite specialized yet as an industry, so there was venture and buyout. And then maybe some geographic differences at the time there was really very little to be done in China Venture. I mean, it hadn't really think about it today. If it's not yet, it will be as big as the US market. But it really hadn't started yet. The Asian markets were predominantly just buyout and developed market buyout at the time. There really wasn't quite a distinction between small, medium, and large buyout. If you think about that, I mean, a large buyout fund in the late 90s was a billion dollars in size. And then on the venture side, it was just venture, right? We didn't have necessarily early stage and late stage and balanced and growth. And there certainly weren't industry specialists of any depth to talk about. There were some that were beginning to specialize, but it was.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, you're pining for the nostalgia of village life, right? Life was simple. Life was simple. So look, it had three businesses, but had four product offerings. So each business, the multi-manager private equity business known as the Fund to Funds business, which the firm had become so successful at many ways identified with because of its success. We had a secondary business and a direct co-investment business. So three business lines. primary business was split between US and non-US. And so there's really just four products and you raise one fund roughly every four years. So you're raising roughly one of those funds per year. And we served almost exclusively institutional investors. It was not quite yet the sovereign wealth funds had not entered the market yet. It was predominantly public and private pension plans, U.S. non-US endowments foundations in that commingled offering.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“And so that diversity of perspective of those experiences, along with the people, I mean, it was really a cottage industry then. And they were managing directors and analysts. And I was an analyst. And so now 25-year-old analyst, you just, you had this incredible opportunity to almost like step into the apprentice business, step into the apprentice model and work with people who were industry pioneers on a day-to-day basis. So that to me was one of the most attractive things.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Harbor vest back then, which actually ironically was it actually didn't have a name yet. It had just completed the buyout from Hancock Venture Partners. They had not yet branded. It was temporary HVP partners way back when. And what attracted me was their market position, their vantage point on the whole industry because we were a limited partner in many funds. We had a very small secondary business at the time. There was the direct co-investment side, which is where I was hired into. We did everything from”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“John, thanks for joining me. It's my pleasure. Why don't you take me back, I don't know, 24, 25 years ago, how did you find your way to Harbor Vest back then? I was a chemistry and physics major, and I fell in love with finance based on what my roommates were doing, my friends in undergrad. They were going to Wall Street and working in banking. And I was building models around atmospheric chemistry, and they were building financial models. And we compare notes at the end of summer. We're like, oh, that actually sounds a lot more interesting to me. So I went and I did our typical tour duty, if you will, as an investment banking analyst. And it was in New York. And look, I'm Boston, born and raised here, went to college here. And so wanted to come home. And in 97, right, 24 years ago, there actually wasn't a lot of private equity firms in the industry. So I reached out to all of them. And what attracted me to...”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source
“Guest on the first episode of Private Equity Masters is John Toomey, one of two members of the Executive Management Committee at Harbor Vest Partners. For more than thirty years, HarborVest has invested across all parts of the private equity spectrum in funds, secondaries, and direct co-invests. Today, it oversees over $75 billion of assets and canvases the world Conversation discusses the early days of private equity investing, evolution of strategies across primaries, co-invests, and secondaries, international expansion, best practices of managers, the next wave of growth opportunities, and risks in this space. John has a unique perch at the top of the industry and offers a wonderful perspective to kick off the miniseries.”
2021-12-27 · Capital Allocators · #5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 · IDENTIFIED FROM THE TRANSCRIPT · source