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José E. Feliciano

lines on the record: 79
first: 2023-02-13
most recent: 2023-02-13
sittings or episodes: 1
sources: podcast

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“About what is clearly and what is it that we're supposed to do with the capital that we trusted to us. And that's a really important component because a very significant part of social contract around private equity fund or any investment firm is doing what URL piece entrusted you to do, doing that consistently. And if there's any deviation or reason to deviate from that, letting them know why and explaining that very clearly, that is part and parcel of the relationship between the GP”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“No more than 40 of the investments, or no more than X. And we refused to do that, even at a time when we were desperate for capital because we were convinced, and this is where the entrepreneurial is that belief thing or doing something a little bit different, we did a compromise. We were adamant that we'd rather raise less capital but have the flexibility we require. You pass over today at the great financial crisis really allowed a lot of institutional LLPs to educate themselves in everything related to special situations and distress. So I felt that all of a sudden we became more mainstream post-financial crisis. Some of our original piece that we had to educate and work with and hold hands with 70 years ago are still our same LPs. So by now, I think people understand what we do. I start every annual meeting with one of my LPs giving a grist enough.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there again, the early days were difficult, particularly if you think about we were trying to raise capital. At a really difficult time, the mess of the financial crisis. And it took us almost two years to raise that first fund. And part of the challenge was we had a strategy that was not blame on the private equity. We had to explain the strategy. We were not selling places on that ice group. We were selling vanilla with sprinkles and nuts and other stuff in it. So we had to explain to people what we were doing. What I was proud of is that at a time where it was very difficult for us to raise capital, at the time where we were not very well known, there were some people that do sacrifice. We actually gave a few of our big LPs in that fund, a discount that are for economics. We had to condolence. But when we did a compromise is that idea that we felt was fundamental for our strategy to have that flexibility and we were circling, we were certainly asked by some of our potential pieces, well, we would invest if you restrict this part of your strategy.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the other tricky aspects of people not being sure exactly what you stand for, of course, is capital formation. I'd love to hear how you went about building the business with a strategy that's a little broader than what a lot of other people would be doing at the time.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Flexibility, the institutional investment. The difficulty is that sometimes it's a strength and sometimes a weakness or it's an advantage and sometimes a disadvantage. Some people think that we are distressing this. And then you may actually go down the street you're in Midtown Manhattan and go to a different bank and they think that we are real worried of the tech only investors. And if you go down the street now maybe sports investors, I'm not really sure. So sometimes That's great because we're able to again tap all those as sources of financial transactions, but sometimes you lose out in terms of people that think somebody that may not be as well versed about who clearly is may actually not call us on that show because we're not aware of the X. And sometimes we get that. Now maybe less so than 10 years ago, but I still sometimes get that, oh, geez.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Minister's weekly and talking about buyouts. Two weeks later, there were no buyouts in our pipeline. We were having investment committee daily and everything that we were looking at was in the secondary market. Very few people are blessed with”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that the most powerful thing about it is that it allows an investor professional to spend both of their time in the sector that they have specialized in. But at the same time, giving you that ability to set back, look at the ecosystem, look at what's going on in that industry sector, and truly find the best investment opportunity to look at the great investors in the world out there. Most of them were not hampered by structure. You think that we got Warren Buffett? One of the key things about Warren Buffett took status is that he had a very flexible capital structure, very flexible source of capital. And within that, the same team, if you think about it, was making buyout decisions, was buying equity in the secondary market, was maybe doing structure equity deals and then messed up the financial crisis to say how big financial institution and all the above that full spectrum. And that's the type of investment professional we want to create. So in times like summer of 2020, where all of a sudden the world changes very, very quickly, when we went from the first week of March, but we were having investment.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“You probably dismissed several secondary market credit accumulations and maybe a few disrespect for control use. And that package we find is extremely valuable, certainly is what makes as part of the ClearLake Magic sauce is definitely makes a Clear Lake investment professional difference than most of our peers in the industry. It also, by the way, makes it a little bit more difficult for us to hire somebody laterally. We actually had difficult time going to a hedge firm or hiring somebody that does his stress very well, naturally as a partner. We equally have a challenge when we go to a growth equity firm, somebody that understands to say in healthcare extremely well, hiring that person naturally also is difficult for us because we find that they're lacking some of the skills that make for a well-rounded, clearly professional. I don't know if this works everywhere, but I know I worked through clearly.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“The time our thought process was we were going to bring the best out, the best practices of private equity, the best practice of special situations. The initial team had borrowed from that, right? So people who were a lot of strong private equity, some people had a lot more experience in special situations. Over time, I think our philosophy has evolved. Obviously, at our perspective, there's how to build a team that we want to hire people at the earlier stages of their career, right? We want to hire investing professionals. at the associate level, maybe at a junior VP level. And over time, they get two bins. They develop industry expertise, but also at the same time, you also become an expert in the full spectrum of the type of transactions that we tackle. So you're going to probably have done LVOs more traditional buyouts. Plus, you probably have done three or four structured equity deals.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“We can recycle any other capital. What happens is the typical fund 25 to 40% of the capital gets invested twice. And that allows us to have the flexibility that we need to pursue traditional private equity or traditional buyouts when the time is right, but also say summer 2020, when COVID created significant mislocation, not only in our lives, but in the credit markets, we invested $3 or $4 billion in the secondary credit markets basically a period of three months. And we did that because we have the flexibility not only to invest, but those investments came back very quickly, we were able to recycle that capital and really return in a value enhancing multiple enhancing IRR enhancing way for ourselves.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we need at the time you should not invest in sleep. It was not a trading strategy. We were not investing today and selling tomorrow and a week or two at a higher price. We needed the time to work with these businesses, turn them around in some cases, grow them significantly, make them better businesses. So I get all that pointed to a longer timeframe, locked up capital. But then you have the question that, well, what happens if you're investing in the secondary credit market and there's some of these investments that have shorter duration? Actually, the multiple might be a little lower than the typical private equity investment target. What do you do? And the answer was simple either way. Answer in some ways from Sarah, I don't face there were already a few precedents out there. But the short version is that it was recycled. You look at our funds, additional funds, like a 10-year lockup, maybe a few exceptions. You best improved this five or six years. But during that investment period,”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“The reality is that when we started the firm, we partnered with a larger firm called Rescue Work Outlo to start our firm. And the reality is that we actually didn't have the answer to that question. We follow a lot about the potential fund structures that would allow us to invest away from us. Ultimately, the Eureka was, well, by and large, we're certainly very focused on own companies that pointed to kind of more of a private equity locked out fund structure.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, with that investment strategy in mind, one of the first things you think about is how do you put those two together in a That manages liquidity needs because certain special situations investments can have a much shorter time horizon than traditional private equity.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have a bass across an economic and credit cycle and do that consistently. If you understood Your ecosystem, you understood that industry, that sector truly well, all that coalesced in 2005, 2006, and really got us excited about at least exploring the idea of setting up our own firm.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was the second nugget of my EDR. Having that entrepreneur, you cannot believe, if you will, sometimes irrational believe that you can do something better, something that other people have done many, many times, but maybe you have. A better idea, better way to tackle that problem.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“We were very missing it. There were some really interesting opportunities, but there were other times in the economic cycle where those opportunities were maybe less plentiful. Similarly, you would look at traditional private equity firms and they went through the inverse of that cycle, times where nancy markets were open, doing LBOs is a great opportunity, but also times where there was not much to do because the Nancy Martins were not available and traditional product equity playbook was really not effective.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I was there for six years. Adam Trepreneurial Edge was always there. I meant to be a great entrepreneur. But you have to have a mix up hopefully. Idea that it's different, something that can be Perhaps I'd even be game changing, but certainly a different way of approaching an existing problem. Or with my time at telling about one of the things that I noticed is that. Because we were more open with special situations, there were times in the cycle.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sector focused. We have multiple sectors, but we're sector focused. And the reason for that is because we made that understanding a sector industry, understanding companies within that ecosystem inherently makes you a better investment. And I think that's what I learned a lot coming back into a financial world, but now with an investing hat on, I really felt strongly to really understand these businesses. I needed to peel a few more layers of young and typical at that point special situation spotted. And in many ways, that's the beginning or that's on the foundation. Clearly, at a sector focused on drugs that we use.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there were a few bets. Why is the lose sight of the personal aspect of it where I just have basically got probably characterized as one of my biggest failures in my career? But I had to pick out the visas. And then to your point, try to basically find the best stuff and apply that to a new job. And I think what it meant for me is it was then what click goes back to what we just were talking about. That yes, the financial analysis piece of what we were doing was really important, but to be a great investor, you needed to do more. And to this day, if you fast forward some of the piece that we do at Player Lake.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“About it's about different types of businesses and industries. But I wanted to do that at the seat of MFS. I really felt that there being an operator, I'd be well, they're being the banker. I really felt that I wanted to maybe combine the two, where they'll be in the seat where I was not only doing the financial analysis and evaluating companies, but being part of the journey. I finally found a job here in Los Angeles where I started to work for a small firm that did special situations, whatever that happens. And that firm later became telling about capital and later became a partner at that firm. So it was a great start of the journey, a restart of the journey, but in many ways it was a time for reevaluation, reinventing myself, if you will, and really tried to figure out what I really wanted that of my career.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was a tough time. So the internet company that I was working for, we had to go through a downsizing effort. So the first fees that I learned a lot about the other sides, what it means to be a company in trouble, be a company that is having to downsize, that is thinking about its very survival, what does it mean? Do I have to really have to lay out people and have those conversations? So it was incredible learning experience. of that company was for me my second campaign in many ways i love a person a lot of ways less and smart deeper than being else it was a time to reevaluate right me one of the few times in my career where i truly didn't have a job or anything to do the next morning so i kind of re-evaluated what i really wanted to do what are the things that got me excited that i came back to the idea of learning more”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very close to you with a match and keeps there and really learning business learning how business really runs again as opposed to what business looked like from behind the Excelsperson.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Working at a real business was eye open. That day to day of making base for everything from meeting revenue quotas to getting payroll to managing your payables, all those are very real base. And most importantly is people. You learn that business is really about people very much day-to-day or imagining people, motivating people, compensating them, retaining them. That was, to me, a really important lesson. And it's an important lesson because many people in our industry, the investing side, have never really had a real job, never worked at a job where they're selling widgets, making producing marketing widgets. I think that gives you a very different perspective about investing. So to this day, one of the things that we do at Clear Lake is that our associates during their time here, they actually spend anywhere between three months, sometimes as much as six months, embedded within one of our portfolio companies or working.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Something that actually applied to this day. On the one hand, Bess and Becky is a great platform to learn about business. As I mentioned before, if you learn about business behind Excel spreadsheet, where in Excel almost everything is possible, you want to increase margins? Sure, no problem. You want to throw revenue, 5% or 10% or 50%? You can just change it.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Spent three years of banking and my time there was actually also interesting because I was working out in New York. I worked with Latin American companies. And this quotaside I would have called And that's great. Decided to go to business school after that to move to Stafford Business School in the late 90s. Great time to be at school and hindsight obviously was close to the peak of the ball, but it was one of those times in the world and everybody felt possible. It was a lot of excitement about changing. I'm very proud of how industries were using internet and decided to business group to join a internet startup.com. So that was a little bit a left turn.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in many respects, I've been working in Best Mackey. It's a great foundation at a lot of the things that I just mentioned turn out to be great to just learn about business, learn about different businesses, make it to this day. I think it's one of the things about what I do is that you get to learn from experts. Doing this all their lives, and they're experts in their sepic industry. So respect the tedious stance of being investment banking accounts, right? The attention to detail. And I want to sound like one of those old guys that By was always more difficult, but printing a presentation and color. Then have it to any account 25 hours for copies to come out. Base like that, it seems much easier now.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“Didn't grow up thinking that I was going to be an investor or a businessman for that matter. I actually thought I was going to be either a pilot or an engineer and I went to school or mechanical and aerospace engineering. The inflection point was in my junior year at Princeton, I basically my roommate who was a year ahead of me. We actually went to work at Wall Street for Merrill Lynch. And that opened up a whole new world for me, a world that I didn't know existed. I didn't know where investment banking was. I didn't know what Wall Street was or finance. But it seemed like a terribly interesting job where he was getting paid to really learn about businesses. He would travel and you were a bit of math. That was plus. These are interesting gig to me.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“And private equity deals to your podcast roster and let the next 10 people you see know about the show. Thanks so much for spreading the word. Please enjoy my conversation with Jose Felician Great to see you Don't you take me back to your initial interest in the business world?”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's show is Jose Feliciano, co founder and managing partner of Clearlake Capital Group. Clearlake manages $75 billion in a flexible strategy across private equity, credit, and special situations in the technology, industrial, and consumer sectors. Our conversation covers Jose's background, operational experience, and launch of Clearlake in 2006 to pursue a flexible strategy. We turn to the challenges and drawbacks of Clearlake's flexible investment approach, its investment process, ownership model, and trajectory growing from $3 billion in assets after 10 years in business to $75 billion six years later. We close by discussing capital transactions for GPs, continuation funds, the current opportunity set, Clearlake's Investment and Chelsea Football Club, and permanent Capital structures.”
2023-02-13 · Capital Allocators · José E. Feliciano – Flexible Private Market Investing at Clearlake (Capital Allocators, EP. 297) · IDENTIFIED FROM THE TRANSCRIPT · source