YouSaid · the spoken record

Michael Fisch

lines on the record: 89
first: 2023-12-01
most recent: 2023-12-01
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

“The second part of your question on what is the capital structure and what's the money, typically the capital structure, the money that we put up and oftentimes lenders if it's a debt-free business goes to selling shareholders. But as part of that, of course you want to capitalize a company with undrawn lines of credit. So called revolvers or delay draw term loans, other terms like that. So there's liquidity to run the business on a day-to-day basis, you know, survive a rainy day and also grow the business as makes sense if it is by add-on acquisition or new customer acquisitions or new plants we're building, whatever.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“It greatly depends. The interesting thing about us is we are very attractive to founder CEOs. Almost half of the investments in our most recent fund, half of the companies we've purchased, we purchased from founder CEOs who continue to be the CEO and in many cases rolled over an enormous amount of money into this company that we now control where they're still being the CEO. So I like to think of those as very choosy investors. They really care about their company because they founded it. They really care about their company because they're running it and they really care about their company because they're going to maintain a very big personal investment. And in a lot of those situations, they are happy and excited to partner with us as we are them. And I think they're attracted by the resources we bring other than money.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“And so that 300 would be a lot of add-ons. And sometimes they're very small, sometimes they're material. It just depends on the company.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a platform investment for us is really the first big investment. It's we're investing in a company with the management team. We're typically the control investor, so we'll own more than 51%, sometimes almost 100% of the company. But the management will always be an investor with us. And that first unique investment is a so-called platform. Some investments will never have add-on acquisitions. They can grow organically or other ways. But many acquisitions do find smaller competitors or sometimes mergers of equals, and we then build them with add-on, what are called add-on acquisitions into the existing platform.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Can we work with a management team and together be great partners and do something different together? And we bring certain resources that some other firms don't have. The largest group of our 180 people that you cited are our so-called resources group. These are full-time operating professionals. They're not virtual. They're not consultants. They're not 1099. They are W-2 colleagues. And so we have a lot of resources we can bring to our companies in purchasing procurement strategy, IT, HR, you name it. And some executives are excited by that. They want the help. They want a fresh set of eyes on certain problems or extra arms and legs on problems. And some people say, you know, we got that. We know what we're doing. You just put up the money and we're better partners for the former than the latter.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, it's very bespoke. Every person is different, different of our colleagues are different, even though we all share the same belief in CEO partnership and management team partnership. And it's really just deciding you want to work together. We're not perfect. Our management teams aren't perfect. But can we make, I like to say my favorite equation is 1 plus 1 equals 3.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“All those things. We add a very important management dimension to the basic product, services, customers, raw material suppliers, and so on.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Eighty percent of the men and women who were running the business before we showed up were running it at exit or are running it today if we still own it.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“We weren't really sure what anyone else was doing at the beginning. You're just kind of doing it and hoping it works out. As it turns out, you're absolutely right. There is a consulting firm which did a study a few years ago. 25% of the CEOs are gone at closing in most the average private equity transaction wow. Fifty percent are gone by two years, and only twenty five percent are there after four years. In contrast to that now for our 30-year existence, are what I call CEO win rate is over 80%.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, when I think about that, we've certainly had the great pleasure to be involved with some great businesses, but it's really the people that stick out the most. Life is people. And we are in the people business, managers, investors, lenders, bankers, the whole ecosystem. And it's the special relationships which we're proud to have created. And some of the CEOs from our very first fund, our very first deals, you know, 28 years ago, are still close friends of mine. I'll be going to Florida to spend a weekend with one of our first CEOs and his wife staying with them next month.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Great people. I like to say money is the ultimate commodity. So our product, if you will, is money. That's what we invest. And so if we're going to outperform for our investors, it's going to be the people that we've attracted our investment philosophy and maybe some processes that we've employed.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“You want to work with. We had then and we have still today a relationship focus. And changing, and it's practical. Changing executives is risky. We believed that if we're coming in and feel aligned and sympathatico with the management team and particularly the CEO running the business that delivered the earnings that were valuing the business on, if we could just help them be the same or better, we'd have only good outcomes for investors. And why take the risk of changing management? We'd rather just look for a new situation. And we wanted to have relatively modest leverage. We tended at the beginning to capitalize our companies with less debt than other investors.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, building on the The investment legacy of the Rosenwald family and some of the things that I had been doing and thinking about, we agreed that we were only going to buy the market leading company, the number one market share company in its niche. I mean, obviously these would be modest-sized companies given the size of our fund, but the number one market share company, we would look to only buy that company and industry which was GDP growth or better. We would look to only support the existing CEO. We wanted to support the...”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“That we could talk to people about and a very specific investment objective about what we were planning to do. And so there weren't that many. And we did talk to a lot of people, but we were grateful to have a college endowment, a publicly traded insurance company, a publicly traded company, corporations pension fund, and some wealthy individuals joined our first fund, which was a mighty $71.4 million at the final closing.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Buried to paint where we were in the arc of private equity. So as we were talking before, it didn't exist until the very late seventies at best. From five firms to ten firms to 100 firms in the 1980s. And so it was growing. And when we went to raise our first fund, again, we had the great benefit of the support of the William Rosenwald family. They were a committed lead investor. But I had been involved in some transactions and those transactions had happily gone well. Chuck Klein and the family had been involved in a bunch of transactions, so we had some form of a track record.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“For the Museum of Science and Industry in Chicago. Julius Rosenwald was an important trustee of Tuskegee University and friend of, I think it's Booker T. Washington. I mean, the family's philanthropic legacy is staggering.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“And they were also an amazing, they picked Julia successfully leverage two really great trends. One was the urbanization of America and the downtown department store, which was so prevalent then. And then almost on a different axis, the catalog, which was mailed, the Sears catalog was mailed. To buy exactly what the city slickers were buying, or vice versa. And they were interestingly, I think it's true to say the first non-utility non-railrod That was thought stable enough to be allowed to be a public company. Only utilities and railroads at the beginning of the stock market were thought stable enough.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, absolutely. I like to say I hadn't thought about thinking about Amazon. I like to say they created the Waltonesque fortune of the first half of the 1900s. Because they were Walmart at least, and maybe Amazon too They had a one-third market share of certain product sales in the entire country.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“So I joined the Rosenwald family in the spring of 1993. And we did some investing together for the first year and we raised our private equity fund the next year.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“It's more complicated than that because Chuck was a very cautious investor. So what Chuck actually said was, Okay, well, come work with me for a year, and assuming that works out well, then we'll go raise this private equity firm, right?”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“He'd retire, and I said to Chuck, I really like you, but that's not really what I want to do. But I got a different idea. You be my partner. We'll set up a private equity firm, and the Rosenwald family will be our lead investor. What I want to do.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Were private when they bought them now. One of them is public and equity market cap of $35 billion. But Chuck was their senior financial advisor, so he's buying, selling stocks. And Chuck and I hit it off on our first breakfast on the upper east side here in New York, and he kindly asked me if I would come join him saying that he wanted me to come join him. He was 55. He wanted to retire when he's 60. Families take a while to get used to somebody, so he wanted me to work with him.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“All sorts of investments, not just the stocks and bonds common of wealthy families of the day, but actually buying businesses, some very, very successful businesses.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“It absolutely was. It was called WRFA, William Rosenwald Family Associates. Julius Rosenwald, who was the eminence grease behind the growth of Sears the Way Croc was with Macdonald, genius for the catalog and downtown department stores, Sears ultimately got taken public. He passed away in the 1930s. Bill was his youngest son. Bill separated his money from that of his siblings and came to New York and right after World War II set up his family office, modeled along the lines of the Rockefeller family, and he founded the name, he registered the name American Securities Corporation. The first corporate owned broker dealer, all the other ones had been private partnerships, but he had capital and didn't want to have it at risk. And that family office had done what were then called bootstraps.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it was more than just Chuck and I, so we had the great gift of the Rosenwald family. So I had worked for two private equity firms when I got out of Stanford, so I'd really gotten a little bit of experience. I was still young. Hope I still am young today. But I'd gotten a little bit of experience and I met Chuck. And Chuck was then the senior financial advisor to the William Rosenwald family. And the William Rosenwald family, Julius was the genius behind Sears Roebuck. And so they had largesse from the Rosenwald fortune.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“EBITDA, which didn't exist as a term believe it or not back then. But EBITDA cash flow was how these bootstrap buyers would look at it. And this seemed kind of interesting and new and different. And I became interested in how they did what they did and how they valued it and the differences between that and EBITDA.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when I was at Goldman Sachs doing MA from 83 to 85, there came to be some people looking at the M&A business was started to boom be a fraction of what it is now. But there came to be in certain situations buyers that were bootstrap buyers that were, we would call them today then leveraged buyout financiers, and now we call it the private equity industry. And so I came to see some of these entities at the very early stages, KKR would be one, but there were others. And a lot of entrepreneurs trying to do the same thing because wealthy families were often these bootstrap buyers. And honestly, it was almost like a religious war between two views of the world, EPS, earnings per share that all public companies would look at to evaluate mergers. And cash”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“So there was almost no M&A activity. There was no M&A departments in any investment bank really until the very late 70s because today where we talk about return on equity, your margins, what your stock price, back then, if you were in business in the real world, they said, how many people work for you? And if you started your career on a line, became a line manager or foreman, became a plant manager maybe or a division manager, so on up the line. If people ask you how many people work for you, what do you mean? And you say, well, I sold a business, you know, I had a thousand, but now I'm at, you know, 800. What do you mean, Barry, you're not a good manager? I thought you were a manager. So literally nobody sold in. And the only things that got sold were bankruptcies. The odd company that went bankrupt would need to get sold, but there wasn't an active M&A business. There wasn't a leverage finance business. All the things we know now”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“The largest fund then was KKR with one hundred seventy five million dollars The second largest fund was Forestman Little with one hundred fifty.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, like Wall Street, it was all so much smaller. In nineteen eighty three by my reckoning, the entire global institutional private equity business was less than a billion dollars of committed capital.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in the time that I was working at Goldman Sachs in mergers, there were a bunch of big public companies who were on, we were on M&A retainer, they call it. So the public companies looking to buy lots of acquisitions, and they would have us running the numbers with their people for them as they would have Bain& Company in two of these situations doing the strategic work alongside their management team. So I got to know the work and we would jointly make presentations to the senior management team or their board if a deal went far. And I got to see firsthand what Bain was doing in strategic consulting and understand their view of business separate from the numbers. And so when I did go out to Stanford, I wanted to spend my summer learning that better and in Paris. And Bain was kind enough to offer me a job to facilitate.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“While that same man, the next year I trotted down and he said, well, okay, we're applying to Harvard and Stanford, aren't you? And when do I write my letter of recommendation? So he did, and I was fortunate to be accepted to both. And that was very important because when this was the dawning of what is now a big analyst program across the country and all banks and investment banks. But back then in 1983, the entire analyst program of Goldman Sachs was 25 people. Wow. And that was a big expansion from the prior year before, and it had only been in existence for two years. So Wall Street was so much smaller. Barry, you remember back in 1983, Goldman Sachs had about 30,000 total employees, 1,500 jobs. They were private partnerships.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'm thinking he's the ex-Dan of the business school. Like, this is a trick question. And I gave him the deer in the headlights look. And he said, well, let me imagine we got three letters here. We got a letter to get into Tuck, a letter to get into Harvard, and a letter to get into Stanford. And I said, well, and I thought to myself, well, I know he went to Harvard. And he said, Dean Natucky, this is a trick question. And I said something like, well, I guess Harvard or Stanford. And he said, well, then we're done. And I said, but I'm not into Harvard and Stanford. He said, Well, you will be.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“So I trotted down the street to called his assistant, made an appointment, all sweaty and nervous, and went to thank him for his gracious recommendation. And he said, in the way of good mentors, well, do you want to go?”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“And he encouraged me to apply. He wrote a recommendation for me, and I guess surprising, not surprisingly, after that, I did get in.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“You basically do three years as an undergrad. You apply to the Tuck School. If you get in and it hadn't taken anyone in over a decade, then you do your senior year effectively as a first year MBA, do the second year, and you get both degrees in five years. Wow.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Interesting. Exactly. And he ultimately encouraged me to apply to the 3.2 program. They had a dormant program left over from the Korean War. Business schools, of course, have favored people with experience.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, like life, it's a serendipitous series of things. I met a terrific man at Dartmouth named John Hennessey Jr. He was the ex-dean of the Tuck School, the Business School at Dartmouth College, and I took a freshman seminar with him because I needed a course. And he became a mentor. And he once asked me what you just asked me. And I explained him, get the CPA, get the law degree, it'd always be employable. And he kind of said, hmm. Have you thought about an MBA?”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source
“Original career plan was to be employed and provide a safety net for my mother and my two sisters. Right. But if I had a plan as to how to do that when I went to college, it was. Learn as much as I could as fast as I could, and get a BA and then become an accountant and a lawyer, because then I figure I could always be employed, either managing the numbers or doing law and get those two degrees.”
2023-12-01 · Masters in Business · Michael Fisch on Private Equity Funds · IDENTIFIED FROM THE TRANSCRIPT · source