00:27:38 · James Bohannon
Someone said to me recently, which I sort of love, choose your own pain points. And I think the opportunity right now to choose your own destiny and buy a business and actually have people that are supportive of it is more enticing than ever because there's a market for it and there's a huge amount of demand as shown by what we're seeing at Maguire Woods, not just from Family Capital that really started this ecosystem. Call it in like 2007 is probably when a lot of this market really started going. Maguire Woods is ten years old. But deals like this where there's a real market for it and a real desire to do these deals is probably since around 2007. There's a real market for it. So you got a market for it. It's going to cause people to want to do it. And there's people that are excited to meet you, etcetera. So like the phrase f two e, Andy Freeman coined that phrase from Brickell Point. So I can't take credit for it, but I've used it before and I wanna give him full credit. It's it's basically identifying someone that has been an op... That has been an investor and an operator before and has a little more wear on them. It's not search. It's not ETA, it's not someone that's like gets an MBA and then just go gets a job as a CEO. It's someone that's got like fifteen years experience, looked at a lot of deals in a particular space, maybe has made some more money and is sort of betting the farm on doing a deal. And you're basically, you're aligning so well. You're finding a very high quality, high IQ, high energy investment professional who's fifteen years in and they're betting their whole career on one deal, that's a pretty good bet. I mean, if you find the right jockey there, like, you don't even have to look at the deal. You know I'm saying? If you're like, look. This guy is, like, super smart. He's went to an Ivy League school, worked at a bank, worked at a private equity fund, and he's betting his entire career and all of his savings on buying this business. Like, that's a pretty good, like, indicator of alignment right off the bat. And that's where sort of talent selection and references is so important in this part of the market. And so I think like backing someone like that is sort of Andy talks about is highly interesting because the alignment is so good.
00:30:12 · Mikk, James Bohannon
[00:30:12] S0: Now, if we take a step back, this individual you just described is listening. The decision is made maybe sixty, maybe ninety days ago. And he's listening to this and okay, there's this interesting family office. And he would like to start building a relationship with this family office. How would one approach this process in a way which you have seen works well, which is not maybe too aggressive, but has led to a great outcome when it comes to maybe it's introductory, maybe it's raising capital, maybe it's finding a talent, maybe it's finding a co founder, you name it. Something great came out of this from this cold email or high at the conference. But how would you describe your experience seeing someone doing it in the right way? [00:31:03] S1: Yeah. And this is someone that has that has sort of already left or they're still [00:31:08] S0: could be could be both like listening now. It's just you got him thinking maybe that's me.
00:31:16 · James Bohannon
[00:31:16] S1: Yeah. I... It's a great question. So I think there needs to be an element. There's like this weird... It's very much like dating. Where is like if someone is out there, like, so desperate and you see it in their eyes and they're trying to meet everybody and you're like, alright, this person like clearly like can't raise any money and it's like gonna be bad. But if someone is like, it appears like, oh, this person is like confident and professional and has a good base of contacts already, there's just gonna be sort of more demand around it. Now I say that kind of glibly sort of half kidding, but there is a lot of similarities to that. I think finding someone that is... Has a really strong, like, that aligns with the thesis of what they wanna do and then is having select conversations and very thoughtful conversations with families. And then that name is sort of passed around amongst the family office community. Like that's the best way is to meet and engage with a family or two and have those families introduce you to a couple more families and just keep adding it one by one and tell your story, get someone excited about whatever thesis, offer to share notes on what you're seeing out there in the market, stay tastefully persistent, right? So persistent and aggressive because I think the LP wants to see that, But in a tasteful way that makes you want to root for that person, not in like an obnoxious way like 12 emails, why you responding type of thing. Ari Emanuel just came out with a book. He's some great references on how to be tastefully persistent and even being self deprecating, etcetera. But I think, look, referral is always the best. I think asking for the referral is a good move. And then I think when there appears to be some buzz around an ISP, it's like, and I see it all the time. Like right now, there's probably like, there's like three or four that are coming out of it. They're like up and comers that like people are talking about, which is awesome. The other thing that's interesting is like 2007, I mentioned, maybe like 2010 is like kind of the early, like the first class of these ISPs, the Garnet Station guys were early. I always talk about them. I'm a huge fan of them. They now have a big $6,000,000,000 organization. But once upon a time they were independent sponsors and they were early in that.
00:33:41 · James Bohannon
The whole like Harvard class, I know like 20 of these guys all sort of came out at the same time, built these amazing businesses. They have all like there's different pockets of diasporas of talent and capital and clusters and networks where everyone's sort of in these deals. And if you can get one of those clusters, if you can get in one of those clusters, either you worked at the same firm or they're sort of backing you or you intern for them or like there's some sort of connection to that, I think that's very powerful as well. It's really like there's like a network effect. Like if there's no connectivity to someone, it's a little hard because it's a marriage. And again, it's like it is kinda like dating. It's like if you need someone on a... I mean, I'm not gonna use the dating app reference because dating apps clearly work. But like if there's some, I mean, it's harder than dating candidly because you're dealing with like giving someone $10,000,000 for potentially seven years. Like having some connectivity or able to back check or I know who this person used to work with and I know who they came from and oh, it's a recognizable firm they worked for and my buddy invested over here. Getting to pencil that together is so crucial. And references in this industry are everything. And I think the really great ISP programs, like an EastRock, for example, always talk about references, references, references. And we are in the talent spotting game. And our... The greatest asset class is talent. I love that line. It is so true. And so the more you can sort of build that goodwill out there in the market, like, look, this person is aggressive, they're talented, they're honorable, they're ethical, they're going places. And if you can somehow put the, like, make the LP feel that you're gonna be successful whether they're in or whether or not. And that's where, again, it's kinda like dating. Like, I'm gonna, like, I'm awesome, and I'm gonna do great. Like, I don't need you. I'd love you for you... To you to be along the ride, but I don't need you. I'm gonna win no matter. Like, I'm going to win. Like, it's gonna be hard. There's gonna be ups and downs. Maybe it takes longer. But in the end, I will figure out a way to win because I'm betting my entire life and my kids and my house and my mortgage on this.
00:36:06 · James Bohannon
Like, I will not be stopped and I will break down doors to make sure this works. And I'm putting all my money in it. I'd love you to be a part of the journey with me. But if you don't want to be, I totally get that. And I'd love to sort of keep you posted on how it goes. Life is long, maybe we do something down the road. And if it's not you, I'm sure I'll find, you know, another great partner who like envisions like that attitude, I think is crucial. So it's almost like, there's no, there's no shortcut, there's no sort of trick to doing it. It's kind of like everything. It's one relationship at a time, which sort of gets you another relationship, which gets you another relationship and going from there. So, yeah, that's it.
00:36:52 · Mikk
[00:36:52] S0: Nice. Nice. Now a step forward when it comes to diligence and agreeing on terms. Something you've said before, actually I'm taking a step back. There are many of those independent sponsors. I've met them, I talked to them, great guys, many of them like you explained here and they have a deal. They've been working on this for the past, I mean, twelve, eighteen months. They have a kid at home, maybe even kids at home. They've been traveling the world. And now they find this finally, this family office who's like they want to raise, let's say, $1,015,000,000. And now this one family office says, yes, like we want to just commit the whole round. So you've said something interesting that even in this moment the individual should do diligence on family office, but so many times this individual is not willing to do that because for all those reasons what we discussed before there's just so much so much going on in their life, so much pressure. You really want to get into the game, get the deal done. So what what would you do in this situation? Or what's what's the right or or what is the way to go from here?