00:51:33 · James Bohannon
[00:51:33] S1: The, I mean, some of the early pioneers of the private equity industry and let's just think about KKR in whatever, 1970 or '60 or '70 or '80, whenever it started. Their original backer was a family and Blackstone had families sort of early on, etcetera. And so family capital backing these early pioneers, those are for a forty, fifty year relationship looking back, like those are gonna be like some of the original pioneers of the space, both on the GP and the LP side. But the journey is long, right? Because every one of these assets can be, look, I mean, can be seven years. And so if you do a deal and an independent sponsor does deal one, someone just asked me this yesterday, how long before they can go do the next asset sort of dependent on communication upfront. But let's just say every, you know, they do their second platform two or three years later, that's starting the clock at seven years again, right? And so you have these like long tenured relationships that all seven years stacking upon each other. And if there's success, you know, then a lot of times there's this sort of like ipso facto understanding if you like have an outsized return with the sponsor, like you're gonna probably invest some of that in their next deal. And then of course, if there's great success, everyone says they don't wanna launch a fund. 98% of people, if could and have great success in their early deals are going to launch a fund because I don't recommend people doing it off the rip, but when you get to a level of success where the capital is available to do it, of course, it's just an easier construct. The capital is just there. The market knows your money good. And so the natural progression of independent sponsor of like first platform, bunch of add ons, second platform, bunch of add ons, Third platform, maybe first platform is ready to sell then. Fourth platform, fund. The family office partner, like their job is to deploy capital with people they trust. They've just found someone they trusted and they found someone who can compound their money at above average rate. Like they're gonna hang on there. And they're also gonna have a lot of goodwill built in. They're gonna have a really good line of communication. Their team's gonna know this team.
00:53:56 · James Bohannon, Mikk
And so it's a great partnership that can look in that case, that could be fifteen, twenty years easily into a fund relationship, etcetera. And even if that family is not a fund investor, it's pretty likely that they'll be like, look, we'll be supportive. We'll be supportive of you because you've made us a lot of money and we've been in business together for fifteen years and it would probably be a negative look on the market if we didn't write some check and so we'll take some of the proceeds that we've made with you and of course, make it as a fund commitment. So they can be long long relate... Long and fruitful relationships. The power dynamics change, funnily enough, because on day one, they need you a lot more than you need them. And then fast forward that fifteen or twenty years, now that sponsor is like way richer than anyone that works at the family office. So anyway. [00:54:52] S0: Okay, James, this has been an hour well spent. Great to get to know you, first of all, how you think and how you view the market. And thanks a lot for sharing those insights and more than happy to do part two in the near future. [00:55:06] S1: Thank you, Mikk. Hopefully, something I said was helpful to somebody. Pleasure to to meet you.