Family Office Connections: Private Equity

Richard Perez, Managing Director and Chief Strategist at SVB Private is joined by Don Phillips, Chairman and CEO of WP Global Partners. Their discussion covers making good decisions during difficult times, best practices when developing a private equity investment platform and considerations to achieve meaningful returns in private equity.

Transcript

Richard: Hello, and welcome to everyone joining us today. I'm Richard Perez, Managing Director and Chief Strategist at SVB private. Today we have the pleasure of being joined by Don Phillips, chairman and CEO of WP Global Partners, which was founded in 2005 by Don.

WP Global is headquartered in Chicago and also has offices in New York City and Los Angeles. And in its 15 years of operation has invested over $6 billion into Lower Mid market private opportunities across the world, the investments in highly curated funds and direct opportunities.

Prior to founding WP, Don was a CIO for Westham [SP] the US subsidiary of West LB, a large German bank where he oversaw the firm's $3 billion portfolio of private equity fund investments.

Prior to Westham, Don was a president of Forstmann-Leff International, building a global investment management firm and helping manage assets of over $8 billion dollars.

He was also chairman of equity institutional investors overseeing real estate and private equity investment activities, and sold the real estate business to Blackstone.

Earlier in his career, Don also spent many years as a CIO for Ameritech Corporation, where he managed their $15 billion pension fund.

In this conversation, we'll draw upon Don's 30 plus years of investment management experience, particularly his extensive background in private equity, investing and managing institutional pension assets to discuss making good decisions during difficult times, best practices in developing a private equity investment platform and how to achieve returns in private equity.

With that, Don, welcome, and thank you for taking the time.

Don: You're quite welcome. Look forward to talking to you.

Richard: Great. Well, I appreciate that. And we all do. Let's start with kind of the elephant in the room. Obviously, we're living in unique times, and COVID is at the top of mind for everyone. And both on the health side, of course, but also from an investment perspective.

Now, Don you have an extensive career in private equity and managing assets for family offices, pension plans, etc. So you've lived through various times of market stress. Curious if you can kind of draw on that experience and talk about what lessons you've learned in different periods of market dislocations? How you draw upon that in difficult periods of time? And how COVID, this COVID environment relates that, you know, are there concerns you have, how you're navigating that? And are there opportunities on the heels of that?

Don: Well, I think if you look back, at least in my timeframe, we lived through a lot of different volatile markets, a lot of extraneous events that have impacted these markets. And when you put a portfolio together in my mind, is the fact that, that I know volatility is everybody's measurement of risk. It's price change, and you have to assume that any particular point in time in a market cycle, you're going to have to sell a security.

So the point is, is to put a portfolio together, where at any particular point in time or a market cycle, you don't have to sell a security. And if you can solve that problem, then volatility is not a measurement of risk.

And that really plays into the private equity marketplace. So if I can position my portfolio where I don't need to draw upon that cash at any particular point in time, I can buy a market cycle, and I can invest in longer term assets. As a result of that I can get a higher overall return over a period of time.

So when I think in terms of something like COVID, I look back in those periods of time and think, wow, we went through the market cycle of 1987. We went through the 1991 timeframe. We went through the 2000 and whatever it was, 6, 7 timeframe, we've gone through times when I think the killer bees were coming after us. There was times when there was...I mean, I put together a list one day of 30 different things that we've been threatened with over our lifetimes and basically we overestimate them and rarely the fear that's created in one ever come about the way in which you anticipate, or thought it would.

So to me, when you run a portfolio, you sit back and you take these into consideration, but you don't let them drive you.

Richard: That's a very great perspective, given the breadth of the private equity market, and people do view it pretty monolithically, particularly folks who are just entering the space and feeling like they need access to it. In the family office space, we see folks have varying levels of sophistication.

And you talked about all those data points, particularly the mid market, and how many opportunities you have. Such a rich opportunity set, it brings a lot of opportunity, but also can be pretty daunting for folks trying to access them, source the right opportunity, and due diligence them.

How do you, in your experience, what are mistakes that folks have made, and what are the best ways to basically kind of attack that problem, try to source the best opportunities and properly due diligence them?

Don: Well, I tell you, the one thing that I've, and I've said this forever, is that you only invest in one thing, and that's people. If you give a really bad manager, a really great science, he always needs another six months and another million dollars. If you give a bad science to a really good manager, the first thing he does is call you up and says, "I'm not putting my career at risk and your money, I'm going to get us out of this deal as soon as we possibly can."

So people are really critical of making things happen. One last thing on that is that, I always believe that it's not a matter of how smart you are. And what I mean by that is that some people can execute and some people can't.

When it comes to playing golf, I know what to do, executions my problem, right? So it isn't the fact that, people knowing what to do, it's whether they can implement what it is that needs to be done in operating that company at the end of the day.

So in sourcing transactions and looking for opportunities, I mean, there's every industry that you've got that you can imagine that's out there, and a small, you know, middle market, even at the large end of the marketplace that you want to go to. But the opportunities are oftentimes driven by the people that you're going to meet at the end of the day as well. And everything is all basically a factor of confidence. Either you have confidence that that person can run that business and be able to manage that particular, you know, business plan.

But looking at a business plan, you can manage it, look at it, evaluate it, and with no issue. The question is, do you have the right person running the business?

Richard: That makes sense. And when you're finding the business plans, given how many opportunities there are, narrowing that funnel so that you can properly assess the people in those businesses. Many family offices sit there and they get a lot of incoming opportunities. Let's say it's kind of a reactive situation where they're wondering if they have adverse selection. How important is it to be actively seeking these opportunities, to be proactive in your deals? How is that sourcing of the opportunities that you're going to evaluate? How do you manage that process? How important is that process?

Don: Extremely important in the sense that you have to be in a position where you can create your own deal flow as a way for somebody else to bring you deal flow. There are a lot of agents in the business. And one of the worst things you do is sit in a room and wait for an agent to bring you a transaction, he or she brought you a transaction not based upon whether this is the best transaction that was available in the marketplace today. It was based on the fact that this is the transaction that was in queue for them to be able to sell to you today.

So the goal is to basically be in a position to certainly listen to what other people bring do you, and yeah, never rule anything out. There's always opportunity there. But it's elective opportunity. But the key after a period of time of building a relationship with people in the industry, and it's amazing how well the word gets out.

Now, for instance, we oftentimes get, you know, calls come from the CEO of a company or somebody in a senior management level of an operating company that says, "Hey, I got a friend of mine who has a transaction you might find of interest." Sometimes it's another money manager that we may have worked with, helping create opportunity, that we were a co-investor with in some fashion, that they call us up and say, "This doesn't meet our goals, but you might find it of interest."

And sometimes just have to be in an industry long enough the phone just rings from people who never know how they got your name, but the phone rings and there's an opportunity that comes to the forefront.

So creating your own deal flow is really, really key at the end of the day, in creating that portfolio.

Richard: Assessing the people and assessing the businesses, there's absolutely a skill to that. And you invest across multiple industries. How important is it to have folks on your team, folks who are making those decisions and having industry expertise, industry knowledge, to really be able to dig down into those companies in those boxes? Is that an important aspect of building the platform and the funds that you partner with? Areas of specialty and specialization?

Richard: There's a degree of specialization. And that degree of specialization is important, you have to have enough knowledge on a specific industry to know how this company fits within the industry, you can understand how the business plan operates, and will operate under a change in management, or whatever takes place.

But when you need to really dive down deep, either everybody in the industry does, I don't care who they are, are going to use consultants and people that they can rely on to do some, you know, some deeper dives with respect to knowledge.

But you can't approach a healthcare transaction without knowing something about the healthcare industry. And you can't approach...I'll use healthcare as an example, because we do a lot in that sector, is the fact that you can go into it and you can do devices, right? You can do drugs, you can basically do services, there's different ways in which one can approach that healthcare industry.

My particular belief is generally is that I like devices, I like services, just simply because they're measurable at the end of the day. But the problem that I have with a lot of other things as well, when the FDA becomes your partner, it becomes...it's not a partner you generally want is the government. And so usually try to avoid that. However, those who do that have generally really high return expectations. But it's one out of every 100 or 1000 that they try.

So my only point is that each sector within private equity is going, you'll be able to identify where you want to be if you have enough knowledge in it to be able to approach it.

So and then there's times when you can be a little bit agnostic on a general management term. We have a bedding company, you know, down in Corsicana, Texas. Well, you know, it's pretty easy to identify what the needs are of a bed in the manufacturing process, and the cost structure and things of that nature. But those are general issues, most of the time we're going to try to focus in on areas where we think we can bring a knowledge base at a table that will be worked to our advantage relative to the fact that others may not have it.

Richard: And I alluded to before, in the long history you have the best in private equity, and you gain a knowledge base across the board. We can take a step back to your early days at Ameritech where you were, if not the first, among the first to invest in private equity. Maybe speak to that experience, how the industry has evolved, and how you've catered your business and catered the way you approach these markets based on that experience? I'm sure it was a much different environment then, it's much more competitive now, but also a lot more opportunities. So I'm just curious how you see that evolution in your experience. So looking back to your days in the early 80s investing in private equity.

Don: The interesting part in that period of time was the fact that there were no consultants of any consequence in the business and that made it a lot more simplistic to communicate with various opportunities. Bu if you look at that period of time, the opportunities that were there are very similar to the opportunities that exist today.

If you look back in the time, say, "Well, look, wow, you know, those were days when Apple Computer and Google and things like either didn't exist, or were in the process of just formulating their existence," and they've grown to where they are today, it's no different today with these opportunities. Like I said, what makes this country different is this bubbling up of opportunity and ideas that continue continuously out there.

I'm going to tie you back to something that you asked about earlier in this: In 1987, right after the market crash at that particular point in time, I think private equity...what we all at that time called venture capital, everything was venture capital in those days. And we had our very first venture capital forum, which was held in SVB. And there were two keynote speakers. Alan Patricof was one and myself.

And we were to discuss the private equity market or venture market at that particular point in time. And Alan went on, and he was a very knowledgeable guy, and very established in the industry, but even then, and the point is, is that Alan said literally that this could be the death of venture capital as we know it today. And I took my notes, tore 'em up in front of everybody, and I said, "You guys believe that BS, I'm going to tell you I'm a buyer."

We ended up buying everything, I told everybody, "You want to sell it? Sell it to us, we'll buy it." We were buying things that at that time, 20-30 cents on the dollar. And we've made returns off of that which were well over 70%, you know, 100% type returns off of those opportunities, because the market basically came back.

But we've gone from a very...marketplace that was very uncoordinated, a little bit less sophisticated than it is today. But the fundamental opportunities that created then are the very similar to the fundamental opportunities you get today.

And the reason I say that is that I can't tell you how many times I've been asked a question over the course of the last 30 years, and it's been asked a lot of different ways: "Is the bud off the rose?" Should I have invested, you know, a year or two ago, is this the time to put money to work in the marketplace today?" Everybody's convinced that all those returns are yesterday's returns.

And the answer is it continues to be the greatest opportunity that you can you can invest in and get it returned, it's in the 18 to 20% range consistently over a 10 year period of time if you can be able to absorb the time value of money. But it's an asset class that has to generate those returns.

If I was running a multi asset class global institutional pool of money, which I did once, I would sit there and say that I'll use Robert [inaudible 00:17:30] numbers that go back in the US equity market in 1926. And I say, "Well, you know, Richard, on this hand, I have $1 that has a 9, 9 and a half percent compound annualized return for the last 100 years, almost, and you want it."

So you have to pay me up for liquidity. You have to pay me up for transaction costs, and by definition above market risk, right? Or why would I give you $1? And does that mean that each of those are 100 basis points, their answer is no. You got to pay me to take those risks.

You’ve got to give me a return that's in the 15 to 20% range, or why in the world would I give you $1. And if you go back, and you look at the properly managed portfolio in private equity over those periods of time, I'm going to tell you that those returns are generally in that range.

Richard: It's actually interesting, because I think some of the points that you were talking about are ones that family office think about. And one of the benefits of a family office is they have the duration of that capital. But being able to execute and exercise that patience and navigate the volatility is sometimes challenging. And a private equity structure, if they do their due diligence in front of the right folks, it kind of allows them to structure it in a way where you can manage that volatility.

But on the same end, when you see big market moves, either a huge rally, or run up like in the .com bubble, or in '87 example you gave where there was a huge decline: In those environments, if you're sensible, sometimes you can either see the risks or see the opportunity. So I'm curious as you kind of outlined those two different scenarios as you look at the world today. It's much more competitive, it's certainly more sophisticated, the marketplace, than it was maybe in 87. But you see this is that type of environment. How important is that to consider when you're building a portfolio? And there's volatile times or times of dislocation?

Don: We only know one thing, we know that it's not going to be consistent over a period of time you're going to live through volatility. What I always liked about private equity is the fact that you were below the radar screen in the sense that you are not being measured day to day in the public marketplace. And what got to me, now I'm going to go off on a tangent, I'll bring you back. Again running a multiasset class global portfolio at the time, my point was, I get paid the same, I have the same voice as owning a $20 million worth of some company stock versus somebody who has a two share system. Why do I have the same voice, same return expectation, in that process? There's something wrong with that picture, I have no control over it, the bigger my presence is in the equity market, the more I'm going to have a return that's going to revert to the mean and I'm going to have a return expectation, it's inevitable.

So how can I add value to a multi asset class portfolio? I can only do it through the inefficient asset classes. Commercial real estate, as well as private equity, and their local knowledge is going to get you, you know, and separates you from everybody else. So if I can get into a marketplace where people are more afraid at times than others, that's the best time to be in.

Richard: You alluded a little to the opportunity now, and do you think that there's...are you shifting or tilting research or areas of focus to certain industries, certain sectors that you think are particularly impacted? Where there's, like the commercial real estate example that you mentioned? Are there things that you're particularly focused on right now?

Don: Last place in the world I'd put a dollar in right now is in real estate. I'd be a seller, I wouldn't be a buyer.

But, if you look at for what we're doing right now, is the fact that we are in a situation where, you know, we'd love health care, it's, you know, it's the best part of 20%, some would argue as much as 25% of total GDP. It's a growing sector, it drives a lot of technology as it moves along. And so we continue to play that sector very well.

We like another sector, which has always been with us and always will be and that's food and agriculture. And that's a segment that's going to continue to, obviously for a period of time, continue to grow. We played water for a while, and made some money in the water area, but it's a very much more esoteric, you know, sector dividend to be in.

But generally, when you think of food and water and healthcare, we're going to overweight a portfolio in those sectors. We do not like any form of retail, never did at the end of the day. I like technology, but if it's a proven technology at the end of the day. But, pretty much where we are.

Richard: Fair. I wanna shift a little bit towards the family office approach to private equity. And many folks, they're very sensitive on fees, they're very sensitive on layers. They also want to feel like they're directly involved in the business. But again, being able to effectively underwrite that challenge.

Have you seen folks, in your experience, what are some of the mistakes folks make trying to go directly into deals without much of a platform? And we talked a little bit about it with all the agents potentially selling the next deal and not the best deal? And I guess, how important is it for folks who are just getting their feet wet in the space and partnering with somebody with expertise who can help them navigate that process and curate those ideas?

Don: Oh, extremely important. I don't care whether you're a high net worth family or a big corporation. You know, we went to, Northrop Grumman came to us as an example back in, you know, back in the year 2000, or there abouts, and gave us a huge, you know, effort of trying to get them into the business, okay. And we helped them build the staff, we helped them organize themselves up because they had the money and the wherewithal, as you can imagine, to do it. But they couldn't start out because they didn't know where to start in the process.

So a high net worth family office depends upon how big they are. Whether you have large family office, whether you're a medium sized one or whether you're small. I don't think it...put this way, I think it would be very difficult for a family office with total assets of less than $500 million to appropriately get into this asset class in an effective manner, because they wouldn't be able to hire the staff of people to be able to go after the opportunities that are out there.

If you're a family office with somewhere around a billion dollars or more, and you're not in the asset class, I think that you would probably want to partner with somebody to kind of help understand where to go and build your own net working arrangement up at that particular point in time.

I think in most cases, you would want some sort of a partner to work with you to get, to access the opportunity.

Richard: Makes sense. Different families, different organizations have different risk appetites, sometimes they know themselves well, are self aware and know what those risk appetites are, but others are not.

How do you think about allocating to private equity, and going in a more commingled approach versus going direct, and how to think about the risk of return? And is how you advise folks who come in and maybe say, "I just want direct deals," but don't really understand the risk associated with that, how would you articulate that?

Don: Basically, if you could start out with the fact that in this segment of the asset class with, let's say, with 100 operating companies at the bottom of your structure, or more, then you're basically going to get the return of the asset class. You can pretty much block it in a 15 to 20%, net of all fees, by the way.

But if you want to come in, and you want to do 7, 8, 9, one-off transactions at the end of the day, then you're basically living by the sword. Some of those are going to be potentially great opportunities and some of them are going to be a disaster, that net over, what you've created over a period of time, may achieve what the asset class returns may not achieve, but you're going to lose a lot of sleep in between worrying about them.

But the one thing that people don't understand is that when you make a lot of those direct investments, or co-investments, if you do the job right, you got to show up to work every day, you have to help them run those businesses. You can't do this passively at the end of the day, because you are, at that particular point in time, you may be a minority investor, and you may own 20% of the business, 10% or 30% of the business, doesn't make any difference, that you are now an owner of that business that's going to draw you into more than just going to a board meeting and having somebody, you know, tell you what's going on. You go to a board meeting and realize that you got the wrong guy running this business. Well, you can't go home and think that that's going to solve itself. Somebody's got to stand up and say, "Hey, we got to find a new CEO, we got to, or we have to resolve a particular issue somewhere that nobody anticipated at the time in which we went into the investment."

Give you an example. We own a company called True Temper. And now it's called True Sports, makes golf club shafts, everybody who plays golf knows True Temper. And so we went into it. Wow, it was a...how could you go wrong buying into a company that makes golf club shafts, and the largest in the industry. It's almost like a staple. But what we didn't understand is that a dramatic shift was going to take place in such a short period of time where the millennials just all of a sudden decided they ain't playing golf, and they're not buying golf clubs. And all of a sudden, we thought we're in a world of hurt here because we, as I said at the board meeting, we have a Cadillac problem. Oh, you know, our buyers are all old and dying. And every year we have fewer buyers.

And so the point is, is that what we ended up, that company, I was only a observer, one of my other partners is on the board and very much involved with it, but they came up with the conclusion that they are no longer in the business of just making golf shafts, they now make hockey sticks, you know, all kinds of other sporting equipments of various sorts that use some sort of fiberglass of similar nature as the hockey stick and other things of that nature. And today it's called True Sports.

So True Sports now...so we saw True Temper go down dramatically. Now we've seen True Sports come back up and we have now a broader array of products to sell and less dependent upon any one particular product and the company is doing very well. But that took a lot of time and effort to crawl inside that company and get people...we went through three CEOs trying to get the right person in there to execute the strategy.

Richard: Now you bring up an interesting point that I've observed as well. Allocators, investors, they make the investment into something, and then they take a step back and they think that that thesis will carry through, and you to speak to the importance of being in the weeds. You own it now, to get private equity, you have to guide it and manage it through.

How do you manage that process? It's important to talk about building a team of expertise, how much time is spent working with those companies? And I guess how do you allocate time between due diligence, sourcing, investing, building the portfolio, and then also managing these companies?

Don: Well we have various teams of people. And we try to rotate everybody around. So everybody gets involved in a lot of different things. But when it comes to looking at a specific transaction, the way that we look at it is that somebody has to identify the transaction in the sorting process. When that person looks at this particular transaction, shares it with the Investment Committee, and in an idea kind of format, it's brought in on the basis that it's an investment opportunity for us.

And then if everybody says, "Okay, that sounds interesting," well, this person says, "Okay, I'll take responsibility for it, and I'm going to go visit the operating company." Now you're going to sign an NDA, and you're going to meet with the management team, you're probably going to end up meeting with the board of directors, you're going to be talking to competitors in the marketplace and consultants and try to understand what does this company mean within its industry and what's its opportunities?

And then that person comes back and says, "Okay, I liked what I saw," and explains it to the committee. So now you have to take a second person down to look at it. And the purpose of the second person is to make sure that the first person didn't just kind of fall in love with people or kind of idea...it's to keep a level of independence associated with it.

And then if they come back and they like it, they basically write up a memo of intent. And we go through that description, looking at it much more in depth at the end of the day. And then there's often questions that come up on that, and the more research that has to be done. And then after that's done, we finally come up with an investment recommendation. And then at that point, the final review within the same body of people.

So there's multiple levels of review that takes place on the operating company. Review of the Investment Committee to have to continue to ask their questions on the independent basis, ultimately making a decision.

Now, once you make that decision, you have to decide at that point in time, "Is this a company that we want to have board representation on? Or do we need board representation. And if we do need that board, are we qualified to go on that board to be able to add value?"

Sometimes we've been in situations where you go into it, and you say, the last thing this company needs is... Take a science based company in the health care area, I don't know what it could even be. And you sit there and say, "What this company needs is it needs somebody with a scientific background to support this company, not somebody with more financial background that we would bring to the table. So let's go out and find somebody and put him in place on that on that company. That doesn't mean that we walk away from it. Now we have somebody inside that we can work with very closely in making educated decisions on what needs to be done and making sure that we oversee that company properly for other people's money."

So on an ongoing basis, it's an evolutionary process. And then you end up with a day when somebody is gonna walk in the room and say, "Guys, we gotta sell this company." One of the worst things that can happen is that somebody says, and I've had this told to me many times, "Boy, I bought this company 22 years ago, and for a million dollars, I just sold it for $2.2. I feel pretty good about it." Well, I don't know why you feel good about it, that was a terrible investment. You know, with all those years, that money lost at the end of the day, probably having a flat or negative return on your investment.

So the time value of money is key. You make an investment into an operating company, somebody's got to be in a room to sit there and say, "Guys, time's up, we gotta sell this company." And now that you're going to sell the company, who's going to begin that process of initiated to manage that process? It's very time consuming. And usually the worst part about it is the person brings it up, the person's got the responsibility to see it through. But our goal has always been to return your money in your lifetime. And I always tell people I only invest in companies that mature in my lifetime.

When I was younger, it made more sense. Now that I'm older everybody thinks I'm going to die. But the point is, is that that I can see five years. I can see three years, five years...I can can't see beyond five years. So you have to have a plan that says that I'm going to get liquid within five years. Then if you're wrong, it's six years or seven years, but it's not 14 years.

This is the thing when you look at a lot of these deals, they're 12, 14 years old, and some are even older. And you think, "Why?"

Richard: Interesting. Going back to you walking through your process, it shows a thoroughness to try to do something effectively, really underwrite it. I think it underscores the challenge that families have, particularly if they're not at the scale and size and the commitment you mentioned, to do it properly. So I think it's an important fact to kind of consider for a family as they decide to go into this space and how they do it effectively and do the proper diligence.

You talked a little bit about the exit and how long you hold the deal and how you look at the outlook. Because I know some of the larger families think about buying a company that is generation, right? And then the flip side is trying to get your capital back out of private equity. How do you think about the discipline of exiting? Managing to exit, what's the right time? And with LPs that might have different time horizons, different goals?

Don: Try never to go into investment with other investors who don't share your time horizon. Number one. See you have to do your review with an evaluation of who else is in the deal with you. Nothing's worse than being in a room with somebody who wants to hold on to this thing forever, and your goal is return on investment to try to return the money back to your clients as soon as you possibly can.

It's a very interesting, you know, exercise. And we've learned it the hard way. So the point is, is that you want to make sure that your goals are consistent with your investors, and they're consistent with the other key investors that are in the operating company that you have today.

So anyway, I don't know if I answered your question, I was kind of going off in a tangent.

Richard: No, no, that's helpful, because I think there's the investment, who you invest alongside with kinda impact the outcome. And other folks on the board, other investors, so I think it's an important factor, particularly with folks trying to go indirect. That just complicates the investments. So again, having the ability to do due diligence about all aspects of a deal is important.

Don: As one of my partners says, all these transactions, they do not come with power steering. These things are never easy to manage. And we've been in deals with some of the best performing deals we've been in, deals where we're ready to close the place in a very short period of time.

I'll give you another example, there's a company that we have currently today. It's called MindCare. MindCare is tele-psychiatry, a phenomenally growing in business in today's world. And we made an investment, and we made it with one other major investor, very high net worth family out of San Antonio.

And we went to set a meeting and this company was...I had conceded because of the knowledge base that was in this room that these guys know a whole lot more about this company than I do. I liked that space and wanted to learn more about the space at the end of the day. And it took me about three or four or five board meetings, and I realized they got the wrong people in here running this company. And today, that company has a market value of about $100 million.

And but we were within hours of closing it up. But you had to be able to understand that this was a science that made sense. This is a product that the market wants, it's being pulled into the market, we're just not executing. And so we need to find somebody who'd bring in a team that can execute. And once we did, it started to blossom.

Richard: Great example of how these deals aren't always simple. And you have to have expertise.

Don: They're never simple.

Richard: And to have conviction to make the changes necessary. I know we're running close to time, but I did want to leave you an opportunity to impart any other thoughts you have to our Family Office clients, other folks looking the private equity space, either things that are timely for this time or overall view of the market?

Don: A family office should have, in my mind, as I look at myself and others, is the fact that you have a tale that you want to continue to grow this portfolio at a rate and everybody has a target return expectation of 20%. Everybody fights all day long for 20% return expectation.

And most people have to get that through some form of an assumption of a lot of volatility. And so my point is, is I don't like volatility, and I can buy into a long tail investment here that's going to be...I have to be prepared for 5 to 10 years. timeframe, but I can generate a return on that portfolio that's greater than any other asset class that I've got, why would I not do that, if I can take care of my cash upfront at the end of the day?

I think it's a highly necessary part of a portfolio. And the bigger the portfolio, the more you can absorb as a percentage of assets in private equity than those which are smaller obviously. And the smaller ones need to go, I'm not discounting at all, $500 million family or smaller to go in making investments in a pool, a vehicle that's going to give them the best part of 100 or so investments at the bottom of the structure that's going to be able to give generate the return expectation they have which is 15 to 20%, and then give them the opportunity to selectively invest into a specific one off transactions within those portfolio companies, if that makes sense.

Richard: Very helpful sage advice. Don, I'd like to thank you again for taking the time to speak with me today. Been really insightful, really appreciate your thoughts and us drawing on your experience and, you know, wish you continued success.

And for our guests on the line, thank you for joining us, if you'd like to get in touch with us or with Don on the WP global team or have any questions, please feel free to send us an email to family office@svbprivate.com.

And also recommend that you check out our website where you can find numerous resources, sign up for our newsletter, get this podcast and much more in your inbox and learn about how we help family offices, that website is SVBprivate.com/familyoffice.

Thank you again Don and thank you all for joining us.

Don: Thank you Richard.