Emily Holdman, Permanent Equity | The Art of Lasting Partnerships in Private Equity

[00:00:00] Sean Mooney: I am so excited to have Emily Holdman, Managing Director with Permanent Equity here. Emily, thanks for joining. Of course. Glad to be here. So I was really excited when Emily agreed to join here because one of the things that we talk about a lot on this podcast is the business of private equity turning into more of a business and people taking different and unique.
And it used to be back in the good old days of, you know, I'll date myself when I started in private equity in the late nineties. I'm much younger than that, but but, but maybe not. And but it was kind of like this one path and people went from investment banking to private equity and that was it.
And what's happened is the private equity industry has, I think, evolved a lot in very, very good ways where the business of PE is turning into a business and people are taking all these unique approaches and your firm, I think, has taken some really unique ones. And so maybe to kick it off, Emily, I'd love to hear a little bit about your background and what attracted you to private equity.
How'd you gotten into it?

[00:01:05] Emily Holdman: Well, to your point, I think the on ramps have certainly become diversified because I don't have the financial background that you spoke of at all. Never took an accounting class, never took a finance class. And it's sort of miraculous that this is where I ended up. So the background for me, which ties into the origin story of permanent equity is, uh, Brent B.
Shore is our founder and CEO. He had three businesses he had started, all of which were in the marketing and media space. So a market research firm, a commercial production firm, and then a traditional advertising agency. My, what I studied in school was journalism and economics. And and I went into major motion picture publicity straight out of school.
And that was during the great recession. So it was kind of an interesting time to be entering the job market. period. But I thought I wanted to go into marketing. And that was kind of the career path that I had planned for. But I also had met a boy and he is now my husband. And and so there were ties to Missouri that I, I wanted to maintain.
And and so I was looking for an interesting opportunity that would take me back to the Midwest and I found a news article, so total serendipity about Brent investing in red one camera technology for the commercial production arm of his enterprise at that point. And and so I reached out to him and said, Hey, it looks like you're making interesting investments, kind of bullish investments during an interesting economic.
period in the middle of Missouri. And I'm curious what you're up to. And he was kind enough to respond and that initiated our conversation. And ultimately I went to visit him and and we sat down and he grilled me for four hours and and created a job for me out of that. So I joined the advertising agency.
I wasn't setting out to join an investment firm. And at that point, I don't know that he fully envisioned what we would become. But he. He was generating excess operating cash flow. And so he was relatively young. I was really young and and so there, there was opportunity and runway to think about what can you do with this operating cash flow to create compounding opportunities over time.
And that's the nature of what we were doing. And this was kind of in that period of, 2009 to 2011. And and so, you know the economy is moving in all different sorts of directions and you can kind of create your own space to the extent that you want to. And so we tried lots of different things.
We incubated some businesses. We did some real estate deals, you know, tried a bunch of different stuff. But the one thing that we had done is we were approached in the same year I joined the firm, which was 2009. Brent was approached about buying a lower middle market business. And it was a recruiting business based in St.
Louis called MediaCross and we still own it today. And the person who introduced made the introduction said, you know, it's a marketing firm. You have a marketing firm. Maybe you guys, you know, this person wants to retire. Maybe you can take it over. So it was kind of an. Gannett introduction and ultimately our business models had nothing to do with each other that business runs under primarily three to seven year contracts with branches of the military and runs a full procurement process for them in onboarding health.
excuse me, in onboarding doctors and nurses into branches of the military. And so it's a very specialized craft that they do. And once we got involved, they had been doing it for 20 years. And so compared to all the things that we were trying to start on our own and all the different, you know, things we had tested, MediaCross was the investment that we made that felt strategic and repeatable.
And by 2011, we had realized. some really significant gains within that business both operationally and financially just by empowering the team and continuing to double down on what they already knew how to do. And so for us, that created sort of the focus. It was kind of one of those things where up until that point, We were trying lots of different things but ultimately found that, you know, by partnering with really good teams that have a great business model, that already have a strong reputation and just being a good steward of that business over time, causing minimal disruption, not focusing on, you know, publicity related to our involvement and instead just being the backend support system for them, that that really generated the best.
And so beginning in 2011, that became the focus of the firm. We were initially called adventures and then changed the name to permanent equity in 2020, based on the idea that we've always invested with no intention of selling and ultimately decided that should be endeared in the name. I love

[00:05:43] Sean Mooney: it.
I think it's a, it's a great background. And you know, one of the things that, that we're seeing a lot more is that. Kind of approach to what you're doing permanent equity longer term capital that lets you make longer investments and one of the things that I always had it may be a little bit of challenge with was This three to five year sprint that you're beholden to in the traditional private equity structure where you're like, we're gonna invest We got a blitz three to five years We're gonna probably sub optimize in a lot of places with the idea that We know that we're gonna have to sell three to five years later And cause we only have 10 years in a fund life and you kind of go through this whole March and then you're gonna have to sell some of your best companies early in your whole, because you're gonna have to fund raise for the next 10 year cycle.
And so you found some kind of unique ways to get around this and more of like a holding company structure. It sounds

[00:06:30] Emily Holdman: like, well, so what we ended up. doing? We used our own operating cash flow for a period of nine years, and then we ended up actually raising a fund. And our fund model, though, is based on being long tenured.
Eso as an alternative to a hold co structure, we raised committed fund, first a thesis fund in 2017 and then raised our second fund in 19. And our funds have a 27 year term, three, one year extensions. And then by vote of the LPs can extend even longer. And so the way I describe that to sellers is we're a generational partner from the business for the business.
And and our investors are aligned with that. Right. And to your point, you know, I think that the way I think about it is. There are different models and there should be different models, right? Some businesses need a sprint and will benefit from a sprint and the ultimate outcome that they're seeking will, you know, best be achieved in that model.
Right. But not every business needs a pressure cooker and some businesses need time. And some. Businesses need more consideration and, you know, kind of nuance and how they're transitioned over time. And so ours is one of several different models that I think have emerged over the last five years that better serve the diversity of situations that businesses face them are facing and when they go to market, right.
As opposed to saying your only option, if you want material liquidity is to be put in a pressure cooker. Yep.

[00:07:55] Sean Mooney: I think that's, that's great. And it's, it gives you the flexibility to kind of go longer if you need to, but sometimes it sounds like you can even do the sprints within, within the holding for those that need it.
But the sounds like the general premises, we're going to build long term value over

[00:08:08] Emily Holdman: longer. For sure. It's a focus on systemic health and compounding, right? So. You know, you don't do something in a quarter or in a year that sacrifices the long term. And so, you know, your trade offs in that regard, but you know, as a colleague of mine says, the, the long term is a collection of short terms.
And so you are tracking your progress. And and if you aren't, you know, making moves during that period in some regard ultimately you're going to continue to just kind of decay, right? That's the natural evolution of things. So you do have to take some proactive action.

[00:08:40] Sean Mooney: That's great. Now. Maybe I'd love to Emily get a little bit deeper into kind of the story of you because it's a really interesting one What would be one of the things that we would know you better if we knew this about you?

[00:08:54] Emily Holdman: Oh goodness I think that I'm just like the the quintessential nerd I've always been You know a voracious reader and super interested and how you know I think why I ended up studying economics is In school was just that I was naturally curious and how markets moved and why people bought certain things.
And, you know, I was working on persuasive writing in, in my journalism strategic communications track. And so with that, like it was, it was always a question of why do people buy certain things and make certain decisions? And why are some businesses more successful than others? And so I spent a tremendous amount of time just.
You know, kind of trying to figure that out. And I always think, I think I'm like an upside person, right? So I always, I like businesses where you can think about how can you diversify the funnel? How can you make the funnel bigger? How can you think about, you know, the ways in which this business will benefit from people more clearly understanding their offering.
And so in that way, like I'm still kind of a. communications person at heart. And I think that's the role that I try and play in both understanding the opportunity sets that exist for us to invest and then also supporting the companies and how they can best grow.

[00:10:07] Sean Mooney: That's great. And so for some, for, for our listeners here, you might hear some clanking going on in the background.
And so we have a great window washer. We'll get this on video. And so it's right, right on cue in Nashville, Tennessee. We're getting our windows washed. It's a perfect time falls

[00:10:22] Emily Holdman: here. You know what? Yeah. I was going to say, you got to see the leaves clearly. It's a good time of year

[00:10:26] Sean Mooney: for it. It's a wonderful time for us to see the red hues and the oranges and yellows, because fall is quite beautiful here in Nashville.
I'm sure our listeners will forgive us for the clanking and it will add some, some character to this recording. So. So Emily, one of the things that I'd love to maybe get a little bit deeper understanding of the way that you and Permanent really think about the world, you know, with this kind of longer term kind of mindset and getting the right kind of companies for your unique approach to private equity, what would you say are two or three of the most important traits in a company that you look for when thinking about operational excellence of the business or its potential for how it could be a great company for you know, partnership with you all.

[00:11:11] Emily Holdman: So we I'll give you kind of the qualitative and the quantitative. So on the qualitative side, we're looking for a company that, you know, is already successful, right. And can be successful without us. And so we want to understand both the market position that they have and what they aspire to have.
And then we want to understand from a team dynamic standpoint, who's supporting that vision and who is. kind of driving that vision and what's the expectation of post close dynamics related to that. So we don't operate from an, an industry thesis. We are the, the backend again, to support a team that already kind of knows their market, knows their customer base, knows their industry nuance, and our job is to be supportive of them.
And so in that way, you know, Understanding team dynamics, it doesn't mean that everyone has to stay with the business, but it does mean that we want to understand, you know, kind of what key drivers are, who has institutional knowledge, all of those types of things. And then from a position standpoint you know, I kind of look at it as like, if you're choosing between time, quality, and price, it's, you know, for us more than anything you know, quality.
Is, is what is going to drive long term sustainability. So we want to understand from a market position standpoint, where are you now? And where do you want to be? Right? Everybody has at some point in the evolution of a business taken fly by revenue. Everybody has taken a concession on some deal to make it happen.
Right? So it doesn't mean that you have to have this absolutely. Perfect record. There is no perfect business, but we want to see that. You've moved to a position. We're choosing the type of work that you want to work on, and you're sort of able to exercise not just pricing power, but just selection in general within the market.
So it means that we look at a lot of super niche value propositions and and want to understand why they should remain independent and why they have opportunity again to kind of grow their funnel and, and to continue to chart that path as they grow. So and then on the quantitative side, you know, the things that Kind of translate with that our margin and cash flow.
And so we want to understand how cash converts within the organization, what the discretion is that the operator has over that cash, right? So if, if the business has a heavy magnitude of reinvestment. requirements just based on fleet or, or some other requirement that can be a tough business because, you know, you're kind of beholden to just continually recycle the cash.
We want discretion. And so cashflow is an important component for us. And then, you know, margin is, is at the end of the day you know, profit, but also margin of safety. So if something changes, if a market dynamic changes, whatever it may be you know, margin is, is your cushion. So we like more margin than less.

[00:13:53] Sean Mooney: Yeah, that makes a ton of sense. And I'd be curious maybe the drill down on the on the team side. And one of the things that you know, one of the old lines that we had in the early days of PE with we had a bunch of linear logical kind of like deal team finance people. And we would say, you know, business would be easy.
If it weren't for the people, because we're trying ourselves, trying to explore our own humanity and understand it, which was no easy task. And then, you know, and then as we look at the evolution today, we look at our data, you know, which reflects all these demand patterns from great P firms like yours.
And one of the things that we've seen is more and more and more investment in the people side. And so absolutely. Five years ago, 18 percent of our projects were related to people. Last quarter, nearly 50 percent of the projects were related to people. And so I'd be curious when you, when you, when you're thinking about looking at teams, what are, what are some of the things that like, how do you know you have a good team?

[00:14:54] Emily Holdman: Yeah. It's a great question. Easy question, right? Yeah, exactly. You know, I mean, it depends on what the business is striving to achieve too, right? And what the mix of people are. You definitely want a team that understands reality and is looking for continuous improvement in some regard. There can certainly be resistant to change.
I'm naturally resistant to change, right? Like, you know, one of our sayings internally is we're all messy, and businesses are just collections of people. Businesses are messy, right? And leadership teams are messy. And so our expectation is again, not that people are perfect either. And we expect people to have things that they're more excited about and less excited about.
But I, I do think that, you know, understanding how well people fit into the roles and accountability that they currently have is an an important assessment in what we do. There's a lot of, you know, kind of natural pushing of, of responsibility onto key executives in the growing of the business.
And sometimes that is constraining capacity or capability, right? Either because that's not what the person enjoys doing most, or it's not what most benefits the business. And in either way, just trying to understand where they are on, on that path and how much they've, you know, delegated between their team how successful they've been at promoting from within.
How successful they've been at recruiting key talent. And, and, you know actually giving people space to lead their area. Those are all things that are important pieces of trying to figure out what is the right mix. Ultimately, you know, what we often end up. Quote unquote, investing in is growing the leadership team, not replacing people on the leadership team, but growing it right?
Because typically it's under staff, right? You have a lot of people responsible for execution, but in terms of strategic leadership and accountability there. are, you know, people who could be fully devoted to an area and that creates capacity for the organization. And so we make a lot of investments that you would find in that space as we get involved with companies and people are willing to say, you know what, what I really want to focus on are these two to three things.
And these other things, I think we can find an expert for. And I think the piece that, you know, oftentimes is boosted by partnering with a firm, whether it's us or someone else is that, you know, your, your ability to recruit expert talent into that role is magnified or exponential because you have, you know, now the backing of a much more, much heavier financial base and a career track for that individual that may include, you know, promotion from within your company and then also other opportunities over time.
And so in that way, I think that, you know, there's a good pairing in thinking about both what already has been and is the existing team and what could be within that team over time. And I think it's, it's kind of an assessment of both, but when we walk in, we want to understand sort of like. What makes them unique?
How do they make decisions between team members? And you know, again, like what's driven the business, right? To be honest, like we get involved in two different types of situations. Primarily one is where we are partnering with the executive team and the owners are actively involved in the business.
And we call those growth partnerships. The other is a legacy transition where somebody is looking to leave maybe today, maybe Two years from now, maybe five years from now, but it is partially a succession planning strategy for them. And when that is the case, it doesn't have to be. And when we walked into media cross as an example, it had been run as a lifestyle business for five years.
That's okay, right? Like you, you run a business when you own it in the best way for you as the owner, right? And no one should judge you for that, right? So, but what we were able to see within that business is that you had people who were hyper passionate and loyal to work there. And, and it was, it was reflected in their tenure.
It was reflected in how they talked about the particular projects that they were working on. and their excitement about the ability to double down on certain pieces of the business. And that's what we want to see, right? Especially when you may have an executive transition that needs to occur. So it's not that we can't help to recruit new, new leaders, but you want to kind of you know, benefit from what's already there, the institutional knowledge that exists, and then add to it.
And that's kind of the ideal situation. I

[00:19:22] Sean Mooney: really like that perspective. And it kind of definitely resonates on multiple levels. One, you know, as I was an investor, you'd go, we invest in, in family owned founder owned businesses as well. And one of the things that we would see is that the weight of the world was on the shoulders of the CEO because they had five jobs.
Yep. Either because that's Kind of how they ran things or because they were part of a larger business. And there, it kind of evolved into an older business and they kind of plateau because they, you get more into playing defense and offense, but once you would say, Hey, we're going to invest in you and allow you to augment your team.
And so both grow yourself, but grow your team, you unleash this tremendous value and relieve hundreds of pounds of stress from the shoulders of the CEO. For

[00:20:08] Emily Holdman: sure. But that's really hard to do psychologically, right? Especially when all of your personal net worth is on the line. Yeah. So I totally get it.
But it is, you know, something that is easier, more easily achieved when you've got a bigger bunch of people who can help you to trust in the hire that you're going to make, the reallocation of responsibility and setting up incentives in such a way that you don't get a perverse outcome out of. you know, handing off that responsibility.
So I think there's a lot of like elements to it, that it does make sense to do as part of a larger change within the organization. So I don't fault any owner for it, but it is, it's, it's a challenge, right. And it does you know, for, for our purposes, right. You can think about it as a constraint on how they've been able to grow the business.
We've seen individual owners who. They have five or 10 jobs within the organization and they can be really profitable. They can be making 10 million a year and it's incredible. But it, it is ultimately a constraint. And you know, when I talk to people like that, I'm like, you're a force of nature, right?
And it's incredible that you're a force of nature, but we need to figure out what that translates into, into something that can sustain past you. And the metaphor we use for that is like, the kingdom versus, you know, the crown, right? The individual ruler. Like, it's great that you're an incredible ruler, but you want a kingdom that's going to outlast you.
I think a

[00:21:32] Sean Mooney: hundred percent. And it's interesting, just even to think about, like, Myself, you know, I was an investor for nearly 20 years and then I go through this crazy Like fit of entrepreneurial craze. I'm like, I'm gonna go start a company but it had always been in the saying versus doing business and It was real obvious when I was saying from the perch of a board like hey You need to you need to delegate and then you're in those shoes and you're going whoa This is really hard to give up And then you start feeling The pressure of the world on your shoulders and there's just only so much of you and you have two choices, right?
You can either you can work more and then watch that growth slow Or you can bring in really good people Share the stress and the problems And the opportunities and then let them do the thing. And then you see the world just kind of take off. And, and so kind of what you're saying, I was like, I've been through it and it's like, and I've told people over 20 years, like, Oh, you need to delegate.
And then when it's, you're in their own shoes, you're like, this is a lot harder than

[00:22:32] Emily Holdman: it looks on the risk. Risk assessment is incredible because once you make one bad hire and something goes wrong, you know, you learn from that too. And it can be very expensive, right, psychologically or financially as an operator.
And so if you kind of have like an early miss I think that that informs a lot of why the management teams typically don't recruit at that level and instead promote from within. And sometimes that's the right thing to do, but it's not always the right thing to do.

[00:23:00] Sean Mooney: It makes a lot of sense and then maybe that's a good segue to You've made the investment you have this great team and now you turn into Into kind of value creation mode.
So how does permanent equity? How does your your firm? Kind of approach value creation. What resources to kind of bring to these companies to help them kind of be all they can be over time.

[00:23:25] Emily Holdman: Sure. So we are an active investors. We have 20 people at the firm. Four of us are focused on investing. Everyone else is focused on post close operations.
So it's a rather sizable team that, you know, each company taps into. And structurally the way we do that is that every company has an operating partner and a financial partner that they work. Work with and you can think about them as wearing the qualitative and the quantitative hats, right? So the quantitative person is not doing the books for the company The company still has their own financial team and they still run their process.
However, however, they see fit. But We are reviewing those numbers with them, and we're looking for patterns, and we're looking for you know, metrics by which we can interpret how the business is doing. Again, the long term being a collection of short terms, we're paying attention to where things start to deviate.
The way that our team describes budgeting is, You know, it creates the box for the year. And as we start to deviate from the box, it just initiates conversations, right? So it's a, it's a useful side of the business to stay incredibly focused on, but it's not intended to be a gotcha. It's intended to just watch and see how well we're performing against what we expected.
And then on, on the operating side, you know, part of what the financial team is kicking over is the initiation of those questions. But alongside that, our operating partners. Pretty much tap into the team. They become a part of the team. So we don't do quarterly board meetings. We don't have that formality to the way that we work with our companies because we know that in most cases they're trying to, you know, make decisions on a much more frequent basis, and we would rather stay up to speed on a more frequent basis.
So typically, the operating partner is talking to everybody and The CEO and potentially two or three other members of the management team on a weekly to biweekly basis. So it's pretty frequent, but it means that that conversation is usually relatively short, maybe half an hour. And it's more of like, what are the updates?
Right. And how can we be helpful? Those are kind of the two key areas that they spend their time on. And then it's like everybody you'll get to work, right? We don't want to be bothersome. We don't want the companies don't travel to us. We go to them. And we want. It's them to feel like they can tap into us when they need us.
And so the real description is like, we want to be a capability extension for them when they need us. Anything that the business is going to do on a regular basis. We expect to, and, and want to staff at the company level, anything that qualifies as like a random one time thing that needs to be done, or is something that's.
Pretty experimental that we don't know where it's going to lead in terms of value creation. We can take over at the firm and, and be helpful with until we figure that out. Right. So what that translates into is in addition to having the operating partners, we also have a full time recruiter. We also have somebody who came from a consulting background who does things like tech integrations for the company.
So you can think about those as being, you know, do they need somebody who does that forever? No, they need to go. Through a transition and purely relying on a service provider at the scale and size of the companies that we work with doesn't always make sense. And so that's why we have, you know, somebody like that on our team.
Right. And our recruiter stays focused on what are the types of talent that are interested in working at smaller companies and she's getting to know them on a regular basis, and then when the company says. You know, we think we're ready to invest, right? And we think we want to move down this path. We have a ready set of candidates and can start to initiate those conversations in conjunction with trying to think about compensation and incentives and all of those things.
So that's the way that we've approached it to date. And we try not to think about, you know, what are things that we can centralize? Like. Our companies are not all on the same tech stack. They, they are very much focused on what they do, what best serves them. We're not looking to disrupt their operations in any meaningful way.
And you know, the, the real purpose of having us is to have a sounding board, to have people who can initiate. Questions, not necessarily, we're not dictating performance expectations or ideas. It's just initiating questions and, and facilitating what can be an opportunity to delegate to our team or an opportunity to advance whatever they're working on with more resources.
And so that's kind of the way that we approach it. And for us, that's translated into a variety of different things because the businesses, you know, cycle differently, pace differently and are growing at different rates, right? We have some businesses that grow at over a hundred percent per year. We have some businesses.
are kind of clicking along at like growing like 10 percent a year. And that's okay. Like we were okay with that. We understood that when we walked in the door. And our view on it is we have a very long time horizon. And so the pace at which a One style of management team works or one style of business model works is not the same as another.
And so we're not trying to force, you know, specific types of performance metrics on every company. We're trying to understand where they are, what best serves them, and how we can best serve them. And that's the way we approach it. That's

[00:28:32] Sean Mooney: great. And I love that approach. It's the, it's the. Active partnership with your portfolio companies.
There's a lot that you're going to be able to do with them, but you also give them the free will to either bring groups from the outside that maybe you're outside that 80 20 or do themselves. And so there's a common, there's some commonality and there's a lot of customization.

[00:28:51] Emily Holdman: Correct. Yeah, we don't want to be prescriptive.
We're not prescriptive, prescriptive on the deal side. And we don't want to be prescriptive about how we get involved. We find that that's like change. It induces change that is not always welcome. And instead like Our, our best version is during diligence. We oftentimes are collaboratively creating a list with the team.
Somewhat out of what's being produced in diligence and some just out of conversation of things they want to do and things they want to focus on. And then, you know, our responsibility is to keep bringing those things up and say, like. Hey, should, is now the time, how should we think about that? Right.
And what have we learned? What additional information have we gained and just continue to chart that course with them. And you know, our executives, we want to be there for a long time. So unlike running a sprint, right? Like we're not, it's not about leaving the mark and, and building through buying in a very short period of time, most of our operators, one of the most important questions we ask them is what can you invest in?
Now, that may not pay off for 5 to 10 years. And we think that's an important question based on our style of investing, because a lot of competitors won't have that luxury, right? And so we think about it as a competitive advantage. And so we put, you know, those are the types of things that we want to discuss on a regular frequency just to make sure that we're exercising the strengths that we have.
That's

[00:30:12] Sean Mooney: great. And, and, and maybe kind of playing on that. What are some of the top value creation opportunities that you all are thematically engaging with your portfolio company leaders right now that you think others should also maybe be thinking about given where we are in the world?

[00:30:29] Emily Holdman: Well, I'll give you a specific example.
So in 2020, so we invested in Pacific Air Industries in 2019. So the aerospace industry, I don't know if you know, but 2020 wasn't its greatest year. And yeah, exactly, exactly. So we invest without debt and try to avoid it in every transaction. And so that. Gives us a lot of flexibility and to, you know, chart our own course in a variety of different macro environments and to think about reinvestment in a fundamentally different way.
And so again, we think of that as a strength of ours. But we didn't fully appreciate, you know, what it may have meant for that particular company. Entering into that market dynamic. So aerospace was down something like 45 percent that year. And our business was significantly down as well. But you know, compared to the competitive set, all of whom were heavily levered we were in a position to be a net acquirer.
And so for 2020 into 2021, we hired a bunch of people who were getting laid off or, you know, resized and in terms of their comp package at other places. And so we got a ton of strategic capability through talent acquisition. And we were also acquiring assets from firms that needed liquidity during that period.
And so for us, it meant that coming out of, you know, what was a short term suppression for the industry, we grew significantly, very much outsized the performance prior to 2020 and are continuing to compound on that. And so I think about it as, you know, kind of seizing the opportunity and making sure that you retain your maximum flexibility to perform in a market in which not everybody is confident in what their prospects are, especially in the near term.
Right. Right. And so we think about that in terms of. product introduction, diversification, all of those things. I think that, you know, coming into 24 you know, if you didn't exercise pricing power in the last couple of years, this is probably not the market where you're going to be able to do so.
Right. And so I think where people have been able to increase their margin in that way, I'm not sure that that's going to be sustainable going forward. So we're more interested in things that look like offering diversification, bundling. And thinking about, you know, ways to grow the funnel and that relates to making sure that you have the right people on board and empowering them to think about the business in ways that fundamentally add capacity and capability.
So that's kind of the path that we're on, but Packer kind of had a condensed timeline for that in a way that's proven to be pretty successful you know, kind of after that initial period. Yeah,

[00:33:15] Sean Mooney: I really love what you said there. And there's a couple things as I kind of think about what you just shared.
And it's one is, you know, good businesses need to be agile, right? And you got to be able to, you got to be able to go left and right and maintain that agility. You know throughout economic cycles and and then if you have but if you have that agility Then do something be action oriented like run towards the storm And so often in in world and life we see and I think others everyone sees this the the human nature that you're you're Your, your intuition is when tough times come is to circle the wagons, unpack it, wait it out and just like hunker down.
That's probably what 90 percent of people in businesses do. They wait out the storm, but the really good ones do what you all are advocating with your companies. They run towards the storm. They reframe risk as opportunity. They take action. And it doesn't mean that it's all like just running right into a tornado, but it's like, it's like.
No, it's

[00:34:13] Emily Holdman: a risk assessment. Right. I mean, we weren't doing crazy things. We were buying distressed companies in a way that, you know, compounded sort of the baggage we were being a lot of bringing along with assets, right? We looked for the assets and we tried to, to mine through those for where there may be good opportunities for us.
I think it's, you know, I think it's. An interesting market, right? Because there are a lot of companies that are heavily levered. And I think it, for those that are not, there is tremendous opportunity, but I think in terms of deals that are being done, it's unfortunate, right? Because if you've been around the block for a while, as you and I have, like, you know, that the market is not always up into the right.
We just had a really long bull market. And behaviorally, I think, you know, advisors as well as owners got too used to being able to. story every time. Right. And, and for us, like systemically healthy businesses that over a full cycle produce tremendous. Financial and, and growth opportunity are what we're looking for.
You don't have to prove to us that in the next 18 months you can grow by a hundred percent. If you can, that's great. But like, it's not the only way to tell the narrative of why you have a good company. And so, you know, in this market, I'm hoping that part of whatever this kind of stresses that, that the deal market is feeling at the moment translates into people being able to tell a story that is.
more true probably to reality of what they, what they can be over a full cycle instead of just focusing on like, what's the next thing, right. Because I think that there's, you're going to get a better investor match out of that hopefully. And I think that, you know, businesses can better reflect on, on what their true value is.
Yeah, I

[00:35:57] Sean Mooney: think that's, I think that's really excellent perspective and advice, Emily, one of the things I would love to kind of get your kind of perspective on, and in some ways, one of the, one of the great things that, you know, I've learned is, is I've, you know, I've learned every lesson three times, but it's like it finally, finally, as I, as I've found more grace and wisdom in my life, you know, I think as I was coming up, I realized like, you know, really successful people don't try to figure it out all on their own.
And they, they learn through others. They learn not only by the people they work with, but the wisdom that other people have taken the time to put paper, you know, pen on paper over time and, and, and really successful people. are, are more often than not voracious readers, and they share books amongst friends.
And that's what my friends do, and we were like, Hey, did you read this? And just, just this morning, I got like five emails from five of my friends, like, Hey, read this. And they're like, Oh, yeah, but read this. And it's almost like, like, who can flex more on what's the better book? Yeah. But so it's like, because they're all competitive, too.
Yeah, but I'd be, I'd be curious, what is maybe, you know, one of your favorite business or Personal books that you've read and maybe some of the takeaways

[00:37:09] Emily Holdman: from it. I think I told you earlier. I'm a nerd so I read a lot I think I'm something like 15, 000 pages into this year. So I'm definitely one of those people.
I'm not competitive about it I read a lot of fiction And so it's not purely just about you know, sort of professional advancement. I just think to your point there are a lot of ways to glean wisdom. And part of it is just, you know, having time to be quiet and contemplate. So for me, I think that the book that stuck with me most this year is a book called the book of Charlie.
Have you read it? No, I haven't. So it was written by a Washington Post columnist, and the premise of the book is that his kids had been asking him to write a children's book to pass along to grandkids around his wisdom. And he kept sitting and trying to write one, and I heard him speak not too long ago, and he said, you know, it turns out writing a children's book may be the hardest thing in the world.
And from a writer's perspective because, you know, you try, you're trying to synthesize something into something that a child wants to read and that's, that's tough, right? And so he said that I kept kind of coming to the resolution that like, I just didn't know what wisdom I personally was going to have to offer them.
And then one day he looked up and his neighbor was washing his girlfriend's car and his neighbor happened to be 104 years old. And he said, you know who I think probably has wisdom, that guy. And that was his neighbor, Charlie. And so Charlie lived to be 109 years old in Kansas city and was born, I believe in 1905.
And and so it's a rather short book. I think it's about 130 pages, but what the premise of it is, and I thought this was You know, applicable to thinking about parenting, to thinking about work and life in general, was that we are going through some sort of, you know, macro environment in which there's a significant amount of change, probably significantly more change than you and I have experienced in our adult lives.
And, As we're entering into that, and especially for this next generation that is growing up his thought was we, you need the wisdom of somebody who lived through that kind of radical change. And if you think about the, you know, first half of the 1900s, that's what was happening, right? The invention of the radio, the invention of television, World War II, you go through all of those experiences and you have to figure out how to survive.
How to develop a career, how to think about how you're going to live through all of that. And Charlie had pretty, pretty profound wisdom to offer in terms of both how he endured hardship and then also how he sort of seized various opportunities and how he kind of. paved his own way. And then ultimately, you know, kind of how you live a life of contentment when you're going to live that long.
And so for me, it's just been a book that I have a lot of people who are getting into Christmas gifts this year. And but it's one of those that just from a wisdom standpoint I think it, it has a lot to offer. And it's one of those that kind of, once you read it, it sticks with you. I

[00:40:23] Sean Mooney: can't, I can't wait to read it.
So I'm going to, I'm going

[00:40:26] Emily Holdman: to, it's really, it's, it's, it's one of those, like, I just, I I've shared it with a lot of people, I think, you know on a more professional level, right? Like I read lots of books about economics and supply chains and stuff like that. And I, I find them all incredibly informative.
But I often, like, I rarely find a book these days that I've. 100 percent agree with, right? And so mostly I used books to start conversations and kind of, you know, debate either in my own head with my colleagues or like with other people about, you know, how applicable or how universal the concepts are.
And where, you know, where there may be other things, but this one I have a hard time debating with.

[00:41:07] Sean Mooney: I love it. And it's it's, it's kind of reminds me. So there's another book by a Charlie that I wrote that I read this year. That's a similar children's book. And it's, it's called the boy, the mole, the fox and the horse.
Yes. Yes. It's great. It's so wonderful. I gave it to And I gave it to not only my kids, but I gave it to every member of our company this year. Oh, I love that. And it's such an announced part. We have, we used to have four books and now we have five books that every team member gets and that's one of them where it's just this great kind of story about life and journey.
Yeah, I

[00:41:41] Emily Holdman: have it. I have it on my shelf at home for

[00:41:44] Sean Mooney: certain. It's great. I'll be reading the book of the Book of Charlie though for sure. Probably in the next week. I have like probably like you, I have, I have about. 15 books on my side table of which I make, you know, like, you know, a quarter inch of progress at a time on each one before I get ADD, but eventually I'll get through them all.
Yep. Yep. I

[00:42:05] Emily Holdman: always have like my long read, my, at least one or two nonfiction reads, a podcast and you know, a couple of fiction books and it's just, yeah, it's, it's fun. I love it.

[00:42:16] Sean Mooney: Well, Emily, this has been a, you know, a, not only a delightful conversation, but a really informative one where I've learned all sorts of things I wish I knew before, which means it was a really good, good talk here.
So thank you so much for joining us.

[00:42:30] Emily Holdman: Absolutely. No, I just to end with, like, we're big on community building. And we think that, you know, one of the things. that private equity can benefit from is being a little less formal and a little more relational. So I appreciate you hosting this type of conversation.
And I think that to the extent that people want to connect my email is on our website. It's e at permanent equity. com. Happy to connect that way. I'm also an active Twitter user and LinkedIn user. So happy to connect on those formats as well. And then we do try to have offline events. So we actually just held Main Street Summit.
And this was the inaugural one. We had 1100 people all of whom are interested in small businesses. So it was a combination of operators, investors and people who are just enthusiastic about the space who all came to Columbia, Missouri for three days. And it was a blast. We had a ton of fun. And then we hold one that's investor focused in the spring called the capital camp.
So I just encourage people who are interested in connecting with us. Please reach out. Like we try to be friendly. We're Midwestern. So we try to be easy to get ahold of and we'll talk to. Pretty much anybody. So would love to connect with some of the people in your network. I love

[00:43:40] Sean Mooney: that and we'll be sure to include all of that in the episode notes for those who would like to Reach out to Emily and team and I truly also appreciate what you all are doing because I think one of the big opportunities in private equity is that the first word in private equity has always been private and slowly, but surely Thanks to work like like you all private equity is doing a much better job of, of being part of the world and not just relying necessarily that you know, discretion is a better part of valor.
It's okay to be out there in the world. So I love

[00:44:12] Emily Holdman: that. I'll take that compliment

[00:44:14] Sean Mooney: as well. So Emily, great conversation. Thanks so much.

[00:44:17] Emily Holdman: Yeah. Thanks.

Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.

BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.