For Business Owners

Clay Hunter (00:00):
What’s the most important thing for you may be very different than what’s the most important thing for
the next guy or gal who is looking to sell their business. It depends. Everybody’s different. Some are tired
and are looking for somebody who can completely take over and they can completely exit, and some want
to do it for another 20 or 30 years. So the answer is, it depends.

Heath Hunter (00:20):
If you can see yourself working with your future partners years from now and can get excited about that,
for me, that’s been the difference between folks looking back at selling their business and considering it a
success or failure.

Alex Kuhlman (00:37):
So who do you want to spend time with? Who do you see yourself being a great teammate through the
highs and also through the lows? Who do you think is going to treat your team with as much respect as
you treat them today?

Clay Hunter (00:50):
There’s certainly some common themes that we hear time and time again. There’s, of course, you’re going
to want to find somebody who values your business appropriately. So valuation is important, and there
are terms that matter in an acquisition or an investment scenario that should be very, very important to
you. But candidly, if you found some right people, some possibly right people, most of those people who
know what they’re doing, there’s going to be a very small band of outcomes on those things. They’re very
important, but they’re not really usually what differentiates partners. So I think you need to figure out
what matters to you. I can tell you what matters to us, and generally what happens is people who are like-
minded find themselves. So if I were selling my business, I’d be thinking about who was going to be the
best steward of that business forever, essentially, who was going to help me grow it, who was going to
take care of my people?

(01:54):
And it’s not really just take care of my people, that’s not what I’d be thinking about. It’s who’s going to
help them grow and achieve their potential and help them, whether it’s professionally or personally, sort
of get to where they want to go in life. Who’s going to be easy to deal with? That’s probably not a popular
answer, but who is just not going to be a royal pain in the rear end? That would be fairly high on my list.
So do they know what they’re doing from a transactional perspective? Are they going to give me a fair
value? Are all the terms going to be sort of market, but more importantly, what comes after the
transaction and how are they going to be to work with is what I’d be thinking about.

Heath Hunter (00:00):
Broadview, we have the ability to make investments that have a longer-term payoff than three or four or
five years. We have the ability to address issues in a more thoughtful, methodical way than potentially our
private equity peers would. Because just from a perspective of time, we typically get into situations where
we see at least seven to 10 years of things to do and the ability to partner with the business.

Clay Hunter (00:31):
We’ve not promised anybody that we’re going to be just this in such that we have to fit an investment or a
structure into a box so we don’t have to fit into a particular box other than the business owner’s box. And
that’s what we’re trying to do. So flexible is about how we structure a deal, how we work with people,
how we sequence things. It’s literally just that. It’s the ability to figure out what matters to that business
owner or that team or that business and do that.

Alex Kuhlman (00:00):
So what’s in the fine print, particularly as it relates to patient or flexible capital? I would say that we’re all
ambitious around here and we do move with a sense of urgency. There’s a misconception that patient or
flexible isn’t rigorous and that’s just not us. So there’s no shot clock when we close a transaction, and
that’s very important to know. We’re deep believers in compounding capital. That doesn’t mean we’ll
necessarily hold the business forever. Those are generally outlier-type results. But we do believe in the
management teams that we back that they do have the capacity to grow for years and years to come.

Clay Hunter (00:36):
Just because we’ve got capital for longer, a longer duration of capital and don’t have to operate like a
traditional private equity firm does, doesn’t mean one, it doesn’t mean that we don’t have any of the
capabilities that a private equity firm has with governance and strategy and acquisitions and capital and
operational help. We have all of that stuff too, but sometimes when you have all that and you’re trying to
differentiate, we use this term “patient capital” and that’s just patience. It’s not really the right term for us.
We have every bit as much urgency as top performers and private equity. So fine print, we want to win
and we are not that happy if we’re just sitting around waiting for it to come. We’re sort of action-oriented.
So I’d say that’s fine print. If you thought you were getting somebody that wasn’t going to be around,
that’s really not us. We’re around and we want to help and we are helping.

(01:39):
The cadence of discussions that we have and the interactions that we have with our businesses is
reasonably frequent. There’s some fine print there. So some people are write a check, have a quarterly
board meeting, have a great steak dinner. Call us every now and then, and that’s not really us. We want to
be more involved in helping you build your business and grow your business. So there’s, I’ll use a little
nasty word, reporting. There’s reporting so that we know what’s going on well enough to be able to offer
you all of our help and pattern recognition. If we don’t know what’s going on, it’s very difficult for us to
be as helpful to you as we can possibly be. So there’s stuff that we need to know. Sometimes people don’t
love that. The diligence process kind of sucks. There’s just no way around that. It’s for us to be good
fiduciaries for our investors and families and we need to know a certain amount of information about your
business. And sometimes that’s uncomfortable. Sometimes it takes a little long, almost a hundred percent
of the time we find people are wondering why we keep asking questions. So we think we’re really good at
knowing what matters and what doesn’t. And so we think that we run those processes in a less onerous
way than most. But I would never tell an owner that it’s an amazing, they’re going to want to do it again.
It’s not that fun of a process.

(03:11):
I don’t know if this is fine print or not, but it’s something that I think sometimes gets lost in translation or
we don’t adequately cover it. You’ve heard a lot probably about, we’re not private equity firm, but we
have lots of, all of the same capabilities for the most part, nor are we a family office, but we’ve got a type
of capital that’s more similar to that in terms of long duration. It’s easiest for people that don’t understand
us deeply to sort of put us into this family office bucket. And some of the family office peers that we
might compete with, part of their differentiation is about keeping businesses forever. So they’ll go to
business owners or management teams and say, part of our advantage is that we intend to keep your
business forever and that lets us act differently. And that’s true, and that’s a way to differentiate.

(04:07):
We’re not saying exactly that. What we’re saying is we have a structure that allows us to keep your
business forever. And man, I hope this particular business has the capabilities to generate great returns on
invested capital over a very long period of time. And if that’s the case, we’re keeping your business for a
really long time. Life gets great, but not all businesses have that capability. And generally businesses have
found, there’s sort of a life cycle to who should be the steward of a kind of business at any given time or size of business. And so we may not be the best steward for your business in 15 years or 25 years. So I
want to be clear when I’m with business owners and I say, it’s not that we will keep your business forever.
It’s that we could, and it’s this really, really important nuance around optionality for if or when we might
sell.

(05:09):
It’s the optionality, not really how long we’re going to keep it that matters. So we might sell your business,
but it’s going to be when it’s right for the business, the people in your business. It’s not about, we don’t
need to do that to stay in business ourselves. And that’s a distinction relative to a private equity firm. They
need to sell your businesses. It’s part of the structure. They need to sell your business to raise the next
fund because we don’t have that constraint, if we do it, and we may very well do it (sell the business), it’s
about what’s right for the business, not about keeping us in business.

Heath Hunter (00:00):
So you’ve heard us talk about the concept of flexible capital, which allows us to hold investments for a
longer period of time than say, a private equity firm might. But it also begs the question, what if your time
horizon doesn’t align with ours? Well, at Broadview, we’ve worked very hard to build in mechanisms
where you, as a business owner today, who invest alongside us in the business that you’ve built for years,
can exit without us necessarily having to sell your company.

Alex Kuhlman (00:32):
So this is an area where we have a slight edge to private equity in that we structure liquidity options based
on the individual, not at the company level, where generally you receive your liquidity event upon the exit
of your business.

Davis Malone (00:00):
In terms of how we would grow your business, we’re there to be a partner day to day. That doesn’t mean
that we’re going to run your business day-to-day decision to decision, but we view ourselves more as a
sounding board to help you grow your business over time.

Alex Kuhlman (00:11):
I think of tactical items like upgrading your financial and accounting processes or technology. I think a lot
about too the information gathering and the data and the insights that allow you to better manage your
business. Those are things we’re absolutely able and willing to help out on.

Clay Hunter (00:27):
Do you need to develop your team? Do you know your competitors are using technology in certain ways
and you just kind of can’t quite figure it out or it’s taken too long? Do you want to do acquisitions, but you
know you’re supposed to say that, but you’ve never done them yourself as a team, or you wonder how
you’ll take on an acquisition and run your business at the same time? Do you need upgrading in different
areas that we can help in? If there are several things that we can help over several years, get you from
good to great, that’s what gets us going.

Davis Malone (01:00):
Where we believe we differentiate is from a strategy and talent development standpoint. When
developing strategy with a business, we work hand in hand with the team to make sure that we’re
developing the right long-term strategy and prioritizing the steps it takes to ge there to make it as seamless
as possible to get from point A to point B. On talent development, that’s more of a longer-term type of
strategy. We know it takes a lot of time. It’s really hard to quantify the true impact, but it does impact the
business over the long term to create a sustainable business going forward.

Alex Kuhlman (01:30):

That’s where we’ll really come up with the strategic planning and the vision for the business over thecourse of one year, three years, five years, and 10 years. That’s where we’re really developing your NorthStar. And it’s funny, we’re dealing with management teams who have thought about strategic ideas andinitiatives for years, and so this is an opportunity for them to come together and voice their opinions andthose ideas. That’s where we’ll also come together, bring our ideas that we came up with during diligenceand just being in the industry, and we’ll prioritize, which is such an important aspect of the strategicplanning process because so many of the businesses we’re dealing with have so many opportunities infront of them.

Heath Hunter (00:00):
A question we get a lot is, how is my team going to be impacted if we partner with Broadview or anybody
for that matter? And I can only speak from our perspective, but from the Broadview perspective, we are
looking to partner with talented management teams and develop those management teams.

Jason Logsdon (00:19):
There are really three components that we typically find ourselves partnering with businesses in. The first
is talent management, strategic talent management, and development. The second is performance
management, and the third is talent acquisition and recruitment. The most important thing to point out is
that we believe every business is different, every strategy is different, and so we customize the approach
to each of the businesses that we partner with. It’s not a one-size-fits-all. There’s an àla carte menu. We
bring our experience, we bring our expertise, but we deeply appreciate and understand that the leadership
of the business has insight into how best affect the talent platform of their business. Every business I’ve
ever seen in my life, so let’s say 99% of the businesses in the world, their most important asset is their
talent and their people. And we want to allow businesses that aren’t Fortune 500 businesses to have access
to Fortune 500-type talent development tools. And so we work with leadership teams of a business
through our processes and through our systems to identify the roles and the people that are most critical to
develop and grow in our business. So that is a key part of the process in the first couple of years of
owning a business. And then we work with that team to allocate the right resources to accelerate the
development of those roles and those people.

Clay Hunter (00:00):
No desire, and it’s not just no desire, we think it’s absolutely the wrong thing to do, to try to “broadview-
ize?” That’s a word I’ve never used before. Broadview-ize. A particular business that we invest in or
acquire. I’ve seen it historically in different places, and it never seems to work, and that’s fundamentally
what we’re investing in is the business that you built, and a large part of that is the culture that you and
your team have built.

Jason Logsdon (00:27):
We try to strike a balance of maintaining the culture and the businesses that we partner with while helping
and assisting the leadership team and tweaking any cultural adjustments that might need to be made. The
key component of that is seeking to understand first, and so seeking to understand a culture, spending
time in the culture, understanding not just through due diligence, but in the early years of partnering with
the company, what really drives the business, understand the history, understand the key cultural
foundations of the business, and then providing candid input to the management team and leadership team
with respect to what we see. At the end of the day, they run their business. At the end of the day, we can’t
impact their culture because we’re not there every day. We aren’t meant to be there every day. We believe
that leaders of the business develop and own that culture, and that trickles down throughout the entire
organization.

Davis Malone (00:00):
We bring the tools and sophistication of a private equity firm, but with the family office flexibility to
make the right decisions for your business over the long term and invest in longer-term growth strategies
like talent development.

Heath Hunter (00:12):
So as an example, if you look at our team, we look like a pretty solid middle market private equity team.
We’ve got a strong track record and we’ve got a team full of hungry individuals that have a lot of
investing experience. But on the flip side, we’ve got all the benefits of a family office, so no
predetermined hold period. And ultimately, we have flexibility to structure transactions to get at all of the
goals of everybody involved, not just us.

Clay Hunter (00:40):
We’re not a traditional private equity firm, but we have all of the good capabilities of a top tier private
equity firm, we believe. Nor are we a family office, but we have really the one advantage that a family
office has, which is very long duration capital. We sort of sit in between, it’s optionality. It’s the option to
keep a business forever. That is really important. It is not the intent to keep one forever, but having an
option to do that means that if and when we might sell your business—this is the fine print—it is not
about us. It is not about keeping us in business. It is about what’s right for this business and this industry
and this team.

Clay Hunter (00:00):
What hasn’t worked well in past acquisitions or past investments, made tons of mistakes, and so a few
things come to mind: Moving too slow. Generally, I’ve found when you start to feel like something’s not
right or something should be going differently, you’re probably already a little too late. Not being
completely, particularly earlier in my career, not being vulnerable enough to admit I didn’t know
something. Imagine us in a room with our teams and they’re looking to us for insights on something that
they’re struggling with, and we don’t have all those answers, and so being afraid to not say, “I don’t
know,” and ended up in sort of the wrong, pursuing the wrong solution, that really wasn’t a solution. Not
appreciating how much, I don’t want to use the “culture” word, but people who operate differently.

(01:10):
A complimentary acquisition for a platform, and how important it is to really think through whether these
two groups of people are going to work together well. Do they have different processes? Do they have
different priorities? Those are some things that have been contributors to things not going unbelievably
well. Not having good data. I learned pretty early that honestly, if you get a bunch of smart people in a
room who are all at least generally aligned on what the goal is, and you present them with the right set of
information to help sort through an issue, people generally sort of align on not just an answer, but the best
answer. But you can’t do that if you don’t have the right set of information. And so not being more
forceful and wanting businesses to really have great sets of data/information, those are a few things that
come to mind on things that have been contributors to stuff not going that well.