Friends for 20 years, Charlie Gifford, the co-founder of New Heritage Capital, and Andy Greenberg, the CEO of Greenberg Variations Capital LLC, teamed up earlier this year to host Middle Market Musings, a podcast series dedicated to the people and ideas of the middle market. Mergers & Acquisitions invited Gifford and Greenberg to share what they’ve learned from the podcast so far.
Andy Greenberg: Charlie, after getting to converse with some of the leaders and innovators in our industry, it’s a nice change of pace to have a dialogue with you. You were thinking of a podcast for a few years before we launched this thing. What gave you the idea in the first place?
Charlie Gifford: The idea was borne out of an interest in profiling the numerous friends and acquaintances built over the past 20 years. The podcasting medium has become more widely accepted, and it’s a nice way to communicate to many, as opposed to just a few.
Greenberg: It has been. I remember maybe four years ago telling you it would be good for you to do with someone else. Howard had Robin. The one Car Talk guy had the other Car Talk guy. Establish a relationship that would be the constant.
Gifford: You convinced me that developing this together as opposed to doing it alone would be more fun and certainly a lighter lift, and it has been – on both accounts. And to be clear, you are most definitely Robin to my Howard. Not the other way around.
We have done 12 or so podcasts. What’s your key takeaway?
Greenberg: Our discussions have crystallized how specialized middle market M&A is becoming on both sides of the ball. We choose to interview people based on a rough sense of their achievement, but it turns out a common theme is the extent to which their firms are achieving differentiation and moving away from a generalist model.
Gifford: Yes. So true. Our conversation with Peter Kaufman at the Gordian Group comes to mind in that regard. Peter and his colleagues focus on distressed investment banking and have served the middle market for over two decades. Their success is attributable to the fact that they are laser focused on a portion of the market that is underserved by most investment banks. That specialization has served them well.
Greenberg: It also marks your business and mine. New Heritage Capital has made its mark focusing on non-controlling investments in support of owner operators. Greenberg Variations Capital works with business owners who made their decision to pursue a transaction with a single or small group of counterparties. But the quest for differentiation runs in other areas. In a long-term environment of elevated deal pricing, achieving business improvements has gone from an acquirer talking point to an imperative. We both remember the days when a PE group would meet an operating partner in the parking lot before the management meeting. That doesn’t work anymore. So we had a great conversation with Glenn Oken about the elevation of operating principals to an equal footing with deal principals at Mangrove Equity Partners. In our latest podcast, Lauren Mulholland talks about the degree of expertise MiddleGround Capital brings to an industry like automotive as a result of her partners both coming out of the operations side.
Because your firm sets itself apart by style of investing, you can cast a wider net in terms of industry. What has struck you in our discussions about the current state of industry expertise?
Gifford: Like you, I am steeped in the belief of “to the specialist goes the spoils.” Efficient markets require expertise and specialization to compete. Much more so than when we first started our respective careers – to note…you started your career decades before I did. But the discussions that we have enjoyed with our guests are also a reminder that size alone doesn’t eliminate a particular firm’s ability to compete. Phil Colaco of Deloitte Corporate Finance gave us insight into how a large multi-national firm scales by hiring talented people and getting them to buy in to a pre-existing culture. In the same vein, Pam Hendrickson traced The Riverside Company’s evolution from middle-market buyout shop to $11 billion multi-style asset manager without a loss of focus.
Greenberg: It has been rewarding to spotlight breaking industry trends, but some things are eternal. One of the most riveting moments in the podcast was in the first episode, when Nixon Peabody healthcare lawyer Michele Masucci talked about how her clients met the challenge of operating in New York during the early days of the pandemic. I know we share a belief that private company M&A is an honorable profession that has caused way more social good than harm, and that the residue of a successful career isn’t the money you make, or the deal that gets the occasional acclaim, but the people you meet who make a difference.
Gifford: Well, despite the barbs thrown your way, I have enjoyed creating this with you. Here’s to continuing to create new, informative, and fun content every two weeks or so together.
Greenberg: Any regular listener would recognize the tone of this exchange immediately. Doing this with you was exactly as pleasurable as doing the podcast.