Andy Levison - Southfield Capital

0:09Andy Levison: Welcome to Northstar's Private Equity Fast Pitch. And thank you for joining us on this journey into the high-stakes world of private equity, where bold ideas, big capital, and brilliant minds collide. In each episode, we sit down with the trailblazers shaping the industry. key leaders, CEOs, founding partners, and visionaries from top-tier private equity firms, influential limited partners, and investment banking powerhouses. These aren't just conversations. They're front row seats into the strategies, insights, and personal stories from the thought leaders driving the deals that define markets and transform businesses.

0:57Andy Levison: Whether you're a seasoned investor, an aspiring young professional, or just curious about the forces moving the global economy, you're in the right place. So get ready to dive into the fast-paced, high-impact world of private equity with your host, the podfather of private equity, Jeff Henningsen. Welcome back to Private Equity Fast Pitch. I'm your host, Jeff Henningsen. Today, I'm joined by someone whose career has mirrored the evolution of modern private equity. Andy Leveson is the founder and managing partner of Southfield Capital. But long before founding the firm in 2002, he was helping shape the leveraged finance market itself.

1:40His career has taken him from Manufacturers Hanover Trust to Drexel Burnham Lambert during the birth of the leveraged buyout era to leading leveraged finance at Donaldson Lufkin Generette before launching what has become one of the premier lower-middle market private equity firms focused on founder-led business services companies. Over four decades, Andy has watched the industry evolve from financial engineering and high-yield finance into today's emphasis on operational excellence, technology, AI, and long-term partnerships with founders. In today's conversation, we discuss how private equity has changed over the years, why Southfield has remained disciplined in its investment strategy, what Andy looks for in founders and management teams, and the leadership principles that have shaped both his firm and his career.

2:29Now we'll get this episode kicked off with Andy Levison. Andy, I'm really looking forward to this podcast today. I've rarely had somebody who has migrated through four decades of the private equity industry. Let's start with the beginning of your career and we'll migrate to when you started Southfield. Thank you, Jeff. Great meeting you. Yeah, it's daunting to hear four decades in private equity. It's a long time. But yeah, I started my career two weeks after I graduated college in 1978, going to work at a big commercial bank called Manufacturer's Hanover Trust Company, which was known as a credit intensive bank for one of the big lenders.

3:16And I thought it would be a great place to go work. I really didn't know what I wanted to do, but I thought going to work at a bank, learning how to lend money to companies and actually get it paid back and getting exposed to all different industries and types of companies would be the best first step in figuring out what I want to do for my career. So Manufacturer's Hanover, as it was called back then, Manihani, amazing place. This was really at the birth of private equity. We didn't call private equity, it was leveraged buyouts. And meeting all types of financial entrepreneurs, very few people had funds.

3:56We were providing most of the capital. Basically, a balance sheet would look like senior debt, seller paper, and a sliver of equity from the financial sponsor, who basically charged a fee equal to their equity. So they had no money yet, oftentimes. So it's an interesting time to be in that space. I loved it. We did all types of business with all types of people. and I guess sort of a number into the early 80s when we first started really seeing private equity funds. They were small, but private equity funds did early deals with KKR and others and saw opportunity to move up in my career by meeting investment bankers in conference rooms on deals and finding out that they were making 10 to 20 times what I made a year and provided no capital to the situation.

4:56And really, I didn't totally understand what they did, but I knew that's where I wanted to go. And interviewed around, didn't really make a lot of progress. No one was interested in commercial banks. No one was interested in a guy who didn't have his MBA. But we had financed a few Drexel deals, and I got a phone call unsolicited from a senior Drexel person who said, do you want to come work here? We need credit people. That's what we do. And it was pretty exciting. Go out to Beverly Hills, spend time with Mike Milken and his team out there. It's a whole nother bunch of stories. But ultimately, I decided this is the place I want to be, but I'm not sure I want to be based in Beverly Hills.

5:41And he connected me on the phone with his New York colleague, a guy named Leon Black, who I met with, and he hired me basically on the spot. And that was my start at Drexel. And one of the many great things about working at Drexel, it was really learning the approach of how do you get to yes, solution-based financing. Anybody can do financial analysis and say, this doesn't work, forget it. Let's do something else. And it really, the art was to dig into those financials, see the negatives. Okay, how can we mitigate those and create a financing that makes sense? And I'll say Mike Milken was the goat of being able to sort through that and successfully execute.

6:27So that was a great place. Again, lots of exposure. I had free reign to go after any and anything, everything I wanted to go after to do. And once you got signed off, there was never a doubt that our high yield bond department, Mike, could execute. And I said many times before, it was literally like everybody else had conventional arms and we had a nuclear weapon. Then the firm ran into some legal issues. Mike had to step aside in the business. And in 89, one of my former colleagues at Drexel had gone to DLJ. They were trying to build a leverage finance business, et cetera. And he said, this is a place to come to.

7:07I met with them and I thought it was a phenomenal opportunity. They had the mechanics in place to execute unleveraged finance, and they had no clients. And that, to me, was just a perfect situation for me. So I went in there as head of leveraged finance, and I'll give them credit for something else most people might not remember, but I started in May of 89. In February of 1990, Drexel went bankrupt. And we had prepped for that and identified sort of our top 10 people we wanted to hire. And a lot of investment banks wouldn't touch any extra people at that point. And we hired, brought in, and our number one choice, we got them.

7:51That was a guy named Ken Mollis, who had an incredible career and founded Mollis & Company. and I'm actually leaving tomorrow morning for a MOLIS conference in Aspen with the CEO of one of our portfolio companies. But the idea that DLJ had the conviction to invest capital in 1990 for high-yield people in calendar year 1990, there was not a single high-yield underwriting executed that year. The market had shut down a combination of Russia issues and Drexel going bankrupt, just shut it down. So I was pretty interesting. And we had a great, great run at DLJ building leverage finance. We used to invest off our balance sheet in investment opportunities.

8:37We raised merchant banking funds to do that investing. And we built the biggest merchant banking. We were number one at leverage finance. We went public. And that was a point in time where I started not being happy with the work. I didn't love managing 350 investment bankers and really wanted to leave, but we were in the process actually of selling the business. So I hung in there at the request of the senior people until the deal closed, and that was selling the business to Credit Suisse. And I made a commitment, and I would recommend this to anyone who's in the position, we all through our lives go one job to the next job to the next job.

9:22And I said, I'm taking at least six months off. I don't care what offer comes in. I really got to separate, step away from all this to figure out what I want to do. And ultimately I came back to, I want to get involved in the lower middle market. I felt that the going in purchase price multiples were not volatile at all. It was a very tight range, mid single digit multiples. and that these companies, you could create a lot of value. And it's a lot easier to double or triple a$5 million EBITDA business than it is a$50 million EBITDA business. So we saw a pathway to do that. Started the business in 2002.

10:06I'm very proud to say, actually, my very first hire, a young associate, is a partner here at the firm today. It's been here almost its entire career. Our partners here, we've got people, I think the average length of time is of 12 years. So we built an environment, a culture that people not only enjoy, but are supported and can be successful. And going back to my investment banking days, and I'll mention it now, I'm not sure if it's appropriate or not, but my very first rule was no assholes. and that includes not only fellow employees, that includes people we're going to partner with on deals, founders of businesses, et cetera, our service providers.

10:50We want to make really work with people we respect, we like, and we look forward to working with. And not that every time the phone rings, you go, oh God, I hope it's not that person. And it's done us very well. I guess the other piece I would add on our side was we started small and hired a few people that I knew. We always had an approach, another part of our culture, is to constantly look at how can we do things better. The old way we've done it does not mean it's the best way. And so we're always looking, how do we do things from the very beginning, faster, smarter, better? And when we first started, our value creation, sadly, and maybe back then that was pretty common, just consisted of deal guys.

11:37Oh, it's a small business. It's raw. We got to put it in a new counting system. We got to put in an ERP and a CRM. That's pretty much what our value creation was. But that led to a lot of successful deals. We're paying low multiples, taking$5 million businesses, EBITDA to 15. By definition, you get a higher multiple, you exit, everybody's happy. The other part that was important from day one is we wanted to be the first institutional capital, ergo founder-focused. The concept originally was like getting to companies that are basically untouched. They have not had someone else's thought about how it should be structured, value creation, whatever.

12:22However, we're looking for businesses that have unique business models, essentially moats, that we have the ability through organic and acquisition to take them from a small, successful business to a regional leader to a national leader. Let's dive into a little bit more of the specifics of where you are today. And if you can give a framing around the types of businesses, I know your business services, but within business services, size, profile, what area of services, if there's any specifics in that area for us. So today, I mean, this has evolved and we'll still do$5 million EBITDA businesses, but we're doing more in the sort of 8 to 15 million of EBITDA, I'd say, as a platform, even a bit larger.

13:08What we like are founder-owned businesses. That hasn't changed. What we like is businesses that we call non-discretionary business services. So this is a business service a company needs, regardless of the financial performance of the company, regardless of the financial environment. If their clients are open for business, they must have this business service. And that's a broad range of things. And I would add, by definition, that means it's contracted recurring revenue business. And you become a critical partner to those companies. Unless you really screw it up, your customer retention levels are high, churn is low.

13:53It's all those pieces. And I can give really pretty amazing examples of that. Where a business we bought in 05, sold it in 10. We bought it again in 25. Those core clients back in 05 were still with them. Now, they were much bigger. But it was pretty amazing to see how that worked. So that's really what we're looking for. Those things, for instance, is the largest independent manager of material handling equipment fleets. Basically, forklift fleets. critical part of their business that is always poorly managed by large manufacturing companies. And again, every one of these deals, it's like a story unto itself.

14:36And it continues today. And we sold it at 11 million of EBITDA. We bought it again at 20, which is not something you normally do because it had a couple of PE owners in between, but the founders were still there. and it's actually a great story. Something happened with the parent company and they decided to sell this business off and they had some PE interest and they go to the old founders who were still there and say, what do you want to do? We have an opportunity to sell the PE firm. And they go, we'd love to sell it to a PE firm as long as it's Southfield Capital. We'd stayed close to them as part of our MO.

15:12Both of the founders invest in our funds, play golf with them once a year, whatever it is to maintain the relationship with our founders, it's really important. Because our founder network is one of our greatest selling tools to a new founder. I was going to ask you about that as far as how do you build those relationships and find new opportunities. I know a lot of e-firms are talking to a lot of investment bankers, but the smaller$5 to$15 million EBITDA companies a lot of times are below that focus for a lot of investment banks. They are. And that's the whole thing, again, that we've been doing it now so long.

15:48We have an incredible network. I'd say on our platform, 60 % of our platforms are proprietary, which means no real sale process. It could have a broker who just calls a couple of people they know and all they care about, not as necessarily as the highest price, but who will close if they say they'll close because that's how they get paid. but that's a big part of where we source is through that sort of broker network, single shingle. It could be one individual or a few. They might do two deals a year. You've worked with them in the past. You've treated them respectfully. You've always delivered what you said delivered and tell them the truth if it's negative upfront.

16:35And that leads to being, I hate to say, a favored buyer, but it helps a lot. I always used to laugh because I feel like every management team we've gotten to meet founders, we became their favorite buyer, but we probably only won 40 % or 30%, whatever. Doesn't mean you're getting the deal. And maybe they're telling it to everyone. Who knows? I don't know. I think they're probably pretty honest if they've had you as an owner. Has the concept of focusing on reoccurring revenue, business services, businesses, Was that part of your foundation? I'd say it was a part of it. It wasn't, that was our focus.

17:14It was a part of it. Being non-capital intensive was a part of our original focus. You like generating a lot of free cash flow, paying out debt back in the day, and that's helping to de-risk a situation. But I'll say as we evolved, we've realized, and well, I've jumped to today, but we realized we can't really continue the way we're doing and just, oh, we're going to buy companies for five times, sell for eight times, double it, and that's a great return. And then value creation became not just, oh, almost an afterthought, but no, this is critical to what we do. We actually hired our first value creation leader back in 14, and he helped us get to the next level, creating and developing a network, game plan, et cetera, way beyond what we were doing before.

18:06And that then led, I'd say, six years ago, determining we need to be the technology leader in value creation in the lower middle market. And how do we do that? And look, our first thought on that was it's to drive returns. And the second part of it is in the lower middle market, there's not really many doing that. And that's what led us to, we met Bob Root probably five-ish years ago. We couldn't have designed a better leader, a senior executive at Microsoft at the intersection of operations, finance, and technology. His last job at Microsoft was leading their AI effort. Originally, the project was called Graph.

18:58He was a leader of that. than when they were ready to release it to the public. The name became Co-Pilot, and obviously it's been very successful, and Bob was the leader of that. There are a million AI experts, but ones who are practical, know how to apply it, know how to do it in a way that on a cost basis, et cetera, that makes sense to a company. Bob is the guy. And so we met Bob like five years ago at a young age, 45, and decided to retire from Microsoft, done well, was married, wife pregnant with twins. And he was like, for the first time I'm having kids, I'm stepping away. I want to be home for the first year.

19:40And that's right around a little before, but right around when I met him. It's funny how things that you'd never done before attract you. So for Bob, big company guy before that, who's at P &G is fascinated about what we do with these small raw companies. It's an interesting, God, if I could have a company, I'm used to making a$2 billion acquisition. We got to tear apart what they've already done and then rebuild it. You can start this from scratch. That's exciting. And so he came on board to be an advisor, a board member for a few of our companies for him to test it out, see if he liked it. For us to test out Bob in a way, the only question I ever had with Bob was just, can he relate to our small founder types?

20:23He's awesome at it, by the way. And so then he came on full time. And he was a game changer in the network and the assets that he brought to bear with us and unique relationships. Part of what we do, the first thing you have to do is clean up their data and organize it to be able to effectively use any technology or AI when you get to that point. And so a guy who worked for him for years, who was the head of FP &A at Microsoft, left Microsoft and formed a data cleaning organizing business called Trujility. And Bob is very close to him, of course. And this guy's business is focused on massive companies.

21:05And so Bob was able to work out an arrangement where we're essentially the only PE firm that they have as a client. And we're doing small stuff. So bringing that to bear and early on, we'd be on Zoom calls, Bob's in Seattle, we're at Greenwich, we have a guy in Louisville, Kentucky. And he'd be like, guys, you're reading a lot of hype about AI. Don't pay attention to it. Most of it's nonsense. I'm all over this out here. And when I find the right opportunity, I'm going to raise my hand and we're going to go. And a year or two later, raises his hands, contextual. Founded at that time, still a quasi startup.

21:43but it was very early stage. I had two clients that I'd ever had. The founders, amazing, their background, pretty extraordinary. The confidence that we had in what they were building was high. So we brought them on first to work with a couple of our platforms. And what their business is, it is an AI consulting orchestration business. There's no change in AI that hurts their business. The more AI that's developed and made better, whether it's Claude or Anthropic or Chet, whoever, or wherever it comes in built-in AI and software, they utilize it and orchestrate it on the company's platform to deliver them the meaningful information to make real business decisions.

22:31And ultimately, it leads to new revenue opportunities. Initially, you get cost savings. And the ROI on that is probably about 5x within six months. It's very quick. And then that helps leading to growth. And the interesting part also is the company, they build this for the company. The client owns the data, the models, the workflows. So they own their AI. This isn't something that can be, hey, we're going to bump the price X percent or take it away. They own it. and what we do is maintain it for them once it's in place and continue to expand it and grow it. So it's had huge success in eight portfolio companies and now four outside companies.

23:17And we liked it so much, we bought it. So it's part of Southfield. It's in one of our funds. It's funny, it's not a Southfield deal, right? Startup, minimal revenue, negative EBITDA. And so we were thinking, hey, we'll just buy this ourselves. But let's bring it to our LPAC and say, here's what we're doing. We want their blessing. We're buying it. We presented it. We had the founder, the CEO, Andrew Brooks, present. And they're basically like, oh, no, you're buying that in the fund that this LPAC is for. You're not keeping it to yourself. So it was pretty funny. And we said, no problem. We'll do that.

23:56But we need to be able to put up a disproportionate amount of GP capital. If our fund has 5 % of the fund is GP capital, and this particular one, we want to put in more. They agreed. And so it's growing and progressing significantly. One of the things we never expected is it's become a huge selling point with founders. That meaning that we meet with them for the first time and we talk about, we bought this company. It means so much. Here's the experience that we've had. every one of these people, and I'll dare say even the big PE firms are still trying to figure out what they're going to do with AI.

24:34But every one of these people are like, we know we're supposed to do something. We want to work with you. So it's become a real differentiator in winning deals. So it's pretty exciting. Let's talk about that in the sense of one of your strategies is you buy the platform and then you buy and build on that platform. So once you have all these systems in place, I would expect it makes those acquisitions very accretive. Accretive and efficient. Literally, when we first started working with Contextual, one of our platforms, which we actually recently sold, the fundamental starts with the financial systems, et cetera, invoicing, AP, A, or whatever.

25:18That's the easy, low-hanging fruit. The interesting part about that, of course, it gets efficiencies, but it's also a way for the founder and the management team to see, oh my God, this is amazing. Where else can we use this? Where at first they're sort of like, well, we don't know how that works. But yes, with acquisitions, that's a great question. On this particular portfolio company, we recently sold, we made probably 15 add-on acquisitions. It would take us six months to integrate the financial systems accurately in the right way. Once Contextual got involved and we focused on that out of the box, we could integrate the financial systems in three days.

26:03That's crazy to be able to do that. And yeah, it helps with growth, efficiency, everything, everything. Look, I get pretty excited about this stuff, pretty amped up, but feel really good about it. I had one of my friends who is a partner at one of the biggest PE firms. And he went and left and started his own business. And he's got a PE firm. And he sends me an email. I got to talk to you about an exciting technological thing and whatever. And I go, oh, great. Let's talk. He goes, yeah, let me explain it to you. And he had some guy on the phone. And here's what we can do. And if we do this together, then if you let us buy your company, here's what we can do.

26:42And so I started asking the guy questions. and then my friend was like wait why are you so knowledgeable in this I said we bought a firm called contextual here's the website take a look at it and they're looking at it while we're talking and then they finish and they go okay yeah you're not going to need us we appreciate it you know Levison you're a pain in the ass you're a step ahead of us or whatever and we've actually talked to them since about helping them, what they're doing. Like they hired a single guy who worked at a big tech firm, I guess no different than Bob, but not Bob. And it just wasn't even close to being applicable to the lower middle market and something you can engage and make happen quickly at cost efficient basis.

27:30Here's the other thing that I guess to understand, unlike 90 % of tech firms, their view, when they get hired to go in, they go to the company and they sit side by side with people in the payables room and see what their day is and work with them and talk to them about what's the bottleneck? What bugs the hell out of you? What slows you down? And they do that and they'll spend a week at the company to really figure out here's where they need help and not just try to put in a blanket solution before understanding exactly what the problems are. And now that might be available for mega companies.

28:08I'm not even sure. But lower middle market companies, no chance. And their initial spend is like 200 grand, 250. Very reasonable. And again, the payback is quick and phenomenal. And that's what's get the buy-in. So let's transition to the human side of your businesses, because I think it takes a special leader to lean into what you're talking about, having third parties come into your business. You've just bought my company and I'm excited, but also probably a little reticent to let all this stuff start happening to a company that I'm so close to. When you're evaluating a new platform management team that you're about to buy, how do you decide that they're the right DNA, right type of personality to run the book that you're running?

28:58That's an mainstream one. And first off, I guess maybe I should add, so we've now got as one of the critical leaders here is Bob Root on the technology value creation transformation side. We also have a gentleman named Vince Tyree. Vince, who I met almost 25 years ago, very unique background, got introduced to him by a friend in the industry as an operator who is different and unique and loved working on complex problems and difficult situations and how do you resolve them at the highest level. Usually brought in as an interim or a CEO to fix something. He had a company he founded and then bought together with Bain.

29:47So he worked with a private equity firm. He had great background on that. And the deal that we originally got introduced on, we didn't end up doing. I mean, he wasn't working there, but then we started working together. So he's been a part of Southfield for 20 years, but it's come in and out where he'll get some really amazing opportunity that he wants to go pursue. Still helping us with some things, but he'll do that. And that can be anything from the University of Louisville called him in to clean up and fix their athletic department, which sounds like, oh, OK. But his first job was to fire Rick Patino.

30:25He was one of the most famous legendary coaches ever. That takes a certain person who handles that. They had to fire the AD. He became the AD. They cleaned house. They rebuilt it. And it's a very successful athletic department again. And Vince came back here about a year ago full time. And he's like a COO. So we now have two leaders, Bob, who has an incredible value creation lens, and Vince, who has an operating lens that's unique. That's something we never had before. But again, it's trying to keep ahead of everyone else. How do we do things better? The one answer at this firm that is unacceptable is, why did you come up with that idea?

31:13That's how we always do it. Now, if they said, I looked at every alternative and the way we've been doing it is the smartest thing, that's cool. So again, that's another differentiator in the lower middle market is deal guys used to be the king. And I'll get in trouble for saying this. But now this value creation and operating focus is more critical because our whole market has become so much more competitive. People are paying higher multiples for businesses that we used to be able to buy for a lot less. So how do you make that work? You've got to have a real edge or angle across the board on value creation, management, etc.

31:56If you can't have that conviction, then it's hard to bid 10 times for a$5 million EBIT to business and believe you're going to make a lot of money on it. I want to take you back to management teams and how you partner with them and how you help them and how you evaluate them before you make your investment. Yes, that's a critical part of what we do. and we've done a good job at it. And I would say the evaluation part, it has to be spending time with the individual or individuals. And it would be a small group of us doing that. The way you're going to really get to know how somebody thinks, how they react is spending time with them face-to-face, proximity versus a Zoom call or something.

32:46And you can catch on very quickly in a gentle way, very straightforward about here's you want to partner with us. You're going to make more on the equity that you roll with us than what you're making on the sale of your business. If you let if we can partner together and do what we do. And that's where we'll have discussions during pre close on all of that stuff. and you've got to do it in a very collaborative, positive way that you're straightforward and transparent. Their first reaction is, oh, PE guys, you're all full of it. You just want to buy a company and rip it up, cut expenses and sell it or whatever.

33:27And you just got to really have the way of talking to them and understand here's how we do this together. And one of the early conversations we'll have is we can do all this in technology. We can do all this in operations, but let's be clear, part of how to create more value is to have a business not reliant on one or two individuals. Are you ready for that? It makes sense to you, doesn't it? And if you want to stay, are you ready for this change? You're going to go from running your business where you know every single thing that's going on to a$25 million EBITDA business. You're going to have seven direct reports.

34:07You're going to be a professional manager, not an entrepreneur. And if you want to stay and we exit and you're the CEO, you're going to have to sign up for another five years with a new buyer who you don't get to pick. We have a fiduciary responsibility to get the highest price. And we owe that to you as well as an equity holder. So how does that all sound? Is that what you want to do? 99 % are like, no, I don't want to do that. But I want to see this business become a regional national leader. And so it becomes pretty clear up front, if they're open minded to that, and how they do things and how they treat their senior team and everything else, you can get a very good feel.

34:53But there's no formula to determine that good partnership. It really is to experience. And I'd say the other thing that's huge is we will give them a list of every founder we've ever done a deal with and say, call any one of them. We're not going to prep them. Take your pick. A not so good deal, a great deal, talk to whoever you want to talk to. And basically 100 % of those people will say, Southfield was a great partner. They're totally transparent. They're collaborative. And whether it was a great outcome or not a great outcome, everything was on the table. Those combinations help a lot. If we could figure this out right now, Jeff, and I can teach associates, here's what you need to do to determine if this is a good partner.

35:39And just a checklist, I wish it was that easy. We could figure that out together. That'd be amazing. Andy, earlier we were talking about you have an internal acronym, DDSD. Tell us what that means. Part of our culture of just always determining how we can do things better, how can we do them faster, more efficiently, and smarter. I would say originally DDS was one of our core internal and with our management teams. It's the same way to treat them. Tenants, which is discuss, decide, support. We will, as a group, discuss every issue. We will make a decision together and then we will all support it.

36:20Now, I added, and this is new, but the other piece that's really important to what we do is debriefing. And that debriefing can be after any Zoom call, after an internal meeting, obviously an outside meeting with management teams, founders, that we will quickly and it can even be on cell phones on the way to different airports. How do we do? What can I do better? What did I miss? We very, I don't want to say aggressive, but are very transparent with each other. about what we can do to make ourselves better, and we're not afraid to do it. And I think that's just a key part. So I called it DDSD, discuss, decide, support, and debrief.

37:06But all four of those things are very important. Yeah, I think so many management teams forget the game film analysis, and that's where they just keep making the same mistake over and over again. Absolutely. And by the way, it's not an easy thing to do, because people have to be open to getting constructive criticism, It takes a little bit of time to not be defensive and take it in. I'm going to transition to one of my questions that I ask all the time, which is advice to young professionals. As I talk to a lot of young professionals, they all want to figure it out when they're in high school, when they're in early college.

37:41And listening to your journey, clearly you didn't figure it out. It meandered through a lot of different phases to get you to where you started your firm. What advice are you giving them on how they should be thinking about their career and what they should be doing to get into private equity investment banking, if that's their passion? My answer to that, Jeff, is really is, look, these 20-year-olds who are truly self-starters, who don't wait to be told what to do, are constantly pushing to learn more about something they got interested in. They're not waiting to be told, oh, here's the next assignment that you're going to do.

38:21No, they're pushing hard, pushing forward. That intellectual curiosity is so important. And it's a trait that is super valuable in any career you're going to be, any organization, unless you're going to be a low-level government employee. But that's one of the things that we're looking for in people. And that comes through, we sometimes call it our flaming hoop tests. But when people come in and do assignments and projects with us in the room for part of it, it's not so much the answer. It's how did they push to get to the answer? And they didn't get stuck, wrapped up in analysis paralysis. So that's a very important one.

39:03Do you have any favorite quotes or mottos that you share with your team? One that I don't know for someone in college where they get it, because when it was told to me, I didn't understand it. And then I later was like, damn. And that was when I was at Drexel. I worked on a deal with Jacob Rothschild, Lord Jacob, who ran the whole Rothschild wealth. And I was just amazed that I'm in the same room as him. And we're in a conference room till late hours of the night. So finally, I'm like, Lord Rothschild. He's like, please call me Jake. I'm like, OK, Jake, to what do you owe all your success? is there anything you could tell me?

39:44And he looks at me and he goes, I sold everything too soon. And at the time I was like, what is that about? And then I learned later over time, yeah, that's a very relevant thought to have at all times when you're investing, meaning nodding, holding on for that last nickel, that last bit. Awesome. And I keep saying this every podcast, but out of 190 guests. I've not had one guest repeat the same quote ever, which is just awesome. It's why I love quotes so much. It's such a personal thing. If I'm a founder and there's so many private equity firms out there, but I've been able to whittle it down to two firms and one of them Southfield trying to decide tonight with possibly my spouse or maybe some investment partners that I have that own the firm.

40:36One of the things that you want me to remember to the night that'll tip me your way to decide to partner with your firm? We have a long track record of being great partners with founders. Most of our former founders invest in our funds unsolicited. We sell their company. They come to us and say, is there room for me to invest in your fund? They are long-term partners. We have an annual event called a CEO conference, and this includes past CEOs. And we have huge attendance of companies we haven't owned, been part of the business for five, 10 years, and they're still coming to spend time with us, to hear what's going on.

41:16We do some presentations about business, et cetera, what's happening, and they all enjoy it. So we're going to always be transparent, open, collaborative. One of my favorite sayings is basically, you can have the smartest idea in the world ever, mankind, about how to grow a business. But if you don't get management buy-in, it will never work, ever. That's the core of what we do, is partnering with management and together determining the path forward. I love that. Andy, this has been a really enjoyable podcast, and I think our audience is going to very much enjoy it as well. So I appreciate your time today and love to continue to watch your future success and what the fifth decade will bring.

42:08Andy Levison: Thank you for joining us for Northstar's Private Equity Fast Pitch. For more information about Fast Pitch or our boutique private equity heavy hitter events, you can visit us at enorthstar.com.

42:29Thank you.