David Hellier - Bertram Capital

0:09David Hellier: 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.

0:57David Hellier: 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. My guest today is David Hellyer, partner at Bertram Capital, and his path into private equity is anything but traditional. David spent nearly two decades on the operating side before ever entering private equity, building businesses across manufacturing, technology, the early internet, and even lab-grown diamonds.

1:41At iOmega, he was part of a business that grew from roughly$145 million to$1.2 billion in revenue in just three years. He later joined asked Jeeves during the early days of the internet and went on to lead a technology startup and serve as CEO of a company that was an early innovator in lab-grown diamonds. That journey eventually led him to Bertram Capital, where for the past 18 years he has helped build one of the more sophisticated origination platforms in private equity. That journey eventually led him to Bertram Capital, where for the past 18 years he has helped build one of the more sophisticated origination platforms in private equity, combining deep personal relationships with investment bankers and intermediaries, technology, data, and a highly disciplined sourcing process.

2:30But I know what you'll find most interesting about David is that relationships sit at the center of everything he does. His philosophy isn't about collecting business cards or asking bankers what deals they have today. It's about investing in genuine relationships over years, understanding what matters to the other person, and finding ways to create value long before you need something in return. We also get into Bertram's approach to value creation, including Bertram Labs and the firm's long-standing belief that technology should be an enabler of growth rather than simply a cost center, a philosophy that has become even more relevant with AI.

3:08Dave and I also talk about what he's learned from building and scaling businesses, how private equity business development has evolved, what he looks for in founders, and some terrific advice for young professionals about building genuine networks and using AI without allowing it to replace the fundamental skills you still need to learn. And be sure to listen all the way through the end for one of my new favorite sayings, tell me what time ASAP is. It's simple, practical, and David explains why those five words can eliminate a lot of unnecessary headaches. Now we'll get it kicked off with David Hellyer.

3:44David, welcome to the podcast. I am super excited to have you on today. This has been a long time coming. We've known each other in the industry for a very long time, and it really feels like a perfect opportunity to share what you do in this business because I really haven't had anybody that has your background and at the same time do what you do in the private equity space. So why don't we get this kicked off? And I'd like you to really start with your journey as opposed to start talking about Bertram. We'll navigate into that once you start with your journey, but it really does set up why you're very unique in this space.

4:19So why don't we kick off there and let's get going. Sounds great. First, thank you for having me on. I'm honored and I appreciate the opportunity. I looked through your list of past interviewees and I'm humbled. Hopefully I can add to the conversation, but really appreciate the chance to speak with you. Journey. I grew up outside of Philadelphia, Pennsylvania, had a fun time in high school, but I wanted to get out of Pennsylvania. I ended up getting into the University of Florida. It was not as academically rigorous then as it is today. I'm pretty sure I wouldn't get in today, although I think the training and techniques that our kids went through to get into school are a lot different than when you and I went to school.

4:59But I had the chance to go there. It was an incredible experience. I will say my undergrad experience was not as auspicious academically as my graduate experience. I did enjoy Florida football. We're probably at about the same point in the 80s as we are today. Hopefully that'll change. And I'm sure you can understand that from your Missouri football days and the program's a little bit different than when you played. So it was a fun experience to be a kid from the Northeast going down to a pretty Southern school. It was a great learning experience. It taught me some of my first networking experiences, and it was a lot of fun.

5:34The point where I had to make a real decision was when the professor I was doing some research for in economics said to me, David, what are you going to do with your bachelor of science in business administration from the University of Florida? I said, well, I'll probably interview with some banks and try to find a job. He goes, you're never going to have a good career with that degree. You need to go to grad school and have some level of differentiation. I'd never heard that before. Professor Frazier said, why don't you apply for the graduate program? You can continue your work with me and you'll have a thesis that you can defend.

6:06It's going to be original thought and it'll help differentiate you when you go into the marketplace. And I did. I wrote the thesis. I couldn't really probably explain it to you today. It was pretty heavy up on math and statistics, but at the time I think I managed through it and I passed my committee and got my degree, but I was going to try to get a job in finance with that degree. Well, the 87 stock market crash happened right when I was getting ready to graduate and there were no jobs in finance. So I had to get creative and pivot. So they put my resume in the MBA book of resumes because it wasn't online.

6:39Everything was in a book. And I was literally the last page. I was after the Z's because I was a master of arts, not an MBA. Fortunately, we had a division of General Electric that was in Gainesville, Florida, that had just been bought by a company out of Denver called Gates, which made belts and hoses for automobiles. And a guy was looking for someone to come in product management, flip through the book and saw my name. And he said, well, he was in a fraternity. The guy that runs our division was in a fraternity, plays golf. The guy that runs the division plays golf. His GPA is pretty OK. Let's interview him.

7:11And so I interviewed and that was my first job was working for Gates Energy Products, but it was run by all guys from General Electric. And the learning there was unbelievable. Really focused on process. I got an MBA in seven years working with them in product management, in sales, learning how to do that. I did international sales development in South America because they said, he doesn't cost us that much. Let's see if we can generate some revenue. And that went pretty OK. It was an incredible experience. and a lot of great learning. And from there, I went with the guy that had run that division.

7:45He actually had an offer to run one of two businesses, True Temper Golf Chefs. And I was very, very, very supportive of him doing that. We're a business called Iomega out in Utah. And Iomega made a technology product that did digital storage. Much to my dismay, he didn't do the golf business. He went to the technology business because he saw more growth opportunity. I was fortunate enough that he brought me along and got to work at a business that really transformed the computer industry. We launched a product called a ZipDrive and you're probably of the age group that will still remember that product, but it was a hundred megabytes of storage at the time when a floppy disk was 1.44 megabytes.

8:22And we were fortunate in that that was when Microsoft launched Windows and all the related products. And now you had products that were generating files that couldn't fit on a floppy disk because you had photographs and movement and other characters that did not fit on a floppy disk. So our timing was great. It taught me a lot of things about hyper growth and managing that growth. We always said, we're building a bridge across a river. As we're running, we're putting our foot down as the next brick goes down as you're building that bridge. And we grew from, when I started, we were$144,$45 million of revenue.

8:55In three years, we were$1.2 billion of revenue. And it was a fascinating run. It was about innovation. It was about really driving and pushing yourself ahead, creating new channels. I had the opportunity to go over and launch our business in Asia. So I set up our operations in Singapore, had a few years there. My youngest daughter was born in Singapore. It was pretty cool. It was a really fun run, came back, ran North America. So had a lot of really tangible experience. And the driver there was around process. So getting your arms around this hyper growth and creating discipline and process. It was about process didn't hinder growth.

9:35Both process enabled growth responsibly. And so really trying to bring that into the mix. From there, I went with a guy I worked with. He took a job at Ask Jeeves. So it was right at the beginning of the internet boom. Again, innovation there. At iOmega, we innovated on computer storage. At Jeeves, the innovation was natural language search. So it was a precursor of where we are with AI today. I can tell you it wasn't anything close to that. But at the time, it was pretty cool because you could actually ask, your browser through Jeeves a question and get a tangible answer, which was unbelievable at the time.

10:11I ran marketing for the firm. I made some great friendships there. We really focused on building the brand and the brand was incredibly important. We created this brand around a butler. It was fun. We did one of the earlier firms to do a commercial on the Superbowl, which was scary and fascinating at the time. We did some really cool sales techniques to generate revenue outside of just clicks. It was a fun learning experience that really pushed your innovation and growing in a field that there were no rules for whatsoever. From there, I broke out with a couple other guys. We did a startup called Global Streams that was kind of a precursor of YouTube.

10:52We had a streaming device that could do green screen. It was one of the more humbling experiences that I had. And then I ended up taking a job with an early stage business that grew diamonds above the ground. And that was fascinating. The technology came over from Russia. It was incubated at the University of Florida. And our job was to figure out how to scale this technology. And growing a diamond is not easy. Today, I won't say it's perfected, but there is mass production. It's totally disrupting the industry. We had to do a lot of convincing for people just to place our products at retail and buy the products that it was a real diamond.

11:30I'm very proud of the fact that I was able to get the GIA, which is the main grading body. So if you have a diamond for your wife that you've bought, you'll probably have a GIA certificate showing its authenticity. I was able to convince them to create a certificate of authenticity that this was a real diamond grown above the ground. And now it's standard today. That was pretty interesting to do that. This is when I met my now partner, Jeff Drazen. Jeff was working as one of the partners at Sierra Ventures. He was very interested in the technology. He and I hit it off right away, had a really good bond very quickly.

12:04He understood the complexity of the technology and where to take this. Unfortunately, the board was not aligned. Instead of taking a very sophisticated, potentially very, very helpful Silicon Valley venture capitalist, they took money from more friends and family. And so we ended up parting ways. But I said to Jeff, I'm either winning this deal with you or I'm out of a job. And he said, well, if you're out of a job, stay in touch. And we did for two years. And after two years, Jeff brought me on as an operating partner. So it was this incredible journey from not being in finance and wanting to be in finance, having to figure out an alternative path, having 20 years of just unbelievable experience and that allowing me through one relationship, Jeff Drazen, being able to make the move into private equity.

12:47That's just so fascinating. And I can imagine a lot of different areas that we can dive into and pull some string on. I think I'm going to start with Jeff Drazen and your relationship there. He set up a firm when he was at a very successful firm before, and you met at that time. I believe a lot in serendipity, and that clearly was a serendipitous moment. How did that relationship develop, and what was the foundation for Bertram that attracted you there? I know that you've had a hand in helping grow. Over the last 18 years for you and 20 for the firm, how did that all develop? Jeff is one of the more fascinating guys I've ever met.

13:26He is incredibly smart, but he's always thinking and always ideating. And when he was working at Sierra, the way he told the story, he had invested in a business. It was a growth equity investment. But basically what he saw was he could apply venture capital growth methodology to a cashflow positive business. And that was the fundamental approach to Bertram, applying venture growth methodology, which now is the Bertram High Five, which I'll dive into a little bit later, to a cashflow positive business. So not growth equity, it's still a buyouts business, but looking for companies where we could really drive growth.

14:05And what Jeff said to me was, I want to buy ball bearings companies and tech enable them. And his view coming from Silicon Valley and a lot of tech enabled business, a lot of software businesses was every company is a software company. And that story is even more true today with what's going on in AI. So he had the vision for that. And coming from the operating side, I'm like, absolutely. The technology is not a cost center. It's an enabler. And so that was the vision Jeff had going into starting Bertram. And I bought into it very quickly because I had been on the other side seeing that. And the other thing that was so interesting was we were literally a startup from day one.

14:45So he didn't spin out of another private equity firm with a couple deals under his arm to start. He found some really interesting young investors. First, my three partners, Kevin Yamashita, Jared Ruger, and Ryan Craig. They were the core. And Jeff gave us all the opportunity to be builders of the business. So we weren't stacked with MDs. We were all VPs at the time. He's like, you guys are going to go and I'm going to give you the opportunity to build this business. And so he did. And so I actually started as an operating partner. My job was to find a business for my partners to invest in. And after a few months, Jeff said, look, we don't have any deal flow.

15:30I think we saw, I think they saw 125 deals the first year they're in business and maybe 200 the second year. And he said, we need deal flow. He goes, you're a business builder. I want you to go build a business around business development. And I thought that was a really interesting idea. And there's a few firms that you can look back and did that. Audax clearly did that. Riverside Company did that. Huron with Gretchen, there's some good examples, but most of them did it as an afterthought. And what I really, looking back, felt was important was Jeff knew this was a business we had to invest in.

16:02It was our lifeblood. He said, I'll give you whatever resources you need. Go build this. And that was pretty cool. And it was pretty cool to have that support. And it's led to how integrated our sourcing effort is with our deal team. There is essentially no separation. I mean, we work absolutely hand in hand from the top of the funnel to the bottom. So I think Jeff's innovation around that, his focus with the deal team on an entrepreneurial approach to every business you run. He's like, look, we're buying businesses that these founders have built it from the ground up. This is to be respected.

16:37Let's find ways not to get in their way. We don't want to get in their way. We want to help them grow their business. And our mantra is, let's find businesses we can grow three to five X in three to five years. And we want to find business owners that really want to align with that. And so that was the beginning of the journey. And that's what really set Bertram on its way. I love that genesis of the firm. And it makes a lot of sense when I look back at the time when you first started and you could tell a huge difference between what you generally term as business development folks out at all the events that we were seeing each other at, collecting business cards versus folks that had a real process.

17:15And that speaks to your success. Let's talk about you specifically in your role here, because I think it's, again, very unique in the sense that you have a entrepreneur, business operator background, and you're doing business development and cultivation of relationships and then driving that all the way through the exit or the sell side, which is also very unique. So maybe give the audience a taste of what your universe that you're responsible for with your team. Originally, a guy named Jeff Giles, who works for Oramay now out of St. Louis, was on the team. Jeff was very instrumental in helping us get things started up.

17:52And then a woman on the team, Michelle Chow, was kind of there side by side with me in helping build the originations effort. Michelle's now head of our investor relationship. So again, kudos to her for really growing up and succeeding within Bertram. But our focus was really on two things, Jeff. One was deep personal relationships with the intermediary investment banking community. I felt that from my past experience, it was just critically important to have real relationships. And then the second part was we're going to drive everything with a technology backbone. So we were one of the first firms that put in Salesforce.

18:30We dedicated ourselves. We figured out how to make it a core part across the firm within our deal team. So we wanted to be able to expand without having to throw a lot of bodies at it and be able to build something, again, coming from a past life that was scalable. So those were the two fundamentals that drove how we built our originations function. The other piece was we wanted to make sure that we understood the needs of the investment bank community. And so what I quickly discerned in my role, and again, I didn't know any better. And so you can do things without knowing any better. And I said to our team, look, I know the bankers better than you guys across the board.

19:13What's important to them is fees. That's what feeds everything for them. We can be friends, but if we don't get them fees eventually. And so I made the proposal to our team, let me quarterback the sell side process. So what we do is we really focus on the top of the funnel. Our team wants to see everything. Our mantra is we need to keep our deal team very well fed. And so they want to see as broad a scope of investment opportunities because they want to gain the muscle memory by reading the books and understanding the business models. And I want to say we've got, I don't know, 20 ,000 deals in our database.

19:49Our teams have read a lot and they've got really good muscle memory because of that. The second piece is working closely with them, knowing everything that's going on in every portfolio company. So our entire deal team and our OCM, our originations team, knows everything that's going on across the portfolio. And so that can help me guide our investment banking friends around where should you spend your time? Where can I help you win deals? So when we do calls, It starts with our portfolio company, not, hey, what deal do you have for me today? That'll come if you build the relationship and build it genuinely and understand their pain points and needs.

20:26And so we really try to help guide them on that and then work hand in hand with my partners on the deals so that we can coalesce around. Here's the guys we got to be really focusing on. and what we try to do is give them every single bit of information that they can possibly have that we can give them so that they can have their best shot at winning so that when they come into a sell side they're not feeling like they're one of eight they're going to be one of two or four and that they feel like they've had every bit of access to our team to the management team understanding the market so that when they come into the pitch they feel like they can really win And they can.

21:02They have that opportunity. So I think combining those two sides, look, I want them to push their finger on the scale when we're trying to buy something, if possible. And the way we can do that is they know that we're going to be really good buyers, friends, and sellers of businesses. Talk about how that extends to the firm that they're representing. And I would imagine the relationship that you've built and the knowledge that you've delivered to them, they reciprocate with that. And so it puts you in a better position when you are bidding. It's got to start with a genuine relationship. Jim Green was running TM Capital for years and years and really good friend, guy I really respect.

21:38And one day in a meeting, he said, David, one of the things I like about you and Bertram is you're genuine and you can't fake genuine. And I said, one, that's one of the nicest things anyone's ever said. And two, you're spot on, like you either are or you aren't. And that's why the deep personal relationship is so important. You can push or allow the process to run out any way you really want to. We're not trying to circumvent what the bid is. You got to hit the bid. That's full stop. We're not looking for, hey, can we get in there or turn and a half lower? It's you got to hit the bid. But what are the things you can be doing to help your friend on the other side, person you like, person you know, do what's right for their client, but maybe align that with a firm that is aligned with them.

22:24and everyone wins in that situation. So what we try to do is be very, very transparent with both our portfolio companies and how we're trying to approach a process. We try not to get too upset when we lose a process. I do think there's a dichotomy there where on the private equity side, we lose processes every single day. On the banking side, if you lose a process, it's the end of the world. And I try to comfort my friends that it's not at the end of the world, we'll get another shot. But I think it's really building those relationships, building the matrix of relationships between the coverage person and the industry banking side and your industry person that that is a close personal relationship because that just extends the family of friends and people that want to see your firm do well.

23:06It starts with the relationship and it also ties into understanding the intermediary's needs and how we can help solve for them. David, we talked a lot about intermediaries. Do you have a direct sourcing strategy? We've separated our sourcing effort into kind of two buckets. One is we have a group that just focuses on intermediated deals. So there's three of us that work on that. We focus on between two funds, between$3 million of EBITDA at the low end for our smaller fund, up to$50 to$60 million of EBITDA on large fund. So we're covering probably 450 to 500 firms between three of us. And then we have a two-person team that is really looking at future deals and future opportunities.

23:50So we've been working very closely over the past two years with our investment teams to really define a few lanes for each one. So a few lanes in consumer, a few lanes in business services, a few lanes in industrials. And from there, we're working back and we've created lists of target companies when each of those lanes mostly sponsor own businesses and very focused outreach to the investment bankers, the industry bankers who may be covering, following, watching them. And so that's been a that's been a key effort. We've used a lot of AI tools to help us research, define, manage, track. That's been a huge effort on our team to start to really build that.

24:34And then it's been a very coordinated effort between us and our deal teams talking on a weekly basis around how we're approaching that. So between the intermediate deals and this proactive effort, we've tried to build an overall processing cadence to that to make sure we're not missing something, especially on the true middle market deals, the$20 to$50 million EBITDA deals where you've got so much competition. you've got a lot of other firms really looking and really tracking and going after those businesses. So we're trying to bring some other angles that we think can align with our investment process and our muscle memory to get out in front and be prepared to try and win as early as possible.

25:19Now, the other part of that has been one of my colleagues that works on our team, Matt Jones, has been focused on our buy-side relationships. So we didn't have many buy-side relationships. We had a few. It started building when we started doing more outsourcing on add-on acquisitions. And we just saw the value there through some of the firms we were working with. And so now we've created a much more comprehensive process that ties into these lanes and some other thesis ideas. And again, there's a lot of firms that have been doing this for a long time and doing it exceptionally well. We want to do it exceptionally well, too.

25:55And I think that has led, one, we're treating the buy-side firms just like a sell-side firm. So give you an example. We talked about relationships. We hosted them out in Utah. We took six guys from buy-side firms who've never been invited to an event or may have like on the side, but this was just buy-side guys. And they're like, this is the coolest thing ever. And we just spent the time talking about our business, how we're working, what their needs are, what best practice they've seen. But we did it in this fun, casual environment around some fly fishing and some golf. And I would say the goodwill we generated out of that and just the relationship building that, again, created a genuine bond.

26:34And so we're going to do it again next year because those guys are really, really valuable in our equation. We weren't set up to leverage their capabilities three, four years ago. We're set up to do it today. Well, I love that. The message I keep hearing is investing in a relationship for the long term, not the immediacy of something in return. And I know that about your firm and the folks that I know that I get to talk to on the road quite a bit. Let's transition into Bertram. So you mentioned the verticals that you're focused on. Maybe give a profile of the firm a little bit deeper than just EBITDA, but profile of the types of firms that you invest in.

27:12and then let's get into some of the differentiators of when you actually work with me as a portfolio company that you're bringing to the table. We've evolved over time in where our focus is. Like many firms, we were generalists for a long time. The foundation for the firm was this idea that Jeff Drazen had, which was called the Bertram High Five. And similar to Charlie Gifford and New Heritage, it is a trademark term. You got private IPO and Bertram High Five is trademark terms in the industry. and we both get to explain what they are. The Bertram High Five are the five things that we want to try to affect in partnership with the company we're investing in to drive three to five X growth in revenue and EBITDA in three to five years.

27:54That's the baseline that we look at. And so four of the five things aren't highly differentiated. We look for businesses where there's either a great organic or add-on growth story. We've gotten much better at the add-on side. We've always been pretty successful on the organic growth side. Over the past seven years, we've built a pretty good playbook on the add-on side. The second piece is driving sales and marketing improvements. So coming in, one of the things I think Jeff really pushed for in a positive way was putting your foot on the gas on the sales side. So looking for opportunities to expand the sales teams by channel, by vertical, by geography, looking for marketing opportunities to really build the brand and the business.

28:40And I'll talk about Bertram Labs and our technology team, but that's been a key component of driving revenue growth and marketing activities. We look for improvements in talent. So again, our mantra is do not get in the way of the business. You're there at the behest of the business owners. We're there to help guide and provide solutions and support where they ask for and need it. And so helping them with talent to fill keyholes is something that we feel like we earn that trust. One great example of that is a business we recently sold, which is called Nefco. They do products called Sharp, which is struts, hangers, anchors, rods, and pipes.

29:17I had to remember that one. That was a hard one to remember. Everything hangs down from the ceiling of a distribution center, a hospital, a data center. So there was great, great tailwinds around that. But when we went into that process, it was a Raymond James process. this, it was very clear from the owner, who was the president, that he wanted his son to be the next guy. And we went into it and my partner, Kevin, is like, this is great. This is going to be a success. And we said, we want to back your son. We want to back him in the business. And we grew with him and worked together and just became an incredible success story.

29:52But tying in that way around talent and helping out, we found to be, again, it's not differentiated. I think the application of it is somewhat differentiated. And then the last is manufacturing and logistics improvements. So supply chain optimization. And we try to do a lot of help there. The key differentiator and the key part of the Bertram High Five is Bertram Labs. And this was Jeff's concept of technology enablement in any business and every business is a software business. First few years, we would hire outside resources. The challenge with that is they're never completely dedicated to your business.

30:27They want to extend the program as long as possible because they're getting paid on a project basis. That doesn't mean outside resources are bad. It just meant that they weren't as aligned with what we wanted to do and as committed to it. So in 2010, we had a business called Spirion. It was a telematics business that you could track fleets. And we had two disparate software systems that we were trying to bring together and the engineering teams were just not getting it done. So Jeff brought in the first person, Brian Wheeler, who built out Bertram Labs. And we said, you guys just keep maintaining the system.

31:01We're going to build a holistic system. And they did. They built a telematic system that at the time was moving as much data as Twitter was in a day. It was scalable and it was a saleable system because the next buyer now had not a problem, but a way to grow their business. And we showed what you could do with dedicated resources. We called Bertram Labs team, the Dirty Fingernails team. And that's a compliment because they do real work and they are true value creators. Now we, as the partnership and the team, we had to invest in that. We have about 25 people working for Bertram Labs right now, ranging everything from software deployment and enhancement to data analytics.

31:41We brought in a guy, Billy Matiker. He's a Stanford PhD in data science, and he's been building out that part of the team, and now he's leading our efforts in AI. And we definitely are moving our resources in that direction across the board around AI. It's becoming a very important piece. But those are the things. We go into a business, we never force Bertram Labs on a business. It is a voluntary association. But when we go into a pitch or a management presentation, it's a pretty compelling story because most business owners view software and technology as cost centers, not cost enablers. And we can really show them how Bertram Labs can help them drive top line revenue and improve gross margins.

32:22So that piece with bankers, you know, gets us on buyer list frequently because they're like, hey, this is a perfect deal for Bertram Labs to come in and help these things that we see in the business. It helps us win deals because founders see where Bertram Labs can really make a meaningful difference. And they know that they're driving the priorities, not Bertram. So they're outlining what they want to do. And then when we get the business for our LPs, it's a great value creation driver to really improve and extend what that business is. Well, I would doubt by the time they become a portfolio partner of yours that they decline to work with you.

33:00We never want to force it. We never want to force it. Exactly. Let me ask you an interesting question. When you meet a founder for the first time, what qualities immediately stand out as indicators of long-term success? I think it's mainly their passion around growing the business. When we find someone that really wants either that second bite of the apple or wants a partner that can help them take the business to the next level, that passion and excitement is what really gets us excited. And what we strive for is that alignment of ideas and direction. Again, we don't ever feel like we're forcing it on someone.

33:41We want those management meetings to be creative forums to find common ideas around where that business can go. And when you find that person, it gets pretty exciting. And I think the number of friends we've made on the CEO side and management team side have been pretty substantial. And I think that's a direct reflection of our investment team. When we were first chatting before we started the podcast, one of the things I said is, One of the things I'm most proud of our team is that they are incredibly humble guys. Put their pants on one leg at a time, just like you and I do. They don't magically appear on their body.

34:22They are very genuine, humble, thoughtful guys. And I think that's one of the reasons why we've created such deep, strong relationships with the CEOs and founders of the businesses. They can have hard discussions when there's challenging times and inevitably there will be, but it's based on genuine friendship and respect for each other and aligned priorities. So I want to go back to your Bertram environment. Just hearing you talk about the firm and knowing some of your folks, it really feels like you have an environment where team members grow in their career and sometimes where they started is not where they end up, like Michelle.

35:04Give us a little background on that and maybe specifically talk about how you grew your team. Jeff really set a tone where he wanted to create an environment where everyone knew it was a long-term opportunity. We want people to be at Bertram for life. We don't want to create an environment where they feel they have to look elsewhere. So if you look at the partners on our team, Jared Ruger, Ryan Craig, Kevin Yamashita, Tom Burley, myself, have been here 18 to 20 years between us. Chris Brown, who just became partner on Industrials team. Chris was here. He did a stint out, realized he really wanted to be back at birth and brought him back.

35:44And he went from MD up to partner. We've got a lot of VPs moving to MDs. We've got Michelle, who spent 14 years in BD, consistently rose up the ranks, was promoted based on competency, capability, and then was asked to take on the role to create and run our investor relations position. On my team, one of my primary responsibilities is to create every opportunity for my team members to grow and advance. and a key part of my responsibility is making sure that their goals are well-defined and supported and that they can grow. And so one of the things I've looked for as I've built my team is experience outside of finance.

36:25When I started, it was great to be able to walk into an investment banker and say, well, I can talk about ERP systems because I walked with them, or let's dig into the gross margin because I had to manage gross margin in multiple roles, or let's talk about these sales channels on how they're trying to expand them. And so finding people on the OCM side, the origination side that have some experiences outside of just coming up through the traditional finance ranks was pretty important. I think holistically at Bertram, it's been about giving our team lots of opportunities to grow in an unfettered way.

36:59One more example of that is we raised a small fund called Ignite. We launched that in 2024. The key thing behind that was Jeff looked at our deal flow and said, you know, we see so many deals between three and$50 million, but we're not going after those, some of those smaller deals, even though they might be perfect Bertram deals because we've got to deploy capital. Our sourcing was aligned with that already. Our Bertram Labs team has a major effect on less sophisticated businesses. So there was an opportunity there. And then the other thing was giving VPs and principals, now MDs in our firm, the opportunity to lead a deal that's slightly smaller size, but give them the chance to do that where with a larger deal was their first deal, they may not always have.

37:45So it really became a professional development opportunity by doing that smaller fund, not putting anything less, it's one Bertram. So everyone's involved in the decision-making, but it really created a pathway for growth within our team. Well, I love that. And thinking about growth, I think it's a great time to transition into a question I ask all my guests, which is advice to young folks. I'm sure like myself, you're getting a ton of young people asking you, hey, what would you do if you're in my shoes going to the work world today, wanting to be in private equity? What are the types of things you're sharing with those folks?

38:17I think one of the most important things is the theme we've had throughout the conversation, which is networking and building genuine relationships, not ticking the box. I think it's easy today to just do a Zoom or have a casual conversation, but actually taking the time to develop that network of people that can be there for you and also help you, because you never know where things are going to go, right? If you think about your career and the people that have affected it, it's because you've built those relationships that have helped you or supported you. If you look at the North Star Network and the events, it's because you built a group of people that trusted you, valued your friendship, wanted to support the effort, saw the value in the effort, and look at your network today versus when you started that.

39:05It's pretty amazing. So I think building those genuine relationships and network, that it's more than just a click of LinkedIn, that you actually know that person and understand them. I do some work with the University of Florida, their Master of Science in Finance program. and I've done a few discussions with them. And one of the things I say at the very end is, I will accept you if you reach out on LinkedIn, but you have to tell me why. Don't send me a link and say, I want to connect. I may not remember you, maybe I will, but tell me we met when you were talking at the presentation. This is what we talked about and why I want to be LinkedIn with you.

39:44And I will tell you, everyone that sent that meaningful request got accepted. And the ones that didn't send that didn't get accepted. I think that's really important. I think the other one is be intentional about the jobs or the roles you choose to follow. I'll apply my one grandfather's advice. It's like, no matter what you do, always do your best. So jumping around, I really struggle to see that on resumes. A year here, year and a half there, two years there. Is that just a series of bad choices? Does that mean that you don't want it to be promoted in two years? I think taking the time and investing and building real skills before you make your next move, that to me is important.

40:24One bad job is a bad date, right? But the next one you should be a little more thoughtful about. And I think showing your commitment to learning and growing is something that's pretty important. I love that one. I, unfortunately for a lot of people look at LinkedIn and eliminate folks fairly quickly when they've had seven jobs in 12 years or something like that. Hard to explain. Yes. I'm going to ask you an add on to that question with AI right now. And I think you're in a better position than a lot of my guests because of what you do at Bertram and Bertram Labs. How does that play into your advice for a young professional knowing that the landscape of work is just changing so rapidly?

41:05So I personally think, and I think our firm view is AI is an enabler and an enhancer, not an eliminator in a lot of things. I was talking with Ashley Torres, who's our originations head of operations. She's the glue. She makes sure everything works. So there's a lot of efforts on AI within our team that fall under Ashley. We were talking about automating how you input teasers into your CRM. And we just hired a new person to help Ashley with some of that. And she made a really interesting comment. She said, I want to use that for the deals that we eliminate quickly, but I don't want to use it for the deals that we're going to follow because there's no way you're going to learn the business model, the idea, the numbers, the description, all the stuff that goes with a teaser or goes with a SIM if you're just having AI put it in.

41:57Like it's just press a button. And she said, I really want to be careful with our new hire that she is reading and discerning it. We'll find ways to automate where it makes sense, but you don't want to lose that human connection to that intelligence. So I thought that was a really interesting comment that Ashley made. And I think we need to be careful in applying that. So the advice would be leverage AI to make you more productive and do the road things, but don't use it to skip over the core capabilities and competencies that you need to have to be successful in your role. That's fantastic advice.

42:35So do you have any favorite quotes or mottos? I know you have a few. Yeah. And a lot of my friends, colleagues have heard a lot of these. One of my biggest ones is tell me what time ASAP is. It's like you get, Hey, I need this ASAP. And it's like, what time's ASAP? Cause my ASAP may be very different than Jeff's ASAP. Your ASAP may be 20 minutes. Well, if I know what the time constraints are, I need this by tomorrow. Okay. I can deal with that. I can negotiate it or whatever, but like, don't tell me ASAP. I can't put a time on that. Probably one of the best ones that I rely on, it definitely supports the innovation theme.

43:14We had this kind of old salt head of manufacturing at my first role at Gates Energy. And he said, if you always do what you always did, you always get what you always got. And I'm like, you heard that the first time and he had a little bit of Southern draw and I'm like, well, okay, what's he saying? Then you really start thinking about it. and you're like, he's really spot on. You've got to innovate. You've got to test and try new things. And that's what I tell my team every single day. It's like, I don't care if it doesn't work. Let's try it. Because then when we get the question, hey, did you think about this?

43:49Absolutely, we did. Here's how we went after it. Here's how we tested it. It didn't work out. Here was the reasons, but here's the other ideas that we got out of it. So that complacency of just doing the same thing, I think it applies to BD today. Today's market requires more than just going to a conference, going to an event, checking the boxes, saying you made X many calls and I've collected these deals. It's finding ways to create more value in those conversations than just checking those boxes. The other one was, again, going back to my quasi-GE days, the guys that ran the Gates business were all GE guys.

44:25And it was about plan, execute, measure, repeat. So it was this constant loop and the measurement piece was so important. And so one of the guys always said, luck is the residue of good planning. And I don't know where he got it from, but kind of like you planning out three years ahead, right? What am I going to be doing? You take out that variability in the equation. If you are planning, executing, measuring, and evaluating that, you eliminate a lot of that variability in the process. And it doesn't matter what you do, you can apply it, whether it's your daily life or it's your work life. You can't imagine how much I love that.

45:01And again, I mentioned this almost every podcast. I don't even know how many guests I've had, close to 200. I have never yet to have somebody say the same quote out of all of those guests. They all have unique ones, as you just provided. But the one thing that I'm going to come back to, which will help some of our younger professionals that listen to this, is that what time is ASAP? I remember early in my career, my team getting super stressed out because Friday at four o 'clock, a client calls and says, hey, I need XYZ. And they're like, they work all weekend on it. And I said, did you ask when they needed it?

45:37They just said, I need XYZ. They didn't say, okay, when do you need it by? And we started doing that. And they started to understand that they would go back and say, okay, appreciate it. I got it. I'm going to get on it. When do you need it? And sometimes they say next Thursday. and they just saved the whole weekend. So what time is ASAP, right? What time is ASAP? That is a fantastic quote. That one's pretty tangible. That one's pretty tangible. Yes, it is. And can solve a lot. And to your point that you just made, solves a lot of headaches. Absolutely. Well, David, this has been really enjoyable.

46:11I know our audience is going to very much enjoy this podcast. And I'm going to ask my final question that I always ask, which is if you're at the final stages of bidding on a new company and maybe it's whittled down to two firms and I'm the seller trying to figure out which firm I'm going to go with tonight. What are the key things you want me to remember as I'm making that final decision? I'm going to be your partner and there won't be finger pointing. We're in this together and that's how we operate our firm. Mistakes are going to be made. There's going to be challenges. But if you're aligned and you really have a partner that's going to be there for you, when things are good, we're going to both share it together.

46:47And when things are not going in the right direction, at some point, we're going to put our arms around each other. We're going to go figure out how to move it forward. And if you have that confidence, we're going to find a way to success with it. I love that. I love that. Short, sweet, and to the point, and actually hits home with me as a seller and resonates in a major way. So I appreciate it and very much appreciate you joining me today. Thanks very much, Jeff. I enjoyed the conversation and enjoyed the time.

47:18David Hellier: 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.