Relationships matter and we need to get to know people, for people. Especially if you’re working in business development for private equity, which is by nature, a highly transactional environment and it can be very easy to forget the people side of things. Today’s guest is Jessica Ginsberg, the Director of Business Development for LFM Capital out of Nashville, TN. Jessica is responsible for LFM’s business development activities such as overseeing the firm’s direct sourcing and outreach to intermediaries. Jessica has served in many different roles including business development, transaction diligence, credit analysis, and investor communications. In today’s episode of Branch Out we dive into our conversation on why relations and responsiveness matter, the need for an established workflow, the importance of culture in a transactional world.
Key Points From This Episode:
- Jessica unpacks why relationship matters and we should get to know people for people.
- How Jessica manages the building relationships and making deals balance.
- The importance of responding: Responsiveness matters.
- Why a workflow is helpful to effectively manage relationships and communication.
- The importance of intentional messaging: Having a unique story and approach.
- How to create and articulate your “story.”
- How to bring company culture to the forefront of your focus: People are important.
- Jessica shares a personal experience about the importance of culture.
- More about the LGO Program: Leaders for Global Operations.
[00:00:01] ANNOUNCER: Welcome to Branch Out, a Connection Builders podcast. Helping middle-market professionals connect, grow and excel in their careers. Through a series of conversations with leading professionals, we share stories and insights to take your career to the next level. A successful career begins with meaningful connections.
[00:00:21] AD: Hey everyone, welcome to Branch Out. I’m your host, Alex Drost. Today’s guest is Jessica Ginsberg, director of business development for LFM Capital out of Nashville, Tennessee. Jessica and I dive into why relationship and responsiveness matters, the need for an established workflow and the importance of culture in a transactional world. Hope you all enjoy.
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[00:00:51] JG: Jessica, welcome to Branch Out. I’m excited for our conversation today.
[00:00:56] JG: Thanks, Alex. Me too.
[00:00:56] AD: Jessica, a few weeks ago you and I were having a conversation and you said to me something I thought was really powerful that I’d love for you to unpack for a listener. So you said relationship matters. Get to know people for people. And real quick before you unpack that. Why I think that’s so important is you sit in a function of business development for private equity, which is by nature a highly transactional business, right? And that doesn’t mean that the relationship side doesn’t matter, but you are doing deals. You are doing transactions, and it’s very easy to forget the people side. I would love just to hear how you’ve overcome that.
[00:01:30] JG: Yes. No. Of course, I think it’s a great question. So exactly as you said, we live in a really fast-paced transaction-driven environment where we want to see results, and translated into my private equity business development world that means show me the deals. And while clearly we want to see the deals, I think it’s really important to understand that this is a really long game and it’s much more gratifying to build meaningful relationships and play an active role in those relationships sort of evolving into business opportunities over time. I’ve always tried to take that approach, and I think one of the things that’s been really interesting about these last several months of Zoom calls and working from home is learning just how little we know about the people we talk to all the time. I found myself really appreciating hearing the sounds of people’s kids and dogs and birds outside, whatever it was, and really taking the time to dig a little deeper. At the end of the day I think we’re all trying to find commonalities and ways to connect and stay memorable. And I think developing those personal relationships is really the best way to do that.
[00:02:46] AD: I think you’re so right on that. And let’s step back and say though you’re busy, you’ve got a lot in your plate, you’ve got a lot of people to talk to. You’ve got to keep up with the appropriate level of deal flow to match the requirements of your firm and of your fund. How do you manage that? How do you balance that? Because taking time to get to know people, that takes real time. And I like you said in there, it’s a long game. How do you manage that? How do you keep that balance?
[00:03:09] JG: Sure. So I think, number one, you’ve got to be – You’ve got to be really organized and I think you have to have kind of a system. We all get tons of emails hundreds a day probably for most of us, and there does become a point where I think it’s impossible to respond to each and every one. But I think remembering that there’s a person at the end of every message really, really helps. And so I think there are ways to do this more effectively. We’ve actually had had lunch and learns at our office about how to manage email. So I think you can flag what’s important and what you want to get back to within 24 hours. You can good old pen and paper, make a list. But I think really developing a system that you subscribe to helps.
I think, for me, every day I hear my mom’s voice in my head, “What? You didn’t respond to that? You didn’t call that person back?” because it was just how I grew up. If someone gave you the courtesy of a phone call or a message, you wrote back. So I think translated into my today’s world, I hear from bankers all the time that they send deal opportunities to firms and get no response. And for me, that’s shocking, because we don’t take the time to explain why we might not be interested in a deal. The next time that same banker is just going to assume we’re not and we won’t have that shot. And second, it’s just rude. In my view, this is kind of common courtesy elementary school stuff. Treat other people the way you want to be treated, and I think we need to remember that.
[00:04:35] AD: I’m hearing you loud and clear there. Responsiveness matters. And if I’m hearing you right, you realize that, as a person, if you send someone an email and you don’t get a response or you call and leave someone a voicemail and you don’t get a response, how does that make you feel as a person, right?
[00:04:51] JG: Exactly. And I mean, for me – And look, maybe I’m more sensitive than the next guy, but when I send someone a note and take the time to try to make it personal and get nothing, I’m wondering, “Well, gosh. What did I do wrong? Why is this person not responding to me? Now, chances are, “Hey, that person’s just having a busy day. And if I try again next week or if I try on you know Monday afternoon instead of Thursday morning, I’ll get that response.” But I just think that you have to make sure that you’re hearing what’s being said to you and people will, I think, thereby hear what you’re saying back.
[00:05:28] AD: One thing I want to say to our listeners I think is so important, recognizing, again, responsiveness matters, because no one wants to feel like they’re forgotten about or they were ignored. We all understand life gets busy. Things are going to fall through the cracks from time to time. It’s going to happen. And at the same time you’re going to get emails in your inbox that you just simply don’t have the bandwidth or the capacity to get back to. I would recommend try to find a way to at least shoot some kind of a quick response back. But understanding too that if you’re sitting on the other side of that, if you’re the person that is sending it and not getting a response, give people some grace. Understand that life is busy.
[00:06:01] JG: Exactly. Exactly. 100%.
[00:06:04] AD: One thing you said there was this idea of system, and I know you and I have talked about this before. Your firm is very much focused on the value of having a system and a process to do something. Explain some thought around why you need to have that workflow and maybe some thoughts of what you’ve done to make sure that that workflow and that system stays in your life to ultimately give you a better ability to manage those relationships and manage that communication.
[00:06:29] JG: First of all, what you said is exactly right. Our firm was founded by engineers, former operating people who kind of grew up in and around manufacturing shop floors and people who subscribe very deeply to lean manufacturing. And so we take the time in our office to go through and really think about and evaluate what processes work.
For example, if you go into our office kitchen, you’ll see that every drawer, shelf, cabinet is labeled with what is supposed to go in that drawer on that shelf or in that cabinet, and it helps keep our kitchen pretty darn organized. And so I think very similar in this case. So for me, I will typically get into the office in the morning. I will scan through my inbox going back to 24 hours. If you do it every day, then you don’t have to go back further than 24 hours. I will open every email that requires a response and I will leave it open until I respond to that email.
Now some days that looks really ugly and scary, but I find that it’s basically making a list. And as I close each email, I’m checking each one off. And so for me, that works. If I didn’t do that every day, I would end up with hundreds and thousands of emails that go unresponded to. But I think and what I’ve heard from the marketplace is that it doesn’t go unnoticed. I sit down with bankers all the time who say, “Gosh! I can’t believe the amount of non-responsiveness that’s out there and people that look me in the eye and say you know this relationship matters.” But clearly it doesn’t, because you didn’t even respond. So I really try to stay true to that.
[00:08:03] AD: I think that’s so true there, and one thing again I want our listeners to make sure they’re hearing loud and clear here. Having a system and having a place to put things or having a way of doing things is critical in effectiveness and efficiency and making sure that you’re really doing those important tasks that must get done. In this case, we’re talking about from a relationship building standpoint. But if you don’t have a workflow for your email, if you don’t have a process to make sure that you’re following up or a process to make sure you’re putting something in the right place, then how do you know where it goes? How do you know what to do? Do you really want to remake that decision every time?
And so many of us have natural workflows, we can call them habits, built into our lives of ways we do things. But making sure that you step back and you’re conscious of that and saying, “Okay, why do I have that habit? Or why am I doing it this way?” and making sure that’s in alignment with what you’re trying to really achieve in the longer term picture.
[00:09:00] JG: Yeah. No. I think that’s exactly right. And I think in today’s environment we have so many tools at our fingertips to develop those workflows. I think most of us have access to CRMs, for example, that track things that we probably don’t even know. How many days has it been since you’ve connected with this person, this firm? Understanding the tools you work with and how to optimize them is really important.
[00:09:24] AD: The technology side, the day and age that we live in today, I think everyone should recognize that it’s easier now than ever before to put those systems and processes in your life and have automation behind them to make sure that you are focusing on what really matters and that you’re staying on track with the big picture goals that you have to achieve.
[00:09:45] JG: Right. Right. And I think that’s exactly right, and I think just like everything with technology, you have to use it wisely. Just because my CRM can tell me how many people I haven’t talked to in more than 90 days does not mean I should send out a blast email to a thousand people that is very sort of high-level, not personal, etc. But it means I need to go through that list very carefully and figure out what message I want to send to which person and do it in a very intentional sort of way.
[00:10:15] ANNOUNCER: This is Branch Out, a Connection Builders podcast.
[00:10:25] AD: That touches on something else I want to dive into here. So you talk about making sure you’re messaging in an intentional way. And you’ve said this to me before, having a unique story and an approach matters. Help our listeners understand why that unique story matters and how you’ve been able to develop yours and use it to leverage in the marketplace and build your brand and your firm’s brand.
[00:10:45] JG: Sure. Sure. So I think you know in the same vein as thinking about just how many emails we get every single day. This is a crowded market. There are a lot of us out here trying to stay up front, trying to build relationships, trying to be responsive, trying to stay current in front of mind. In my view, the best way to do that is to be fundamentally different. We’ll take this opportunity to explain why we at LFM are different. As I mentioned briefly, our firm was founded by engineers and operators who grew up in factories and really understand the types of businesses we invest in. And because we’ve lived it and breathed it and continue to have a ton of passion around it, this operational experience in our firm’s focus on manufacturing really makes us unique. And I think our ability to add value to the companies we partner with based on what we know, who we know and where we’ve been is really meaningful to business owners and the management teams we partner with. So I think having a story not just being another firm looking to make money just isn’t good enough in today’s really competitive environment.
[00:11:54] AD: You’re so right there. As a professional, especially as a private equity professional, you have a commodity, right? You bring dollars to the table and everyone’s dollars look about the same. The difference is that the people and what you’re bringing to the table that really differentiate you, right? There’s that human element. We’ve talked about it’s important and everyone can, I’m sure, nod their head and say, “Yes, it’s important to have a unique story and a unique approach.” How do you go about making sure that you know what that is for you and for your firm? And then more importantly, having the ability to really articulate that value when you’re communicating with the marketplace?
[00:12:33] JG: That’s a good question. I think, for us, I would say I consider myself very lucky because I have a great story to tell. I think I can see how for some firms it could be tougher. For some firms you might need to be really intentional about creating the story. So maybe you tell a story based on the types of businesses you invest in and the successes you’ve had. Maybe there’s a common thread in the types of management teams or owners that you partner with and what works or what doesn’t work for your firm. For our firm, I’m able to tell the stories of the backgrounds of my partners. And in many cases draw really bright lines between, for example, the operating experience of our partners and the businesses that we invest in. So I think, for us, that has been really effective and our partners really understanding of kind of what makes these businesses tick.
And I think on top of that, just kind of firm culture and making sure that the culture of your firm really emanates from everyone representing your firm. For us, we’re in Nashville, our office is in an old firehouse. We have a very sort of non-corporate, more hands-on ops culture. And I think that talk to anyone in this firm for 30 seconds and you’ll get it. So I think that’s important.
[00:13:50] AD: Well, let’s dive into that for a minute. Let’s talk culture matters, right? We all say that, right? You’re never going to say culture matters and someone’s going to argue and say, “No, it doesn’t. Culture is not important.” We all know it’s important, but what does that really mean? How do you really step back and make sure that you’re focusing on culture and bringing it to the forefront?
[00:14:09] JG: Sure. So I think it really comes down to people and making sure that you value people and your people know that you’re valued. We really pride ourselves on being stewards of a company’s legacy. So we really try to embrace the culture of a business and work with the people to sort of elevate and develop teams and so that everyone’s on the same page and we can really rally around taking a business to the next level. We really focus on partnerships versus sort of taking a heavy-handed approach. And I think private equity historically has kind of a bad rap, because this impression of a company getting bought out and guys in suits coming in firing people, shutting down factories, cutting costs to no end. And I think we really try to take the opposite approach, which is to come in and say, “Hey, let’s all sit around the table and talk about the best ways to grow this business and then let’s sort of come to agreement and then figure out, “Okay, which lever do we want to pull and how hard and in what order?” So we found that sort of getting ourselves on the same page really work.
And on the people side, really taking the time to get to know people. We certainly look at businesses of different sizes and have a pretty broad range, but not only do we define that by revenue and EBITDA, but we also think about people and we will be hesitant to dig into a business where there are more than, say, 250 employees. Because from our perspective, it’s really hard to know everybody’s name, for example, when a business gets bigger than that. And so we feel like given where we’re playing in the lower middle market, that’s important.
[00:15:46] AD: I think what you’re saying there’s, it’s very spot on. And I think you know before you and I have talked about an example where your firm may be unintentionally skipped over the people and culture part, but then quickly realized where that might have of hurt you in the deal process and then made a quick pivot to adjust and fix that. Can you share some insight around that?
[00:16:06] JG: Yes, of course, and this was a really enlightening experience for our team. One of the things we really pride ourselves on is knowing the end markets, knowing the operations side of the companies that we dig into better than anyone else out there because of the operating experience that we have. And we were looking at a business a couple years ago where this was just a slam dunk for kind of what we know, who we know, etc. And we felt like, “Okay, if you put us in the driver’s seat of this business, take it to the moon kind of situation.”
And so we went through sort of the normal process, submitted a bid, got to sort of the management meeting stage and we got to the dinner. And we immediately started sort of firing away with business questions and kind of wanting to talk about the business and show just how smart we were understanding the distribution channel, understanding the products, etc., etc. And had dinner, it was fine, and then went on to the management meeting, and that was that.
When the team got back to the office, the feedback that we got from the banker was, “Hey, it was really clear that you guys know what you’re talking about. But from a cultural fit perspective, you didn’t score very high. The other teams that this company had met with previously, they just talked about baseball. It was much more of a, “Hey, let’s just get to know each other and see if there’s any chemistry there.” And we were so grateful for that feedback. We took it and we said, “Oh my gosh! Yeah, you’re right. We got really excited about the business and we wanted to talk about the business. But people and culture are absolutely as important. And so we went back and said, “Oh my gosh! You’re absolutely right. We invited the business owner and the team to come down to our office in Nashville. We basically said, “Hey, let’s have a redo.” Thankfully that went very well and we did end up winning the deal and closing the deal and things are going great, but that for us was sort of a shining bright moment that I think we think about all the time and sort of before we go to meetings especially when we feel like we might be the smartest ones in the room to kind of step back and say, “Whoa! Whoa! Industry knowledge and company knowledge isn’t everything.” And we’ve got to make sure that we all enjoy each other’s company, because this is a long road.
[00:18:12] AD: People don’t care how much you know until they know how much you care. There’s so much of that relationship building that it’s not about just talking about how smart you are and how much you know. And in your case here, right? I mean very clearly it wasn’t intentional. It wasn’t your team trying to go in and just show off how smart they were. They were excited. They were giddy about this.
[00:18:32] JG: Oh, absolutely.
[00:18:33] AD: Right? And that happens. We all get there, myself included. You get excited about something. You love it and you get fired up and you just want to talk about it. And it’s really easy to forget that, “Hey, let’s make sure that the human on the other side of the table here, that we’re really getting to know them as well. Let’s make sure –” And listen, if you start getting giddy and talking about the business and the person on the side of the table is just as giddy and that’s a way for you to bond, that’s great, but that doesn’t always happen and you have to make sure that you’re building that relationship first before necessarily just demonstrating the knowledge.
[00:19:05] JG: Right. And for us, we always say – We might lose because we’re not the highest bidder. And if all that matters to the seller is being the highest bidder, we probably aren’t the right buyer, because we think people, culture, story, all of these other things matter. So when we received that feedback, we were like, “Oh man! If it’s the valuation, we’ll take it. We’re out. We get it. We lost. But we can’t lose on culture. We can’t lose on fit. We put so much effort and pride into that.” So that one hurt, but thankfully we fixed it.
[00:19:38] AD: One really good thing to look back there, one, the banker was generous enough to make sure they were giving you the right feedback and still having some open mind there. But more importantly, you and your team were open-minded to say, “Whoa! Maybe we did mess this up a little bit.” Because, again, I’m sure it wasn’t intentional. I’m sure they didn’t come back and say, “Man, we really missed it on culture,” right?
[00:19:58] JG: Right. Right. Right. Right.
[00:19:59] AD: So, again, you have to be open-minded to that, but you went in. If you’re in the situation whether you’re the bank or anybody else but you’re in a situation where you can provide that feedback, make sure you do. And then if you’re in the situation where you’re getting that feedback, make sure you’re acting upon it.
[00:20:13] JG: Yes. Yes. Completely.
[00:20:16] ANNOUNCER: This is Branch Out, bringing you candid conversations with leading middle market professionals.
[00:20:23] AD: Last thing I want to jump into here, you’ve mentioned the LGO program before. I’d love if you could share just a little bit about that, because I think it’s something that our listeners and others would really benefit from hearing.
[00:20:34] JG: Sure. Sure. And I would say this thing that kind of goes into that uniqueness of LFM and in another way that we’re different. So three out of four of our partners here at LFM attended a program at MIT up in Boston that is called LGO, Leaders for Global Operations. Now at the time when Steve, our most senior founding partner, went to this program, it was actually called LFM, which stands for Leaders for Manufacturing, and is obviously where we get our name. Today, LGO stands for Leaders for Global Operations. And it’s a two-year program that you come out with a master’s of engineering and an MBA. And when the program was founded, it was at a time when a lot of manufacturing in the US was going abroad and large US manufacturing companies were trying to find a way to sort of attract top talent that year go into manufacturing. And so they partnered with MIT to create this program. And it really prides itself on breeding kind of the next generation of manufacturing leaders.
So my partner Steve went through this program. He then went to work for Dell. Dan Shockley went through this program. He then spent years and years at caterpillar. And then Chris Lynn, another partner here at LFM went into consulting at Bain. So all three just very strong operating backgrounds. But what’s interesting is it’s a really tight-knit program, about 40 to 50 alumni a year and just incredibly tight-knit relationships coming out of the program. So a network that sort of keeps growing every year but that remains really intact. And I would say our firm knows people who came out of this program going back 20 and 30 years who have all had very impressive careers in and around manufacturing. In many cases, very large, well-known companies like GM, Boeing, etc. So what’s been really interesting for us as a firm is being able to really partner with this program and partner with this network to find talent to come play really active meaningful roles in our portfolio companies. So it allows us to be much more flexible in how we approach deals and management teams.
When you have you know maybe an aging business owner who says, “I really want to sell my business and go to the beach.” A lot of private equity will get scared by that because a management transition does introduce risk. We can be very in arms in a situation like that because of our confidence in being able to find a leader. Being really aligned with this program and, again, sort of the cultural backgrounds of these people has been really helpful. So we as a firm have gotten involved with the program. We’re sort of an official partner to the program. So our portfolio companies have opportunities to get interns from the program. And our partners help present in certain classes and things like that. So it’s been a really great sort of addition to our firm.
[00:23:33] AD: What I love about the story there and why I wanted to make sure we shared it here on the podcast is whether it is the LGO program or others, it’s stepping back and saying, “How do we build relationships with the next generation of talent? How do you put yourself in a position where you’re able to build a network around and continue to have those relationship?” Because especially in your role, especially if you’re sitting in a private equity sponsor seat, you’re going to have to continually find talent. But I think that really goes for anyone in a professional career. It’s how do you build that network out with the right line of next level talent that you need to bring into your organization to continue to grow and prosper.
[00:24:12] JG: I think that’s exactly right. And with everything, I think this goes back to the very first question you asked me. It’s a long game. And so you know you really have to put the time in and sort of plant these relationship seeds through your career and through your lifetime and keep pruning and keep developing. And it has paid incredible dividends to us at our firm.
[00:24:36] AD: Awesome. Well, again, thank you so much for sharing that and thank you so much for your contribution to the show today. This has been a lot of fun and I really hope that our listeners enjoy what you had to share here.
[00:24:45] JG: Awesome. Thanks, Alex. It’s been great.
[00:24:46] AD: Awesome. Thank you so much.
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