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This episode is the second in a three-part series we are running on Chenmark, a highly successful small business holding company founded in 2015. Today they have acquired 11 operating companies, completed 30+ acquisitions when including add-ons, and have over 600 employees today.
This second episode focuses on their operating ethos, culture, and incentive structures. We discuss meeting cadence and formats across the company, the use of debt, CEO incentive models, broad incentives beyond CEOs, and lessons learned from building and maintaining good cultures. I hope you enjoy this second part of the series with James Higgins and Palmer Higgins.
Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.
Links:
James on LinkedIn
Palmer on LinkedIn
Chenmark
The Weekly Thoughts Newsletter
Listen to Part 1 of this series here
Topics:
(4:26) - How do your core values extend to your portfolio companies?
(6:13) - What are some ways you learn about the culture and core values of a company you acquire?
(8:32) - Is there a wide range in terms of how quickly teams can adapt to these new core values?
(10:52) - How do you assess the willingness to change the culture in new ownership?
(13:57) - Are there a set of recurring meetings you have in the early days of ownership?
(20:02) - Is there an ideal set of principles and tools you’re looking to reach internally for portfolio companies?
(21:26) - Is there a way you’re storing past decisions in a database?
(27:43) - What’s the next piece of the communication cadence journey for you?
(29:00) - How many acquisitions are you making per year?
(32:34) - Are there any other flywheels you didn’t anticipate coming to fruition?
(35:14) - What’s been the evolution of CEO incentives?
(38:53) - Chenmark’s stock purchase program
(42:54) - What companies do you look to for inspiration on compensation plans?
(44:30) - Does the incentive plan change across roles?
(47:06) - Are there any negative consequences of a Free Cash Flow Compensation plan?
(51:51) - What’s the philosophy behind the FCF compensation plan?
(55:18) - Are there any other common principles around compensation or budgets that don’t fit with what you want to do?
