Mike Odrich, the Managing Partner and Founder of A&M Capital Partners, shares his journey from aspiring doctor to private equity expert managing $5.9B. He discusses adding operational value to investments, emphasizing strategic partnerships with A&M Consulting. Mike highlights the shift from public to private equity, lessons from the 2008 financial crisis, and the challenges faced by family-owned businesses. He delves into navigating today's economic landscape, emphasizing the importance of operational expertise amidst rising interest rates and inflation.
Mike Odrich emphasizes the critical role of operational improvements in enhancing company value, particularly through the collaboration with A&M Consulting.
His career journey illustrates the importance of adapting to market changes, highlighting strategic investments during periods of volatility and opportunity.
Odrich underscores the necessity for private equity firms to balance securing good deals with avoiding bad investments, focusing on strong leadership and risk assessment.
Deep dives
Mike Odrich's Journey in Investing
Mike Odrich's passion for investing began at a young age, growing up in a middle-class neighborhood where he developed an interest in the stock market. His first investment was in Ramada, a hotel chain entering the gaming space, highlighting his early understanding of growth opportunities. Despite initially pursuing a career in medicine, he shifted to Wall Street after being drawn to corporate finance and investing. His foundational experiences at Lehman Brothers in M&A further cemented his career path into private equity, where he sought to create value through strategic investments.
Transition from Lehman Brothers to Private Equity
Odrich navigated significant changes during his tenure at Lehman Brothers, especially during the 1994 spinout from American Express, which provided him the chance to establish a diversified private equity platform. He identified opportunities during the internet boom, leading investments in promising tech ventures that yielded high returns. Despite Lehman’s eventual bankruptcy in 2008, Odrich leveraged his connections and expertise to reposition valuable investment strategies into new firms. This experience helped him understand the vital role of operational capabilities in generating value amidst market volatility.
Key Investment Lessons Learned
Throughout his career, Odrich has emphasized the importance of skepticism and due diligence in investment decisions, particularly when evaluating information provided by sellers. He believes that understanding the business model and identifying key risks are essential steps in assessing potential investments. Odrich also highlights the significance of having the right leadership as businesses scale, arguing that a founder may not always be the best fit as a company grows. Additionally, he reflects on the necessity for private equity firms to not only secure good deals but also avoid bad ones, underscoring the delicate balance in investment approaches.
A&M Capital's Unique Operational Approach
A&M Capital integrates operational expertise with private equity investments by leveraging the capabilities of A&M Consulting, which provides essential management support to portfolio companies. This approach is designed to help businesses overcome operational inefficiencies, particularly in family-owned firms lacking robust systems. By focusing on essential services and recession-resistant business models, A&M Capital targets investments that are both manageable and profitable. The firm emphasizes a collaborative culture where decision-making is shared among partners, ensuring diverse perspectives are considered in investment evaluations.
Navigating the Changing Private Equity Landscape
Odrich discusses the implications of rising interest rates and inflation on the private equity landscape, noting the challenges related to higher borrowing costs for portfolio companies. He stresses that firms need to adapt to these economic shifts by focusing on operational improvements rather than purely financial engineering. As weaker firms may struggle to raise capital in this environment, the potential exists for more significant opportunities for those with a strong operational focus and sector expertise. A&M Capital aims to differentiate itself through its established methods while navigating the evolving market dynamics.
Mike is a Managing Partner and Founder of A&M Capital Partners, which is a private equity firm that manages $5.9B of total commitments (as of 9/30/24). In this episode, Mike shares valuable insights on how to add value to companies through operational improvements, leveraging the unique partnership with A&M Consulting.
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