Middle Market Growth Conversations

Olympic swimmer Ryan Lochte is trying to repair his reputation after two suspensions that cost him valuable sponsorship endorsements and hurt his chances of qualifying for what would be his fifth Olympic games in 2020. To try to fix the damage, the 35-year-old swimmer signed on to CNBC's "Back in the Game," in which former baseball player Alex Rodriguez helps athletes repair their finances and reputations, as he had to do a decade ago following revelations that he used performance-enhancing drugs. Lochte accompanied Rodriguez to ACG's 2019 InterGrowth conference, where Rodriguez was speaking, and sat down with Middle Market Growth for an interview about the show, his swimming career, and how he plans to regain the public's trust. Lochte was suspended from swimming in 2016 during the Rio Olympics, when he claimed he was robbed at gunpoint, which led to accusations that he filed a false police report. He was suspended again in 2018 after he posted a photo of himself taking an IV injection, which the U.S. Anti-Doping Agency prohibits under most circumstances. As a result of the suspensions, Lochte lost his sponsorship endorsements and much of his income. Parts of this interview were included in the episode of "Back in the Game" featuring Lochte, which originally aired on Nov. 13. (https://www.cnbc.com/video/2019/11/07/full-opening-the-first-7-minutes-of-the-ryan-lochte-episode.html)

During the Toronto ACG Capital Connection conference, Middle Market Growth sat down with leaders from two technology-focused growth equity firms. The first interview in this episode features Scottie Wardell, managing partner and co-founder of Integrity Growth Partners, a firm based outside of Los Angeles that invests in software and tech-enabled services businesses. Wardell discussed the role of data analytics in value creation and how her firm leverages data during sourcing and due diligence. The second interview is with Lisa Melchior, founder and managing partner of VERTU Capital, a Toronto-based firm that invests in Canadian technology businesses. Melchior spoke about the tech investing landscape in Canada, why venture-stage companies have had an easier time attracting capital than their late-stage counterparts, and how VERTU works with entrepreneurs to take their businesses to the next level. To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

Kal Beidas, former president and CEO and current board member of Aetna Bearing Company, spoke with Middle Market Growth on the sidelines of the Great Lakes ACG Capital Connection in Detroit to discuss the impact of tariffs on midsize manufacturers and how trade developments are reshaping due diligence. Aetna, a bearing manufacturer based in Livonia, Michigan, is among many U.S. businesses affected by the Trump administration's tariffs on Chinese goods. Beidas described the opportunity costs for companies as they divert resources to customer service, price negotiation with customers and price concessions with suppliers. He also discussed what companies should consider when looking to shift to suppliers outside of China, and he suggested ways to evaluate supply chain exposure when considering an investment. To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

Dug Song is vice president and general manager of Duo Security, which he founded in Ann Arbor, Michigan, in 2010 and sold to Cisco last year for $2.3 billion. He sat down with Middle Market Growth on the sidelines of the Great Lakes ACG Capital Connection in Detroit to talk about the origins of Duo, why he decided to sell it to Cisco, and how the company helped draw venture capital investors to Michigan. "The things that you do while you're small get amplified in hypergrowth," Song said, while speaking onstage at the conference. On the podcast, he elaborated on that comment by describing steps Duo took to build a strong culture early on and as it grew to reach unicorn status, and how he ensured the business could maintain its values post-acquisition. He also weighed in on the state of the information security industry, and how he's seen it evolve over the last decade. For more insights into corporate development and M&A, consider attending ACG's Strategic Acquirer Summit on Nov. 4-5 in Dallas. Designed for corporate professionals, the program will feature speakers from Microsoft, Twitter, Johnson & Johnson, Mark Cuban Companies, and many others. Visit acg.events/sas2019 to learn more. To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

Kevin Depew, RSM's deputy chief economist and industry eminence program leader, spoke with Middle Market Growth about RSM's Q3 U.S. Middle Market Business Index. The index, which slipped to 129.4 from 132.3 in the third quarter, reflected a decline in confidence among middle-market executives from the previous period. Depew notes that although any reading above 100 indicates confidence among business leaders, the latest survey was conducted prior to recent escalations in the trade war with China and so does not reflect uncertainty associated with those developments. With a global slowdown in manufacturing underway, there's the potential for risk to spread to other industries, such as professional services or commercial real estate, Depew says. The Q3 MMBI report includes steps that middle-market companies can take to prepare, and he points to two as being particularly important for surviving the trade war. At the end of the interview, Depew recommends "Capitalism without Capital: The Rise of the Intangible Economy," a book that he's reading as part of the industry analyst program he oversees at RSM. To read the latest RSM US Middle Market Business Index, visit https://rsmus.com/economics/rsm-middle-market-business-index-mmbi.html To read more about trends in the middle market, visit MMG's website, middlemarketgrowth.org.

Andrew McCabe, former acting director of the FBI, spoke with Middle Market Growth about the mounting threats posed to the public and private sectors by state-supported hackers. McCabe chronicles much of his time with the FBI in his new book, "The Threat: How the FBI Protects America in the Age of Terror and Trump." He spent 22 years with the bureau, where he began his career as an agent in the New York field office. He worked high-profile cases, including the 2013 Boston Marathon bombing, the Clinton email investigation and the investigation into Russian interference in the 2016 election. He assumed the role of acting director of the FBI in May 2017. On the podcast, he described his reaction to the findings of the Mueller report and whether he has seen an improvement in security leading up to the next presidential election. He also addressed how cyberattacks against U.S. businesses have evolved in recent years, the impact he expects the trade war with China to have on malign cyber activity targeting American companies, and how the FBI has adapted to increasingly advanced cyber threats. The episode referenced in the intro, featuring Chris Voss, the former lead hostage negotiator for the FBI, is available on the MMG site: https://middlemarketgrowth.org/podcast-former-fbi-lead-hostage-negotiator-chris-voss/ To hear that episode and to read about trends in the middle market, visit middlemarketgrowth.org.

Jessica Robinson, co-founder of the Detroit Mobility Lab and president and executive director of the Michigan Mobility Institute, sat down with MMG on the sidelines of last week's Great Lakes ACG Capital Connection in Detroit to talk about training the engineering workforce of the future. In Robinson's definition, mobility encompasses the transportation of not only people and goods, but also livestock, food, and even data and information. It also increasingly includes an emphasis on social and environmental considerations. She discussed her organization's focus on creating a talent pipeline for mobility careers, which require expertise in areas including software development, cybersecurity and data science. The skills gap is already causing a hiring bottleneck and threatens to limit the growth of mobility businesses in Michigan and beyond. At the end of the conversation, Robinson weighed in on autonomous vehicles and when we'll see them on the roads. To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

Tom Turmell, founder and managing director of TMT Capital Partners, spoke with Middle Market Growth about how health care entrepreneurs are looking to grow their businesses, and the common questions he hears about private equity, which continues to show strong interest in acquiring physician practices. In addition to his role at TMT, Turmell delivers and teaches a class to physician entrepreneurs at Northwestern University's Kellogg School of Management, where he serves as director on the executive education team and as an academic director. During the interview with MMG, he described what his Physician CEO class covers, and the questions he's heard from his students about selling to a private equity buyer. Common concerns include loss of control, both in terms of the patient experience and in making key business decisions, as well as questions over future compensation for the doctors selling the practice and junior physicians alike. Some physicians recall a spate of failed physician practice investments by PE firms over a decade ago, but Turmell says the private equity industry has learned from those past mistakes. Choosing the right investment partner remains critical, and he suggests considerations for physicians to keep in mind as they evaluate potential investors. During the conversation, Turmell referenced an article published in MMG in May focused on physician practice M&A: https://middlemarketgrowth.org/the-round-private-capital-stitches-up-physician-practice-space/ That article was featured in a health care-themed edition of the magazine. The full issue is available here: https://middlemarketgrowth.org/read-the-may-june-2019-issue/ To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

On the sidelines of ACG Denver's Rocky Mountain Corporate Growth conference, Middle Market Growth sat down with two corporate leaders from Colorado: Karla Nugent, founder and chief business development officer for Weifield Group, an electrical contractor; and Stuart Smith, CEO of Buehler Companies, a moving, logistics and storage company. In this episode, Nugent and Smith discuss how their companies have grown since they were founded, the role of M&A and private capital, and dealing with disruption in their respective industries. They also describe strategies they've used within their organizations to build a strong culture, and how they've addressed talent shortages. Nugent spoke about the career paths available in construction, an industry that has changed amid technological advancement; meanwhile, Smith discussed the impact of marijuana legalization in Colorado and how Buehler has adapted its own drug-testing policies. Nugent and Smith were panelists during the Corporate Development Summit held at the start of the Rocky Mountain Corporate Growth conference in April. To build on the momentum of ACG Denver and other chapters with corporate development initiatives, ACG Global will host its inaugural Strategic Acquirer Summit in Dallas on Nov. 4-5. More information about the event, including eligibility criteria and registration details, is available at acg.events/sas2019.

Christopher Gavigan is co-founder and chief purpose officer for The Honest Company, the baby, home and beauty products company he started in 2012 with actress Jessica Alba. On the podcast, Gavigan discussed his experience running a wellness brand, including building trust with customers, recovering from product recalls and reputation challenges, and competing at a time when consumer goods giants are pivoting toward healthy and safe ingredients. Gavigan also talked about his latest venture, Prima, a wellness brand focused on the benefits of CBD and hemp, and what his role at The Honest Company looks like today. To listen to past podcast episodes and read about the latest trends in the middle market and M&A, visit middlemarketgrowth.org.