This episode features an interview with John Broderick, Operating Partner at Argosy Private Equity. In addition to operating partner, John has served as a business unit manager, a general manager, and a VP of operations. And now he supports growth initiatives as part of Argosy’s private equity team.
As an engineer (unusual in the private equity world), John cut his teeth as an operator for small divisions of large billion-dollar companies. After being exposed to world-class business execution, he made a pivot into private equity bringing a “been there, done that” skill set. He’s excelled in private equity for 15 years, making for an almost 50/50 career split.
Some key takeaways from our conversation:
About Argosy Private Equity
- Argosy Private Equity invests in the lower middle market with a diverse portfolio of companies in industrial manufacturing, municipal services, aviation, and franchising.
- John has been involved with Argosy as an Operating Partner for five years.
Value Creation Methodology
- Argosy leadership developed a proprietary value creation toolbox modeled after best-in-class companies, such as Sandvik, Siemens and Danaher that they offer to their portfolio.
- John is a practitioner and a zealot, of best practices. When he came to Argosy, he brought a set of tools which they call the Value Creation Methodology.
- Argosy has deployed those 40 tools across its portfolio with good success.
- Chief Outsiders was instrumental in building out Argosy’s marketing playbook with best practices. That’s how they go to market and how the operating partners work with the portfolio group.
Engaged from LOI
- The operating partners get involved post LOI (letter of intent). That helps with integration and creates a much easier transition post close.
- They work with the deal team, and in most cases, cooperatively manage diligence streams.
- Earlier involvement helps to build relationships, understand the levers of the business, and avoid delays post close.
- A strong, three-way relationship is formed between the operating partner, the deal team, and the leadership and management of the company.
- Post close, they run a 100-day plan and start working with strategic planning to carve out the roadmap for the company.
Getting Stronger During the Pandemic
- Last year, all of Argosy’s portfolio companies had to innovate quickly.
- Argosy knew in mid-March of 2020 that the business world was going to change and applied a seven-step process with its portfolio groups to adapt.
- They did a lot of best practice sharing and hosted webinars for PPV and PPP loans and remote workforce engagement and conducted a variety of sharing and learning forums.
- By October of last year, Argosy’s portfolio revenue, year over year, exceeded 2019’s.
- Argosy was able to come through the pandemic stronger in its portfolio companies because they innovated.
- Many companies developed a built-in resiliency like, “Hey, we got through 2020, we can get through anything.”
- Engaging customers is completely different now. Buying behaviors are not going back to what they were pre-pandemic.
- The work that Argosy did with Chief Outsiders in 2019 on developing a playbook for marketing was very much exercised across its portfolio last year.
- A heavy push in marketing acted as a springboard for continuous investment and a commitment and an appreciation for the power of great marketing.
- Argosy’s value creation toolbox is broken up into three categories or pillars, human capital and professionalization, strategy and growth, and lean enterprise focused on the entire organization.
- Phase one is getting the right team in place, the right talent, then working on culture.
- Phase two is to capitalize on that talent and culture and build a great execution or operations foundation for the business.
- The last piece is to lean into marketing and sales without hesitation and without risk.
- Every investment is different, which modifies Argosy’s approach and strategy.
- Argosy and a dozen of its portfolio companies use the seven-step Hoshin Kanri process as a centerpiece of voice of customer strategic planning and building a world-class execution model.
- Marketers know more than anyone how important it is to be nimble
Using Outside Resources
- Argosy employs third-party resources as an arm of their value creation playbook.
- They have developed intimate relationships based on trust and collaboration with a variety of third-party groups.
- As a small operating partner group, Argosy often relies on outside resources for bandwidth and expertise that an individual or operating partner lack.
- They introduce third-party groups to the portfolio company that’s in need, whether it’s a strength to capitalize on or a weakness to mitigate.
- A real, collaborative, trustworthy relationship, like the one Argosy has built with Chief Outsiders is a model for its other third-party groups.