Podcast Summary
Empowering Teachers and Supporting Entrepreneurs: The WS Skinny podcast supports teacher empowerment through iConnections funds and discusses high-returning search funds for entrepreneurs, emphasizing the importance of networking and unexpected opportunities.
The Wall Street Skinny podcast is supporting the iConnections funds for teachers initiative, which aims to empower educators by providing access to the Ron Clark Academy's professional development opportunities. This cause is being funded through events in major cities, with all proceeds directly donated to the academy to aid teachers in participating in its groundbreaking training programs. Additionally, the podcast is discussing search funds, a high-returning investment vehicle that supports entrepreneurs in acquiring and growing privately held companies. A shoutout was given to Elena Nunez for her persistence in introducing the podcast to their guest, emphasizing the importance of networking and relationship building skills. Networking opportunities can come from unexpected places, such as standing in line at a store or on LinkedIn, and should not be underestimated.
Every interaction is an opportunity to make a connection and potentially make a difference.: Stay open to new opportunities and lean into your values to build a meaningful and impactful career.
You never know who you might meet or where you might meet them that could potentially lead to new opportunities or significant career advancements. Whether it's in an elevator, on an airplane, or even online, every interaction is an opportunity to make a connection and potentially make a difference. It's important to remember that how we behave in all public spaces, including social media, can impact our reputation and future opportunities. Additionally, having a clear understanding of your values and using them to guide your investment decisions can lead to meaningful and impactful career paths. As Nate shared, his diverse background in finance, family offices, and entrepreneurship through acquisition is a testament to the power of staying open to new opportunities and leaning into one's values.
Investing with values: Negative screen and positive allocation: Invest responsibly by excluding companies that don't align with your values and allocating to those excelling in specific areas like entrepreneurship, environment, and liquidity based on UN Development Goals.
Investing in line with one's values is an essential aspect of being a responsible and effective investor. This process begins with a negative screen to exclude companies that do not align with your values. However, it can also involve positive allocation to companies that excel in specific areas. The United Nations Development Goals provide a useful framework for identifying areas of focus. Haulbar, as an investment firm, has adopted this approach, focusing on entrepreneurship, environmental goals, and liquidity in the private markets. By finding the most innovative companies in these areas, Haulbar aims to make a positive impact while generating strong returns for its investors.
Thematic investing in lower middle market businesses driven by demographic shift and family offices' role: Family offices, managing wealth for a single family or small group, play a crucial role in thematic investing in lower middle market businesses due to demographic shift and lack of succession plans. They differ from hedge funds and help investors understand direct investing in private markets.
Thematic investing in lower middle market businesses is driven by the demographic shift of baby boomers retiring and lack of succession plans. Family offices play a significant role in the investment management ecosystem by connecting intel and growing the scale of their investing power. They differ from hedge funds in that they are typically dedicated to managing the wealth of a single family or a small group of families. Family offices can be categorized based on the wealth continuum, with retail investors having less than $1,000,000 of investable assets, high net worth investors having between $1,000,000 and $30,000,000, and ultra high net worth individuals having more than $30,000,000. Family offices help investors understand the direct investing selection and portfolio construction in the private markets. It's essential for high net worth individuals to right-size their portfolio and not rely solely on it for investment but rather view it as part of a larger investment strategy.
Family Offices vs Ultra High Net Worth Individuals: Family offices offer tax advantages and incentives for UHNWIs with around $250M in assets, but accessing high-quality deal flow and investment products can be difficult for pre-institutional family offices and UHNWIs, requiring thorough due diligence.
There is a distinction between being an ultra high net worth individual and having a family office. While both may have similar investable assets, organizing as a family office can offer significant tax advantages and incentives once an individual reaches around $250 million in assets under management. This pre-institutional family office stage involves hiring a team to manage money and deploy capital on behalf of the family. As the family office grows, it can eventually become an institutional family office, granting access to institutional contracts and investment opportunities. However, accessing high-quality deal flow and investment products for pre-institutional family offices and ultra high net worth individuals can be a challenge. It's crucial to ensure proper due diligence is conducted to secure these opportunities ethically and effectively.
Family Offices Create Their Own Due Diligence Firms for Investment Freedom: Family offices create their own due diligence firms for more investment freedom and top-tier talent, allowing them to invest in various types of deals and assets like individual investors, unlike hedge funds with strict mandates.
Due diligence is crucial for making informed investment decisions, especially for institutional family offices and ultra-high net worth investors. However, finding reliable outsourced due diligence firms can be challenging. That's why some family offices create their own companies to help with underwriting private investments using the same rigorous process. Family office executives, such as the president, CIO, CFO, and COO, are typically compensated with a salary and the opportunity to coinvest in deals they've worked on. This setup allows family offices to afford top-tier investing professionals and offers more investment freedom compared to hedge funds. Family offices operate more like individual investors, with the ability to invest in various types of deals and assets, unlike hedge funds with their strict mandates. For those interested in growth equity, understanding the family office landscape can provide valuable insights into investment strategies and portfolio construction. Yale University's endowment model, for instance, offers a solid framework for allocating capital. Family offices can start portfolio construction discussions by studying university endowments and their investment strategies.
Halbar's Unique Approach to Entrepreneurship through Acquisition: Halbar invests in individuals with domain expertise to operate and grow companies, rather than buying companies and finding CEOs (search fund approach). This strategy aims to create long-term value and growth for the companies in its portfolio.
Halbar, an institutional investment manager, focuses on entrepreneurship through acquisition in the lower middle market. Unlike traditional private equity firms, Halbar invests in individuals with domain expertise to operate and grow companies, rather than buying companies and finding CEOs. This approach is called a search fund, where individuals search for companies to buy and operate. Halbar's strategy is to invest in entrepreneurs with a proven track record and provide them with resources to innovate and lead their businesses for an extended period. This approach sets Halbar apart from traditional private equity firms, which typically buy companies and then find CEOs to run them. By investing in individuals, Halbar aims to create long-term value and growth for the companies in its portfolio.
Halbar's Entrepreneurship Through Acquisition (ETA) Program Solves Problems for Entrepreneurs, Business Owners, and Investors: Halbar's ETA program offers financial support, resources, and expertise to middle career entrepreneurs, enabling them to focus on finding the right company to buy and increasing the likelihood of a successful acquisition for all parties involved.
Halbar and its entrepreneurship through acquisition (ETA) program aim to solve problems for entrepreneurs, business owners, and investors by providing resources, financial support, and expertise. The entrepreneur faces challenges such as limited working capital and lack of knowledge in sourcing and acquiring companies. Halbar addresses these issues by offering two years' worth of salary to eligible entrepreneurs, enabling them to focus on finding the right company to buy. Additionally, Halbar partners with Nova Stone Capital Advisors to provide investment professionals who help underwrite deals and ensure a successful investment. This support not only benefits the entrepreneur but also the business owner and investor by increasing the likelihood of a successful acquisition. Overall, Halbar's ETA program provides a solution to the unique challenges faced by middle career entrepreneurs in their search for a company to buy.
Unique alignment of incentives for investors and entrepreneurs: Halbar's NCA approach minimizes acquisition risk, ensures successful deals, and provides valuable resources post-acquisition, creating impressive IRRs for investors and better performance for companies.
Halbar's investment approach through NCA provides a unique alignment of incentives for both the investors and the entrepreneurs. By taking the risk out of the search process and having a list of institutional investors ready to invest, Halbar ensures a successful acquisition while minimizing risk. This structure allows institutional investors to invest in a portfolio of profitable companies, creating an asset class with impressive IRRs. The investors' involvement doesn't end at acquisition; they provide valuable resources post-acquisition. Additionally, the investors' active role in the search and selection process creates a deeper connection to the companies and leads to better performance due to the owners' trust and confidence in the new leadership. This model differs from traditional growth equity as it focuses on replacing management in mature companies rather than supercharging new ideas in younger companies.
Entrepreneurship through acquisition for experienced professionals: Military and corporate backgrounds can lead to acquisition opportunities, providing a safety net for growth strategies with investor support.
The entrepreneurship through acquisition model provides a unique opportunity for experienced professionals, often with military or corporate backgrounds, to take the helm of established companies and implement growth strategies. This approach offers a safety net, as investors typically provide support and resources, allowing the entrepreneur to "jump off the cliff" with a net beneath them. Nate Taylor's story is an excellent example. With a military background and an MBA, Nate was introduced to the entrepreneurship through acquisition concept and found success in acquiring a clean water transportation company, where he could leverage his logistics expertise and technology implementation plans. This model has proven successful for many individuals, including those with elite MBA degrees, as it offers a chance to lead companies, make a difference, and potentially achieve impressive returns.
ETA Program: Investing and Running Middle-Market Companies: The ETA program offers individuals the chance to invest in and run middle-market companies, with no MBA requirement but a focus on operator mentality and entrepreneurial spirit. Competition is fierce, but personal growth and gaining an education in this asset class are valued.
The Equity through Acquisition (ETA) program, which was originally pioneered in elite MBA programs like Harvard, Stanford, and Yale, provides an opportunity for individuals to invest in and run existing middle-market companies. This program was started due to the void of preparing students for investing in and leading such companies. While having an MBA can be beneficial, it is not a requirement as the program looks for individuals with an operator mentality and entrepreneurial grit. The competition for these programs is high, with thousands applying and only a few being accepted each quarter. However, personal growth and going back to school for an MBA at an older age are encouraged. The ETA program is a relatively new asset class and strategy, and as it matures, it is expanding beyond the elite MBA programs.
Embracing New Chapters in Life: Focus on personal growth outside of your profession through certifications, self-teaching, or building relationships to stand out and succeed in various fields.
Retirement as traditionally thought of is no longer appealing to many people, and instead, individuals are embracing new chapters in their lives. This can be seen in the experiences of children transitioning between hobbies or careers. To stand out in a crowd of 3,000 people, focus on personal growth outside of your profession. This can be achieved through certifications, self-teaching, or building relationships. While certain certifications may not be relevant to every industry, they can still add value and demonstrate dedication to learning. Ultimately, being a good human and understanding humans is a key component to being a successful leader and operator. Investing in people, not just their technical skills, but also their interpersonal skills, is essential for success in many fields.
Passionate Founders and Societal Impact: Passionate founders and investments in businesses aligned with societal themes can lead to significant financial success and positive societal impact.
Having a deep passion for a business or product can lead to significant financial success and positive societal impact. Ben, the founder of Cadmium Carbon, is a prime example of this. He started out as an investor but fell in love with the company and became an operator. His passion and interpersonal skills have made him an incredible success. Similarly, when investing, looking for businesses that align with macroeconomic themes, such as decarbonization, can lead to significant financial returns. However, the impact of such businesses can extend beyond just financial gains. For instance, planting trees in urban areas not only helps in decarbonization but also boosts economic activity and improves mental health. Companies like Kiwi Carbon are helping urban centers plant tree canopies, leading to observable changes in economic activity and culture. Therefore, investing in businesses that have a positive impact on society can lead to both financial success and societal benefits.
Investing in decarbonization and local benefits: Decarbonization is crucial for combating climate change, investing in large-scale decarbonization companies offers local benefits, and Halbar is a leader in thematic investing focusing on decarbonization and entrepreneurship through acquisition.
Decarbonization is a crucial strategy for making a difference in combating climate change, and investing in companies that can do it at a large scale is a worthwhile theme. Additionally, there are local benefits to decarbonization efforts, such as planting trees in urban areas through companies like Cambium Carbon, which can lead to the reuse of fallen trees instead of burning them. Corporations are also starting to prioritize certified carbon-smart products, which can help replace the "silver tsunami" of retiring workers with new talent and replant fallen trees. Halbar is an example of a firm leading the way in thematic investing, with a focus on entrepreneurship through acquisition and decarbonization at scale. For investors interested in getting involved, Halbar can be reached through their website. It's important for listeners to leave a review on their preferred podcast platform to help the show reach a wider audience.
