Middle Market Growth Conversations

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.

Martin Okner, president and chief operating officer of dpHUE, sat down with MMG during the Association for Corporate Growth's InterGrowth conference to talk about the evolution of the beauty industry and how dpHUE's robust digital strategy is helping the company compete in today's market. Okner, who will step into the role of ACG Global board chairman in September, described dpHUE's business model and products, which help customers who color their hair maintain and boost color between salon visits. Okner also shared some of the innovative ways the company is leveraging technology, including an app for salon professionals to order products for their clients while earning a commission, and dpHUE House, a content studio in Los Angeles frequented by celebrities and other influencers. Read more about the "Age of Micro Beauty" in Okner's 2017 article, referenced on the podcast: https://www.linkedin.com/pulse/age-micro-beauty-martin-okner/ To read more about trends in the middle market, visit our website, middlemarketgrowth.org.

The Association for Corporate Growth's membership includes roughly as many corporate members as private equity, and a number of them are involved in the function of corporate development. As part of its efforts to help corporate development officers build their networks and share best practices, ACG will host its inaugural Strategic Acquirer Summit on Nov. 4-5, 2019 in Dallas. On this episode of the podcast, ACG Global board members Brent Baxter, a managing director with Nolan and Associates, and Aaron Polack, head of business development at Lion Equity Partners, discussed the role of corporate members within ACG, corporate programming at the local ACG chapter level, and what attendees can expect from the upcoming summit. To learn more about the Strategic Acquirer Summit and the criteria to attend, visit acg.org/events/strategic-acquirer-summit.

Kevin Depew, RSM's deputy chief economist and industry eminence program leader, spoke with MMG about the economic outlook for middle-market businesses and how they're responding to tariffs, technological change and a tight labor market. During an interview on June 19, Depew discussed recent developments in the United States' trade dispute with China, the industries that will be most affected, and how middle-market companies are adapting. RSM recently published its latest US Middle Market Business Index, and Depew discussed some of the key findings, including the positive outlook of executives in Q2. In the index, RSM noted a concern that the middle market is not in a position to make investments for the future, such as training for the modern workforce. Among the obstacles is the overwhelming number of options of new technology offerings and vendors, which many middle-market companies lack the resources to evaluate. 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 middle-market private equity investment, visit our website, middlemarketgrowth.org.

Whit Matthews, senior investment director at Aberdeen Standard Investments, sat down with MMG on the sidelines of the Association for Corporate Growth's InterGrowth conference to talk about what his firm looks for when selecting GPs to work with and some of the common missteps he sees private equity firms make during succession planning. During the conversation, he also described his firm's relationship with independent sponsors, and he commented on some of the broader fundraising and investing trends he's watching. To read more about trends in middle-market private equity investment, visit our website, middlemarketgrowth.org.