Private Equity Spotlight: The Art of Value Creation and Global Expansion with Livingbridge’s Curt Kahn

[00:00:00] Sean Mooney: Welcome to the karma school of business, a podcast about the private equity industry, business, best practices, and real time trends. I'm Sean Mooney, BluWave's founder and CEO. In this episode, we have a fantastic conversation with Curt Kahn, investor and head of us operations with Livingbridge. Enjoy.
I am so pleased to be here together. With Curt Kahn. Curt, thanks for joining us.

[00:00:43] Curt Kahn: Yeah. Thanks for having me, Sean. Pleasure to be here.

[00:00:44] Sean Mooney: So I've been really excited about this conversation. We've known each other for a while. And one of the things that I continue to get fascinated by is how many different paths there are to private equity versus way back machine where it was just like this little narrow path.
And I think the industry is a thousand percent. Better because of the way that it's involved. So Curt, I'd be curious to hear a little bit about your background, how you found your way into this industry, et cetera.

[00:01:15] Curt Kahn: Yeah, sure. Happy to. So I have a bit of a non traditional route to private equity. So I actually started my career.
I'm consulting with Booz Allen and PricewaterhouseCoopers, PwC, and predominantly focused on M& A advisory throughout that path. I actually eventually hopped over the fence to a client after spending quite a bit of time with the Summit Partners and Baincap Ventures, healthcare technology portfolio company called Ability Network.
I joined Ability Network to build a corporate development function for them. And we quickly grew that business to somewhere north of 50 million of EBITDA. Across eight acquisitions, about three and a half years, ended up exiting that business to a publicly traded company called a Novolon for just north of 1 billion.
And along that journey, I was actually approached by Wemingridge, who I actually hadn't heard of at the time, as they were considering launching their first office in the U. S. here in Boston. So we had a long courting period while I was at Ability Network, where we spent about a year getting to know each other.
They had a really unique search request where they were looking for someone with a mix of operating experience, consulting experience, and investment experience, while also being sort of like unique cultural bits into a UK headquartered private FB fund.

[00:02:25] Sean Mooney: So not a hard search at all.

[00:02:27] Curt Kahn: Yeah. It was really interesting, actually, and it gave me time to figure out the Livingbridge culture and how I felt I could fit into it.
And also how I could bring a bit of unique skill sets. into a unique role within private equity. So I joined LivingBridge just after the ability acquisition about five and a half years ago as LivingBridge's first U. S. employee. I now lead our U. S. operation here in Boston, where we're largely focused on accelerating our portfolio's position in the U.
S. through a variety of routes, including M& A. For those who are unfamiliar with LivingBridge, so we're a middle market private equity fund headquartered in the U. K. With operations across the U. S. and Australia and about 85 folks globally, which are uniquely one globally integrated funds. We now have somewhere north of 4 billion in assets over our 30 year history made somewhere north of 170 platform investments.
And today we invest out of two funds that really just vary by check size and allows us to cut checks from 20 million. Up to north of 200 million, completely flexible in capital structure.

[00:03:29] Sean Mooney: It's an amazing background. And as you describe your experience, it's increasingly uncommon, but common in this, this serendipitous path that does not seem linear at all.
And that you found your way into the industry by having in some ways, kind of the EGOT of the career you did investment banking, consulting, private equity, that kind of a thing. And so. I think it's great to hear that story. I'd be curious maybe to double tap a little bit. What were some of the big kind of nuances or differences you felt when you jumped from an operating role into private equity and how has maybe that informed how you think about private equity?

[00:04:03] Curt Kahn: Yeah, it's interesting. So like what we actually built at building networks. Actually felt like a little private equity house within an operating role. So we were highly acquisitive in the healthcare technology space, making those data acquisitions. And we built a function that really mirrored how you source and build relationships within private equity model.
And we had a phenomenal boards that's now sort of splintered off to different firms, which really molded some of the philosophy and principles that I brought to Livingbridge as well, some of the major differences. And again, my role is so unique in that. We're pretty well established large funds in the UK, but I was originally sitting in office with two folks sort of satellite in Boston.
So the biggest adjustments was actually just figuring that out. It's like figuring out how you properly integrate into this well oiled machine across the ponds and make an impact across the funds. Now, interestingly, like COVID ironically, actually really accelerated that. It's like, as you think about how hard it was for a lot of people to move home and work remotely and collaboratively online, that actually just like tore down all the barriers and walls and how we collaborate now internationally within LivingBridge, and it's actually really fluid and easy now how we collaborate.
A lot of the ICs, like it was foreign to have remote ICs pre COVID, now it's common stakes. It was foreign to have remote boards pre COVID, now it's our common stakes. So all of that has actually made us as a firm. Who looks for national opportunities, that's really fluidly going forward.

[00:05:26] Sean Mooney: We'll dive into that more certainly, but the way that you all approach the world and acknowledging that it's a small place, even though it's very big, we all live in global markets and I think you guys have a pretty unique perspective on that.
But maybe before we jump into that and we'll go deeper in a moment, but I wanted to learn a little bit more and share a little bit more about maybe the uncommon knowledge of Curt. And so one of the questions I love to ask is we know you better if we knew this about you. So what's one of those things?

[00:05:54] Curt Kahn: Yeah, that's a funny question. I feel like my life's pretty boring these days. I got two little boys that were raising about 20 miles south of Boston, a little harbor town called Coassets. I was pretty obsessed with sports growing up. I feel like my fits now for sports is this random sport called paddle tennis, which I became like addicted to in COVID.
So it's like the only socially acceptable thing to do during COVID. And I play that pretty competitively now whenever I can folks outside the Northeast Midwest, probably what the heck is paddle tennis, but it's basically like this hybrid of tennis squash and pickleball played in this like pickleball size court that's elevated with heaters below it's wrapped in chicken wire.
So it's like this really funky little sport that's super competitive and there's really fun culture in the Northeast around it. So, yeah, I guess that's my in secret outside of work.

[00:06:41] Sean Mooney: Well, I love paddle tennis and that was something when I was living in Connecticut. We would play in generally something you can do in the winter that is at least moderately athletic, and it comes with drinking beer.
And so, yeah, in moderation, but, uh.

[00:06:58] Curt Kahn: And with like a four and six year old at home, it's like, you can do it after bedtime too. That's exactly right. Every box out there we play at nine o'clock. Yeah, exactly.

[00:07:07] Sean Mooney: And it's tremendously fun. It moves kind of amazingly fast. And the other thing that I learned quickly is particularly when it, like the first time I play, you know a lot of people who do it, they're looking for a competitive outlet and so we kind of give it our all.
And there's always that one person, and maybe that one person was me at one time. I was being a try hard and you like die for something. And what you don't realize is the floor, because it's plated winter, where there's often snow, is like the sharpest, harshest sandpaper in the world. Yeah, you definitely get some battle scars.
So I learned that lesson very quickly and never again, but I wish we had it in Nashville. It's a ton of fun and it gives you an exercise and an outlet during the winter when normally you don't have as much to do. Yeah, absolutely. It's a great sport. I'd be curious, Curt, maybe turning the page back here to your business perspectives.
I think a lot of people in private equity, they have something that they're looking for. I used to call it my yardstick and there's a whole host of features to it that kind of shows this is a company that is good or probably more importantly can be good and get to great. And so I'd be curious, what are some of the traits that you look for in a company when you're thinking about its potential?

[00:08:19] Curt Kahn: Yeah, sure. Great question. So First and foremost, team, we are obsessive about backing ambitious and experienced entrepreneurs and really empowering them to maximize the potential in their business. I think history pretty clearly tells us and probably most funds that situations where you're backing a high quality team and equally important, you're aligned to that team's vision and strategy.
The outcome's typically pretty positive. So we are absolutely obsessive about team, spend a lot of time prior to investing and making sure that alignment's there. Secondly, say customer satisfaction and loyalty, the obvious sort of quant metrics that we look for around customer and partner NPS, gross net retention, but we also actually over index.
And ensuring that we spend adequate time with key stakeholders across the company's ecosystem to really understand things like their competitive positioning, their customer satisfaction. That's just the sentiments in the market generally. The third bit is probably around scalability of the platform.
And this may be unique to where we invest in the market where we're typically targeting businesses. With called 5 to 20 million of EBITDA or 15 to 30 million of ARR. So these are often businesses in the relatively early stages of investing. It's like the scalability of the platform. So we spend a lot of time just getting real clarity and where that business is in its journey, such that where we are, when the right time is to accelerate certain value creation strategies, such as M& A.
Such that you have a stability of underlying platform before you press those buttons.

[00:09:49] Sean Mooney: So I'd be curious, Curt, if we dig into a couple of those, and I think those are all a hundred percent on target in terms of this is a good, or could be a good company and will be a great company. Talk about team a little bit.
So you've talked about looking for ambitious teams. What do you mean by that?

[00:10:06] Curt Kahn: Yeah. Oftentimes you have a information memorandum and a business plan for sending a deal process. But we actually spend a lot of time to make sure that we're underwriting a plan that the team backs and is deliverable. And we're looking to really get alignment and vision in what they want this business to look and feel like in three to five years time.
And not every process is designed to allow that collaboration free deal. And so those processes probably aren't for us because we just really over index wanting to get to have the opportunity to spend that time with the team to make sure that alignment is there.

[00:10:41] Sean Mooney: I think that makes a ton of sense. And maybe one other thing, I'd just be curious when you say scalability and you think about, you've got business owners who are trying to build a company knowing that it's important to you and it should be important to them.
What do you mean by that?

[00:10:54] Curt Kahn: Yeah, it's interesting. If you think about that scale of business, particularly in that like five to 15 million, even a business, it was like very basic practical things. Like many of these businesses may not have invested into proper systems such as an ERP system and a CRM system.
But there's other sort of scalability things around processes. It's a people led business and some sort of tech enabled service. And to hit the growth plan, you need to move from 200 to 500 people. Do you have the right recruitment and retention and development processes in place to deliver that scale?
So we're quite focused on, before we think about like transformational M& A or value creation accelerators to really drive accelerated growth. We want to make sure those fundamental building blocks in the platform are there. Such that the business doesn't break when you do drop in accelerated revenue growth.
So that's a bit more sort of operational tactical things that we think about on the way in, but it allows us to phase when we think we can really accelerate growth in certain investments.

[00:11:50] Sean Mooney: I love that point there. As you think about. People building businesses. And I even looked through the lens of now an entrepreneur, then a former private equity partner.
And I don't know that I fully understood it as much before I was an entrepreneur, like in the seat. And you had been in that seat as well before. It's this idea that you often have to invest ahead in infrastructure and capabilities more so than you ever really thought, if you're ever going to enable yourself to get to that next altitude, And like the example I use here, it's like, I always say we're kind of building the plane as we're taking off.
If you're always waiting for perfect in your life, you're never going to find anywhere close to it. So you're kind of leaning forward, but you feel the wings wobbling. And then you're like, we got to do that whole next layer because we're not gaining any more altitude. And so I think that's a really good point of like these preconditions that you're looking for that are going to enable scalability.

[00:12:35] Curt Kahn: The uncomfortable part is like, it may mean in year one of an investment, you actually suppress earnings because you need to take that year to really build that scalability to accelerate growth in years, two, three, four.

[00:12:46] Sean Mooney: I think that's a great point. And I think really important lesson for anyone who's growing through this accelerated growth journey is you got to sometimes invest ahead intelligently.
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Now back to the episode. So Curt, I'd be curious, maybe bringing it back to Livingbridge and we've kind of started touching on this already. How does your firm approach value creation and what resources are you bringing to support your portfolio companies along this kind of journey that we've been talking about?

[00:13:40] Curt Kahn: So where we sit in the middle market or even consider it the lower middle market in some U. S. market definitions, I think we have a really unique approach to value creation. So most funds of our size don't have 85 resources on the funds P& L. To the credit of our founding partners, well before my time, we created this really unique private equity value proposition that's like a bit of a spin on the traditional U. S. operating partner model. So alongside our new investment team, We have this team, what we call our value strategy group. And these folks effectively have the responsibility to unlock value creation in our investments through the exits. These individuals, many of whom are ex operators or consultants or non traditional private equity backgrounds, they'll sit on five or six boards at a time, oftentimes alongside a new investment team member who led the investments.
And this really creates like a unique benefit to our investees and it allows us like fluid ability to share best practices across our portfolio and give like real attention to our portfolio where you're not fully have the full distractions of the new investment team chasing the next deal. In addition, we also have.
Like it's more traditional team of functional experts on the living rich payroll that we sort of push across our portfolio at no cost. This includes folks like our talent team, our data science team, our M& A sourcing team, insights team. So you're sort of more traditional sort of value add group that we also have in house.

[00:15:06] Sean Mooney: I think I really appreciate that integrated approach. It goes with this theme that we. Talk about where the business of private equity is turning into a business and you're thinking about it instead of a single instrument, it's gone to a quartet and now it's a symphony of motion between the portfolio companies, the deal teams, the operating teams.
And one of the things that I also find really interesting about the way that you all do business is kind of the international element as well. We're able to bring capabilities and perspectives that span oceans.

[00:15:36] Curt Kahn: Forward to our proposition now, if you think about our capabilities here in the States, also in Australia, combined with our headquarters in the UK.
If you think about it's like some of the leading software businesses that we looked at back in the UK, they often are either already in the U S or have U S growth aspirations. And oftentimes are considering also investment from traditional U S private equity. So like the proposition we bring is really unique in that we are an integrated model that can really help you on both sides of the pond with on the ground resource that's dedicated to supporting growth in those local markets.
And that's really unique compared to other funds that are either in the U. S. or U. K. or have distinct funds in each geography. We'll always be one integrated global funds to provide that international approach to investing.

[00:16:20] Sean Mooney: And I think that's really value added. I can definitely think about portfolio companies that I was involved with.
And we're talking about international opportunities. And it's so daunting when you don't have people on the ground in direct perspectives. And almost every time we would skin our knees, three, four times, we eventually figured it out, but it was rough. And so, you know, Just having that capability where you can say, we got you, here's how you do it.

[00:16:46] Curt Kahn: This week, we actually have one of our portfolio companies from London in town today, and we're considering a U. S. full time acquisition here in Boston that will bring considerable scale into their U. S. team. And our team here is working hand in hand with them to support them through that acquisition and then also help them build the integration strategy going forward.
So it's really sort of tangible support that we can provide in those situations.

[00:17:08] Sean Mooney: I think that's a really important and something that I think is truly differentiated out there on the next topic here, Curt. I'd love to get your perspective. The world has been in kind of this, what I call a washing machine economy is kind of this good news, bad news, good news.
And one of the things that I love about private equity is even in this kind of topsy turvy world, you also have eyes forward and are looking for opportunities. regardless of kind of what the churn of the sky and the water looks like. And so what are some of the value creation opportunities that you all are thematically engaging with your portfolio of business leaders today?
And what should others maybe be thinking about?

[00:17:49] Curt Kahn: It's not a secret that the last 12 months have been a tricky period with rising interest rates on certain economic conditions, certainly slower M& A markets. For us, value strategies vary asset to assets. But we've seen a real focus on Bolt on M& A across our portfolio, particularly in situations where organic growth may be coming out of premium now, as mentioned earlier, our fund structure really allows us to lend a heavy hands to our portfolios in supporting and delivering this.
We also spend a lot of time working with our investees to better leverage data to drive outcomes. It's been a real focus across our portfolio, really over the last couple of years and sort of put this in context, so this may be transitioning a database Static customer usage data into a machine learning model to better predict customer behaviors and ultimately measure that by driving improved retention outcomes.
And we've done this now across a couple of our software assets where collecting really interesting customer data, but sitting in the static database. So can we actually empower our customer success teams? Through more predictive knowledge of that data to go have better informed conversations with their customers and perhaps better predict churn considerations.
And that's been pretty powerful value strategy that we work with our data science league in house across our portfolio rounds.

[00:19:09] Sean Mooney: We've raised a really important theme for Everyday businesses that previously maybe was out of reach and it's this whole concept of the data science tools that are now addressable by kind of mere mortals in the world.
It used to be you had to be the federal government and very kind of secretive places or Apple or Google or now guys. Yeah, no, no, we can have it. But still the vast majority I think of the world are not jumping in and every year we make these kind of predictions in kind of what's going to happen and those predictions are really informed by what you all are doing through kind of the lens of working with the top business builders in the world like Livingbridge and one of the things that we see is that data science is going to be one of the.
Top trends in private equity, bringing data scientists into private equity firms and helping portfolio companies who are daunted by this. And what I really like that you all have been doing is this is something you've been doing for a while already, and I think the rest of the market will eventually kind of come your way.
But the fact that this has been part of your business model for multiple years, I think is really important.

[00:20:17] Curt Kahn: Yeah, I completely agree. There's other like really practical value strategies. That's our value strategy group is excellent at. So good example of this, our value strategy group worked across our portfolio to implement interest rate hedging to protect against rising interest rates about two years ago.
This was probably in like early 2022. Looking back on it, you can quantify it. The cashflow savings across the portfolio, just by that sort of predictive measure, it feels really basic, but you can look across the markets and hear anecdotal stories about businesses in real trouble because they perhaps didn't do that.

[00:20:53] Sean Mooney: It's another thing that you talk about where you say, oh, it seems like it's obvious in retrospect, but Not many were doing that. We can think of some very, very public examples of where they didn't do that and the repercussions. Yeah, totally. And just by having that forward sense and realizing that, you know, sometimes discretion is the better part of valor.
Let's lock in some interest rates, even if we have to pay a little bit more now. It must have created millions of dollars of savings. Yeah, absolutely. So, one of the things I love. Asking people and mainly because I kind of view my world through the lens of others and whatever modest success I've achieved in life is largely due to me borrowing insights that others have learned kind of the harder way, I guess, and then I'll still learn that thing two or three times before I learn it.
But there's a lot that I would have gone back to my kind of former self if I. Could have gone back. And so if you were to go on into the Wayback Machine and offer some advice to your 22 year old self, what would be maybe some of the advice that you'd share with yourself then.

[00:21:54] Curt Kahn: For me, I've had like a bit of transition in my career and throughout those transitions, there was like loads of uncomfortable situations where like you're trying to learn something new, it's a new situation.
So for me, it's like finding those opportunities. To really step outside your comfort zone early in your career. And if you don't embrace the uncomfortable and difficult situations, finding success will be really hard. That's probably if you make transitions or not. And I think most people's like natural tendency is to find a comfort zone and just sort of try to stick into that pocket.
So for me, it'd be to go seek out those uncomfortable situations, really embrace them early in their career, because it's typically only leads to success.

[00:22:33] Sean Mooney: What would be an example where you'd say, this is an uncomfortable thing that you eventually did, and you got a lot of value out of it, but it was hard to do and probably nerve wracking.

[00:22:42] Curt Kahn: There's probably loads of examples, but so. As I made the transition to private equity, I'm really focused on building relationships with key members of management across our portfolio and taking leadership positions across some of these portfolio companies. There's difficult discussions that have to be had at times, and it's really embracing those discussions and embracing the uncomfortableness because you learn a lot through it.

[00:23:05] Sean Mooney: It's really interesting you mentioned that. As I kind of go back to my way back, I was in high school. I was this thing called Boy's State, which was like put on by the foreign legion. And they take two kids from the high schools in Texas and they send you there. And I think there's like a documentary on Netflix now and the craziness of this thing.
But they had this admiral there who gave a big speech and that was one of his things he was talking about. I was like, you got to do the hard things, do the uncomfortable things. And that I think really resonates and anytime you're doing something new, it's hard and it's scary and you're going to probably get worse than better.
And so I think what you're sharing is something that's so true and still so hard to adopt because doing things new are scary and hard. Yeah, absolutely. I think this has been a really. enlightening conversation for me, Curt. I appreciate the insights. I've got tons of notes and like always, that's how I've kind of made small gains in my life is just by borrowing things that you and others have done.
So I've got a lot of things that I'm going to start copy pasting.

[00:24:00] Curt Kahn: Yeah, I appreciate your guys supports along the journey. It's been a journey and sort of opening up the U S market for living Britishians. We've certainly been a good partner in helping us along that journey.

[00:24:09] Sean Mooney: And likewise, we appreciate it.
And it is a privilege to see people who do things really, really well. And what you do, not only for the businesses you back, but also getting just the engine of the world going again. Great. All right. Well thanks so much, Curt.

[00:24:22] Curt Kahn: See you guys. Bye.

[00:24:25] Sean Mooney: That's all we have for today. Special thanks to Curt for joining.
If you'd like to learn more about Curt and Livingbridge, please see the episode notes for links. Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcast, including Apple, Google, and Spotify. We truly appreciate your support. If you like what you hear.
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Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.

BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.