Episode 116
Don McDonough on Leading A Private Equity Business Development Function
In this episode of Karma School of Business, Sean Mooney speaks with Don McDonough, Managing Director at GTCR, about his career in private equity and his role in building GTCR’s business development function.
Episode Highlights:
1:24 - Path to Private Equity: Don’s journey from investment banking to private equity and his early career experiences.
4:56 - Leadership Lessons: How sports and teamwork shaped Don’s approach to leadership and problem-solving.
10:09 - Building a New Role: Challenges and strategies in developing GTCR’s business development function.
27:04 - Value Creation Themes: GTCR’s focus on technology, AI, and proactive risk management strategies to drive portfolio growth.
33:02 - Advice to Younger Self: Don’s insights on identifying strengths, following passions, and seeking mentorship.
For more information on GTCR, go to https://www.gtcr.com/
For more information on Don McDonough, go to https://www.linkedin.com/in/don-mcdonough-a6a3611
Episode Highlights:
1:24 - Path to Private Equity: Don’s journey from investment banking to private equity and his early career experiences.
4:56 - Leadership Lessons: How sports and teamwork shaped Don’s approach to leadership and problem-solving.
10:09 - Building a New Role: Challenges and strategies in developing GTCR’s business development function.
27:04 - Value Creation Themes: GTCR’s focus on technology, AI, and proactive risk management strategies to drive portfolio growth.
33:02 - Advice to Younger Self: Don’s insights on identifying strengths, following passions, and seeking mentorship.
For more information on GTCR, go to https://www.gtcr.com/
For more information on Don McDonough, go to https://www.linkedin.com/in/don-mcdonough-a6a3611
EPISODE TRANSCRIPT
[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 an amazing conversation with Don McDonough. Managing director with GTCR. Enjoy.
[00:00:34] I am super excited to be here with Don McDonough today. Don, thanks for joining.
[00:00:40] Don McDonough: Thank you for having me, Sean. Great to be here.
[00:00:42] Sean Mooney: Yeah. This is one I've been looking forward to for a long time. I think our listeners might notice some familiarity. As Don and I talk, we've known each other for a long, long time.
[00:00:52] I. When I certainly had Brown in my hair, Don is holding up much better than I am against time.
[00:00:58] Don McDonough: Oh God.
[00:00:58] Sean Mooney: But, uh, but uh, this is gonna be a fun one. So I, I've been pleading with Don to come on for some time when we finally got him.
[00:01:05] Don McDonough: I'm really looking forward to it. Thanks so much again.
[00:01:07] Sean Mooney: This'll be great. And so maybe for our listeners who don't know as much about the story of Don, Don, how about you kind of give us your abridge story of you kinda where you grew up, any kind of form of life events.
[00:01:21] First job outta college, and then ultimately how you got into pe.
[00:01:24] Don McDonough: Yeah, sure. I'm a born and raised New Yorker. Grew up out on Long Island in a town called Garden City. Was active in sports throughout high school and college. I went to Princeton undergraduate before starting my career in investment banking in Manhattan.
[00:01:40] I worked within Pricewaterhouse and JP Morgan and their investment banking groups here in Manhattan for five, six years. Ultimately got my MBA at Columbia Business School. And started my private equity career about 20 years ago, as scary as that may seem.
[00:01:56] Sean Mooney: Yeah, so Don and I have very similar paths other than the Princeton, the really good athlete, and some of those other things that I lack.
[00:02:04] So Don is the better version of me as I kind of grew up in life. But, uh, please, no, but one thing you'll notice with Don, he is also incredibly humble. But he's been someone who I think has accomplished a lot, and that's one of the reasons why we're excited to hear it from him and how he views the world, because I think there's a lot of kind of insight and wisdom and tenacity and grit and Don's kind of story.
[00:02:27] Don McDonough: Back then kind of path to private equity was a little less straightforward. It was much more of a cottage industry and having been in investment banking, getting to more on the investment side. There was a lot more, obviously, opportunity to help build businesses, understand more about how companies work and working with management teams and strategy.
[00:02:47] In my mind, a little more accountability as far as putting your money where your mouth is and use the training that you received early in your career is really what attracted me to it and kind of a competitive nature that just spoke to me, especially in middle market where I. Not only opportunity to get really strong training at good firms in a smaller environment, but also the opportunity to get more of an impact on smaller to mid-sized companies in a beginning of my career.
[00:03:17] Sean Mooney: That's, I think, great additional kind of color on your background. And now that we've done more than a hundred of these episodes, and certainly you and I knew each other when I was in pe, that is something that's, if I look at like what are the personas of people that are attracted to this industry? It's people who.
[00:03:34] Generally our high achievers kind of competitive. There's a humility and humbleness to them. There's also this idea to kind of lifelong learn and like you mentioned training multiple times where you want to constantly kind of get a little bit better each day, but then it's also like you're drawn almost like this, like inexplicable siren call from these other really good.
[00:03:56] Kind of pursuits and backgrounds into this idea that you want to be more of a hands-on business builder and have this ownership, this kind of like accountability over actually making things done versus maybe some of our prior kind of chapters of our lives.
[00:04:10] Don McDonough: Yeah, no, I, I think that's right. I was fortunate to be able to work at firms like Pricewaterhouse and JP Morgan.
[00:04:17] I really enjoyed my time there, but it was really a time where I was thinking about what I wanted to do with my life and where I wanted to take that training. I. Without realizing necessarily that I wanted to pursue a different path than where I was at the time, the more I learned about it, particularly in the earlier stages of the industry, is spoke to my nature a bit more.
[00:04:38] Sean Mooney: That's spot on and that a hundred percent fits with the way I know you, and I think the way a lot of us know each other. And so maybe with that in mind, Don. One of the questions I always love to ask is, we know you better if we knew this about you, that maybe doesn't jump off kind of your LinkedIn page, et cetera.
[00:04:54] So what's one of those things?
[00:04:56] Don McDonough: You referenced a little bit about some of my athletic background and I was quite fortunate, not only in college but also growing up through high school. Athletics were a big part of my life, a very competitive person and was really to have a lot of great coaches and teammates.
[00:05:14] Both high school, college and really throughout that I be a part of some really successful teams as well. I learned a lot from them. I was, I guess, very competitive and drove myself, but also learned a lot of great lessons from those coaches. Those teammates where that I impart on life every day and what I'm doing either work, what I'm doing in business.
[00:05:36] Really where I try to not only take them and become a better version of myself, my job as head of business development here at GTCR, but also at home. I try to get back in my community and coach young kids some of those lessons as well. So I guess that would be one thing that's important part of my life that's really impacted in a great way.
[00:05:56] Sean Mooney: And Don, what was the sport that you played growing up?
[00:05:58] Don McDonough: I played lacrosse, played football and lacrosse in high school. Went on to play lacrosse at Princeton. Where I said I was fortunate to be a part of a terrific program. We won a couple of national championships while I was in school. And again, just a incredible experience to be part of those teams and with my coaches and and those teammates that really made it special.
[00:06:19] Sean Mooney: Yeah, lacrosse is one of those fantastic sports because it requires agility. It's a really fast moving sport. It's one that also requires kind of physicality, so you blending all of those at once. It's really interesting. So I grew up in Texas where football was king, and I really didn't know much about lacrosse until I went to college.
[00:06:42] Now it's, I think it's everywhere, but maybe when I was growing up, it wasn't so much until I went to college in Washington, DC where you had all these extremely exceptional kids and athletes from New York, Connecticut, Maryland, Virginia, and lacrosse was. The big thing, and they were some of the most exceptional athletes I'd ever seen.
[00:07:06] So it was just like this epiphany to me. I was like, whoa, what is this sport? It's unbelievable.
[00:07:12] Don McDonough: It was a lot of fun. It's an incredible sport. I loved it. I also loved everything they kind of brought and taught me, not just being out on the field and being very competitive, but again, what it takes to be successful in that environment, not just individually, but.
[00:07:28] As a team, and it really taught me a lot.
[00:07:33] Sean Mooney: Hey, as a quick interlude, this is Sean here. Wanted to address one quick question that we regularly get. We often get people who show up at our website, call our account executives that say, Hey, I'm not private equity. Can I still use BluWave to get connected with resources?
[00:07:47] And the short answer is yes, even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders. Every day we get calls from everyday top proactive business leaders at public companies, independent companies, family companies. So absolutely you can use this as well.
[00:08:05] If you want to use the exact same resources that are trusted in being deployed and perfectly calibrated for your business needs, give us a call. Visit our website@BluWave.net. Thanks. Back to the episode.
[00:08:21] So maybe as we turn the chapter of our conversation forward here. I'm curious, Don, what is maybe one of the harder things that you've experienced in business, in your career, and how did you overcome this? And I think that's like a common trait in PE is this kind of tenacity, grit, resilience and kind of trying new things and encountering challenge and overcoming kind of stuff.
[00:08:43] Don McDonough: Yeah, so I've been fortunate, as I mentioned, my private equity career spent almost 20 years and been for to part of a number of terrific, terrific firms where I. I learned various things. I started in a role that was much more traditional in execution and operations and kind of soup to nuts, private equity.
[00:09:01] And over time it kind of transitioned into this business development role here at GTCR. And it's like anything else you from one step to the next and you've learned on the past experiences into the next environment. And over the several years I've been here at GTCR almost three years now, and. This role here at this firm has been a terrific challenge and obviously the most recent.
[00:09:27] GTCR is a very successful, longstanding firm in the industry that has a, a terrific model of investment and operations, and this was a role that hadn't existed before. It's a firm that has, compared to where I had been in the past, much more complex in that it's headquartered in Chicago and multi-city and multi.
[00:09:50] Strategy across industries and funds, and it's a really exciting place and one place to be, but isn't in establishing a new role here in business development. It's taken a lot of hard work and it obviously the job's never done, but it's been a tremendous challenge. That's been a lot of fun so far.
[00:10:09] Sean Mooney: What were some maybe the lessons you learned from going to maybe an established role where you had been with the firm for a while and then you have to create something new?
[00:10:19] Within a really good company as well, but it just hadn't existed before. So for people who are thinking about doing those same things, did you have any kinda lessons learned, whether it was in private equity or you're working at a portco, what are some of those kind of like universal maxims you picked up that said, this is the thing, like for that person who follows you, and if you were to coach them, like what would be some of that advice?
[00:10:42] Don McDonough: Yeah, I would say certainly the job itself, and Sean, you were so successful at it for so long. You know, the, the role is one thing, and I call it the outside job, is always continuous challenge and, and helping to try to maximize your firm's investment strategies. But I would say getting to know the firm, getting to know the context in which you're gonna sit down in the middle of, and try to impact in a positive way.
[00:11:07] The hardest part of that is taking what's been successful for and molding it to the environment that you're in. That takes a lot of understanding of who you're working with, what the construct is of the firm, what's made it successful in the past, maybe identifying certain gaps with what you do well that might be able to address sooner than later, and whether that's interpersonally technology operationally working within GTCR, we have four really strong industry teams.
[00:11:40] We have a terrific leader strategy in a platform of really talented executives that we back and work alongside and all of our investments. We've got a terrific resource group that are functionally super talented in things like cybersecurity and procurement and technology. And so kind of understanding all those elements and what they can bring to bear and the conversations that I'm having outside the firm.
[00:12:06] Was one of the biggest challenges and it just takes time and it really comes down to not just each of those platforms, but individual to individual and what they're bringing to the table as far as what they're trying to get accomplished and how what they're doing. Plus what I might be able to bring to that initiative can really hopefully make one plus one equal three.
[00:12:25] I
[00:12:26] Sean Mooney: really like that advice. It's this whole notion of really when you're doing anything but particularly anything new, the first thing you come into is like this idea of. Observe, listen, learn, see what you're getting into before you start saying, let me show you how things work,
[00:12:41] Don McDonough: ready, fire, aim is not always a big strategy, and so I find that usually just listening, but getting in front of your colleagues and the job's never done.
[00:12:52] The market's always evolving. Our firm is evolving and trying to be our best competitively and maximize help our portfolio companies help our investment strategies. One of the things I love about this job is it's, it's always evolving that job's never quite done. Makes it a lot of fun.
[00:13:09] Sean Mooney: It makes me even think back, so when I joined the PE firm before BluWave, it was a brand new PE firm.
[00:13:15] So it was a spin out by a couple senior partners from another larger cap PE firm, and they were gonna do a lower middle market focused firm. And so I joined right at their final close when they had partners and they had associates and I was their first vp. And it was, and I came in and I had been with another PE firm for eight years, and so I had one way of really great mentorship and now entering a whole new phase of mentorship.
[00:13:42] And we just did things a little bit differently. I. At first, it was like a bucket of cold water got thrown right on me and it was shocking. Yeah. And I was 90% sure I was gonna get fired right outta the gates. And so I'm forever grateful to my then partners who like gave me some time because Yeah. But it was like kind of what you said, it was like, all right, you gotta slow it down.
[00:14:05] Almost like sports, like when you make varsity for the first time. And then like it's moving so fast. Even in like something new you're just like, but eventually you just watch and you learn and it all starts slowing down and then you know the rules of the game and you can start playing it.
[00:14:21] Don McDonough: You hopefully at this point or your career, you've kind of arrived with a toolkit and understanding of how to do your job and as much as it is understanding how your partners are doing their jobs and all of the great things that the firm and your partners bring to.
[00:14:37] It's also allowing them to understand what you can bring to the table for them because it, it might not always entirely be obvious in a new role. And again, a firm that's been around, in this case 45 years and quite successfully for that time. And again, very fortunate that a great group of partners that have allowed me to do that.
[00:14:59] Sean Mooney: And as you said, GTCR is one of the very best of the best and sets the standard in many ways in pe. So to be able to do something like you do and bring your talents to a team, that's also a really good one. It's kind of, you got drafted by the, I will not be provocative and pick a team, 'cause that's a third, third rail here in private equity land.
[00:15:20] So I'm not gonna say the Yankees or the Red Sox or pick your favorite team.
[00:15:26] Don McDonough: It's an amazing team. But one that's always seeking to get better at everything and then find new ways to create value. In the last five years, there's been a tremendous amount of growth within the firm, and that means some really exciting initiatives and ways to impact our world.
[00:15:44] So it's pretty powerful and you marry all of that with what's been the hallmark of our firm since the beginning and our leader strategy and great. Operating executives and we don't have an operating partner model, if you will. It's really, we identify themes that we feel like are a great investment strategies within our, our known sectors, and try to partner with really talented executives within those worlds to not only just identify, but help add value with companies from the lower middle market.
[00:16:16] People think of GTCR and it is a, a sizable firm and we do have a large cap. What they don't realize is. A lot of the investments we look at are really lower middle market and founder owned businesses and sponsor businesses that were bringing the same resources to those folks and the same senior level attention execs to those investments.
[00:16:36] And that's really the bread and butter of the firm and what's made it successful for so long and allowed for those other big things to happen. It's still going on. It just doesn't always make the front page of the paper.
[00:16:46] Sean Mooney: It's real interesting 'cause you're right, I think today some people may overly think about.
[00:16:51] The large cap things that GTCR does, but it seems like as you're describing, they've never really left some of the origins of the middle market. They've maybe augmented what you've become, but you haven't left where you came from.
[00:17:04] Don McDonough: Correct. When we raised the new strategic growth fund a few years ago to do just that, as our flagship had grown to a larger size, again, same type dynamics in investing and philosophy, and we're structured as one team, one dream.
[00:17:18] So. Leveraging all that institutional knowledge on. Businesses and founder and family owned businesses up to much larger enterprises.
[00:17:29] Sean Mooney: Hi, this is Sean. Wanted to take a quick moment to tell you a little bit why BluWave exists. It's based on this whole notion that assessing opportunities and building business is really hard. We all know third party expert service providers can dramatically help, but at the same time, it's hard to know who's good.
[00:17:48] Usually leaving you, like I would do, and call friends and ask, Do you know someone who does this? Or just go the square peg round hole route. So after nearly 20 years in PE, I decided to solve my own problem and create a BluWave. Today, many hundreds of PE firms, thousands of portcos, leading public companies, private companies, All call BluWave to instantly get connected with the exact third party service provider they want that's pre credentialed by BluWave and perfectly calibrated for their need and really good.
[00:18:19] You too can give us a call or visit our website@BluWave.net. We're free to use and you can benefit the same way other top P firms do act the show.
[00:18:30] As I kind of take in some of what you've shared here on GTCR, it's this multifaceted organization. You're bringing a lot to bear. You're using, I think, very importantly, the word and not, or you're not doing these binary choices. You're bringing a whole range of constituencies as part of your strategy to build, create value, partner with owners, and then ultimately being in service to.
[00:18:53] Stakeholders ranging from the whole gamut of limited partners, whether it's university endowments, pension funds, et cetera. And so how are you all managing this interplay between the business development team, the deal team, the operating resources that you bring to bear your port co leadership team?
[00:19:12] Don McDonough: Yeah, so it is a fairly sizeable constituency and a lot of terrific experts that you're trying to. But I guess it, it starts in the industry teams, and obviously we've been fortunate to have decades of experience in these markets. Identifying trends and identifying markets as they evolve and where we want to be from a business development standpoint.
[00:19:35] That's obviously understanding where we want to go and where our portfolio companies want to go within the industry. Context is critical on. Recruiting from the outside or this leader strategy initiative, that's a key part of what we're doing. So out into the market and business development for us not only means investment opportunities, but talented operators, talented executives in-house from an operating standpoint.
[00:20:05] I mentioned functionally talented folks, and whether it's data and analytics, procurement. Ai, things of that nature that we can, again, bring to bear to businesses that are just learning how to implement them in, into their strategies. And so the nice thing is for us, I may be leading business development.
[00:20:24] It's a part of everyone's job. The deal teams are well versed in some of, there may not be experts in AI or procurement, but they know when, bring those folks in and, and it obviously differs depending on the opportunity. It's a bit of a dance. And when you look at companies that are large and small and different parts of their transition, one of the great things as firm have been able to show is the ability to bring small companies into the much larger market and help those companies grow.
[00:20:51] So again, it starts with our industry teams and the themes of where we want to invest. What we're seeing, business development sits at the intersection of those industries. And for us, it's technology. It's financial services, it's business services, it's healthcare. So a diverse set of services and technology companies.
[00:21:12] And so being out in the market and having that credibility for me, but again, working with a team as development center to identify companies, identify advisors, identify executives, and marrying that with our operators. From an LP standpoint, I mean, we've got a terrific investor relations team and.
[00:21:31] Institutional investors from around the world that been with us for a long time. They've invest alongside our deals. Every situation's different. But we're, again, I think we've got a great platform that has in-house all of those aspects that need to be successful.
[00:21:47] Sean Mooney: That's great. And as I reflect on what you were saying there, Don, it made me think back to like the earlier innings when you and I were entering the world, and in some ways it reflects the evolution of the business of private equity.
[00:21:59] So like. When I started, in the early days, most PE firms would say, oh, we specialize in partnership. And there was a picture of a handshake on a website. This is a long time ago. And then it was like, well, what's your value creation plan? It's like, we're gonna upgrade the accounting system and add a salesperson.
[00:22:15] And then I was like, I'm like Neo. I see the world in slow motion. I can see the ones and zeros cascade,
[00:22:21] Don McDonough: right? We invest in niche leaders, cliche. The business development role has evolved. The whole industry has evolved, and while it's really nice to have those institutional partners that we have and the capital base that we have, it's really, I think of it as more of a byproduct of the value that the firm has been able to bring to the table, to the business owners.
[00:22:44] We want to be business builders alongside our management teams, alongside our execs. We're partnering with, I mean, that's why we're in this. We bought low, we sold high. We found some obscure business that no one had ever seen before and paid a low price. We're cognizant that we're investing in really interesting, in some cases, very high growth and competitive fields.
[00:23:07] It can be expensive, and it's really about what you can do to help build that company and that platform More than anything else this day, not just for us, but really across the industry, it's gone from a industry as we talked about, to. Alternative assets. Right. So that's what we try to do.
[00:23:25] Sean Mooney: It's interesting.
[00:23:25] So very often here we're having new people start and I always try to explain the industry to them and where it came from to where it's going. And what you're describing is kind of pretty in, in line with how I describe it in that in the early days it was a nascent industry. It was coming. And one of the things I borrowed here at Blue is this concept of and not, OR, and industry has.
[00:23:49] It's not that you can be a kind of hands-off delegative partner or a hands-on prescriber and the world has to exist in this or, and a polar realm on one side or the other. It's like, no, we're gonna be good partners and we're gonna bring resources and we're going to have deal teams, ops teams, partners, you know, all these other things and we're gonna make 'em work in symphony with each other versus saying something has to be this or that.
[00:24:16] Don McDonough: A hundred percent. The job that I have in business development, I think most people within private equity, whatever their role is, would say their job has evolved dramatically and gotten much more complex. I think business development early days was, were you where somewhere others weren't and found some obscure asset and it was a purely sourcing initiative and that's an important part of it, but it's also much more now to be, is it development and marrying strength with strength?
[00:24:46] And much more proactive around investment strategy. I would say
[00:24:51] Sean Mooney: that's this whole idea, and it's one of the cliches I'll use a lot. It's like the business of private equity has turned into a business, and so you've got sales and marketing operations and technology and strategy and back offices and forward offices, and it's all working in this kind of symphonic motion with the portfolio companies so you can create a greater hold because at the end of the day, your alignments are about as perfect as they can get because not only does.
[00:25:15] A PE firm in one portco have to succeed together, but the PE firm really has to succeed across the entire portfolio in support of each other, or no one does. Well.
[00:25:26] Don McDonough: Yeah, but it does come back to some of the basics of investing as well. I think one of the most impressive things that I see every day and GTCR is despite the teams, despite the success over the years and, and all that, it comes back down to the same rigor and hard work.
[00:25:45] Started 40 years ago, and the hard questions that are asked, not just internally but of our portfolio companies are potential investments and you can't skip a step. It's all additive. These things that we're talking about and they're really important, but at its heart comes a very proactive but very rigorous step by step approach to investing.
[00:26:08] There's just no shortcut.
[00:26:09] Sean Mooney: Yeah, I mean, I mean, at the risk of like sounding like an over flatter kind of fan. Of GTCR. What I really appreciate about really great firms like yours is that in this and not, or kind of realm, you're not leaving the foundation that you built the firm on, but you're probably constantly shoring it up.
[00:26:28] Strengthening it, and maybe bringing the footprint of what you do into adjacent spaces that make the whole thing better.
[00:26:36] Don McDonough: I think that's right, and it goes to the, the culture of the firm and the hunger to get better every day.
[00:26:43] Sean Mooney: So, kind of extending on some of the things we talked about is these kind of things that you all are seeing out there and that you're bringing support to your companies on.
[00:26:53] What are some of the top value creation opportunities that you all are thematically engaging in your portfolio company with these days that maybe other business builders should also be thinking about?
[00:27:04] Don McDonough: Yeah. Well, I mean I think some of that is, that we've been known for, for a long time from a business building standpoint is somewhat standard, whether that's.
[00:27:13] We mentioned building into the new markets and some cases m and a and other things, helping bring in additional leaders and executive talent, which again, is part of our hallmark of what we do. And then there's the market to market developments, and we are, as I said, a very proactive firm. And whether it was interest rates a couple of years ago that were pushing up.
[00:27:35] We have a really talented capital markets team and operators who are proactively focused on what's to come within those risks. So we're prepared for it. Obviously these days you're seeing it with the pronounce coming out of Washington. Obviously tariffs and challenges like that, I would put those in the same bucket where we are identifying, trying to get out ahead of issues and being proactive within the portfolio to help support our management teams wherever they may be operating.
[00:28:05] That's a constant. I mean, some of the themes, however, that I would say that are maybe a little longer reaching that we're spending a lot of time around would be things around technology, ai, how it helps potentially our investment strategies, our process, how it may help our management teams leverage themselves that much better, create efficiencies throughout the portfolio.
[00:28:28] I think we're spending quite a bit of time, not just internally. Dedicating resources to that and understanding the interplay there and the opportunities there, but also what it is and what it isn't. And so that would be an example, but where we're trying to bring that to bear more on a platform level, but it's a never ending dance of what's coming in the market that we're trying to stay out ahead of.
[00:28:50] Sean Mooney: I think it's a really good point is you think about what top business builders do, right? The world is full of change. The world was full of scary stuff. A large portion of the population, your intuition is to kind of like, let's batten down the hatches and just weather the storm and it'll come by and then sun will just magically appear in particularly times like now, and even as I try to communicate with our team about these kind of big tectonic shifts in the world, it's real easy to get overwhelmed and scared and, and just say like, okay, we're gonna stop and just see what happens.
[00:29:25] What you're articulating, I think is so foundational for anyone who's building companies, whether you're an investor, a portfolio company leader, part of a company is that those who benefit are those who don't resist it. They run towards it, right? Whether it's like, Hey, tariffs are coming. We saw people taking action on tariffs starting last year in the PE world.
[00:29:44] Okay? Interest rates are going up. Okay, well, let's make sure we're hedged or that we're being agile. And even as I go back, you remember the internet? If the investment bank that I worked for right outta college, they wouldn't let us access the internet. They didn't know what it was and they're like, this is really scary guys.
[00:30:00] We're not gonna let you do this. Like what?
[00:30:03] Don McDonough: Right. The worldwide web. Yeah.
[00:30:04] Sean Mooney: He's like, well, you can use American online though. I'm like, what? That's not good. And then like iPhones came out. I'm like, no, I'm sticking with my Blackberry.
[00:30:13] Don McDonough: Exactly. That flip phone turned as well for a while. Yeah,
[00:30:15] Sean Mooney: I still do miss the keyboard, but that's a different conversation.
[00:30:18] And then like the cloud, I'm like, no way am I putting my information on the cloud. That's nuts. But what you see during each one of these shifts is the people, the groups that run towards that with kind of iteration and appropriate level of just caution in that you're not just gonna run into a tunnel and see if it's a train or a light, but those who kind of run towards it embrace it almost every single time differentially benefit.
[00:30:43] And so the things that you're talking about with ai, it's the same thing. There's so many people that are resisting it, but guess what? It's not going away.
[00:30:52] Don McDonough: I think you said it well. And this is an industry to be successful, you need to kind of overcome and run towards problems and not, not away from them.
[00:31:02] It's a complicated world out there right now as investors, as operators, and that can mean lots of different things. And you hear this phrase being thrown, well, some people are. You risk on, are you risk off? Are you pencils down and. One of my partners said it best a couple of weeks ago at our A GM. He said, there's never been a time where we've been pencils down.
[00:31:24] It's our job is to provide solutions and to create and find opportunity. So what, certainly every market is different and the risks and opportunities can change, but our job is to be in that market and to hopefully create a better set of opportunities and address those risks better than others. It may not work for the other side depending on what they need to achieve, but it's our job to try to create that.
[00:31:49] And that's a lot of what business development does to bring to the table. But also obviously my investment partners and the executives that we support. Obviously there are great new tools that are coming up every day, but they bring their own risks. But it's things like AI that we're working very hard, hard to try to understand better how to try to bring practicality to that.
[00:32:08] And everything that we do is one broad theme from market to market. I think that attitude serves us well. It helps that we've got the rigor and the infrastructure and the approach, and frankly the culture that helps withstand that and is pushing and it's really about what's next. Okay, great. How do we continue to improve?
[00:32:28] How do we continue to tackle the next challenge in a better, differentiated way? And you're absolutely right,
[00:32:35] Sean Mooney: and I love it with maybe with introspection in mind. One of the things that I'm a huge borrower of is other people's kind of advice and lessons hard learned, and I'm curious, Don, if you were to go back in the way back machine and meet your 22-year-old self, what would be one of the top piece of advice that you'd share with your self that you wish you knew then, that even if 22-year-old done may or may not listen to it, but what would be one of those things that you kind of wish you knew then?
[00:33:02] Don McDonough: I think we talked a little bit about some of these things. What's really important, I think as a 22-year-old are hungry or competitive. You want to get out into your career and start accomplishing things, and I was a bit focused too much on the ladder itself. I just gotta keep head down and learning about this and all that is important.
[00:33:22] But I think at the same time, I would say, to answer your question, I would tell my 22 olds up. Focus on your passions and what you're good at and what may differentiate you in the world that you've chosen. Whether that's finance and investing, and that's part of how I ended up in business development.
[00:33:40] What are your strengths in this world? And then seek out mentors and people who are successful in where that marries. That's really critical. You need people who does not only see what's made them successful, which I think you do a great job with pointing out, but it may be a boss, it may be a friend, it may be, but having that different type of conversation and not just.
[00:34:02] Here's how you model this. Here's how you go find a company That, and doing the job, but understanding, again, you bit about yourself, so that introspection and getting to where you may be most successful down the road in the context of the world that you're in. And then really seeking out the best people in tho in those worlds of folks who are willing to give their time, either inside your office or outside your office to help you get there and understand more of that bigger picture.
[00:34:29] That you might not be getting if you're just focused on that next rung of the ladder and whatever it is that you're doing. I think it just a little bit more self understanding and mentorship.
[00:34:39] Sean Mooney: I think there's great advice in there that certainly I wish I knew then, as I kind of replay in my mind what you're sharing there, it's a couple really, really good points.
[00:34:50] It's follow your passions, but also know where your passions interplay with your strengths. Because I'm passionate about a lot of stuff and not really good at 'em. Right, right. So I was like, what do you like doing? And what are you good at doing in your Venn diagram? And then the other thing I really liked is like seek help.
[00:35:07] That was something that, to this day I have a hard time with it is just idea of like, look for mentorship. 'cause people are like, more often than not, are very eager to kind of show you the way if you demonstrate. The desire to listen and take it. So I always felt like I had to kind of like figure stuff out myself.
[00:35:25] 'cause they view it as a weakness. It was not productive.
[00:35:28] Don McDonough: Be able to say, I don't know, and can you help me? And why does this work the way it is? Or how did you get to where you are? How did you think about it? Oftentimes our passions are our strengths because people love what they're good at. But to say I don't know everything, and to seek out that help is really, really important.
[00:35:49] People want to share what they've learned. I find for the most part now we're all busy and we're all competitive. It may not happen on the first time, but I think most people in town of folk really wanna share and teach and help folks in that world. I know I do and always welcome that, but I wish I had spent more time kind of with my head out of the financial model and thinking back when I was 22 and understanding what is this all about?
[00:36:15] What does it mean? What do I love? What am I good at? And where do I want to go with this? Who do I talk to? Help me get there. And whether your friends, your former leaders create the world that you wanna live in. And obviously Sean, you have done an amazing job of doing that with BluWave and beyond, but I'd say that's gonna be a key to life.
[00:36:35] Sean Mooney: Yeah, a hundred percent. And thank you for the kind words and thank you for being in my life for all these years as well. 'cause I appreciate you. And so this has been a really wonderful conversation, Don. I've learned all sorts of things that I wish I knew before and I think I can say with confidence that I'm better for it as are our listeners.
[00:36:53] So thank you for taking the time.
[00:36:54] Don McDonough: Well, thank you so much for having me. It's always great to talk to you, my friend. I. Anytime. Really appreciate the opportunity. Thank you.
[00:37:13] Sean Mooney: That's all we have for today. Special thanks to Don for joining. If you'd like to learn more about Don McDonough and GTCR, please see the episode notes for links. Please continue to look for the Karma School of Business Podcast anywhere you find your favorite podcast. We truly appreciate your support. If you like what you hear, please follow five star rate, review and share.
[00:37:34] This is a free way to support the show and it really helps us when you do this, so thank you in advance. In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers, independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of leading private equity firms and thousands of portfolio companies, and you can do the same whether or not you're in the PE world.
[00:37:59] Give us a call or visit our website@BluWave.net. That's B-L-U-W-A-V-E and we'll support your success onward. The views and opinions expressed in this program are those of the individuals presenting and do not necessarily reflect the views or positions of any other persons or entities. Including those referenced herein, no representations, warranties, financial, legal, tax, or other advice are made herein. Consult your advisors regarding any topics discussed during this episode.
[00:00:34] I am super excited to be here with Don McDonough today. Don, thanks for joining.
[00:00:40] Don McDonough: Thank you for having me, Sean. Great to be here.
[00:00:42] Sean Mooney: Yeah. This is one I've been looking forward to for a long time. I think our listeners might notice some familiarity. As Don and I talk, we've known each other for a long, long time.
[00:00:52] I. When I certainly had Brown in my hair, Don is holding up much better than I am against time.
[00:00:58] Don McDonough: Oh God.
[00:00:58] Sean Mooney: But, uh, but uh, this is gonna be a fun one. So I, I've been pleading with Don to come on for some time when we finally got him.
[00:01:05] Don McDonough: I'm really looking forward to it. Thanks so much again.
[00:01:07] Sean Mooney: This'll be great. And so maybe for our listeners who don't know as much about the story of Don, Don, how about you kind of give us your abridge story of you kinda where you grew up, any kind of form of life events.
[00:01:21] First job outta college, and then ultimately how you got into pe.
[00:01:24] Don McDonough: Yeah, sure. I'm a born and raised New Yorker. Grew up out on Long Island in a town called Garden City. Was active in sports throughout high school and college. I went to Princeton undergraduate before starting my career in investment banking in Manhattan.
[00:01:40] I worked within Pricewaterhouse and JP Morgan and their investment banking groups here in Manhattan for five, six years. Ultimately got my MBA at Columbia Business School. And started my private equity career about 20 years ago, as scary as that may seem.
[00:01:56] Sean Mooney: Yeah, so Don and I have very similar paths other than the Princeton, the really good athlete, and some of those other things that I lack.
[00:02:04] So Don is the better version of me as I kind of grew up in life. But, uh, please, no, but one thing you'll notice with Don, he is also incredibly humble. But he's been someone who I think has accomplished a lot, and that's one of the reasons why we're excited to hear it from him and how he views the world, because I think there's a lot of kind of insight and wisdom and tenacity and grit and Don's kind of story.
[00:02:27] Don McDonough: Back then kind of path to private equity was a little less straightforward. It was much more of a cottage industry and having been in investment banking, getting to more on the investment side. There was a lot more, obviously, opportunity to help build businesses, understand more about how companies work and working with management teams and strategy.
[00:02:47] In my mind, a little more accountability as far as putting your money where your mouth is and use the training that you received early in your career is really what attracted me to it and kind of a competitive nature that just spoke to me, especially in middle market where I. Not only opportunity to get really strong training at good firms in a smaller environment, but also the opportunity to get more of an impact on smaller to mid-sized companies in a beginning of my career.
[00:03:17] Sean Mooney: That's, I think, great additional kind of color on your background. And now that we've done more than a hundred of these episodes, and certainly you and I knew each other when I was in pe, that is something that's, if I look at like what are the personas of people that are attracted to this industry? It's people who.
[00:03:34] Generally our high achievers kind of competitive. There's a humility and humbleness to them. There's also this idea to kind of lifelong learn and like you mentioned training multiple times where you want to constantly kind of get a little bit better each day, but then it's also like you're drawn almost like this, like inexplicable siren call from these other really good.
[00:03:56] Kind of pursuits and backgrounds into this idea that you want to be more of a hands-on business builder and have this ownership, this kind of like accountability over actually making things done versus maybe some of our prior kind of chapters of our lives.
[00:04:10] Don McDonough: Yeah, no, I, I think that's right. I was fortunate to be able to work at firms like Pricewaterhouse and JP Morgan.
[00:04:17] I really enjoyed my time there, but it was really a time where I was thinking about what I wanted to do with my life and where I wanted to take that training. I. Without realizing necessarily that I wanted to pursue a different path than where I was at the time, the more I learned about it, particularly in the earlier stages of the industry, is spoke to my nature a bit more.
[00:04:38] Sean Mooney: That's spot on and that a hundred percent fits with the way I know you, and I think the way a lot of us know each other. And so maybe with that in mind, Don. One of the questions I always love to ask is, we know you better if we knew this about you, that maybe doesn't jump off kind of your LinkedIn page, et cetera.
[00:04:54] So what's one of those things?
[00:04:56] Don McDonough: You referenced a little bit about some of my athletic background and I was quite fortunate, not only in college but also growing up through high school. Athletics were a big part of my life, a very competitive person and was really to have a lot of great coaches and teammates.
[00:05:14] Both high school, college and really throughout that I be a part of some really successful teams as well. I learned a lot from them. I was, I guess, very competitive and drove myself, but also learned a lot of great lessons from those coaches. Those teammates where that I impart on life every day and what I'm doing either work, what I'm doing in business.
[00:05:36] Really where I try to not only take them and become a better version of myself, my job as head of business development here at GTCR, but also at home. I try to get back in my community and coach young kids some of those lessons as well. So I guess that would be one thing that's important part of my life that's really impacted in a great way.
[00:05:56] Sean Mooney: And Don, what was the sport that you played growing up?
[00:05:58] Don McDonough: I played lacrosse, played football and lacrosse in high school. Went on to play lacrosse at Princeton. Where I said I was fortunate to be a part of a terrific program. We won a couple of national championships while I was in school. And again, just a incredible experience to be part of those teams and with my coaches and and those teammates that really made it special.
[00:06:19] Sean Mooney: Yeah, lacrosse is one of those fantastic sports because it requires agility. It's a really fast moving sport. It's one that also requires kind of physicality, so you blending all of those at once. It's really interesting. So I grew up in Texas where football was king, and I really didn't know much about lacrosse until I went to college.
[00:06:42] Now it's, I think it's everywhere, but maybe when I was growing up, it wasn't so much until I went to college in Washington, DC where you had all these extremely exceptional kids and athletes from New York, Connecticut, Maryland, Virginia, and lacrosse was. The big thing, and they were some of the most exceptional athletes I'd ever seen.
[00:07:06] So it was just like this epiphany to me. I was like, whoa, what is this sport? It's unbelievable.
[00:07:12] Don McDonough: It was a lot of fun. It's an incredible sport. I loved it. I also loved everything they kind of brought and taught me, not just being out on the field and being very competitive, but again, what it takes to be successful in that environment, not just individually, but.
[00:07:28] As a team, and it really taught me a lot.
[00:07:33] Sean Mooney: Hey, as a quick interlude, this is Sean here. Wanted to address one quick question that we regularly get. We often get people who show up at our website, call our account executives that say, Hey, I'm not private equity. Can I still use BluWave to get connected with resources?
[00:07:47] And the short answer is yes, even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders. Every day we get calls from everyday top proactive business leaders at public companies, independent companies, family companies. So absolutely you can use this as well.
[00:08:05] If you want to use the exact same resources that are trusted in being deployed and perfectly calibrated for your business needs, give us a call. Visit our website@BluWave.net. Thanks. Back to the episode.
[00:08:21] So maybe as we turn the chapter of our conversation forward here. I'm curious, Don, what is maybe one of the harder things that you've experienced in business, in your career, and how did you overcome this? And I think that's like a common trait in PE is this kind of tenacity, grit, resilience and kind of trying new things and encountering challenge and overcoming kind of stuff.
[00:08:43] Don McDonough: Yeah, so I've been fortunate, as I mentioned, my private equity career spent almost 20 years and been for to part of a number of terrific, terrific firms where I. I learned various things. I started in a role that was much more traditional in execution and operations and kind of soup to nuts, private equity.
[00:09:01] And over time it kind of transitioned into this business development role here at GTCR. And it's like anything else you from one step to the next and you've learned on the past experiences into the next environment. And over the several years I've been here at GTCR almost three years now, and. This role here at this firm has been a terrific challenge and obviously the most recent.
[00:09:27] GTCR is a very successful, longstanding firm in the industry that has a, a terrific model of investment and operations, and this was a role that hadn't existed before. It's a firm that has, compared to where I had been in the past, much more complex in that it's headquartered in Chicago and multi-city and multi.
[00:09:50] Strategy across industries and funds, and it's a really exciting place and one place to be, but isn't in establishing a new role here in business development. It's taken a lot of hard work and it obviously the job's never done, but it's been a tremendous challenge. That's been a lot of fun so far.
[00:10:09] Sean Mooney: What were some maybe the lessons you learned from going to maybe an established role where you had been with the firm for a while and then you have to create something new?
[00:10:19] Within a really good company as well, but it just hadn't existed before. So for people who are thinking about doing those same things, did you have any kinda lessons learned, whether it was in private equity or you're working at a portco, what are some of those kind of like universal maxims you picked up that said, this is the thing, like for that person who follows you, and if you were to coach them, like what would be some of that advice?
[00:10:42] Don McDonough: Yeah, I would say certainly the job itself, and Sean, you were so successful at it for so long. You know, the, the role is one thing, and I call it the outside job, is always continuous challenge and, and helping to try to maximize your firm's investment strategies. But I would say getting to know the firm, getting to know the context in which you're gonna sit down in the middle of, and try to impact in a positive way.
[00:11:07] The hardest part of that is taking what's been successful for and molding it to the environment that you're in. That takes a lot of understanding of who you're working with, what the construct is of the firm, what's made it successful in the past, maybe identifying certain gaps with what you do well that might be able to address sooner than later, and whether that's interpersonally technology operationally working within GTCR, we have four really strong industry teams.
[00:11:40] We have a terrific leader strategy in a platform of really talented executives that we back and work alongside and all of our investments. We've got a terrific resource group that are functionally super talented in things like cybersecurity and procurement and technology. And so kind of understanding all those elements and what they can bring to bear and the conversations that I'm having outside the firm.
[00:12:06] Was one of the biggest challenges and it just takes time and it really comes down to not just each of those platforms, but individual to individual and what they're bringing to the table as far as what they're trying to get accomplished and how what they're doing. Plus what I might be able to bring to that initiative can really hopefully make one plus one equal three.
[00:12:25] I
[00:12:26] Sean Mooney: really like that advice. It's this whole notion of really when you're doing anything but particularly anything new, the first thing you come into is like this idea of. Observe, listen, learn, see what you're getting into before you start saying, let me show you how things work,
[00:12:41] Don McDonough: ready, fire, aim is not always a big strategy, and so I find that usually just listening, but getting in front of your colleagues and the job's never done.
[00:12:52] The market's always evolving. Our firm is evolving and trying to be our best competitively and maximize help our portfolio companies help our investment strategies. One of the things I love about this job is it's, it's always evolving that job's never quite done. Makes it a lot of fun.
[00:13:09] Sean Mooney: It makes me even think back, so when I joined the PE firm before BluWave, it was a brand new PE firm.
[00:13:15] So it was a spin out by a couple senior partners from another larger cap PE firm, and they were gonna do a lower middle market focused firm. And so I joined right at their final close when they had partners and they had associates and I was their first vp. And it was, and I came in and I had been with another PE firm for eight years, and so I had one way of really great mentorship and now entering a whole new phase of mentorship.
[00:13:42] And we just did things a little bit differently. I. At first, it was like a bucket of cold water got thrown right on me and it was shocking. Yeah. And I was 90% sure I was gonna get fired right outta the gates. And so I'm forever grateful to my then partners who like gave me some time because Yeah. But it was like kind of what you said, it was like, all right, you gotta slow it down.
[00:14:05] Almost like sports, like when you make varsity for the first time. And then like it's moving so fast. Even in like something new you're just like, but eventually you just watch and you learn and it all starts slowing down and then you know the rules of the game and you can start playing it.
[00:14:21] Don McDonough: You hopefully at this point or your career, you've kind of arrived with a toolkit and understanding of how to do your job and as much as it is understanding how your partners are doing their jobs and all of the great things that the firm and your partners bring to.
[00:14:37] It's also allowing them to understand what you can bring to the table for them because it, it might not always entirely be obvious in a new role. And again, a firm that's been around, in this case 45 years and quite successfully for that time. And again, very fortunate that a great group of partners that have allowed me to do that.
[00:14:59] Sean Mooney: And as you said, GTCR is one of the very best of the best and sets the standard in many ways in pe. So to be able to do something like you do and bring your talents to a team, that's also a really good one. It's kind of, you got drafted by the, I will not be provocative and pick a team, 'cause that's a third, third rail here in private equity land.
[00:15:20] So I'm not gonna say the Yankees or the Red Sox or pick your favorite team.
[00:15:26] Don McDonough: It's an amazing team. But one that's always seeking to get better at everything and then find new ways to create value. In the last five years, there's been a tremendous amount of growth within the firm, and that means some really exciting initiatives and ways to impact our world.
[00:15:44] So it's pretty powerful and you marry all of that with what's been the hallmark of our firm since the beginning and our leader strategy and great. Operating executives and we don't have an operating partner model, if you will. It's really, we identify themes that we feel like are a great investment strategies within our, our known sectors, and try to partner with really talented executives within those worlds to not only just identify, but help add value with companies from the lower middle market.
[00:16:16] People think of GTCR and it is a, a sizable firm and we do have a large cap. What they don't realize is. A lot of the investments we look at are really lower middle market and founder owned businesses and sponsor businesses that were bringing the same resources to those folks and the same senior level attention execs to those investments.
[00:16:36] And that's really the bread and butter of the firm and what's made it successful for so long and allowed for those other big things to happen. It's still going on. It just doesn't always make the front page of the paper.
[00:16:46] Sean Mooney: It's real interesting 'cause you're right, I think today some people may overly think about.
[00:16:51] The large cap things that GTCR does, but it seems like as you're describing, they've never really left some of the origins of the middle market. They've maybe augmented what you've become, but you haven't left where you came from.
[00:17:04] Don McDonough: Correct. When we raised the new strategic growth fund a few years ago to do just that, as our flagship had grown to a larger size, again, same type dynamics in investing and philosophy, and we're structured as one team, one dream.
[00:17:18] So. Leveraging all that institutional knowledge on. Businesses and founder and family owned businesses up to much larger enterprises.
[00:17:29] Sean Mooney: Hi, this is Sean. Wanted to take a quick moment to tell you a little bit why BluWave exists. It's based on this whole notion that assessing opportunities and building business is really hard. We all know third party expert service providers can dramatically help, but at the same time, it's hard to know who's good.
[00:17:48] Usually leaving you, like I would do, and call friends and ask, Do you know someone who does this? Or just go the square peg round hole route. So after nearly 20 years in PE, I decided to solve my own problem and create a BluWave. Today, many hundreds of PE firms, thousands of portcos, leading public companies, private companies, All call BluWave to instantly get connected with the exact third party service provider they want that's pre credentialed by BluWave and perfectly calibrated for their need and really good.
[00:18:19] You too can give us a call or visit our website@BluWave.net. We're free to use and you can benefit the same way other top P firms do act the show.
[00:18:30] As I kind of take in some of what you've shared here on GTCR, it's this multifaceted organization. You're bringing a lot to bear. You're using, I think, very importantly, the word and not, or you're not doing these binary choices. You're bringing a whole range of constituencies as part of your strategy to build, create value, partner with owners, and then ultimately being in service to.
[00:18:53] Stakeholders ranging from the whole gamut of limited partners, whether it's university endowments, pension funds, et cetera. And so how are you all managing this interplay between the business development team, the deal team, the operating resources that you bring to bear your port co leadership team?
[00:19:12] Don McDonough: Yeah, so it is a fairly sizeable constituency and a lot of terrific experts that you're trying to. But I guess it, it starts in the industry teams, and obviously we've been fortunate to have decades of experience in these markets. Identifying trends and identifying markets as they evolve and where we want to be from a business development standpoint.
[00:19:35] That's obviously understanding where we want to go and where our portfolio companies want to go within the industry. Context is critical on. Recruiting from the outside or this leader strategy initiative, that's a key part of what we're doing. So out into the market and business development for us not only means investment opportunities, but talented operators, talented executives in-house from an operating standpoint.
[00:20:05] I mentioned functionally talented folks, and whether it's data and analytics, procurement. Ai, things of that nature that we can, again, bring to bear to businesses that are just learning how to implement them in, into their strategies. And so the nice thing is for us, I may be leading business development.
[00:20:24] It's a part of everyone's job. The deal teams are well versed in some of, there may not be experts in AI or procurement, but they know when, bring those folks in and, and it obviously differs depending on the opportunity. It's a bit of a dance. And when you look at companies that are large and small and different parts of their transition, one of the great things as firm have been able to show is the ability to bring small companies into the much larger market and help those companies grow.
[00:20:51] So again, it starts with our industry teams and the themes of where we want to invest. What we're seeing, business development sits at the intersection of those industries. And for us, it's technology. It's financial services, it's business services, it's healthcare. So a diverse set of services and technology companies.
[00:21:12] And so being out in the market and having that credibility for me, but again, working with a team as development center to identify companies, identify advisors, identify executives, and marrying that with our operators. From an LP standpoint, I mean, we've got a terrific investor relations team and.
[00:21:31] Institutional investors from around the world that been with us for a long time. They've invest alongside our deals. Every situation's different. But we're, again, I think we've got a great platform that has in-house all of those aspects that need to be successful.
[00:21:47] Sean Mooney: That's great. And as I reflect on what you were saying there, Don, it made me think back to like the earlier innings when you and I were entering the world, and in some ways it reflects the evolution of the business of private equity.
[00:21:59] So like. When I started, in the early days, most PE firms would say, oh, we specialize in partnership. And there was a picture of a handshake on a website. This is a long time ago. And then it was like, well, what's your value creation plan? It's like, we're gonna upgrade the accounting system and add a salesperson.
[00:22:15] And then I was like, I'm like Neo. I see the world in slow motion. I can see the ones and zeros cascade,
[00:22:21] Don McDonough: right? We invest in niche leaders, cliche. The business development role has evolved. The whole industry has evolved, and while it's really nice to have those institutional partners that we have and the capital base that we have, it's really, I think of it as more of a byproduct of the value that the firm has been able to bring to the table, to the business owners.
[00:22:44] We want to be business builders alongside our management teams, alongside our execs. We're partnering with, I mean, that's why we're in this. We bought low, we sold high. We found some obscure business that no one had ever seen before and paid a low price. We're cognizant that we're investing in really interesting, in some cases, very high growth and competitive fields.
[00:23:07] It can be expensive, and it's really about what you can do to help build that company and that platform More than anything else this day, not just for us, but really across the industry, it's gone from a industry as we talked about, to. Alternative assets. Right. So that's what we try to do.
[00:23:25] Sean Mooney: It's interesting.
[00:23:25] So very often here we're having new people start and I always try to explain the industry to them and where it came from to where it's going. And what you're describing is kind of pretty in, in line with how I describe it in that in the early days it was a nascent industry. It was coming. And one of the things I borrowed here at Blue is this concept of and not, OR, and industry has.
[00:23:49] It's not that you can be a kind of hands-off delegative partner or a hands-on prescriber and the world has to exist in this or, and a polar realm on one side or the other. It's like, no, we're gonna be good partners and we're gonna bring resources and we're going to have deal teams, ops teams, partners, you know, all these other things and we're gonna make 'em work in symphony with each other versus saying something has to be this or that.
[00:24:16] Don McDonough: A hundred percent. The job that I have in business development, I think most people within private equity, whatever their role is, would say their job has evolved dramatically and gotten much more complex. I think business development early days was, were you where somewhere others weren't and found some obscure asset and it was a purely sourcing initiative and that's an important part of it, but it's also much more now to be, is it development and marrying strength with strength?
[00:24:46] And much more proactive around investment strategy. I would say
[00:24:51] Sean Mooney: that's this whole idea, and it's one of the cliches I'll use a lot. It's like the business of private equity has turned into a business, and so you've got sales and marketing operations and technology and strategy and back offices and forward offices, and it's all working in this kind of symphonic motion with the portfolio companies so you can create a greater hold because at the end of the day, your alignments are about as perfect as they can get because not only does.
[00:25:15] A PE firm in one portco have to succeed together, but the PE firm really has to succeed across the entire portfolio in support of each other, or no one does. Well.
[00:25:26] Don McDonough: Yeah, but it does come back to some of the basics of investing as well. I think one of the most impressive things that I see every day and GTCR is despite the teams, despite the success over the years and, and all that, it comes back down to the same rigor and hard work.
[00:25:45] Started 40 years ago, and the hard questions that are asked, not just internally but of our portfolio companies are potential investments and you can't skip a step. It's all additive. These things that we're talking about and they're really important, but at its heart comes a very proactive but very rigorous step by step approach to investing.
[00:26:08] There's just no shortcut.
[00:26:09] Sean Mooney: Yeah, I mean, I mean, at the risk of like sounding like an over flatter kind of fan. Of GTCR. What I really appreciate about really great firms like yours is that in this and not, or kind of realm, you're not leaving the foundation that you built the firm on, but you're probably constantly shoring it up.
[00:26:28] Strengthening it, and maybe bringing the footprint of what you do into adjacent spaces that make the whole thing better.
[00:26:36] Don McDonough: I think that's right, and it goes to the, the culture of the firm and the hunger to get better every day.
[00:26:43] Sean Mooney: So, kind of extending on some of the things we talked about is these kind of things that you all are seeing out there and that you're bringing support to your companies on.
[00:26:53] What are some of the top value creation opportunities that you all are thematically engaging in your portfolio company with these days that maybe other business builders should also be thinking about?
[00:27:04] Don McDonough: Yeah. Well, I mean I think some of that is, that we've been known for, for a long time from a business building standpoint is somewhat standard, whether that's.
[00:27:13] We mentioned building into the new markets and some cases m and a and other things, helping bring in additional leaders and executive talent, which again, is part of our hallmark of what we do. And then there's the market to market developments, and we are, as I said, a very proactive firm. And whether it was interest rates a couple of years ago that were pushing up.
[00:27:35] We have a really talented capital markets team and operators who are proactively focused on what's to come within those risks. So we're prepared for it. Obviously these days you're seeing it with the pronounce coming out of Washington. Obviously tariffs and challenges like that, I would put those in the same bucket where we are identifying, trying to get out ahead of issues and being proactive within the portfolio to help support our management teams wherever they may be operating.
[00:28:05] That's a constant. I mean, some of the themes, however, that I would say that are maybe a little longer reaching that we're spending a lot of time around would be things around technology, ai, how it helps potentially our investment strategies, our process, how it may help our management teams leverage themselves that much better, create efficiencies throughout the portfolio.
[00:28:28] I think we're spending quite a bit of time, not just internally. Dedicating resources to that and understanding the interplay there and the opportunities there, but also what it is and what it isn't. And so that would be an example, but where we're trying to bring that to bear more on a platform level, but it's a never ending dance of what's coming in the market that we're trying to stay out ahead of.
[00:28:50] Sean Mooney: I think it's a really good point is you think about what top business builders do, right? The world is full of change. The world was full of scary stuff. A large portion of the population, your intuition is to kind of like, let's batten down the hatches and just weather the storm and it'll come by and then sun will just magically appear in particularly times like now, and even as I try to communicate with our team about these kind of big tectonic shifts in the world, it's real easy to get overwhelmed and scared and, and just say like, okay, we're gonna stop and just see what happens.
[00:29:25] What you're articulating, I think is so foundational for anyone who's building companies, whether you're an investor, a portfolio company leader, part of a company is that those who benefit are those who don't resist it. They run towards it, right? Whether it's like, Hey, tariffs are coming. We saw people taking action on tariffs starting last year in the PE world.
[00:29:44] Okay? Interest rates are going up. Okay, well, let's make sure we're hedged or that we're being agile. And even as I go back, you remember the internet? If the investment bank that I worked for right outta college, they wouldn't let us access the internet. They didn't know what it was and they're like, this is really scary guys.
[00:30:00] We're not gonna let you do this. Like what?
[00:30:03] Don McDonough: Right. The worldwide web. Yeah.
[00:30:04] Sean Mooney: He's like, well, you can use American online though. I'm like, what? That's not good. And then like iPhones came out. I'm like, no, I'm sticking with my Blackberry.
[00:30:13] Don McDonough: Exactly. That flip phone turned as well for a while. Yeah,
[00:30:15] Sean Mooney: I still do miss the keyboard, but that's a different conversation.
[00:30:18] And then like the cloud, I'm like, no way am I putting my information on the cloud. That's nuts. But what you see during each one of these shifts is the people, the groups that run towards that with kind of iteration and appropriate level of just caution in that you're not just gonna run into a tunnel and see if it's a train or a light, but those who kind of run towards it embrace it almost every single time differentially benefit.
[00:30:43] And so the things that you're talking about with ai, it's the same thing. There's so many people that are resisting it, but guess what? It's not going away.
[00:30:52] Don McDonough: I think you said it well. And this is an industry to be successful, you need to kind of overcome and run towards problems and not, not away from them.
[00:31:02] It's a complicated world out there right now as investors, as operators, and that can mean lots of different things. And you hear this phrase being thrown, well, some people are. You risk on, are you risk off? Are you pencils down and. One of my partners said it best a couple of weeks ago at our A GM. He said, there's never been a time where we've been pencils down.
[00:31:24] It's our job is to provide solutions and to create and find opportunity. So what, certainly every market is different and the risks and opportunities can change, but our job is to be in that market and to hopefully create a better set of opportunities and address those risks better than others. It may not work for the other side depending on what they need to achieve, but it's our job to try to create that.
[00:31:49] And that's a lot of what business development does to bring to the table. But also obviously my investment partners and the executives that we support. Obviously there are great new tools that are coming up every day, but they bring their own risks. But it's things like AI that we're working very hard, hard to try to understand better how to try to bring practicality to that.
[00:32:08] And everything that we do is one broad theme from market to market. I think that attitude serves us well. It helps that we've got the rigor and the infrastructure and the approach, and frankly the culture that helps withstand that and is pushing and it's really about what's next. Okay, great. How do we continue to improve?
[00:32:28] How do we continue to tackle the next challenge in a better, differentiated way? And you're absolutely right,
[00:32:35] Sean Mooney: and I love it with maybe with introspection in mind. One of the things that I'm a huge borrower of is other people's kind of advice and lessons hard learned, and I'm curious, Don, if you were to go back in the way back machine and meet your 22-year-old self, what would be one of the top piece of advice that you'd share with your self that you wish you knew then, that even if 22-year-old done may or may not listen to it, but what would be one of those things that you kind of wish you knew then?
[00:33:02] Don McDonough: I think we talked a little bit about some of these things. What's really important, I think as a 22-year-old are hungry or competitive. You want to get out into your career and start accomplishing things, and I was a bit focused too much on the ladder itself. I just gotta keep head down and learning about this and all that is important.
[00:33:22] But I think at the same time, I would say, to answer your question, I would tell my 22 olds up. Focus on your passions and what you're good at and what may differentiate you in the world that you've chosen. Whether that's finance and investing, and that's part of how I ended up in business development.
[00:33:40] What are your strengths in this world? And then seek out mentors and people who are successful in where that marries. That's really critical. You need people who does not only see what's made them successful, which I think you do a great job with pointing out, but it may be a boss, it may be a friend, it may be, but having that different type of conversation and not just.
[00:34:02] Here's how you model this. Here's how you go find a company That, and doing the job, but understanding, again, you bit about yourself, so that introspection and getting to where you may be most successful down the road in the context of the world that you're in. And then really seeking out the best people in tho in those worlds of folks who are willing to give their time, either inside your office or outside your office to help you get there and understand more of that bigger picture.
[00:34:29] That you might not be getting if you're just focused on that next rung of the ladder and whatever it is that you're doing. I think it just a little bit more self understanding and mentorship.
[00:34:39] Sean Mooney: I think there's great advice in there that certainly I wish I knew then, as I kind of replay in my mind what you're sharing there, it's a couple really, really good points.
[00:34:50] It's follow your passions, but also know where your passions interplay with your strengths. Because I'm passionate about a lot of stuff and not really good at 'em. Right, right. So I was like, what do you like doing? And what are you good at doing in your Venn diagram? And then the other thing I really liked is like seek help.
[00:35:07] That was something that, to this day I have a hard time with it is just idea of like, look for mentorship. 'cause people are like, more often than not, are very eager to kind of show you the way if you demonstrate. The desire to listen and take it. So I always felt like I had to kind of like figure stuff out myself.
[00:35:25] 'cause they view it as a weakness. It was not productive.
[00:35:28] Don McDonough: Be able to say, I don't know, and can you help me? And why does this work the way it is? Or how did you get to where you are? How did you think about it? Oftentimes our passions are our strengths because people love what they're good at. But to say I don't know everything, and to seek out that help is really, really important.
[00:35:49] People want to share what they've learned. I find for the most part now we're all busy and we're all competitive. It may not happen on the first time, but I think most people in town of folk really wanna share and teach and help folks in that world. I know I do and always welcome that, but I wish I had spent more time kind of with my head out of the financial model and thinking back when I was 22 and understanding what is this all about?
[00:36:15] What does it mean? What do I love? What am I good at? And where do I want to go with this? Who do I talk to? Help me get there. And whether your friends, your former leaders create the world that you wanna live in. And obviously Sean, you have done an amazing job of doing that with BluWave and beyond, but I'd say that's gonna be a key to life.
[00:36:35] Sean Mooney: Yeah, a hundred percent. And thank you for the kind words and thank you for being in my life for all these years as well. 'cause I appreciate you. And so this has been a really wonderful conversation, Don. I've learned all sorts of things that I wish I knew before and I think I can say with confidence that I'm better for it as are our listeners.
[00:36:53] So thank you for taking the time.
[00:36:54] Don McDonough: Well, thank you so much for having me. It's always great to talk to you, my friend. I. Anytime. Really appreciate the opportunity. Thank you.
[00:37:13] Sean Mooney: That's all we have for today. Special thanks to Don for joining. If you'd like to learn more about Don McDonough and GTCR, please see the episode notes for links. Please continue to look for the Karma School of Business Podcast anywhere you find your favorite podcast. We truly appreciate your support. If you like what you hear, please follow five star rate, review and share.
[00:37:34] This is a free way to support the show and it really helps us when you do this, so thank you in advance. In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers, independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of leading private equity firms and thousands of portfolio companies, and you can do the same whether or not you're in the PE world.
[00:37:59] Give us a call or visit our website@BluWave.net. That's B-L-U-W-A-V-E and we'll support your success onward. The views and opinions expressed in this program are those of the individuals presenting and do not necessarily reflect the views or positions of any other persons or entities. Including those referenced herein, no representations, warranties, financial, legal, tax, or other advice are made herein. Consult your advisors regarding any topics discussed during this episode.
THE BUSINESS BUILDER’S PODCAST
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.
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.
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