Welcome back to PE Value Drivers.

In this latest issue of PE Value Drivers, I talk with Todd Markson from Bain Capital. Todd is an Operating Partner in Bain’s Tech Opportunities Fund, where he leads value creation efforts across the portfolio and partners with management teams to support their key initiatives. Prior to joining Bain Capital, Todd was CSO & COO at Cengage, a multi-billion-dollar Private Equity backed, global education and technology company, where he led strategy, corporate development, channel, pricing, procurement and supply chain. Before Cengage, Todd was a management strategy consultant in London, Dubai and Boston, most recently as a Senior Principal in the Technology and Private Equity practices of BCG, with a focus on Go-To-Market. Todd’s also been a technology entrepreneur in Silicon Valley, co-founding and successfully exiting education technology and information services companies.

Some highlights from my conversation with Todd – view the video to hear more.

• Bain Capital is a long-standing private equity firm founded in 1984. It is one of the leading multi-asset alternative investment firms with over $160 billion in assets under management. The Tech Opportunities Fund is the latest vehicle in the Bain Capital family, and is focused on high growth, midmarket B2B SaaS companies across FinTech, healthcare, IT infrastructure and security, Ed Tech and applications. They have invested through their first fund, which is about $1.5 billion and are now investing out of their second Fund which is well north of $2 billion.
• Todd leads the portfolio group, which partners closely with the portfolio companies to help them in the next phase of their growth journey.
• Todd has been in and around private equity for a little over 15 years as a consultant (BCG), at a PE-backed tech company (Cengage), and now as an Operating Partner at Bain.
• He’s attracted to private equity as it gives him a chance to be involved in investing in something he believes in by combining strategic capital with the vision and execution of exceptional founders to see the business grow over a period of time. It’s exciting to have skin in the game. Todd loves the intensity and the rush of being in the middle of a deal, especially a competitive situation where, he’s able to bring his experience and expertise to the table as founders choose their preferred partners.
• His experience gives Todd the ability to connect with multiple stakeholders, from the entrepreneurial CEO to the dealmakers at Bain, to the portco board, and the “operators” running the business inside the company.
• Understanding the timing and the machinations of how the company operates is really important, as is a maniacal focus on being impactful. Todd and his counterparts measure themselves on how they continue to increase the enterprise value of the businesses in which they have invested. They are constantly looking at how they are driving impact and helping the business grow.
• Being impactful working with portfolio companies requires a balance of IQ and EQ. As an Operating Partner, Todd needs to earn a seat at the table by showing that he can drive impact and be a supportive partner.
• In Bain’s process, Operating Partners like Todd get very involved early in the process from early-stage investment committee meetings to due diligence where they may be going through the models and underwriting the plan as something they will have to deliver during the hold period.
• This early and active involvement by the Operating Partners helps bolster Bain’s “right to win” and create a relationship with a management team to highlight how they can work with them. As the first 6-12 months of the investment timeline is critical to setting the company on the right trajectory, tapping into all the different value creation ideas discussed during diligence is really, important.
• Bain doesn’t have a set playbook when it comes to working with portfolio companies. Instead, they have core principles when they’re thinking about value creation. The plan they put in place for each portco is specific and customized based on what is needed to help that business grow, and then take a different trajectory than it already has. Full alignment on that plan with company management is also a must. The goal is to become trusted advisors to the team to be invited in to help, not pushed in.
• Todd is part of a lean team at Bain and using trusted 3^rd party resources provides leverage as they work across three to four portfolio companies at a time. They create a curated list of third parties they trust and have worked with to recommend to portfolio company management. When they can, they’ll offer 2-3 options to the portco to choose the partner that fits best.
• Importantly, the resources Todd brings to the portcos need to be willing to roll up their sleeves and show impact vs. delivering a PowerPoint.
• Todd’s parting advice for other Operating Partners:
  • Choose the PE firm to work with. Be sure to go with a firm that buys into the approach.
  • Get into the weeds and focus on impact
  • Don’t try to do 50 things. Instead choose the three or four things that matter and that will actually change the trajectory of the business.
  • Put the systems in place to measure impact and fine-tune.

Please view the video for the full discussion with Todd and be sure to check out the whole PE Value Drivers series. If you are interested in being interviewed for the PE Value Drivers series or have any questions, feel free to reach out to me at skobran@chiefoutsiders.com.