Welcome back to PE Value Drivers.

We’re taking a different approach in this episode in talking with Vikash Magdani, Executive Director at ACG New York. As executive director at ACGs largest and most influential chapter, Vik has his finger on the pulse of private equity in the New York area and around the world. In addition to his role in leading ACG New York, Vik is an entrepreneur with extensive international corporate product and business development experience in private equity, energy, financial services, and B2B multi-platform media. He's well versed in B2B global strategy, operations, and business stewardship and sponsorship, corporate partnerships, product and program launch, and content development.

About ACG, New York

AGC (Association of Corporate Growth) launched initially by an entrepreneur named Peter Hilton who understood what middle-market businesses mean to this country. In 1954, Hilton created a network for public or private investors to connect with entrepreneurs. Today, ACG has grown into a global organization with 59 chapters across the globe. Through these chapters, ACG provides a conduit that puts together great forums for people in the middle-market ecosystem to promote best practice knowledge, network and get deals done.

So, what changes has Vik seen in middle market private equity?

• In the last 20 years, private equity has seen an incredible explosion from a relatively small number of managers to a large industry of entities that includes independent sponsors, family offices, sponsor-backed strategics, and big behemoth strategic.
• A lot of them have steered towards the middle market, which is $5 million up to $500 million.
• The primary strategy, which from inception was to hold for a set period and then let go, has shifted to more of a buy and build approach with organic growth playing an increasing role.

On supporting value creation for middle market Private Equity

• The ecosystem is wide, and there's a big interest to not just look at the deal making community. He looks at it in four funnels.
  • One is fundraising. More and more LPs are doing co-investments and direct deal investing. Many different institutions not only fund invest, but direct deal invest.
  • The second is M&A and the deals and the players within.
  • The third, very important to him, is value creation. He’s never seen so many data scientists and operating partners leaving industry to join private equity firms.
  • The fourth is exits. AGC has many strategics joining, big industry companies, be they private equity backed or otherwise, because they use their balance sheets to invest.
• Many are spinning off and creating platforms that are investing in funds and bring a lot of value creation prowess.
• To support this, AGC has incepted a series for Operating Partners and other value creators. They meet once a quarter to talk about their vagaries and woes, how they engage with the deal teams, create value, engage with management teams, and everything in between.

What has Vik observed regarding how funds work with third-party consultants like Chief Outsiders

• Private equity has become much more sophisticated and nuanced with third-party support. And the LPs are demanding their sophistication, more transparency, and more governance.
• There's so much to it they need that assistance, whether that be help with sales and marketing, HR, supply chain and procurement, or whatever.
• Not all managers have the same number of staff and human capital at their disposal, so vendors and suppliers like Chief Outsiders are integral to them.
• That's exactly what he sees within the lower middle market where they don't have numerous operating partners like a larger company.

On how Operating Partners and other value creators can engage with AGC

• The short answer is if you're involved in value creation and not engaging with ACG, you're missing out.
• Because of what's going on in the market, organically building companies, it's important to engage with AGC.
• Many more Operating partners are joining the membership.
• AGC has numerous VCs that are selling up into lower middle market. So, with operating partners from large organizations all the way down to VCs, there's a lot of learning going on.
• Membership is available to individuals and groups from a single firm.
• It’s important to remember that you get out of the membership exactly what you put in.
• AGC has lots of proactive members. So, join, especially if you're a value creator, sit on a committee and be proactive in arranging programs and events.

A bit more about Vikash Magdani’s background

• A Brit born in London, Vik went to university and fell into a business in the after-school club industry providing breakfast, after school care, and holiday care for children aged 4-12. His mother who's a teacher opened a school affiliated club and that morphed into something bigger.
• After university, he fell into PE work for a mega-buyout firm doing BD origination for consumer business information media firms worldwide, predominantly B2B.
• Then he joined a portco of a well-known B2B media house servicing the financial services space with a tangent in energy private equity.
• He led, soup to nuts, many verticals. That gave him great exposure and learning operationally within firms.
• He launched with a couple of others the Oil and Gas Council, a committee-steered, member-based BD network that put public or private investors in front of oil and gas companies, five guys looking for a deal all the way up to Exxon.
• About two years ago, he was approached by ACG and joined ACG New York, the largest chapter.