Nestor, the chairman, senior managing partner and CEO of Kirtland Capital Partners, a 20-employee private equity firm, has built an emphasis on successful partnerships into the firm's culture. Without partnerships, acquisitions don't happen and the business doesn't grow.
Nestor and his associates perform due diligence on each acquisition candidate, but they also try to build a long-lasting relationship with each by truly getting to know the business and the people.
Smart Business spoke with Nestor about how you can find - and capitalize on - the right growth opportunities.
Q. What are some keys to developing a relationship with the management teams of other companies?
When we're talking to a management team in the early process, before we've bought the business, we say, 'You don't know if you have a good partner until you hit a bump in the road.' So you start the relationship usually after you've closed on a deal. We'll start with meeting with the senior management team from our group, and talk about what we found during our due diligence process, both positives and minuses, and then agree from the standpoint of getting everyone on the same page of what their goals and objectives are and what ours are, and be sure those mesh.
That establishes trust and that kind of thing, and if you develop that relationship right, that management team will call you with not only good news but bad news, not only with opportunities but with challenges. That trust factor only develops over a period of time, once they realize that if they call you with a problem, you're not jumping through the phone at them. Once they see that you're willing to help with an issue, that opens up the lines of communication so that they're coming to you.
It's getting to know people one on one and having a lot of exposure to them, particularly if you're working through an issue or an opportunity. That's how you begin to develop that working relationship, that kind of rhythm. Over a period of time, that really builds.
Q. How do you create those opportunities to engage people and really get to know them?
You kind of have to make those engagement opportunities with people. On the front end with a company, particularly if it's going through a sale process and we have an intermediary who is conducting the process, we try to meet with management as much as we can. If they're not in Cleveland, we try to get them to come to Cleveland and meet with us, also to talk with some of our current and former CEOs who will tell them what their experience has been like. We have a very long track record of working closely with management teams, and that seems to go a long way toward getting them to feel comfortable with all the good things we're telling them on the front end, and the fact that we're a supporting partner, somebody else who has been through the good times and bad times. It's just trying to spend time with them and getting to know who they are, not only from a business standpoint but who they are as people.
There is nothing that beats making time, and spending a lot of time with people, asking a lot of questions and getting them to know you. You want them to do their homework on you. Typically, you'll check out our companies and do your due diligence on managers, and a company ought to be doing the same thing. They ought to be looking at your company, calling companies that you have invested with, management teams that you have worked with and even some of the people who supply services to you - bankers and accountants and so forth. It is just about doing your homework and getting to know the management team. You can get a lot of information as you go through that due diligence process, as you sit through meetings and see how a CEO relates to others on his management team. You see if there is a collaborative style, if there is mutual respect and so forth.
Q. How do you set the example for your employees?
It's how you work with companies, how you treat the management team, how you communicate with them, those types of things. It's coming together on a philosophy of how you do business and how you treat people. There is an authoritarian way when you're buying companies as we do, and you typically have an ongoing relationship with the management of the company. But it really has to be a collaborative effort with, and you need to build the relationship. Unless you do that, you can't really lead.
Q. What makes for a good investment opportunity?
It's being sure that everybody is on the same page in terms of where we want to go. One of the things I would not describe us as is a company that is going to simply make an investment and hope for the best. It's working closely with the management team and being sure that we're bringing them the resources that they need to be successful.
We ask our management teams, whether it's an existing manager or a management team that we're collectively looking to buy in to, that they also invest hard dollars, they write a check along with us. It's important that everybody have at least a few dollars at risk. That puts everybody on the same page.
HOW TO REACH: Kirtland Capital Partners, (216) 593-0100 or www.kirtlandcapital.com