Thomas C. Anderson - Restructuring the Hold: Optimizing Portfolio Company Performance and Management Team Returns

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 4
5. Chapter 5
6. Chapter 6
7. Chapter 7
8. Chapter 8
9. Chapter 9
10. Chapter 10
11. Chapter 11

Thomas C. Anderson

Mark G. Habner

Copyright 2021 by Thomas C. Anderson and Mark G. Habner. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data

Names: Anderson, Thomas C., author. | Habner, Mark G., author.

Title: Restructuring the hold : optimizing private equity and portfolio company partnerships / Thomas C. Anderson & Mark G. Habner.

Description: Hoboken, New Jersey : Wiley, [2021] | Includes index.

Identifiers: LCCN 2020027480 (print) | LCCN 2020027481 (ebook) | ISBN 9781119635185 (hardback) | ISBN 9781119635215 (adobe pdf) | ISBN 9781119635208 (epub)

Subjects: LCSH: Private equity. | Mutual funds.

Classification: LCC HG4751 .A56 2021 (print) | LCC HG4751 (ebook) | DDC 332.6dc23

LC record available at https://lccn.loc.gov/2020027480

LC ebook record available at https://lccn.loc.gov/2020027481

Cover Design: Wiley

Cover Images: William Dodge Stevens/Alamy Stock Photo, binkski/Getty Images

Author Photos: Jovanka Novakovic

This book is dedicated to our families.

To my wife, Jean, whom I've loved since our high school days; and to our children, Benjamin, Caroline, Elizabeth, Catherine, and Samuel. Thank you for your unceasing love and support. I'd be remiss if I didn't mention Bear our black Labrador and constant family companion. Tom

To my lovely wife, Pamela; my beautiful twin boys, Colin and Ryan; and my parents, Jill and Wayne. Like many of us, my family has been an integral component to every accomplishment I've been fortunate to achieve and supportive in every failure I have accepted. Mark

Restructuring the Hold is an invaluable read for anyone engaging with private equity for the first time, as well as for those who've had previous experiences with private equity. I'm a big fan of PE but private equity done right. This book provides a roadmap for doing private equity the right way.

Over the years, I've experienced each of the primary types of business ownership structures, including a large public corporation, small startup enterprise, private familyrun business, and a private equitysponsored company. I'm convinced that private equity is the most efficient and the most rewarding for building great businesses. Let me explain why I think this by telling my PE story and explain how the concepts laid out in Restructuring the Hold are so relevant today.

After graduation, I joined a large multinational public company and gained a great deal of experience as a young professional. While I enjoyed the work, I became intrigued with the idea of selfemployment. After four years and two promotions, I resigned at the young age of 26 to start a carpetcleaning franchise. My friends and colleagues thought I was nuts.

During the next several years, I worked hard and expanded my franchise to include three different brands, each achieving top performance within the franchise holding company. At 37, I was invited to become president of one of the brands. I sold my businesses and moved my family to Waco, Texas, where the company was headquartered. I was soon promoted to COO and president of the overall multibranded international business. While technically a public company (with the onerous reporting and expectations of posting everpositive quarterly results), the founder's family still owned a controlling interest. Perhaps not surprisingly, the family had become somewhat riskaverse following their early success and was increasingly hesitant to make good bets to further grow the business. It was the worst of both worlds.

Eventually, the family decided to sell the business. It was 2003, and at that time PE was not widely known in the franchising community. We were intrigued and listened to the private equity firm suitors, and after research and reference checking we sold the business to our firstchoice firm. Over the many years that followed and to this day, we've been private equityowned and have transitioned through three increasingly successful investment periods and currently are on our fourth. With each year, we've achieved impressive growth and increased profitability, enabling us to continuously provide better experiences for our customers, our franchise owners, and our employees.

Neighborly is now fully 20 times bigger (and better) than we were in 2003. But it was during this last full investment period between 2014 and 2018 where we achieved the fastest growth and created the most value that was the investment period where Tom Anderson and his colleagues partnered with me and my team to drive the most positive change our company has ever seen. During those four years, Neighborly expanded exponentially through our implementing a broad value creation program of organizational improvement, operational efficiencies, organic growth, and addon acquisitions. Together during that time, we more than tripled the enterprise value of Neighborly and provided investors much more than that in the form of cashoncash financial returns.