PODCAST:Masters in Business
TITLE:Michael Fisch on Private Equity Funds
DATE:2023-12-01 00:00:00
URL:
MODEL:gpt-4-gizmo
Summary of "Masters in Business: Michael Fisch on Private Equity Funds" (2023-12-01) Podcast:
The podcast features Michael Fisch, co-founder and CEO of American Securities, a private equity firm managing over $27 billion in assets. Hosted by Barry Ritholtz on Bloomberg Radio, the discussion delves into the intricacies of running a private equity firm, particularly one that emphasizes partnerships with management teams and facilitates company improvements.
Michael Fisch's Background:
- Fisch discusses his educational journey, starting with a BA in Economics from Dartmouth and an MBA from Stanford. Initially aiming for stable employment to support his family, he shifted focus under the mentorship of John Hennessy Jr., leading to a career in finance. His early career included working at Goldman Sachs in M&A and Bain & Company in Paris.
The Evolution of American Securities:
- Founded in 1994 with the backing of the William Rosenwald family, American Securities focused on investing in market-leading companies in GDP-growth industries. They aimed to support existing CEOs and use modest leverage. Fisch highlights the company's approach to management partnership, which significantly differs from industry norms where CEO turnover in private equity transactions is high.
Investment Strategy and Focus:
- American Securities focuses on investing in market leaders with a sustainable competitive advantage in industries growing at or above GDP. They prioritize backing existing management teams and often work with founder CEOs. Their strategy includes both platform investments (initial major investments) and add-on investments to grow the companies.
Challenges in the Current Economic Environment:
- Fisch addresses challenges like increased bankruptcies, higher interest rates impacting valuations and borrowing costs, and issues in deal-making and exits in the current economic climate. He emphasizes the importance of microeconomic analysis over macroeconomic trends in evaluating investment opportunities.
Corporate Citizenship and ESG Focus:
- The discussion touches on American Securities' commitment to good corporate stewardship, including philanthropic activities, diversity and inclusion efforts, and ESG initiatives. They strive to be responsible corporate citizens, influenced by their origin from the philanthropic Rosenwald family.
Future of Private Equity and Personal Insights:
- Fisch reflects on the surprising growth of private equity as an industry and offers advice for those interested in a career in private equity. He stresses the importance of enjoying the work and the people you work with. He shares his astonishment at the evolution of private equity from a niche sector to a massive industry.
This podcast provides a comprehensive insight into the private equity world, highlighting the unique approach of American Securities and the personal journey of its CEO, Michael Fisch.
