Private Equity Advisory from Deal to Exit: A Conversation with Stax
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Private Equity Advisory from Deal to Exit: A Conversation with Roy Lockhart of Stax

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In this episode, Jenny Rae chats with Roy Lockhart - a Stax Managing Director. Roy leads the exit planning/sell-side practice at Stax and has been involved in over 100 deals!

Jenny Rae and Roy break down:

  • The key seasons Roy has stayed with Stax for so long
  • What career development looks like at Stax - and how it evolves
  • Advice for young professionals
  • Stax’ integrated approach to private equity consulting
  • Roy’s most memorable client projects

Stax Links and Previous Episodes

Management Consulted Links

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Roy Lockhart Bio

Roy Lockhart serves as a Managing Director in the Boston office, offering almost 15 years of experience providing strategic counsel to a range of clients across the private equity investment ecosystem.

Additionally, he leads Stax's sell-side and exit planning practice, supporting equity sponsors, management teams, and investors in developing investor-friendly narratives to drive successful capital raises and exits.

His contributions to growth strategy development, alongside his involvement in sell-side engagements, provide investors with data-driven analyses spanning diverse sectors, with a particular emphasis on software and technology.

Prior to joining Stax, Lockhart supported private equity-centric engagements at Investor Group Services.

Lockhart holds a Bachelor of Arts in History from Bates College.

Transcription:

MC: Jenny Rae Le Roux 

I'm Jenny Rae Le Roux, the managing director of management consulted and we're really excited to be here today with Roy Lockhart.

Roy serves as a managing director in the Boston office of Stax offering almost 15 years of experience providing strategic counsel to a range of clients across the private equity, the private equity investment ecosystem. Additionally, he leads Stax's sell side and exit planning practice supporting equity sponsors, management teams and investors in developing investor friendly narratives to drive successful capital raises and exits. 

Roy is based in Boston and holds a Bachelor of Arts in History from Bates College. Welcome, Roy, to the strategy simplified podcasts. We're excited to have you.

Stax: Roy Lockhart 

Thank you, Jenny. Appreciate it. I'm excited to be here.

MC: Jenny Rae Le Roux 

Well we're gonna just kick off by asking if you could quickly catch up our audience on the work that Stax does, and the firm's special sauce.

Stax: Roy Lockhart 

Yeah, absolutely. So Stax, we are a consulting firm. And both our work and our special sauce are integrated and intertwined. Together. Our focus specifically is on private equity consultants. So supporting PE sponsors, deal teams, operating teams, portfolio companies, kind of everything and anything and everything within within a private equity fund in the private equity deal lifecycle, it would encompass the work that we do.

The way we think about it as our work spans from the earliest stages of private equity of a potential private equity investment ranging well before there's a specific asset of mind or specific investment in mind, we work with a lot of our partner and client funds on thesis development, you know, understanding what types of investments what types of themes do they do? Could there be potential opportunities in Are there specific areas within verticals, specific business models that, you know, they should build a thesis around over the course of a couple of years following that will help them identify or even define what an attractive investment looks like within under the umbrella of one of those theses, or even within a given vertical or, or get again, business model.

And then that flows straight into the more traditional commercial due diligence support, where we'll help them vet potential investments, dig into markets, make sure that there aren't any major issues with with potential assets they're evaluating, but also, more importantly, help them understand and go into an investment with a plan for how to grow the business or how to grow the asset following acquisition.

And then that obviously, logically, flows right into our support for portfolio teams, portfolio ops, management teams within private equity funds, you know, we do anything and everything to really support portfolio company growth and optimization, things like pricing optimization studies, how should you, how should you price products, how should you bundle and package products, how should you think about discounting, sales, Team incentives, all that type of stuff. If you're thinking about entering a new market, developing a new product, trying to figure out better ways to monetize an existing customer base, as an example, we'll help out with that we'll also help diagnose issues, you know, third portfolio companies that are underperforming, get under the skin of the extent to which issues may be market driven, execution driven, you know, in either case, the head that leads to a different set of answers or recommendations.

But then that leads logically, the next step into preparing for exit preparing for sale capital raises whatever it may be, that is, as you mentioned, that's where I spend most of my time I lead our exit plans sell-side practice specifically. And that that can range quite a bit as well, as you probably expect, there's quite a bit of overlap between that side of the business and what we do and the value of the portfolio value creation side of things.

All of that is really everything that we do even on the front end of the funnel at the buy side is with exit in mind, we want to make sure that there is a plan a long term vision for the business. And that that vision extends beyond our clients hold period. So that at the point where they're looking for the next investor, that investor doesn't have to look at the asset and say, hey, at the point of close, I need to figure out what's next for this business. They want to be able to buy into an asset that has legs where the existing strategy and vision has has legs.

That's where I spend most of my time. You know, some of that in some cases, that's a diagnostic of the bit of a business, understand how it fits if there are issues that investors are going to dig into, how do we get ahead of those and make sure by the time we're in front of investors, we already have the answers. Sometimes it's the more traditional Hey, we are going to hit the market in a couple of months. We need to have a market study ready to tell our story for potential buyers. We will do that as well. And that even the support that we that we offer on that and extends beyond just the study itself. You know, we're there through all the way through the exit and that includes you know, we'll talk to investors, we'll answer questions. You know, we have CEOs that are texting is when they're in investor meetings right before they're going into fireside chats like, hey, we're getting issues or we're getting push, push back on a certain aspect of the business, what should we be? How should What should the talk track be or how should we think about getting ahead of those issues? So it's really the work and what I think the secret sauce is are very much one and the same and that it's sort of end and private equity specialism for lack of a better term.

I think I should have just asked you what you don't do is there, you know. Yeah, so seriously, I mean, that was a that was beautiful. And so comprehensive, and honestly, private equity work is some of my favorite after leaving consulting, I decided to buy companies, I'm thinking about how everything you talked about, I just bought a company about five weeks ago. And so I'm thinking about how everything you talked about, is it a piece of that process?

MC: Jenny Rae Le Roux 

But is there anything that you don't do is there a, like, we carve this out or this, this goes somewhere else, or you kind of let people know, this is a boundary that we don't actually handle?

Stax: Roy Lockhart 

Yeah, so we don't do tech diligence on, you know, like we do a lot of software work, we're not going to do any of the tech diligence on the kind of under the hood. For the product. For the software, exactly. We do partner with people who do that as part of the diligence work that we do. So we don't do that.

We also don't do a lot of your traditional on site, you know, four days, four days on site with a team, long term operational type consulting, ours were very much more focused on top line growth, and like diagnostics and understanding, if there's an issue with the business, what diagnosing what that issue is and how to rectify it. We do do some bottom line, bottom line work, but it's much more point solution type value creation engagements, as opposed to long, you know, multi year on site kind of becoming embedded with the team type consulting.

MC: Jenny Rae Le Roux 

Amazing. Okay. I think that's very illuminating. Thank you. Because yeah, so let's talk a little bit about you. So you joined in 2011. Is that right?

Stax: Roy Lockhart 

Yes, that's right. Yeah.

MC: Jenny Rae Le Roux 

And so you have effectively grown up in your career with the firm. Yeah, I'm sure that along the way, I had this happen. And I can't imagine that you wouldn't have that clients were like, right, you need to come over on our side. portfolio companies presented opportunities, and certainly that you could have also looked elsewhere inside the consulting ecosystem. So why have you stayed at Stax?

Stax: Roy Lockhart 

Yeah, it's a great question. So I didn't get into consulting Stax with the intention of staying in one place for as long as I have, I don't think anyone does. Or it's very rare that they do. And the reason I am where I am, is because as I have progressed and developed, so too, has Stax. And I've been here for a long time, the nature of the work and the breadth and depth of the work that we do, has evolved and expanded quite a bit since I started. So we started when I was first working at Stax, it was a lot of mostly buy side diligence work. I don't want to say confirmatory diligence exclusively, but it was really hey, let's make sure we're making the right good decision that there's nothing wrong with this company. Before we buy it was

We want to buy, right? We're in the process of we're in diligence after

Yeah, I think that's fair. And this is going back 10 plus years. And you know, we parlayed that into more growth oriented type engagement. So we'd always work in hey, yes, let's make sure it's a good investment. And there's nothing wrong with the company. But let's also have a view on what to do next with it, how do you optimize it? How do you grow it? What are the three or four things that are going to move the needle post acquisition, and that really opened the door for us to do more complex work, you know, our clients started asking us for more that led into some more strategic work that led into some of the Exit Planning and sell side work that we do.

And each of those the opening the opening of those doors, I think within each of those components, product categories, or product families, the within those, as we got more growth oriented and move more into the really kind of trusted adviser type role for our clients, they would ask us for more. So each of those, those those projects, like your typical buy side diligence will get much broader and much more complex. Same would happen with the strategic work same would happen with the sell side work. So you had the needs and the applications of skills that was developing over the course of the last 10 plus years, expanding both horizontally and vertically, if you think of it on that type of matrix.

So really what we're what happening is, as I developed more and could do more things, there were new challenges to overcome a new project type a new client type, a new situation that I hadn't seen before that was new to me, I had skills that I could use to apply to those situations, but I never reached a point of stagnation, never reached a point where I felt like okay, I've, I'm not going to learn anything more here. And you know, had I reached that point, we could be having a different conversation.

But it's been really fun to be develop. Obviously, it's been great for myself to be able to develop and do new and more interesting things over the course of the years. But to do that, while the firm is doing the same thing, in conjunction with my own development, has been just really super rewarding that obviously landed in the sell side bucket more so because that's just work that I just liked the nature of that work better, it's a little more, you know, there's a lot of stakeholders to work with, we're working with banks, management, Team sponsors, making sure that, you know, kind of coordinating between those groups, but also collaborating with those groups and something that, that, you know, that became a new skill to me, when we started doing those probably back in like 2018, when we started doing them in volume.

So you can kind of see how there's sort of an endless progression, both by nature of the work that we're doing, but also by the nature of how Stax invites, or proactively tries to expand what we're doing. As those opportunities come.

MC: Jenny Rae Le Roux 

Can we throw a little sparkle on on one of those specific stories? Like you mentioned, the 2018 experience, but can you can you actually walk us through a time when you had a front seat to a client, either expanding their scope with you or coming up with a new line of business for you effectively, when you were in that conversation with them? Because I think people understand how you capitalize on that it's really unusual that a firm would be as entrepreneurial as that.

Stax: Roy Lockhart 

Yeah, so it's interesting we have back several years ago, I don't know exactly when this was, but we were working with a company, a company that did so it was like a to promote, multifaceted a company one side of the business, it's very obscure, they did. They're called substrates. And it's essentially materials that things are printed onto. And you can print pictures on them or shirts or pins and magnets and that type of stuff. That was one side of the business. And they had a very specific type of material that facilitated a specific type of printing, called sublimation, which yields a better image. And there are some differentiators there. So that's one piece of the business.

The other piece of the business was a composite decking flooring for warehouses. So there was quite a bit going on there and very different. And we were brought in by an M&A adviser in the New England area, who we knew pretty well, who was like, Hey, we were working with this company, and they could use some strategy work before they go to market. And yeah we had a good relationship with that with his M&A advisor, we have done some, some work helping them prepare some assets for potential investment. But this was really like, Hey, this is more of a strategy piece in to set them up for a potential buyer down the road, which was it was definitely new for me at the time.

You have to have a formal CFO function or you have to like have your ducks in a certain place. It wasn't, it wasn't like, you know, just kind of dusting it off. Right? It was really, really changing what they were thinking through.

Exactly, yeah, it was like, Hey, we, we have these two businesses, we need to have a story, we need to know how we're going to accelerate growth on both sides of this business, because we are that wouldn't necessarily they were stagnating. But they they didn't know where to go next, I guess is the simplest way to put it.

So on the mezzanine composite flooring for warehousing, for example, there are all kinds of potential applications for the business, there were things like self storage facilities, there's retail applications, for the for those types of things. There are also opportunities to be had where warehouses for things like Amazon, where they're employing more technology, so industrial automation type situations where they're adding technology and some degree of robotics, you know, mixed with people to pick stuff off shelves and pack them.

And our flooring was a better solution than certain other flooring, but no one knew that. So we had to help them understand where, why and when do we go to market and get the message out? And where, why and when do we actually want to be putting the effort into trying to get our flooring into those situations? Sell stories is a different story than those ecommerce warehouses, you know. So helping them understand really, where next and how to grow the business and accelerate the business on a pretty open ended basis was a big part of a big part of what we're doing.

And then on the other side of the business, it was there's a geographic component, you know, where do we sell where can we sell more? There are there are also tiers of products you know, some that have this really nice aluminum looking materials that you could print a huge picture on it was super high quality. You could also have like a little magnet this big that you know you could get from an overseas warehouse as well without too much trouble. So it's like how do we think about we do all this laundry list of products? How do we think about which ones we want to focus on? And how do we get them in the right channel partners hands and the right customers hand? So it was to is almost two kind of unrelated, really open ended, where next? How do we grow this business? And how do we figure it out? type projects, which, at the time, I had not done, myself, and I know the firm hadn't done too many of those.

And that really then opened the door to a sell side type offering, which is a is very much deliberately a mix of both, we always want to make sure we go into those engagements, making sure that part of the value we're going to be delivering is a strategic strategic support to the management team. Think of it as an internal type deliverable, an internal output for the business, which is which then they can then use and make sure that they know where they're going, that they have a kind of clear strategic vision using the intel that we're able to provide. And then also use that same information to craft the externally facing investor facing type outputs. And that's really sort of the the genesis of that type of what I like to think is a fairly differentiated value proposition.

MC: Jenny Rae Le Roux 

Absolutely, and so just to just to be clear that one, engagement opened the door for you to build a practice and the firm took the opportunity to actually do that.

Stax: Roy Lockhart 

Sure. I guess for me, I wouldn't, I wouldn't say it was the only only for me personally, yes, it opened the door very much. So I think there are a handful of other instances across the firm, where we were doing strategic work like that, that that helped push things along. But this one was, was very much. If you think about it, our lineage of sell side work and strategy work, I think it's one you can very much point to.

MC: Jenny Rae Le Roux 

Love that. Well, switching gears a little bit, I understand that Stax doesn't utilize the up or out model, and many firms are very famous for this, you and one role and then one year after promotion, and then you go to business school need to come back and it you're very much, you know, on the conveyor belt, right? thing, but why don't you do that? And what are the advantages of not doing it that way?

MC: Jenny Rae Le Roux 

Yeah. I mean the reason we don't do it is because there's a lot of value in keeping people that are good at their job. You know, it's simple as that sounds

MC: Jenny Rae Le Roux 

Like why send them away, if they're actually good at what they're doing.

Stax: Roy Lockhart 

There's a ton of institutional knowledge and experience experience with doing the types of projects we do for the clients, we do it for that, you know, some people that have worked at Stax in the past, are really happy and really enjoy a given role, they reach a certain level.

And it's and this is I enjoyed owning a work stream, I enjoy managing a project, I enjoy doing this, I don't really have any interest in doing anything beyond that. That doesn't negate the value that they're providing the firm at that level and in those applications. And they're incredibly valuable examples for new hires, and people that are being on boarded learning skills, we have people that have incredibly deep and long term experience, doing these types of private equity projects at every level.

So managing the project itself, running a given work stream, executing work streams, executing specific research tasks, all of those types of things, because they've been doing it for so long. And that is sort of an inbuilt training and onboarding mechanism, because we have, we don't have to retrain the trainer's every couple of years, because they're all like you said, being conveyor belted beyond beyond beyond that role. And I think that that's made a huge, a huge difference for us. And it's also a byproduct, we don't have we're not very hierarchical period.

So you don't have to reach a certain point to have meaningful contributions or to have direct client exposure to be answering questions directly to the to our clients. And that puts also puts a little bit less pressure on individuals to hey, I need to, for me to actually have an impact I need to get to level x. That's just not the case at Stax. I think it's I think it's a good thing.

MC: Jenny Rae Le Roux 

Now, on the other hand, if it's not clear when your career is developing, or how, what is the system for that? So how do people actually participate in career development? And does it change as

Stax: Roy Lockhart 

Yeah. Yeah, so the good thing, a good thing is at Stax is that you're right there's it isn't up and out, but there's pretty good clarity around what the progression looks like. Now there's two, two sides of the fence in terms of career development, at Stax and one is informal, and one is very formal.

On the formal side, we have a very good onboarding program. We have very, very clear kind of outlines. For roles instructors, we have training materials available, we have training curriculum for everybody. We also have a very robust I'd call it mentor program where every person has an advocate for them whose real part of their job is to facilitate and support that individual's career progression. And they work with them to make sure they know what they're working on, you know, what, what are they already good at? And what do they need more exposure to what types of projects they need access to what types of team structures? Do they need access to? What kind of stretch situations would be ideal for them? And that way, the individual isn't on their own to try to figure out where should they go next, they have someone who's been there before, and is also an advocate for them more broadly, within the firm, they can say, Hey, I know you're running this project, it'd be a great fit for my mentee, they're working on X, Y, or Z. So that's on the formal side. So there's, there's all kinds of support on that front, which I've benefited from over over my time at Stax for sure. But that is more framework esque, I would say.

I think the real crux of development comes from just on the job experience. I mean, there's nothing that you can't learn any more than you learn from being on a consulting project and being face to face with our clients listening directly to them hearing what their issues are hearing how they react to the information and the implications of the insights that we're providing them and seeing how that changes the type of questions that they're asking.

The most important thing for career development at Stax is it boils down to client empathy and understanding what it is that the value that we are really providing to our clients and what they need and what they're looking for from us. You get that by exposure to them by exposure to project situations. And that just happens naturally over the course of over the course of months, years, etc, as you're at Stax. So you pair those two things together. And there is a very nice,  synergy, I guess, in terms of how people develop at Stax.

MC: Jenny Rae Le Roux 

I love that. Thank you for that illumination. Last question about this before we shift gears a little bit, what are two critical skills or mindsets that you love to see every young professional walking in your door cultivate both before and while they're with you?

Stax: Roy Lockhart 

Yeah, absolutely. The first one is being adaptable, which I know is not unique to Stax or consulting. But it really is the bottom line reality. If you're able to be flexible, listen, understand what's happening, in our case, a consulting engagement, and understand how what's important on day 20 can look very different than what's important on day one. And adapt the nature of what you're doing and what you're focusing on and what you're providing. That makes a massive difference in just being able to, to know what matters most at any given point in an engagement is a critical skill.

And again, I don't I don't think that's unique to us. But that is a critical skill that people that have success, I see very much have that. And that's all driven by the other skill, which I just mentioned, which is empathy, empathy, generally, obviously, but specifically client empathy, and listening, just listening to listening to them understanding what is their situation, why are they asking the questions that they're asking? Why and why do these two key questions matter to them as they're evaluating this business?

These are the two questions that I would have thought of when I first looked at it, but being able to understand, alright, this is a fund that invests in businesses, a businesses that look like X, Y, and Z, they think there's an untapped opportunity there can there's been some under your under realize you execution in a certain areas of business, that's why they need to make sure that you know, there is there, this business is able to beat competitor x on y feature, you know, being able to not just listen and hear them say, hey, we need to know who's better at x or y.

But understand they need to know who's better at x or y because of all these reasons, they inherently will ensure that the work, and the outputs are more meaningful that they're, they're not just providing information, we're providing insights to inform better decisions, we don't want the information itself to be viewed as the output, infer the information and research we generate is an input, the output and the value we provide is the advisory, which uses that information as a basis. And that all boils down to just simple client empathy, trying to understand where they're coming from. If you do that, you will in it, you will inherently do the other stuff.

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MC: Jenny Rae Le Roux 

Asking the why behind the why I love that.

Stax: Roy Lockhart 

Yeah, exactly. Yeah.

MC: Jenny Rae Le Roux 

It's so good. Amazing. Okay. Well, shifting gears just a little bit. Can we talk about your client relationships kind of going back to the stuff that you've learned and the development over time, but also to get a picture of why Stax is special in the marketplace? So why do clients work with you? And actually, why do they work with anybody at all I would tag on to that, you know, some of what you described, when you were describing it earlier, I was thinking, well, you know, and this is a question that I got a lot when I was in consulting, like, why can't the companies just answer their own dang questions?

So, you know, is it is it bandwidth? Is it capability? Is it Industry Focus, like, tell us what it is in particular, that that not only draws them to Stax, but also draws them outside of their own firms in the first place?

Stax: Roy Lockhart 

Sure, yeah. Bandwidth and capability is a fair, fair set of reasons to put on top but not exclusively, that what I was just describing around advisory as an output, we generate a bunch of information, but that serves in that feeds into the advisory and the insights that we're able to provide, which really inform where next, what to do, how to think about this? Well, you know, all of those types of more advisory support elements as opposed to information support, those are, that's really what people come to Stax for.

And we're able to do that, well, the value proposition that we really hang our hat on is being able to do that through the end to end private equity lifecycle. And so we can offer advisory using again, research as an input. But we understand not only the situation a given investment thesis or whatever, whatever an issue with a portfolio company may be having, we understand the implications for where that moment of time is on the broader investment lifecycle. What does it mean that this is the issue we're having at this point in our whole period, you know, as an example, we also were able to bring enough, we've seen business models, commonalities, we've seen industry and vertical commonalities, and we've seen differences across all of those.

So the advisory and support that we're bringing is not specific or not, not narrowed to that individual project or situation, we're also bringing, you know, 30 years of experience doing this type of work focused specifically on private equity to the table. And that's something that our clients are not, you know, people can't do internally, you know, we're yet to find someone who can do that internally.

So that's really the value. It's not just a capability and capacity question, obviously, there, that's a layer which might motivate someone to first pick up the phone if they don't know us. But they're not calling us for capability or capacity. They're calling us for advisory support that they can't get anywhere else.

MC: Jenny Rae Le Roux 

Amazing. Well, here's another one. So you've been involved in I understand 100 deals or more,

Stax: Roy Lockhart 

More, a lot more

MC: Jenny Rae Le Roux 

Do you get a special luggage tag? Or like, what do you get? What is it? I don't even know.

Stax: Roy Lockhart 

I'm waiting for it. I'm waiting for it to arrive in the mail.

MC: Jenny Rae Le Roux 

Tell them it's a house in the Hamptons. And you're just waiting. Right? Or like I guess in Boston, maybe right? Cape Cod South Shore? Something like that

Stax: Roy Lockhart 

Yeah, yeah, yeah, that'll be great.

MC: Jenny Rae Le Roux 

Yeah, well, we'll put in a note for you. So give us one one specific kind of just like end to end example. Right. You know, and you mentioned one that we already talked about this the one that we put the sparkle on, for the building of the practice. But if you have another one just right, what was the client deal context? Why did they come to you? What actions did you take? And then ultimately, what happened?

Stax: Roy Lockhart 

Okay, sure. Yeah. Guys, I think about that question. I think one that would be interesting for people to hear is one that's a little bit longer term. So this is one that we did for private equity clients, they had just acquired a business in the call it nonprofit, edtech space, and they did sort of scheduling type solution software solutions a lot for mostly for K 12 situations, but not, not exclusively, so they bought them. And they had a few other similar types of businesses that serve similar types of customers, but they had the, they they existed independently of one another.

So they brought us in to to get some help and some external perspective on, you know, how do these things fit together? What, what how should we package the case, the various capability sets and how do those capability sets once packaged, mapped to different end customer segments, because we have a lot to work with here but we don't necessarily know how to combine it and then where to aim it. So we spent quite a bit of time. You know, we did a lot of in depth research into really nonprofit world education world where these guys, the individual pieces, all all were serving, and we help and we we understood, we went to the market to really understand what are the pain points, what are the issues? What are the unmet needs that these groups have, that this type of kind of scheduling CRM type type technology can actually solve? And so over the course of a couple of weeks we were able to figure out, you know, there's a big hole in the nonprofit side of things for kind of a true tailor made CRMs function solution for midmark for the mid market for so for smaller, smaller organizations, then the ed tech side of things, they need to be like district wide communications district wide scheduling, that type of thing that the broadly speaking, and also some CRM type functions.

So anyhow, went to the market and figured out all right, collectively, we have all these things, if you take all these things, and look at what they do, and then you look at the markets that these things have their tentacles and the unmet needs that these things collectively can address look like x and y. And that's how we can bundle these capabilities together. So that's what we came back, we made some recommendations, here's what we think the product should look like, here's what we think the go to market should look like. There are two of them education one, there's nonprofit one. And a lot of working sessions with a management team with a PE front with a PE team.

You know, it's really very rewarding. And in the majors, they want to develop some really good relationships over the course of that project. But then also saw it in action. And they brought the businesses together and as a whole new company afterwards, no, not just because of what we did, obviously, they're doing plenty of other stuff. But that was a really fun one. And then we came back, I don't know exactly how long it was maybe a year or two later. And we helped them sell the business. So we knew the business inside and out. We knew what they're aiming for what the platform was supposed to like, should look like what the market was looking for. Let them they took some time and kind of built it out. And then they're like, Hey, we got like, we've done this, we want to take it to market and sell it.

So then we turned we use a lot of work we've done prior previously did a bunch of new research, we turned that strategic vision from an internally facing like, hey, this is where we should be going and this is what it should look like, into an externally facing, hey, this is what this business is today and where it's heading and what it could be. It goes back to a lot of the stuff that we were talking about at the outset. But you know, being a part of from early on in the whole period all the way through to exit that helping make sure we're telling a story where there's a nice kind of runway for the business and runway for the vision well beyond the initial hold period was super rewarding one of my favorites over the course of the last 13 years that I've been at Stax.

MC: Jenny Rae Le Roux 

Amazing. And I'm guessing they made a little money.

Stax: Roy Lockhart 

Yeah, yeah, they did fine. Got it. Don't worry about them. They're doing all right.

MC: Jenny Rae Le Roux 

Well, we'll call them for that house, I'm sure. Like a backpack or something.

Stax: Roy Lockhart 

Yes, I think you're right yeah.

MC: Jenny Rae Le Roux 

Last question that just last professional question is about the practice area, the Exit Planning and sellside practice? Well, you know, let's talk just about macro economic environment and the specific questions that your clients are asking you today. So, right, you know, holding periods, interest rates, just all of the things that are affecting the climate, one of the things I've just been thrilled to find out is that Stax is still growing, and your clients need you. And they're still faring, right, because we're hearing about this meltdown in private equity and so much of the news, but but what your business is doing is not bearing out for that, but on the sell side, but you're getting a front row seat to it.

So can you just tell us a little bit about what your clients are asking you for? If that's different than it has been before? And yeah, now in the macro environment?

Stax: Roy Lockhart 

Yeah, that's a really good, really good question. So what they're asking us for is different now than it was 18 or 24 months ago, 2 years ago, or two years ago, almost every instance of the sell side? Was it a part of a sale process? So you know, we're going to market in a couple of months, we'd ever market saving to make sure we're telling our story, we need to get ahead of what the issues are going to be. And that was great. You know that that's what the that's what the core product is supposed to be

MC: Jenny Rae Le Roux 

Interest rates were zero, like there were probably plenty of buyers.

Stax: Roy Lockhart 

Yes, exactly. Yeah. But what's happened since then is obviously the macro environment has become more challenges, interest rates, we know on the buyer side, from all the work we do on that front, the bar from investment committees has never been higher than it is right now. So we've had more, you know, much greater degree of skepticism on the buy side at early stage, really from end to end of the process.

So being able to tell a story tell a clear and concise story around exactly the stuff we were talking about earlier, strategic vision for the business, making sure that there's still runway there. But also what's the downside risk? And how do we get ahead of the downside risk here. So the form that that's taken is more and more exit plan, sell side work, which bleeds much further back into value creation and portfolio strategy. So we're doing more work.

We'll do a couple of weeks of diagnostic on a company. We This isn't this isn't just sponsor backed businesses, and some of these are founder backed business as well. They're looking for this type of help before they go to market looking for a PE buyer? And what we're helping them do is they want to, they realize that there's going to be an incredibly skeptical market of buyers out there. So they want some help understand, okay, what are buyers going to hate about this business? You know, what are all the holes, they're going to poke? What are the issues that we don't know about right now that we're going to have to answer for once we get put in front of potential buyers? And so do a lot of work to answer exactly that.

But it's not just that. That's the downside of it. They also want to know, how can we tell what's go what's a what will be a compelling growth story? What's a growth story, we can tell that when potential buyers are doing their own due diligence work is going to hold up, they're going to hear confirmatory feedback from the market. So we're doing a lot of work that looks like that, which is called a diagnostic portfolio, or a strategic direction, strategy, development, even that type of work.

And then we'll say, okay, great, we've done that. Here's what we think you should do. Here's what we think you need to look like by the time you hit the market. And sometimes they'll say, okay, great. Let's take that. And let's do another week or two. And we'll turn that into something that can face the market and can go externally. Or they'll say, Hey, we got a lot of work to do here. We'll call you back in a year. And, mate, yeah, it I know, it sounds crazy, but it's it's it's happened multiple times. And it's they'll have a much better outcome by by doing it that way.

But it's fine. It's like it's all part of one big project for us, sometimes there's just a 12 month break in the middle of it. But that that form being becoming less exception, more rule, I think is endemic and a byproduct of the macro issues that you were you were talking about earlier. And it's very funny, because we do I mean, I still do a lot of buy side work as well. And it is the appropriate reaction to how skeptical buyers are I mean that they just don't trust anything. until they've that they will, they'll trust it eventually. But it you need to help them and you need to do everything you can to make sure that they have every reason to believe it.

MC: Jenny Rae Le Roux 

There's so much tire kicking that their toes are sore, right?

Stax: Roy Lockhart 

Yeah, yeah, that's right. That's exactly right.

MC: Jenny Rae Le Roux 

And can I can I just clarify, because I this is still a little murky for me, when I think about real estate, right? In a frothy market, that's a seller's market, right. Just desperate for a home, you put a sign out on the street and your houses from the 1960s and nobody cares, right? They buy it anyhow, top dollar. And so you're saying it's actually this has actually bolstered both the end of sell side work that you've been doing, and also the duration of that work or, or reducing the duration that's changed, but there are fewer people who are also listed.

Stax: Roy Lockhart 

It's both there are I mean, there are there have been fewer assets that actually go to market but for the sell side, you know, people need to put money to work you know, in the hold periods are getting, you know, they're getting kind of long. So a lot the the sell side, but the there's a greater proportion of sell side work done being done preemptively. And then even just as a general rule, you don't do a sell side report for every single business that goes to market some, it's simple enough or small enough or whatever, whatever, whatever the situation might be.

The attach rate of sell sides to assets that are looking to raise money in whatever form is continuous continuing to to elevate every time because there's more skepticism on top to bottom in these reports directly combat that skepticism. That's literally what they're designed to do. So it's it's been good, you know, it's been, it's been good for us. It's been really good for that side of the business.

MC: Jenny Rae Le Roux 

Love that. Thanks for that clarity. Well, this explains why Stax is hiring because yeah, it's all fine which seems like it'd be the hardest place or I could imagine the ops period is extending and we're running in a more competitive environment and on the on the buy side right you know, like you said, the diligence periods are longer there's a lot more that they're looking at. But if also you have that piece, nailed in well done.

So yeah, just wrapping up the final piece of this interview we want to get to know you just a little bit more so I wanted to ask a few final fun questions. And three of these at you can answer one minute or less they don't have to be super long unless of course, drama and color that we must know. But the first one is your most memorable recent travel experience.

Stax: Roy Lockhart 

Yes, so two I went to I had to go to Hawaii did a we did a week in Maui and a week in Hawaii both of which were amazing. Did the tour where Jurassic Park was shot in Hawaii was the best thing I've ever seen. I did Ireland with my wife and brother and sister in law and that was an incredible trip to the cliffs and more Galway Dublin about God knows how many pubs get So, of course, you're not allowed to leave without going there.

MC: Jenny Rae Le Roux 

They don't even let you out of the country.

Stax: Roy Lockhart 

Yeah. So yeah, so two no drama, but just two great trips, and I can't wait to go back to both places.

MC: Jenny Rae Le Roux 

Amazing. Great second top weekend hobby or passion.

Stax: Roy Lockhart 

Sure. Yeah. So this one used to be a lot more fun. But I try to get as many Patriots games as I can from Boston. So I go to most of the home games spend a lot of time in Foxborough try to go to at least a couple road games every year. Like I said, it used to be a lot more fun. It was it was a little my, my faith was tested this year. But I'll be back. You know, I'll be back in September. Nowhere to go but up. So I have I have I am confident in the direction of the team.

MC: Jenny Rae Le Roux 

Amazing. Yeah, I love it. Great. And last one, do you have a hidden talent? And if so what is it?

Stax: Roy Lockhart 

Yeah, I mean, I like to think of myself as a pretty good cook. I think the reviews may vary. But some would confirm that. And specifically,

MC: Jenny Rae Le Roux 

Are we talking like four to five star variation. Are we talking like one to five star variation? Because that's a pretty,

Stax: Roy Lockhart 

Let's say four to five. But specifically like to get on the grill? I think I I've kind of mastered the grilling of a ribeye. I don't think you'd find many better in the south end of Boston that are not better done by nonprofessional. So that's, that's something I'm looking forward to the summer for. To do a little bit more of.

MC: Jenny Rae Le Roux 

What's your tool of choice? Are you just like straight up? You know, char broiled charcoal or are you like Big Green Egg? What do you know, tell us nothing, there's like other secrets that you want will not disclose for very good reason. But like

Stax: Roy Lockhart 

So so it's a Napoleon gas grill. And the key the key is there's a separate side searing area which get like to 1000 degrees. So that way, you can really lock it all in and absolutely blast the the the outer layer of the steak flip it, you know, it's 90 seconds max on each side out there. And then obviously, indirect heat once you throw it inside the grill, but you need a big enough grill that you can get the heat to fill it up but also not have the have enough room to do indirect heat and cook it that way. So those are that's functionally what I do there's obviously layers and certain secret things that that I can't disclose unfortunately, but it's well thought out

MC: Jenny Rae Le Roux 

You're under strict NDA with the

Stax: Roy Lockhart 

With myself.

MC: Jenny Rae Le Roux 

We're so used to having NDAs and all the other parts of our life.

Stax: Roy Lockhart 

Oh, sure. Yeah, of course.

MC: Jenny Rae Le Roux 

The kitchen too Roy really enjoyed the conversation today. Any final note that you wanted to add that you didn't get to add in our conversation before we sign off?

Stax: Roy Lockhart 

No, I don't think so. It's been great. I appreciate the the opportunity to have the conversation and get the word out. But yeah, this has been it's been fun. No, I think we I think we've covered plenty here.

MC: Jenny Rae Le Roux 

Amazing.Thanks for your time.

Stax: Roy Lockhart 

Yep. Thanks, Jenny.

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