ACG Member Summit Panel
Industries Remaining Strong During the Pandemic

Katie Mulligan:

Hi everyone. Thanks for joining us for our afternoon panel about Industries Remaining Strong During the Pandemic. For those of you tuning in for the first time today, I am Katie Mulligan, editor-in-chief of ACG’s magazine Middle Market Growth. Before I introduce our panel, I would like to thank Global Upside for sponsoring our live program.

Global Upside helps companies create value throughout the investment lifecycle with specialized private equity solutions in over 150 countries. Global Upside services are specialized to provide optimal support for mergers and acquisitions and carve-outs, PE firms and their portfolio companies and companies preparing for exit.

The topic of our panel this afternoon is one that our editorial staff has been watching closely. The COVID-19 pandemic has presented challenges for so many businesses in the middle market over the last few months. At the same time, there are companies and entire industries that have stayed strong during the crisis and it has been fascinating to hear about the creative ways businesses have shifted their models to get through this.

Our panel today is going to look at some of the best practices to come out of the last few months and the steps that business leaders took to steer their companies through the economic disruption. With that, I will introduce our panel. Our speakers today are Mike Ruggieri with Comar Inc, Mike Wirth with Mason Wells, Adam Sheffield with Global Upside and our moderator is Danielle Fugazy with Mergers and Acquisitions magazine.

Before we get started, just a reminder that if you have a question for the panellists, please submit those through the Q&A box at the bottom of your zoom window. I will now turn it over to Danielle to get us started.

Danielle Fugazy:

Hi, everyone. Thanks for joining us today. We only have a short bit of time here together, so I think we should go ahead and jump right into things. Before we get to our first question, I want to give our panellists just an opportunity to quickly give us a little bit about their background in their firm and their position with their firms. So why not we just go ahead and start with you, Mike Ruggieri, and then we will go around.

Mike Ruggieri:

Great. Good afternoon, everybody. My name is Mike Ruggieri, CEO Comar. My background is in engineering. I have spent the majority of my career at Comar, our family business started by my grandfather in 1949. And we are a manufacturer of plastic packaging and device components primarily for the healthcare space. We serve a variety and markets pharmaceutical, nutraceutical, and some other things such as the homecare wet wipe space, which has been a really unique and interesting segment for us. Some of our products that you might know would be bottles used in vitamins and supplements or over the counter pharmaceuticals or syringes and dosage cups that you might find in paediatric pharmaceutical products and as I mentioned, things like wet wipe canisters and lids, which hopefully everybody has one on their dining room table.

Danielle Fugazy:

That is right, we all do.

Adam, why not you go ahead and tell us a little bit about yourself in Global Upside?

Adam Sheffield:

Sure, no problem. So, my name is Adam Sheffield, I am the Chief Revenue Officer here at Global Upside Corporation. I have been in the HR and payroll side for almost two decades now, both domestically and globally. Just a little bit about Global Upside Corporation, I have been in business for 20 years in the Bay Area, we help with the global complexity that clients face. We service all aspects of their global needs, whether that be an interview setup or creation or they are utilizing one of our employer record services that we provide like the PEO in the United States, but internationally, we do it for them. We have one of the largest footprints of that solution. We also have our own technology that is based in those countries with 17 different languages and multiple, different HR, and timing attendant solutions built within that solution, so it handles all those complexities and needs that companies face. And we do that from ongoing HR, payroll support accounting functions in 150 plus countries.

Danielle Fugazy:

Perfect. Thanks. And Mr. Wirth, do you want to go ahead and just give us a little background?

Mike Wirth:

I would be happy to, Danielle. Good afternoon to all. My name is Mike Wirth. I am a director at Mason Wells. Mason Wells is a Milwaukee based mid-market private equity firm. I am a born and raised Milwaukee guy, did not leave the nest too far. Although my travels took me up around the world when I was at Rockwell Automation for 11 years prior to Mason Wells, leading the corporate development group there. Background is in finance, operations, as well as engineering so similar to Mike, start off as an engineer in prior life. I had an opportunity to join Mason Wells about four years ago, I currently lead up the engineered products and services sector. Mason Wells invested in four sectors altogether, so in addition to engineered products, outsource business services, consumer packaged goods, and packaging and material converting. We currently have 13 portfolio companies and we like to think we have carved out a unique niche in Midwestern based family-owned businesses that have a liquidity need often coming about due to a succession challenge that they are looking to address. I am happy to be here with you today and share a few of our findings and takeaways from recent times.

Danielle Fugazy:

Thank you all. So obviously, you are all going to be answering the questions from your own perspectives, whether it is your portfolio company or your company directly. But I do want to start with how each one of you how you fared throughout the pandemic.

Mike, do you want to go ahead and start?

Mike Wirth:

Yes. You got two Mikes here, but I will be happy to jump in here.

So, I would say, out of our 13 portfolio companies, it has been a bit of a mixed bag. We have had roughly a third of those companies be relatively impacted. These are companies that have had exposure to foodservice, for example or other large CapEx type exposure. We have got a third that have been relatively flat throughout the last few months and then maybe a third that have actually experienced increased demand through one shape or form. And in particular, those would be our portfolio companies that have significant healthcare exposure. One of our portfolio companies is in the healthcare, plastics space and they mould many of the diagnostic instruments for some large pharma companies out there. So obviously a logical connection to what we are going through today and also maybe a little less direct impact has been on those portfolio companies. We have two in particular that market sporting goods or games. So, Buffalo Games is known for jigsaw puzzles and tabletop games, and eSports are more of your backyard recreational games or rec room games, and with everyone in lockdown, looking for ways to enjoy the family and friends that are socially distant space, we have actually seen quite an increase in demand for Home Entertainment products.

Danielle Fugazy:

Great, Adam, can you just tell us a little bit about your perspective through the pandemic?

Adam Sheffield:

Sure, I think it is interesting because we help with the international employees of our clients and we have seen a shift away from maybe global expansion and going into new countries, but they need help when it comes to HR consulting services. So how do you handle COVID in this particular country? What needs to be done? What kind of direction can we give them when it comes to, maybe they have to furlough some of those employees or what does it look like to support them and how you keep them engaged internationally? Right now, there is a big focus on that, so that has shifted a lot of our business. We have been very consistent; the growth has been good for us. As we have gone through this, we just had to listen to our clients and listen to what their needs were and kind of shifted to those directions versus what we were doing in January. So, we had to make some of those changes.

Danielle Fugazy:

Okay, and what about you, Mike Ruggieri? How have you fared through the pandemic?

Mike Ruggieri:

We have been incredibly fortunate as an organization, about 90% of our customers, and end products have been growing at normal rates or better than normal rates. We have nine plants around the US and Puerto Rico and all of them have fared exceptionally well. So fortunate to be in the right-end markets, the healthcare space was very favourable for us, the wet wipe space of course is very favourable for us. Even some of our diagnostic products because of the urgency of testing for COVID-19 was favourable for us. Our single biggest challenge as an organization was keeping our team safe. We kept all of our plants in production. So, putting all the proper protocols in place to ensure we kept the team healthy, prevent spread of coronavirus throughout our organization that was where our focus was and it was a pretty significant strain on the organization. But the team really came together, pulled together nicely, and focused on what mattered most and that was affecting our team and keeping our customers in business.

Danielle Fugazy:

So, Mike, you opened up a whole bunch of questions that I had. I am curious from all of you, how have you been able to keep your employees working and safe throughout this? You all had companies that were deemed essential and kept working? What are some of the things you did to make sure your employees are working and keeping them safe? Adam, if you want to start us off there?

Adam Sheffield:

Sure, no problem. We have just over 500 employees internationally and so you can imagine having to make sure that we had the right tools in place. So, laptops and all of those things in place so people can work from home and understand as things were shutting down and opening up and being able to navigate all of that. That is how we were able to be successful because it was part of our plan. We recognized at the end of February that we probably needed to pick up a few more laptops for our India employees. Even though most of them had them already, there was just a handful that we needed to make sure that they had it, just in case. And sure enough, all those things happened and we were planning for it. So, none of our customer service really took a hit. Even though we just sent everyone working from home, we already had the tools, the technology in place to be able to support that. And also working from home in different countries, the internet connections not as consistent, we had to make sure all those things were tested and properly done so we could provide great service to our clients.

Danielle Fugazy:

Mike Wirth, you had more of like a physical presence with a lot of your portfolio companies. Can you just talk a little bit about how your employees continued to work and you kept them safe?

Mike Wirth:

Yes, absolutely. So, it was obviously interesting times in March for everyone in the country, at least, and I would say we tried to address things as proactively as possible. As we all recall back to march, I do not think anyone, I certainly did not realize I would still be working out of my home today, come the end of June. So, was it a week, was it a month, was it a year we took matters very seriously, we stressed the seriousness not only within our firm but within our portfolio companies? And I think sending that message top-down really went a long way. I remember now it seems common sense but those first few days and weeks it was like “Really! Seriously, are you working from home?” And why are we thinking it that serious but we did, we got ahead of it. Made sure all of our facilities, all of our portfolio companies were communicating their employees. We had a shared portal; we hosted several calls with all of our portfolio company CEOs and CFOs on the line to share best practices and provide connection points and an opportunity to compare notes. But a lot of it was common sense making sure that you had your PPE, your sanitizers, your wipes. I am like all over the place, which were not easy to get in the early innings here and then segregation of work teams, making sure that you did not have a lot of overlap, you had different entrances, had temperature checks going on. So, I mean a lot of the blocking and tackling but if it was not for the quick responses early on, I think we would have faced a lot more cases and a lot more spread and potentially jeopardize the operations of our portfolio companies.

Danielle Fugazy:

Adam, bouncing back to you. You were able to look and see how the pandemic was sort of moving across the country, right? Because you are international, that is what you do. Can you just talk a little bit of how you manage your international employees and what that looked like? Where you are seeing it in this area and saying, it is coming here, we have got to do this, what that process was?

Adam Sheffield:

Yes, it was a unique process, because it was the timing of a lot of things. You had some places that were shutting down and other places that were still open for work and we really wanted to have a consistent message across the organization because that was important because safety is number one, right. And we wanted to make sure our employees are safe because, without our employees, we are in trouble. So not only just them being safe, and also their spouses and their children if they have those. So, we had to be very aware and very diligent on what was going on in those different countries, not only just for our employees, but for our clients’ employees. We support them and we help them so, we help navigate those challenges as they come up and give guidance and direction as appropriate when it came kind of ebb and flow across the world and it has not stopped, by the way, right? You have hotspots that pop up and flare up, and then you have other places to start opening up. How do you open up properly? What are the things you need to do to make sure that those things are done properly in your office spaces? All of those things we help them to navigate in each country kind of has their own nuance when it comes to that. We help support that.

Danielle Fugazy:

And, well, the name of this panel was being successful throughout the pandemic and some of you actually were able to expand and complete deals during this time. So, Mike Ruggieri, I want to move up to you and talk a little bit about how you guys actually achieve some growth there during this time.

Mike Ruggieri:

So, I think for us what was most helpful very early on, we were very crisp and clear with the organization on our priorities. First, it was protect employees, second was prioritize, keep products, third protect our plants, keep them in operation, and then fourth, communicate frequently. And I think what we found is the communication, in particular, helped us move faster, with key decisions around capacity expansion, helped us move a little bit faster around even key decisions on how we were going to keep employees safe and keeping employees informed of what was going on within the organization. But because of that streamlined communication, the clarity that we had on where the organization was going, we are able to really advance for with a couple of big expansion plans. We announced in the middle of a pandemic expansion of our New Jersey operation. We are adding significant equipment in two of our Midwest locations to keep up with demand and continued to invest heavily in a West Coast consolidation for us. So, for our organization, having that crisp clarity around priorities, what matters to our organization, what matters to our employees, what matters to our customers, made it easier for us to continue to lean in making some really, really big investments. We are investing more in capital this year, probably in the last five years combined, and to be able to continue to push forward and maintain confidence in those types of investments. Not easy in time like this, but having the organization aligned around common goals, has really made that happen for us.

Danielle Fugazy:

Mike Wirth, I believe that you also were able to get some things done during this during that the height of the pandemic in the US.

Mike Wirth:

Yes, definitely, we have had some good news as well during this, we, fortunately, were able to close a platform deal about a month ago called Schoeneck Containers, which is a rigid plastic manufacturer for many consumer-packaged goods, just outside of Milwaukee. That was a deal that was a process that started kind of late last year and enrolled into this calendar year and of course bumped up into the COVID world. So, got delayed a little bit there but fortunately as Mike knows, the products held up quite well with all the purchases of consumer products that all of us are making, and we are able to get the transaction completed. So, we are very happy to have to bring on Schoeneck as part of the family. And then, most recently, earlier this month, we announced the closure of our fifth fund, which is a little bit north of 750 million, which again, it did not really plan on closing our fifth fund in the middle of a global pandemic, but that was a process that took many months and fortunately, we are able to get it over the finish line come June. So definitely some good news to report.

Danielle Fugazy:

So just a few follow up questions on that. Mike Wirth and I think you can probably all chime in on this a little bit. Was your fundraising delayed? Or was it impacted at all by the pandemic? And then my second question, which I think everybody can kind of speak to a little bit is now that I hope at least a little bit on the other side of this pandemic, are you looking at different kinds of deals to do different add-ons or platforms? Are you leaning into certain sectors that you think are going to fare better going forward?

Mike Wirth:

Sure. Well, yes. To address the question on funding, fortunately, our fundraiser was not delayed due to the pandemic we had I would say 75% of it behind us come March so it was a little bit of a continuation clean up but thankfully we have been around for a while and our LPs know us well and we treated them well so, fortunately, they stuck with us. And I think it did not hurt that the public came back as quick as they did the equity markets so we did not have the feared denominator challenge that many private equity companies are concerned with when going through a period of slowdown and drastic change in public valuations. But in any event, no, thankfully, we got to get that done without delays. And then the other piece of your question, Daniel was on strategy going forward. Is that right?

Danielle Fugazy:  

Yes, just if anything has changed in terms of the deals that you are looking at, or the add-ons and your perspective, what are you looking at going forward?

Mike Wirth:

Yes, we kind of hate to say it, but throughout the last few years, we have been anticipating a slowdown, we did not know when or how dramatically it was going to be. So, I would say our portfolio is certainly overexposed to some recession-resistant industries and a lot with consumer staples and health care, which has proven to be helpful in times like this. Going forward, I am actually starting to see a lot of calls from corporates contemplating various carve-outs. So, I think that could be part of the deal flow, at least in the near term. And we are also starting to see some processes come back aligned that went silent back in March and April.

Danielle Fugazy: 

Okay.

Mike Ruggieri:

And for us, similar dynamics and we remain pretty active in the M&A market, I think the organic growth opportunities that we have been fortunate enough to have in front of us allow us to be a bit more selective in the M&A space and we absolutely continue to expect to grow through acquisition but we will be pretty choosy about what we go after and hopefully there will be some unique opportunities coming to market as Mike was saying. And hopefully, we will start to see things loosen up a little bit and there will be some good buying opportunities, but from our perspective in the short term, we have been really focused on the organic growth and allowing us to be a bit more selective on the M&A front. So, the slowdown, at least over the last couple of months has really been a non-issue for us from a strategic perspective.

Danielle Fugazy: 

Adam, you want to chime in there?

Adam Sheffield:

Yes, I was just going to say that what we have seen in our space and how things strategically are moving forward, we are seeing a lot of companies now have been in this growth mode for so long. Right now, they are starting to say we need to consolidate, we need to get our processes lined up a little bit better and there is a consolidating vendor across the international space. So instead of working with 17 different vendors, they are bringing it in under one umbrella like what we provide, so that is been a great growth for us. We also see it on the M&A side, there has been a lot of clean-up, there is a lot of growth that goes on, a lot of work that gets done on the front end of M&A and sometimes there needs to be that clean-up phase, especially on the international side, to make sure that everything is compliant. So, we focused a lot to help clean up some of those things to position us for when the M&A activity starts to accelerate in which we do anticipate at some point.

Danielle Fugazy: 

So, I am sorry, I am going backward a little bit, but I think that people, we had our protocol. Everybody was curious about this and I feel like this comes up all the time. Did you guys actually experience any COVID cases? And how did you mitigate the risk there? And how did you handle it? How did you keep the doors open during that time? I would like to hear that from probably all of you, Mike Ruggieri, you want to start us?

Mike Ruggieri:

Sure. We, unfortunately, had a number of COVID cases across the organization. We have had, I think 15 or 16 confirmed cases from about 1000 or so employees. Early on, it was a little bit more difficult for us to manage before we had all of the proper PPE in place with people wearing masks and things of that nature. So early on when we had a couple of cases, we shut plants down and did full cleanings never lost more than 24 hours. But in an abundance of caution, we said, “Hey, let us make sure we can do whatever we can to keep people safe.” As we got further down the path, we developed some pretty good processes around risk assessments that if somebody was confirmed with the coronavirus case, we would go around and do the tracing and understand who they were within close contact of, we would have some people take time off based upon that. So, we had some pretty good processes in place to help protect that. And we, unfortunately, we had an employee and his mother who both passed away from the virus so impactful across our organization. I think it really hit home with a lot of people in our company.

Danielle Fugazy: 

Adam, how about you? Did you experience any COVID?

Adam Sheffield:

Yes, we did. Not too many, mainly more around family members, of our employees. That has been the biggest challenge. So, we really try to keep, everything in place to help them help and support their family members. Because I think sometimes the mental challenge of all of that can be really daunting on employees, maybe if they do not have COVID themselves, but their spouse does or their mother or father do, it can be a challenge, especially internationally as there could be, in this small space. And so being able to kind of shift things around to help support them. Also, we do a lot of what we call hangouts, for a lack of better term where we get in teams on around the world, and we just have a really good kind of party on zoom. Just to get that mental engagement going for those employees that have not seen anyone for a long time. So, we really tried to focus on the mental side of that as well.

Danielle Fugazy: 

And how about you Mister Wirth?

Mike Wirth:

Yes, unfortunately, we experienced at least one case in all of our 13 portfolio companies, but fortunately, we were able to isolate those cases and give the employees an opportunity to isolate and recover and it did not spread throughout any of our facilities. So, we are very thankful for that, obviously but, to echo Adam’s point, a lot of individuals were facing issues at home, they had a spouse that was in the health care industry or doctor, nurse, that perhaps was not even living at their home, so they were responsible for the kids and everything else. So, I think a big part of this has been trying to understand what your employees are going through and trying to be understanding and compassionate to those causes, which we are all going through. All of us are going through times that none of us could imagine so not trying to jump to conclusions, but giving your employees the opportunity to take either paid or unpaid time off, which a lot of our employees have taken advantage of surprisingly and that is allowed us to not have to invoke as many furloughs or layoffs as we otherwise might have. Thankfully, it seems to have stabilized as of right now, I am getting very few notices of new cases that are coming up, although we continue to be diligent on the precautionary front.

Danielle Fugazy: 

So obviously, having COVID in your offices and in your companies is stressful enough. But what other types of challenges did you face? And how did you overcome them? What other things were sort of on the forefront during the pandemic?

Anybody want to take that?

Adam Sheffield:

Yes, I will take it real quick. I think one of the challenges that we had is, things kind of stabilized and secure, but early on, it seemed like everything froze, frozen decisions, everyone did not adhere in headlights on how to approach things. So, we were really careful to make sure that we reached out to our clients, go in front of them and talk to them about what might be going on in their industry, in their business, and how we can help them. Navigate their international employees, and make sure that they were aware of what is going on, and how does it impact them, because they might be just focused on what they are dealing with here in the US, but forget about those employees in Germany. So, it is really important that we got engagement in these companies with all of their employees and as time went on, that became more of a critical need, that our clients had. They wanted this engagement, this kind of increase of compassion, for their employees, because they know, we take care of the employees, we are going to take care of their clients. So, we really helped them navigate that and that was because everyone was frozen until we were really trying to get out there and talk to our clients and how, how we can help them to kind of wake up a little bit as things were changing so fast.

Mike Ruggieri:

I think for us, the single biggest challenge was just the intense demand on top of that chaotic world and it created a lot of stress and anxiety for our production teams. And I believe that our communication and that real clarity around our priorities and where we were going as an organization helped create some forward-looking perspective for the team that I think helped settle the organization. We heard frequently from our employees that they felt more comfortable and safer inside of the four Wells of Comar than they felt walking around in a big box store or doing something else where they did not feel like there was as much control. So, for us just trying to create that sense of calmness and control within a very chaotic period of time with incredibly intense demand was a big challenge.

Danielle Fugazy: 

Okay. So, I want to ask you guys what you are thinking about moving ahead, as business opens and moves forward. What kinds of things are on your mind and you each have alluded and touched on the M&A environment? I want to hear a little bit more about what you are thinking about in terms of M&A going forward, like, where you are expecting it. I know, we talked a little bit about carve-outs and Adam, you said, you expected to come back. So just sorry, that’s a lot of questions in one. You guys would comment on those things? I would appreciate it.

Mike Wirth:

Yes, I would be happy to take a shot at it. I think in addition to corporate carve-outs, an opportunistic investments, we do think this is going to be a unique time going forward here over the next two-three ten months that you are going to have some really big companies that are coming into some challenges or currently facing challenges and they could be looking for potential partners to get through these times. So, we have been kind of looking inward and reassessing how we can be creative as a firm in terms of our financing structures, whereas traditionally we typically would not play in that realm. We think given the uniqueness of this period, it can be really well positioned, especially just having raised a new fund to be able to offer assistance and not only in terms of capital, but also in terms of our resources, our network, our expertise, and potentially have a real nice, win-win both for the organization as well as for our firm and our investors.

Danielle Fugazy:

Do you, just to follow on to that really quick, and then I want to get back, you were working on this fund before the pandemic, do you feel your LPs will support flexibility and deal-making as you move forward?

Mike Wirth:

Yes, that is a good question. I think they will to an extent, we have earned the reputation of being a very conservative firm and our definition of flexibility is probably quite a bit different from others out there. But I think that this example of going through this severe downturn and not having any one of our 13 portfolio companies face any issues with liquidity or covenant violations, I think that sort of speaks to how conservative we are on that front. So yes, the answer to your question, I think would be yes, but our definition would likely be more conservative than any out there.

Danielle Fugazy: 

Fair enough. Sorry, Adam. I did not mean to cut you off there.

Adam Sheffield:

No, no, you are fine. I was just going to say, I think Mike said it well. I mean, we look at it like how Mike is explaining it. There is opportunity to be had kind of a uniqueness right to this cause because of this pandemic, that maybe companies that were not thinking about making an acquisition or making a transition now are and we see that that activity is going to, as time goes on, and as things start to come back, we will start to see the M&A activity pick up pretty substantially because there is a lot of private equity groups, for example, do have cash, you might be explaining it to him, right during the pandemic, you still raising cash and closing out it is fifth round. I mean, that is what we are seeing and so we know that that activity is going to happen. I think what is going to be a little different, though, is there is going to be a little bit better process on the due diligence side around the employees, around infrastructure, at least on the international side. So, they are not stepping into some landmines that they could possibly did not realize before. That now they will take a little bit extra step or precaution. But then they will move quickly once they kind of pass those hurdles because I think they will start to look at that a little differently than they did in the past.

Danielle Fugazy: 

Mike Ruggieri, do you have anything you want to add there?

Mike Ruggieri:

So, as I mentioned earlier, we are very thoughtful about acquisitions within our business. Our private equity sponsor, of course, is very bullish on continuing to invest in Comar’s growth, whether it is organic, or through M&A. Our approach on M&A has been by businesses that really accelerate our organic growth. So I am hopeful that this will create some opportunity to buy a business that maybe has a capability that we do not have today or it can bring capacity where we are trying to build capacity organically, which is very typical do so maybe businesses that are in a slightly different market that may have been challenged during this time but could bring us a great capability or capacity in a geography that we want to be in could be really interesting. But for us, it absolutely has to accelerate our organic growth. That is a key requirement.

Danielle Fugazy: 

Okay, I know we were talking about successful companies throughout the pandemic, can you just talk about some of the common traits that you saw with the companies that were successful or how to be successful and how that will serve them going forward? Anyone have any thoughts about these things?

Mike Ruggieri:

I can mention a few other things that worked well for us that are going to be incredibly impactful for us going forward. So, we had some pretty good tools around our payroll system with really great technologies to quite understand. We were using, we had Microsoft Teams and video conferencing but we were not using any of those things to the fullest and this pandemic really forced us to use those technologies and figure them out quickly. And we have found them to be incredibly valuable during this time, but we know will be incredibly valuable going forward. So, I believe that companies that have been able to figure out how to utilize technology to improve communication within their organization across the organization will gain big benefit moving forward. I think being in the right-end markets, of course is always helpful and that was impactful for us. And really showing employees the true colours of a company is companies with good culture that really believe in putting employees first. I think those companies shine, we shine and we are seeing some big benefits and hopefully, that will help us continue to recruit and bring on more talent as they need to build a business.

Adam Sheffield:

Yes, I think Danielle, for us, what we have seen is those companies that have been able to focus on their employees and engage with them and making sure that there is that compassion there. And it is not just not just language but it is natural, there is a natural feeling there. Those companies are striving very well, but they focus on their clients. They listen to, their needs, as they are changing and being able to support that, and then the other piece of it that Mike said it well. It is the companies that are focusing on improvements. Whether that be processes or taking advantage of the technology that exists within a company already, it works. We are seeing that companies are now spending the time to do that and it is going to help them be not only successful now, but really when things start to turn, they are going to be in a better situation. So those are the areas where we see massive improvements for companies.

Danielle Fugazy: 

So, we have about 10 minutes left and I have more questions, but the truth is the audience has been submitting questions. So, I would like to answer some of those now if that is okay with you, and if there is time, I will get back to some of our questions. But a question came in – Are there any specific markets you are looking at versus others? I think we have touched on this a little bit but if anybody wants to talk about any specific markets first others that you are paying more attention to today?

Mike Wirth:

Sure, I mentioned a couple of that, we really like obviously anything with health care, consumer staple food and beverage exposure, desirable and markets. One that I am dying to find an opportunity in is the automation space. Automation has been an intriguing proposition for years, given the productivity and the quality improvements and so forth, but never did we think of it as being a potential lever of sustainability in terms of social distancing and operational support. So, I think, whole new emphasis on automation and would love to find the right opportunity there.

Danielle Fugazy: 

Any other thoughts? Okay, so, Mike Wirth, I think this is probably for you too, because, well actually if you talked about this, but why are carve-outs becoming attractive? What is the underlying factor? Do carve-outs have executive teams that are sellable?

Mike Wirth:

Yes, I guess the short answer, I would think maybe liquidity is obviously a piece of it. And in addition to that, I think this is a really nice, maybe convenient time to look at your overall portfolio and clean it up a bit. Anytime you have a significant impact like we are going through today, I am going to provide a little bit of cover to clean up the portfolio, frankly, and I think maybe some businesses are saying we can kill two or three birds at once, generate some liquidity, clean up the portfolio, find a better home for some non-core assets. And in firms like mine are still flush of capital. So, I think the stars align there and it is not surprising to me that I have been getting calls late in terms of the teams, they are all over the place. Definitely some really good teams. But that is always a question. And frankly, that is one of our value propositions that we bring to these situations is now working with smart guys like Adam here, right to make sure you have the right team and processes in place to support a standalone operation that was previously integrated into a larger organization.

Danielle Fugazy: 

So, somebody has a question about banking. It is pretty broad, it just says – Can someone talk about banking, what are banks doing? And I assume that is more about where the leverage markets going and how our deals getting done and how are your lenders behaving? I am assuming that is what that means. Anybody have a feel?

Mike Wirth:

I would just mention that we did close a portfolio company about a month ago so, the banks are still open. Now, it was at a modest leverage reed versus what you might have got a year ago and like we paid a little bit more on top of that, but overall, I would say banks are still open for business, the capitals are certainly there. Banks are in a much better position than they were back in later 2019. We have never had any issues on our revolver being drawing capital or gaining resources. They have been willing to work with us if we have needs where we know we need some type of accommodation. So, I mean it has been very good all around. I do not know what others have been experienced. Mike have you had an experience?

Mike Ruggieri:

It is a similar view for me but my mind is maybe a little bit more narrow just in terms of our lending relationship. Strong business performance always helps but our lenders have just been fabulous and very supportive of our continued organic growth. They are funding that at a very big way and they have not skipped a beat, they have not shown any sense of discomfort or unwillingness to the need to support us the way they were three months ago or six months ago.

Danielle Fugazy: 

The next question is – There is a slowdown and I would like to hear how much you are feeling that slowdown in your business? Anybody feeling that slowdown?

Mike Ruggieri:

We are feeling it but we are trying to stay ahead of it because we know it is going to come. We know there is some pantry stocking, we know that people are buying things that the ordinarily would not buy because they are stuck at home. So, we would talk a lot about how do we stay ahead of that and make sure that we changed the pace of our production to line up with demand which we know will be softer than where it where it sits today. So, we have not seen any direct effects. I think the only small segment in our business has been some of the disposable surgical instruments we do were naturally impacted by the cessation of elective procedures but for us, it is very much about stay ahead of it, it is going to come at some point and we need to be prepared to manage the business accordingly.

Danielle Fugazy: 

Adam, did you have something they add to that?

Adam Sheffield:

Yes, I was just going to say we anticipate to slow down for us where we have a little different situation to Mike is some of that has already happened. We found a lot of companies waited and see what is going on but now they are starting to make decisions again so things are starting to pick up on the international side quite a bit. So, we are feeling like some of that is behind us on the slowdown aspect because they are expanding international and doing things international. Governments are starting to open up that is another thing. How do you handle an M&A transition when you are trying to set up an entity in the countries closed? We are able to help support some of those things so things do not slow for those companies but we are starting to see those things pick up and the good news is that we kind of see the slowdowns a little bit behind us and what we do.

Danielle Fugazy: 

This is a good question – how is COVID impacting your due diligence process for new deals? Everybody is nodding, I do not know if anybody wants to take that on.

Adam Sheffield:

Well, when I spoke to these M&A activities that are coming that things will have to be done differently. They will need to evaluate COVID, they need to evaluate employees specifically on the international side how we look at it. What the impact in that country? What land mine might you be stepping int you are not aware of? And that is really important that they take that extra step or before they did not have to worry about it so much, they managed it. It is different today, so that is when I mentioned there is going to be some extra pieces – that is the COVID aspect that they will need to evaluate.

Danielle Fugazy: 

Thanks! There is, well, one very quick question, I think we can answer really quick for somebody. Mike Wirth, I think you talked about automation, somebody said do you mean robotics?

Mike Wirth:

Yes, absolutely. I mean any technology that is going to enable employees to remain in a distance and continue to support the production of a facility is what I mean by automation. So, yes robotics is certainly a key part of that.

Danielle Fugazy: 

Okay. I think we are just about out of time. I really want to thank Mike Ruggieri, Mike Wirth, Adam Sheffield for sharing your insights with us today. I hope everybody found this session valuable and have a great rest of your day and enjoy the networking sessions coming next.

Mike Wirth:

Thank you, Danielle.

Mike Ruggieri:

Thank you.

Adam Sheffield:

Thanks.

Danielle Fugazy: 

Thank you, guys.

Katie Mulligan:

Thank you everyone so much to our awesome speakers Mike Wirth, Adam, Mike Ruggieri, Danielle and a huge thanks to Global Upside for its support of this afternoon’s program. So, for everyone still on the live networking is open now and so we have sent that link to join the networking in the chat box so that you can easily join. You can join an industry round table or mingle the open tables and you can also return to ACG access for any late afternoon one-on-one meetings that you might have scheduled. Thanks again for joining us and being a part of ACG’s member summit.

Danielle Fugazy: 

Thank you.