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- [00:01]
A
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B
This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. This is a session that you're going to hear now how CEOs win. This is a session from our CEO summit recorded for us to release as a podcast. We've got on this session Tom Mallon, the CEO of Perpetuate Capital, Mark Williams, the CEO of Magna Legal Services, and Micheline Davis, the CEO of National Medical Fellowships, each of them a remarkable guest. Let's ask each of them to start with introducing themselves.
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C
Tom, let me ask you to take a moment, introduce yourself, tell us about your organization and I'll ask you, Mark and Michelin, just to start there. A quick introduction and a quick oversight of your organization.
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D
Thanks, Scott.
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E
I'm Tom Mallon.
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D
I'm a managing partner of Perpetuate Capital. We're in the business of facilitating and financing ESOPs for business owners who want to maintain the culture and the values of their business past their retirement time. We also raise funds and provide an opportunity for investors to get a good return on their capital, plus some inflation protection and hopefully in the process help employees retire much better off than if they were just 401k beneficiaries.
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C
And Tom, give us a moment on your business background. What you do today is run Perpetuate Capital, help people do ESOPs, invest in those, and so forth. Give us just 30 seconds, 60 seconds on your business background, which has been extraordinary.
- [02:20]
D
We started Region Surgical Health as Scott mentioned, back in 2001. Scott and I have had the pleasure of working together since 95, so it's been a wonderful relationship and he's been a great advisor all those years. We ran built Region surgical health for 15 years and then tried to figure out what to do with it because we had several partners who needed to retire.
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E
We ended up converting it to an
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D
ESOP and it was truly one of the best things that happened in my professional career. We ran it as an ESOP for four and a half years, had an unsolicited offer to purchase it at a much higher price. Employees were happy, investors were happy and management was happy. So that's why I decided to spend the rest of my career helping other business owners have successful exits.
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C
Thank you so much. Mark, you've had an extraordinary leadership career with private equity funded companies. Take a moment and introduce yourself and tell us about what you do and what Magna does.
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F
Yeah. So first of all, Scott, I gotta say I'm grateful to be here. I don't want to date either of us, but I looked up to Scott as an esteemed upperclassman in the late 80s and a few years ago. So, you know, honored to be here with him today, truly. So thank you for having me, Scott, and with, with our other panelists. So, yeah. Mark Williams spent about half my career as a partner, as a lawyer partner at a large global law firm. I was an M and a corporate partner at Hart, but spent eight, nine years of my career overseas. Different places, Asia, China for four years, the Middle east, other places. And then decided that I liked running businesses better. Thought maybe I was a little better at it. And now for the last 17 years or so, it's, it's been a long time. I've been leading private equity backed legal support services, legal technology companies in the space and have had a number of exits in that, in that segment joined Magna legal services in 2019. They had the first private equity investment by CIVC partners in 2018. I joined in 2019. Odyssey Investment Partners took a controlling stake in 2022. We have about 30 offices around the country, about 1500 employees, thousands of 1099s. And again, we support the legal industry with technology and services in court reporting, deposition services, records retrieval, jury and trial consulting. I think we're the largest company in that, in the country. Service of process and investigations.
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C
And Mark, what's it been like? Because you have in the audience a whole bunch of people. Some have worked with private equity, some have not. You and Barry Tanner, who's on as well a little bit later today, worked with several different private equity funds. Any sense of that? Because people, there's so much noise out there about working with private equity hard. Is it easy? Are they impossible? Are they not? Give us just a moment on working with private equity as an investor or sponsoring your company.
- [05:50]
F
Well, the just a moment part might be hard, Scott, but I'll do my best to keep it short. Yeah, I mean, I think it's all about alignment. Right. So I've been with, I think over time, seven different private equity funds. I was CEO of a company called Crow on Track, that was chapter 11. So that was you know, owned by distressed companies that invested in distressed equity. You know, Magna is a growth story. We've done 20 acquisitions. And either way, I think it's all about alignment with your, with your investors, with your private equity, with your lenders in the private equity space. There's certainly a lot of, you know, dotting your eyes, crossing, crossing your T's, you know, institutional investment as a different parts of the ecosystem. But I, I think if you have the right aligned partners, which I have had every step, I'm very fortunate every step of the way. It's been, it's been strong alignment. It can be a great ecosystem to provide not only capital to fund investments and acquisitions, but also as a thought partner and a strategy partner. So I think it's a terrific ecosystem. Maybe not for everybody, but again, it's all about the right partner and the right alignment.
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C
Thank you. I think, very well stated. Micheline. You've had this extraordinary career. One of the most inspiring people I get to work with. Talk a little bit about what you do in national medical fellowships.
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G
Scott, thank you. It is always good to be with you in community, no matter whether or not that community is in person or virtual. So I'm delighted to be here with both Mark and Tom. And I have the fortunate opportunity to, I call myself the chief servant officer, but to serve as the president and CEO of National Medical Fellowships, an organization that for the last 80 years has been advancing the issue of addressing the physician shortage that this country is now actually facing and already in the midst of. And so with over the last 80 years, NMAP has done that by ensuring that they provide financial support, professional development, and then additional training and certification for individuals once they have graduated from medical school and gone on to become practicing physicians. We train them to then turn around and become emerging investigators in clinical trials research.
- [08:04]
C
And talk a little bit about. You've got the 80th anniversary event coming up. Give us a sense of how many students national Medical fellowships helps each year. Could just, just give us a sense of that.
- [08:18]
G
Well, I will tell you, over the last 80 years, we have given out some $50 million to over 35,000 students. On an annual basis, we can do upwards of 5,000 students. And so it's been just really an incredibly impactful opportunity. Right. The greatest segment of capital is our human capital. And so by doing this, I am making certain that there are individuals who will be there to take care of you, Scott, Tom, Mark and all of
- [08:44]
C
our employees and talk for a second. I'm asking each of you this question for CEOs trying to build enduring companies, sort of. And you've done this great job of building national medical fellowships. I know in the last year also received a large, large grant that has really helped the future of it. And you've also done a great job of structuring the team at NMF. The best advice for founders CEOs trying to build enduring institutions. You've got the different situation here of being a not for profit leader. Mark and Tom are for profit leaders. But at the end of the day, so much of the building and what you're trying to do is the same. Talk about a little bit of advice to people trying to build enduring institutions and how you think about that. Micheline and then Mark and Tom will ask you the same question.
- [09:39]
G
Thank you so much for that question. I think it's undoubtedly worthy. And as you know, I come out of both large scale academic medicine, health care, and then government before that. What I will say to you is that I once heard someone give really great advice from a stage and that was to hire slowly but to fire quickly. And the reason and the rationale for that is that truth be told, one of the most important elements that we have in building any infrastructure for sustainability of any organization for profit, not for profit, it doesn't matter, is really right that the culture that you are building and your institution, and truth be told, as a CEO, the best culture that you're ever going to have is only as good as the worst behavior that you are willing to tolerate, right? And so we really had to make certain that we are looking at toxicity in the way in which it affects the mental health and well being of all of the members on your team. Oftentimes, Scott, we have an individual who may be really talented, but if that individual does not also practice those kind of soft skills that help to propel the organization forward as a whole, then we really need to make certain that we are evaluating the actual impact on the organization, on its people and ultimately its bottom line.
- [10:56]
C
And how do you balance that, that great contributor with behavior to make sure you've got the right balance of people? Because you need those great contributors to. But you can't tolerate awful behavior. How do you try and balance that? Can you coach that? Or is it some point where you just have to sacrifice one for the other and get rid of the person who's just a bad behavior person?
- [11:17]
G
Listen, I will tell you this. I think that it is all about the evaluative process, right? So literally I believe that there's always an opportunity to cure however, individuals have a choice to elect whether or not to be coachable or not. And so the question ultimately is always, is this person salvageable? Right. Can we in fact utilize an opportunity to bring to their attention? Sometimes individuals are unwitting, unknowing about their behavior and the way in which they show up in the world. Do we have an opportunity to bring this to their, the forefront of their frontal lobe and will they in fact welcome a chance to literally turn that around? Some people will say, you know, I hadn't realized the ultimate effect of that. I didn't realize how I was showing up in the world. Because every single individual that is working under your mantle is an extension. They are an agent of U.S. principal. And so it really is how do you want to show up in the world? And so I think that we ascent, we initially we try to address it and then quite frankly, if we found out that the person is not right, it's not salvageable, they're not malleable, they're not educable, then you wish them well and you let them go have a great opportunity to be successful somewhere else.
- [12:29]
C
Thank you so much. I love that and so much about building great organizations is great people and also what you'll tolerate in people and their behavior. Mark, talk a little bit about when you think about building great organizations and you've done this incredible job of building Magda and before that building other companies, you had this incredible track record. What advice would you give to founders, the CEOs, to entrepreneurs, about what works? What are a couple core things people should be thinking about?
- [12:56]
F
Yeah, so I certainly agree with Micheline about a focus on culture and values and people and you know, one toxic person can really bring down a culture. So yeah, I mean, I agree with that. Invest in your people, they are your greatest competitive advantage and you know, higher, slow fire, fast and then build systems and processes that allow the business to scale. A lot of what I've done the last, you know, 15 years particularly has been taking, you know, family run businesses or smaller businesses and then scaling them up private equity owned. So having the system and processes to scale is critical with, with the right people, you know, today particularly you got to be focused on technology, cannot be left behind in technology. So if you don't have one eye focused on technology, I think you're probably in trouble. Which means different things for different people, but it is critical. And part of that is listening to your clients, listening to their needs, adapting to their needs, which again is changing fast. I think with technology, with artificial intelligence you know, I think again, as Micheline stated, you know, leading with integrity and consistency. You know, culture starts at the top. So mission, vision, values, I'm a big believer in, in that and activating them, they can't just be a piece of paper, but having strong mission, vision, values, making people understanding them and then making it real within the culture and then finally, you know, execution. I mean, all this goes for not if you're not focused on executing on your strategy and executing on your mission, vision, values.
- [14:46]
C
And Mark, let me ask you a question because I think currently at Magna you mentioned, I think thousands of ultimately between employees and contractors, many in the audience have managed organizations with thousands and some have managed organizations with 10 to 100 or less. Talk a little bit about how management has changed for you or how you've had a change as you've grown to manage much larger organizations than you might have earlier in your career. How does that change? How does that change you as a manager and how you have to approach things?
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F
Yeah, I mean there are two categories of topics that really come to my mind. One is just the change in the world, especially in the post Covid technology fueled world, which is we do so much virtual today. And yeah, we have thousands of people around the country. So even if that was not the case, I couldn't go see all them and be with them on a regular basis. So that's the challenge. You can't be with people all the time. But how do we use zoom? I mean a great example is this, this, you know, what we're doing today, this summit that we're doing and it feels great, right? But how do we effectively use tech technology to reach as many of our employees and clients as possible and then the other, and it goes back to systems, process, culture, mission, vision, values. How do we replicate it? Right? How do we make sure that second level, third level, fourth level leadership are living those values, enforcing those values, communicating, helping create the culture one wants to create. And that's hard to do at scale. It is hard and it is hard to balance, you know, culture with bureaucracy. And you need rules and process and system. But how do you not lean so deeply into that that you lose your heart and lose the culture and lose the values and lose that human touch? So Scott? Yeah, it's a great question. I wish I had a magic answer, but it's all that.
- [16:52]
C
But I love your point on as you get larger and larger, how do you mix systems with maintaining that human touch and the right culture? And sometimes it's much easier to do that in an organization of 80 to 100, where people, you could really be on the same page with everybody. Be very careful about every hire. You get to thousands and you see some organizations that really live that, where you really feel the culture per permeates the organization and others it doesn't. And, and I think that's a fantastic sort of perspective on it. Tom, let me ask you the same question. I'm gonna come back to each of you in a moment with a question from one of the, one of the attendees. Tom, best Advice for founders, CEOs trying to build enduring companies. You built a highly successful surgery center company that had, by the time it sold dozens of locations, dozens of partners. How do you build that and how hands on do you have to be? What advice do you have for founders that are trying to build sustainable organizations?
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E
Well, you can't be so hands on
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D
that you're doing everything.
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E
So a lot of problems in companies you can identify by just looking in the mirror as the CEO. And the things that you'll allow, the things that you'll empower in health care, everybody takes care of everybody else. Well, we got to the point where my COO and I were running each other. We were running ragged. And we looked at each other and said, we're running ragged because other people aren't doing their jobs and we're having to jump in and fix it. A very wise person once told me again, Michelina's fire quickly, it's easier to change a person than change a person. Scott Becker, have you heard that before? Has that come out of your mouth?
- [18:41]
C
It came out of my mouth because we had a managing partner at the law firm that used to say that, that it's very hard to change someone, that it's easier to change out the person than change a person. Though you certainly want to try, but that's very hard to change people. That.
- [18:54]
E
But you have to deal with reality. And if the person's person doesn't have the values, doesn't have the discipline. A CEO can't demand discipline in his organization if he always shows up late to meeting. Just a little thing, you know, so, you know, my, my, I'm a very big proponent of values and discipline in an organization and having people do their jobs. And if they don't want to do their jobs, have them, have the this is America speech with them. Hey, this is, you know, this is America. Everybody has the right to pursue their own happiness. We're going to figure out how you can go someplace else and be happy because we're not happy here and you're not happy here. That's usually the case.
- [19:38]
C
So let me ask each of you this question. Just, just 30 seconds to a minute each. Michelin, I'll start with you and then we're going to come back to the reader, to the listener question. What are you most excited about currently in what you're doing? What are you most excited about currently? And then Mark and Tom will ask you the same question. Michelle?
- [19:57]
G
Thank you, Scott. I really am excited about. You mentioned earlier that we are celebrating our 80th anniversary as a really unique opportunity to, to call back to all of the students over the years who are now practicing positions, some of whom are actually retired, and really call them back into community one with another. So I'm excited about the intentional community, but I'm excited for the next generation of healthcare leader. I'm excited that they will have the knowledge, experience, the wisdom of those who have already been in practice and been in the profession and that we are going to be able to have a chance to layer that on with them. What healthcare of tomorrow is going to be right? And so all of that experience will be laid on top of innovation and transformation and really what we have the chance to cultivate as healthcare is continuing to evolve. And so that actually excites me.
- [20:47]
C
Could you take one moment, if you're okay with it, on the historic mission of nmf. And today I know it's really focused on helping underprivileged people become doctors excel as physicians excel as clinicians. Give us a moment on the historical mission and how much has been done for that mission for sure.
- [21:06]
G
Thank you, my friend. Well, I will tell you, you heard me mention the fact that it's our 80th anniversary. We were founded in 1946 at a time when, quite frankly, segregation made it really difficult for lots of individuals who were absolutely brilliant, but in different zip codes and different aspects of the country to literally have access to the opportunity to become a physician. And so over the course of that time, literally NMF was the vehicle that provided a chance for those who were kept out of certain systems to literally obtain the education that their brilliance was already ready to receive. And so as a result of that, every U.S. surgeon general who happens to have been of an underrepresented demographic in medicine is literally an NMF alum. We have created astronauts and given them to the world because of the double down focus and making certain that those who were prevented from having access to opportunity were given a chance to have that access so that their brilliance would have that opportunity.
- [22:05]
C
Thank you. We do something with Michelin every single day. We serve on a board. We're huge fans of what NMF does, both historical mission, the current mission. And Michelin is a remarkably inspiring leader. Mark, take a second on what you're most focused on today. Is it growth? Is it execution? Is it trying to embed technology? Everything you do. Where is the biggest focus today?
- [22:27]
B
Mark?
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F
Yeah, I mean, it's all that. I'm really excited about continuing to accelerate our growth through acquisitions. I think we just closed our 20th acquisition this week. And you know, that brings more talent, more services, strengthening our position. So excited to continue that journey again. Private equity helps fuel that from the capital perspective and a partnership perspective. Technology, I said it earlier, we're investing a lot in infusing AI into our products, into our services, into our workflow. That's a critical part of what we need to get right. We need to execute on it and enhancing the way work gets done. And I'll tie this just quickly, Scott, to the last subject, which is as we progress through greater technology and acquisitions and growth, I need to always remember what got you here won't get you there. Right? So your question, about 30 people, 300 people, 3,000 people. I think that oftentimes there's a mistake made that people look and say, well, the way they were doing it or we were doing it before was wrong. I don't think that's the right way to look at it. I think it might have been the right way at that time, but things have now changed. You're bigger, you're larger, there's more technology. So how do you scale? How do you grow? What got you here won't get you there. You need to adapt and change to the circumstances.
- [24:03]
C
Thank you so much, Tom. I'm asking you the same question. Now, we've got a handful of listener questions I'm going to try to address to each of you. Quickly, Tom, first, what are you most excited about and focused on?
- [24:15]
E
Currently, we are just finishing up investing our first fund, which is a proof of concept fund, small fund, primarily individuals who we've done business with for many years. That fund has focused on basically three areas that the government has identified as critical to the country. National security, critical minerals and energy security. And because we're investing in those areas, we have the opportunity to apply for an SBIC license for our next fund, which should increase our capability of serving the market by two to three times what we raise as private capital.
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D
So that's going to start next year. Most Likely.
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C
Thank you. I'm going to ask each of your different questions that came from our listeners. Tom, this is actually specifically addressed to you. This person says that in your literature and your perspective, the Perpetuate Capital, you know, also has a perspective from a biblical perspective, seminars for financial literacy. And how do you sort of mix the biblical views with the financial views and some of your thoughts on that? Because I know this is a deep part of who you are. If you don't mind, if you're comfortable with it, spend a moment on how those two things apply together, that you could be in business and be religious as well.
- [25:52]
E
Well, when I was running Regent Surgical Health, I joined an organization called C12, which is similar to Vistage, which is a CEO roundtable organ organization, but it's primarily Christian business owners. And that organization, I was in it for seven years, had really helped me through the ups and downs of Obamacare and all the things that were happening in health care during the season that I was CEO of Regent. I believe that the best CEOs are the ones that continue to educate themselves. And if they're willing to sit down in a room with 12 other business owners for a day, a month, whether it be a Vistage meeting or a C12 meeting or a convene meeting, those are better people to invest in than the CEOs that know it all. And so that's the, that's the pond we fish in. And it's a wonderful group of people. We invest in that, those organizations every chance we get because they just seem to be better investments for us. And we, we are on the same page, we talk the same language. And they are very much in the mode of rewarding their employees through the ESOP conversion, more so than someone who just wants to get the maximum amount of dollars and walk away from their life's work.
- [27:23]
C
Thank you. Mark, let me ask you this question that comes from a listener and thank you, Tom. This question comes from a listener. Middle managers, how do you make sure that you're dealing well with middle management, that they don't just become part of a big bureaucratic situation where things aren't. How do you deal with middle management, I guess is really the question.
- [27:47]
F
Yeah, I think it's a really good question. A really hard challenge is again, how do you make sure that the team at various level is living the mission, the vision, but especially the values? And you know, one way we're doing that is we're just pushing this out now is an entire entirely new sort of meeting and communication structure where we are having meetings, I'm having meetings with different levels and different teams on a regular basis. Some are weekly, some are monthly, some are quarterly. But the whole goal is to connect the team. Again, I go back to alignment, to make sure everybody's aligned, understands the strategy, understands the mission, and have two way communication around the values and how it gets rolled out at different levels of the organization. And it really comes down to culture, right? Making sure you empower your people to do the right thing and to have that communication and those open channels. But it is, it is hard. It's a great question. It's hard.
- [28:53]
C
Let me ask you this question. If you were advising somebody who's starting as a CEO or wants to be a CEO, what skills would you encourage them to develop? What skills are necessary to be an effective CEO and would you encourage somebody who wants to be a leader to develop?
- [29:12]
G
So I'd really encourage them to do two things. One, to make certain that they have a really great understanding of what it is that they are good in, right? And the finite universe of all the things that they are not. And I say that because I thought that Tom just hit it right on the head. My goodness, right? You never want to be the kind of CEO, believe that you know it all. I am afraid of you. If that is in fact the case, that's one, two, right? To be really intellectually curious, to make certain that you are embracing the opportunity to be an active listener and an active learner of everyone that you work with, of the company that you are now going to be running, quite frankly, but also of your consumer, right? And so I really think that it's a really great chance for you to double down in that space. Listen, you know what a CEO is supposed to do. You are setting strategy. You are the vision. You've got to communicate, communicate over, communicate and communicate. Again, to Mark's exact point just a moment ago, one of the really important aspects of that, that mid level, right, Employees, to make certain that they feel like they are a part of everything else that you're doing. Where do they see themselves in your vision? What aspect of your strategic plan did you actually include them? And have they had an opportunity to feel like you built a big enough tent for them to now be able to see their own fingerprints and what it is that you're building together? I think that these are all the kinds of skills that you want to make certain that you have as you go forward into this new role and into this new realm. And then my friends, make certain that you get Yourself a really great executive coach, mentor. There is no such thing as now I have arrived. So really making certain that you understand that being a CEO is just a great opportunity to serve more people on a bigger scale.
- [30:57]
F
And Scott, can I jump in, Scott, and say something? I just want to tie a thread between what Tom's answer and mine and Michelin, which is, I think again, it's about leadership with conviction and values, whether it's, you know, through religion or through any other reason. It's, it's. What does one do when they don't have the big audience? When you're doing the right thing by your employees, the right thing by your clients, the right thing by your vision and mission and the integrity encouraged to stick with it, which includes openness. Right. Openness. To get it wrong too. And to be vulnerable. So I, I think that's a theme through all this and to be called
- [31:34]
E
out for it and be willing to listen.
- [31:36]
G
Yeah, yeah. And to actually. Right. Bring it back to them when you are wrong. Come back to your, to your employees and say, listen, we tried this. I was the biggest proponent of this. It was the wrong call.
- [31:48]
E
One of the best features of Scott Becker as a counselor is his willingness to speak the truth, whether I wanted to hear it or not. And it was always appreciated.
- [32:00]
C
No. Thank you so much. I want to thank all three of you. Micheline, there was a question here about does your program also sponsor mid level providers, nurse practitioners, physician assistants? Could just really quickly address that because someone had that question.
- [32:15]
G
Absolutely, we do. Right. So I talk about the fact that we address the physician shortage because we were founded as an entity in order to propel more individuals into being physicians. But we absolutely. PhDs, Pharm. DS PAs. You got it. And so we really are attempting to address the entire workforce shortage across the board.
- [32:38]
C
Thank you. I want to thank each of you. I've known all of you for a long time. I'm privileged to serve on the not for profit board that Michelin has. And it's really one of the great experiences of my life working with Micheline. I served on a board of Tom a long time ago. One of the best as well. And Mark Williams, I know him forever. Tom, Mark, Micheline. Fantastic. This will also be distributed as a podcast on the Becker Business series. But I want to thank each of you for sharing your thoughts, your time. It's a great privilege for our audience. A great pleasure for me. Thank you all very, very much. Thank you.
- [33:09]
F
Thank you, Scott.
- [33:10]
G
Thank you, Scott.
- [33:11]
B
Thank you so much for joining us for the CEO Summit in this portion of the CEO Summit. Thank you for listening to the Becker Business and the Becker Private Equity Podcast. Thank you so much.
- [33:26]
A
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