Rami Cassis speaks with The Wall Street Lab about how private equity can be a force for good

Rami Cassis speaks with The Wall Street Lab about his approach to portfolio management, the hybrid between a family office and private equity firm, and why it’s crucial to address private equity’s image problem.

In his chat with Andreas von Hirschhausen, host of the podcast, Rami covers his role as Chairman within his portfolio companies, what Parabellum looks for in a business, and the intricacies of integrating a new acquisition into existing investment. Rami also touches on the importance of networking and why strong relationships are crucial for good business.

Transcript:

ANDREAS von Hirschhausen: Welcome to the Wall Street Lab podcast, where we interview top financial professionals and deconstruct their practices to give you an insider look into the world of finance. Hello and welcome to another episode of the Wall Street Lab podcast. Today my guest is Rami Cassis. Rami is the founder and CEO of Parabellum Investments, a hybrid between a family office and a private equity firm, and he’s also the chairman of several portfolio companies. 

He began his career at Schlumberger, working as a director of the Asian region and director of Engineering, resourcing and development for Mayor and Apac. He also had a brief consulting career originally with KPMG, prior to returning to line management at ATOS Origin where he was director of IT outsourcing for the firm in the UK. 

Rami holds degrees in aerospace engineering and pure and applied mathematics both gained at the University of New Southwest Australia. Rami, welcome to the show.  

RAMI CASSIS: Thank you, Andreas. Thank you for the kind intro.  

ANDREAS: I’m really excited to dive into your background about how Applied Mathematics worked out for you now doing pre. But before we start, I really kind of wanna set the frame of how I came across you, and it was kind of, I read a piece entitled, Private equity must start caring about its image problem, or face damaging, restrictive regulation. With that kind of that as a backdrop, could you tell us a bit about what a hybrid between a family and a private equity firm is and why you care so much about private equity?  

Maybe that those two things could be a nice intro. 

RAMI: Sure. So depending on your definition of a family office and private equity firm, and as you say, I think most of your subscribers are sophisticated, so we won, run through the definitions, but at the very least, the reason why I think it’s a hybrid is that in simple terms, I use my own money, which is typically deployed in the way a private equity firm would deploy it. 

So that means we have no external LPs. The investment committee is myself and the team, but it’s not a committee per se. We only make direct investments where we have control. I always act as the chairman of the companies in which I invest, which means I, my role is really to support the CEOs in each of the respective companies. 

So the direct investment and the operational or the hands-on involvement in the businesses is, I think similar to a typical private equity model, but with no LPs to answer to, with no investment committee to answer to, and with importantly, with no investment horizons dictated upon us. So, I do not follow the typical three to five year investment horizon. 

I’ve been involved in some investments for over 12 years, and there are some that I’ve acquired and sold within a year. So in my mind, that’s the hybrid. We have autonomy and independence of a family office. But with, I would say the slightly more commercially aggressive approach that a PE or a VC might have with a very, very hands-on, very operational focus. 

And the asset test of an operational focus is the following: it’s you know, if things really don’t work out well or there’s a major problem, am I able to step in as we know enough about the business and the industry to be able to step in and address the situation? And I typically don’t get involved in investments where I can’t do that.  

ANDREAS: So, you kind of, you’ll only take companies on where you know that you actually can operationally help, otherwise, yes it probably would not make much sense.  

RAMI: No, no, exactly. So, you know, I try and stick to my knitting, but equally it’s important to work with CEOs who you trust, and I can say that with all the CEOs I work with. 

But yes, I tend to stick to my knitting. And my knitting or my trade is defined by the first part of my career.  

ANDREAS: Okay, let’s dive into the image problem bit later because it just got too interesting for me to not do that.  

RAMI: Lemme answer your second question perhaps Andreas, forgive me very quickly. The reason why I care about the image problem is because I see many mid-market firms, many lower mid-market firms, all of which unequivocally seemed to have a very negative impression of private equity or have had negative experiences and it’s had a really negative impact in their life. So, I care about it because I think improving it and communicating the fact that private equity can be a force for good will have a huge impact on the business community and on a large number of people out there. So if we’re able to help them, then it’s something I’d like to be able to do.  

ANDREAS: How has it affected your personal investment process, if at all, that this bad image problem has? Did you encounter companies that you wanted to acquire and they were like, oh no, we’re not talking to private equity firms? Or did it actually help a bit? Because you said like, look, we are a family office. Right? We are not a private equity firm.  

RAMI: I don’t think it’s either helped or constrained the process of engagement, but I have had many mid-market firms say we would not want to work with private equity for a number of different reasons. Now, clearly there’s a lot of exceptionally talented private equity firms. That’s been the initial feedback. For better or worse, I’ve never been confused for a private equity person. So, when they’ve spoken with me and they’ve understood my experience, It’s never really come up because, you know, ultimately it’s just a tagline. It’s just a name. Whether you say it’s, it’s a private equity firm or a family office, people judge the business relationship they will have by the person sitting in front of them. 

And for all of the businesses that I’ve ever dealt with, I think they associate me more as being an operator or an entrepreneur than a so-called private equity professional.  

ANDREAS: I think that’s a nice segway into exploring a bit more how the investments that you do come to be investments. What is your approach to sourcing investments? 

RAMI: So, sourcing is always one of the more challenging aspects of deal making. I work with a number of existing and sometimes new relationships who drive deal flow for me. So that is applicable, particularly in the US. But also, across Europe, where most of my deal focus is, primarily in the US actually. So I don’t have a much magic answer to originating deals.  

It’s a combination of engagements with buy-side bankers, my own network, and importantly also the network of the CEOs with whom I work.  

ANDREAS: Hmm. And do they usually approach you, because I guess, you know, with such a track record, you made a reputation among your network to help those companies.  

Or do you more hear, oh, there’s a company that is maybe looking to sell a controlling interest share, or even they don’t, but they’re such a great company and you kind of know that you would be really helping them.  

RAMI: To be honest, it’s a combination of the three. As time has gone on, I have had more direct approaches, as you say, because I’ve been around a bit longer. 

We are also doing market research and looking for companies that would be a good fit to the existing portfolio. And occasionally I come across corporate disposals. The first half of my career was in corporates and I’ve run a few transactions where I’ve acquired very small divisions out of large corporates like Atos, like Schlumberger, like First Data or now Fiserv. 

So, it’s really been a combination of all three. But as time has gone on Andreas, I’ve found more and more people approaching me. But having said that, we also have people actively representing us and searching for investments on our behalf.  

ANDREAS: Okay. Let’s say you found a company, no matter how, if either you approach them, or they approach you, what are, and you mentioned one of them that you should: that you need industry experience, what else is important for you to say, okay, this is a company that I wanna be the chairman of and I want to invest in and probably contribute a significant amount of time?  

RAMI: Yes. So, the answer to that is divided into two sections for businesses that are complimentary to something in the existing portfolio, it’s a different set of considerations to whether it’s a new platform. So, let’s focus on complimentary businesses to the existing portfolio. it very largely comes down to, I’d say three factors. The product fit, so three of my five investments are in enterprise software, so the fit in terms of the product and the sector is very important. Both from a technical perspective, which I’m not really qualified to opine on, but my colleagues are, as well as in terms of the industry. So, we we’re very deep in, I’d say two main industries, and that’s financial services and pharma tech. So, industry, alignment in terms of industry and product is essential.  

The quality of the management team is also very important because even if there are, let’s just say cost synergies in bringing businesses together, the majority of the upside is in revenue synergies, which are historically much more difficult and typically much more difficult to achieve. Delivering these revenue synergies is going to mean working alongside the management team that’s just been acquired.  

So, making sure that I’m comfortable and that my colleagues, the CEO and their team is are comfortable working with the management team of the target. Is a very important consideration. 

And the third one, of course, is value in valuation. So, you know, is it a fair market price? If either side feels as though they’ve done very well, it typically means the other one is bitter. So, I try and look for pricing where neither side is perfectly happy, but both sides can live with.  

ANDREAS: Mm, very nice. 

RAMI: That’s, that’s the considerations for a bolt on. A complimentary acquisition. For a standalone, it’s much more opportunistic. For a standalone, the criteria are, is it in a sector and in an activity that I am familiar with so I can deal with my asset test of, you know, can I step in, or can I help to address things if things really go wrong? 

Secondly, value in a platform investment, in a new investment. The question of valuation is much more important, so we’re a little bit keener in terms of understanding what the valuation looks like, and I’d say thirdly, equally, just as importantly, it’s also the strength of the management team, probably slightly even more so in this instance, because I like to think that the management team that I’ll be working with are the ones that will continue to stay involved in the business. 

Their allegiance is important and my role as chairman happens in either of those scenarios, whether it’s a bolt-on investment or whether it’s a new platform. I don’t typically take on the CEO role — I’ve spent many years in line management in my employed half of my career — it is to act as chairman to really support the CEO and guide him or her, in whatever decisions they need to make. And that’s where some of my experience in the past and some of the engagements I’ve had as an employee and working in industry has helped. So long-winded answer, but hopefully that was clear.  

ANDREAS: No, very clear. I really enjoyed the answer. And one thing to follow on that is, does it usually, because in private equity, it might just be my naive outside view, often a lot of the management team gets cut. If it’s not a management buyout, right? But it’s, you know, like you, you’re not so eager to work with the management team, but in your case, you really vet the management team kind of like it seems, again, very naive question, more like a kind of venture capital approach where they actually, you look for the right management team, you look if the management team fits to the company, and all of that, less than because you’re acquiring the value of the asset. 

RAMI: I don’t think it’s a naive question at all, Andreas. It’s a very legitimate question and is incidentally one of the concerns or the stigmas that many mid-market or lower mid-market firms have of private equity, that their asset strippers, that they’re in it to make a quick buck and it’s a flip and they wanna bring in their own people. 

So, it is a concern for many of the managers, but no, whether it’s a VC approach, I’m not entirely sure. But I think, there isn’t a perfect CEO. There isn’t a perfect management team. I would rather, and this is through some painful experiences, I would rather work with a CEO who’s less than perfect. Incidentally, there is, as I said, no such thing and help him or her to work on their development areas. So, the key for me is really to help develop the CEO and, if they’re not aware of them, to help them recognize where they need help and address it accordingly. And there are lots of examples. You know, typically as a CEO, you typically move up into the position of being CEO, either through sales or operations, and that drives two very different types of behaviours. 

Operations individuals are much more cost-driven and efficiency-driven and less talented. If I can say that in terms of sales, sales driven CEOs are very focused on the top line but are typically less numerate. I’m generalizing to make a point, but the conclusion remains that it is much better to work with an existing management team and identify their weaknesses and help them to overcome them than to make wholesale changes. 

ANDREAS: Mm-hmm. Just out of curiosity, the teams you work with, are they often the founders, the entrepreneurs who founded the company, or are they kind of, did this transition already happen, from Founder to an external management team that might, for example, not have the same amount of stock and ownership in the company. Also, usually a very high ownership of the company already in the existing management team 

RAMI: No, in all my cases there is no founder. There were a couple of transactions where I acquired a business with a founder. He was phased out in my limited experiences of transactions with founders. I think founders have found it difficult to make the transition from seeing, you know, setting up the company, leading it to a position where they’re no longer in control. So, I haven’t been able to make it work with a founder. Whether that’s an admission of failure or not, I don’t know.  

But no, so all of the managers are, have been brought in, in some cases they used to work for large corporates and have adjusted to the lower mid-market because there’s many advantages in working in that space and in others, they’re, you know, they were very, very sector focused and have operated in that, in those types of businesses, in those size of businesses, for a number of years.  

ANDREAS: And the next thing you mentioned is you kind of you try to focus more on revenue versus on cost. And my best guess is it kind of also plays into what makes a family office, private equity style investor very different from a typical private equity firm. Right. You mentioned it yourself. The private equity investors often have. This. I’m stripping the assets, I’m doing everything. Do you think, and now we’re coming kind of back to the image thing. Is it fair to say that a lot of private equity investors actually do that, or do they also focus on increasing on revenue and does it kind of give you an advantage in talking to the management team. 

RAMI: I don’t think it’s fair to accuse private equity of asset stripping. I think many private equity firms do not do that. And I think many private equity firms genuinely spend time and money in developing management teams and sourcing deals and helping them to grow by acquisition and organically. The issue is, I think it used to do that many years ago, and I think there is no one in the private equity industry who has made a point of effectively communicating the fact that this has changed. I think that’s point number one. But I also think the private equity industry generally tends to attract a certain type of profession. In the main, I think the overwhelming majority of private equity professionals are either from a finance or legal background. And although both those professions are admirable in themselves. The typical way that a finance person will engage with a management team is inherently very, very focused on governance, board control, forecasts, it’s very numbers driven, which is fine in itself, but isn’t a very human approach to engaging with a management team and that. 

So if you’re dealing with a founder, for example, who’s very passionate about their product, or someone who’s been involved in the business for many, many years who has a sense of loyalty to their employees and to their clients, yes, you can speak to them about their forecast, you can speak to them about board controls, but that’s not really going to excite them in the same way as if you’d spoken to them to about retention or employee motivation or other less numerical measures. 

So, the type of engagement that you tend to have with private equity professionals in general perpetuates the idea or the impression or the myth that private equity are just interested in numbers and their asset strippers. I don’t think that’s any longer true, but I fear the change in the way the private equity firms engage is different to the way they communicate, and ultimately a lot of it comes down to style.  

Family offices are seen as being more warm and cozy and wooly and defensive and more interested in it for the long term. And you have this image of people walking around with tweed jackets being part of a family office. And I think that’s changing as well and that’s probably the other extreme. They’re perhaps there’s a view that they’re less interested in numbers and more interested in the betterment of mankind and doing good for the planet. I’m exaggerating to make my point. But I think there’s a happy medium in terms of style and engagement between the two. 

But if I’m a manager being interviewed or being met by a potential acquirer, I know which one I would rather speak to.  

ANDREAS: Yeah, I, I see that. I see that happening. I mean, I haven’t covered family offices in a long time, and then I started covering family offices, I got really interested and kind of saw a bit also the development that they’re more active in companies, they’re also more active in startups and that, yeah, the tweed jacket, it’s kind of like, get into or put into the closet, it’s actually a very kind of entrepreneurial approach because often the people that have family office money, right, they have acquired this through entrepreneurial means.  

RAMI: That’s true. That’s true. I agree. I think that’s changing. I think family offices are moving more towards private equity and I think private equity is hopefully moving more towards family offices, in terms of style and engagement I mean, irrespective of the investment model.  

ANDREAS: Let’s jump to the last point of how you decide to, on your start of investment, that’s what you mentioned, valuation. I really enjoyed what you said about, okay. Like try to find a pain point where it’s kind a bit of painful for both. Right? And then to find that, how do you decide that? Like is this, how do you go about finding the right valuation?  

RAMI: Right. But that’s a delicate balancing act and I think I said something along the lines of, an outcome that neither side is happy with, but both sides can live with. Something like that. Yeah, and I think that sums up quite succinctly the spirit of a compromise on evaluation. The starting point is probably having some knowledge of the market and other comparables, so you at least already identify whether you are in the same universe.  

So, if you are coming into a transaction and you are expecting a valuation in the range of, let’s just say five to seven times EBITDA, five to eight times EBITDA, whatever the range might be, and then, the seller is expecting 12 to 15 times EBITDA. Well, you know you are not in the same on the same planet.  

But you would also know that, for example, some industries that are considered legacy or some activities that are more linked to services will be valued on a relatively modest multiple of EBITDA versus software businesses with a very high level of recurring revenue, and 40% organic growth will more likely be on a multiple of revenue. And then even within that, there are a whole host of considerations. I mean, one extreme is acquiring a business in Russia, which we looked at four years ago and didn’t agree terms on, where the valuation, even before outbreak, is going to be substantially less to acquiring something in the us. So typically, enterprises in the US market command a premium, then they’re followed by Western Europe. 

Then very broadly speaking, you have, I think I’d say the rest of the world, with the exception of, you know, the Japanese and Chinese markets, which are economies on their own. So, where you start, is firstly, you need to have a sense of where the market is at, where the market is for the particular asset you are considering, and then I think you are better off having a valuation conversation as early on as possible. In order to not waste your time. And importantly, the, you know, the company’s time. Often, it’s done through a banker. Sometimes we’re in the position of being able to communicate directly with the company.  

But I think, and more often than not, as you may know, Andreas, if it’s a bank led process, then there will be a process and they’ll ask for an LOI, or an IOI in some cases, which is an indication of interest before you get to the LOI, which is quite a tortuous process. But establishing a range of expectations early on is the most important thing because then, you know, you either want to be the one who’s got the deal or you want to be the first one out. Anything else in between has been a waste.  

ANDREAS: I would be really curious to, I don’t know, hear a bit about how this works. For example, I had a long time ago made an interview with Wayan Sean, who has been a private equity investor from Hong Kong, investing in the Korean bank and he talks about, you know, like the deadline’s to hold and like last minute everybody pulls five all-nighters in a row to make the deadline before the deal goes bust and all of that. Is it the same in your position that you, you know, like have to pull the all-nighters to make the deadline, or is it a bit more relaxed and after the IOI and THE LOI or is it like also very, you know, like the, the PE war stories, do they also happen with you or is it a bit more Okay. That’s fine. Common ground and take it easy.  

RAMI: Yeah. No, I think I haven’t done a single deal that’s been relaxed. I would say it’s maybe not barbarians at the gate or some of the war stories that you hear about, but invariably, Andreas, I’ve found that in the lifecycle of every deal, there’s always at least a couple of points within that lifecycle where you have to face the prospect of walking away. And I think that’s a healthy tension that you need to keep all the way through the signature because you find that you otherwise sign things that you wish you hadn’t signed, and I’ve been on the wrong side of that a couple of times.  

So, there is increasing tension as you go on through a deal, through deal negotiations. Partly, also because unless you are able to, in some ways self-impose or agree a deadline with a target, you’ll find that things will drift. And the saying that time kills all deals is equally true when you are selling a new product to a client, as in when you are running an acquisition. The level of anxiety and tension typically tends to rise as you get closer to the deadline, which almost invariably slips. But it slips by a week or two, then that’s okay. You run into trouble if it slips by any more than that because things end up dying slowly as they run out of momentum. So, there’s been a few all-nighters. Thankfully I haven’t had to do a few of those recently, my colleagues and my teams have. But yeah, there’s always tension in the deal, and you always have to be prepared to walk away just to check yourself that you’re not either overpaying or accepting terms that you shouldn’t be accepting.  

ANDREAS: Mm-hmm. So, you don’t run into this kind of sunk cost fallacy that, oh, I’ve invested so much effort and so much energy, so much legal cost into this deal, you know, like I’ll just agree to one more term, one more term, one more term. Then in the end you look back and just the deal is ruined.  

RAMI: Look very tempting to use that argument and I’ve used it on myself many times. I don’t really have a, you know, a clear answer to that, because, no, I don’t buy… well, I do have a clear answer. I don’t buy that argument, even though I have tried it on myself a few times because I fear that if, you know, it’s a bit like death by a thousand cuts, if you end up signing a deal that ends up being a money pit, you are throwing good money after bad. You are better off cutting your losses and moving on. 

So, I’ve had many deals where I have wasted time and money that, you know, did not conclude. And other than one, I don’t think I regret any of them.  

ANDREAS: Hmm. What other kind of tips or mental models or kind of issues that you had in the past, would you try to convey to people to try to either avoid or to set for themselves? You know, I think this is really good advice to learn from this. Do not let yourself be killed by a thousand cuts, right? This is very important. You have no matter, you know, at one point, no matter how small this one term seems, you have to cut it even though you know, like it seems marginal in the moment because it just leads to so many different things. Are there any other things that you could convey that you think a lot about, that it felt important?  

RAMI: There probably are, Andreas. The immediate one I can think of to follow on, on what we were discussing is that it’s always best to try to negotiate as much as possible all terms at the same time. So, when you get to the point of negotiating terms on a contract, after you’ve had sufficient… well, there’s a few things. Firstly, don’t be tempted in coming up with a — I’m gonna contradict myself — but don’t be tempted into coming up with a price too early on. Because by that point, you may not yet have enough financial information to be reasonably accurate in terms of your valuation range. So, there’s a delicate balance between coming out too early and coming out too late with a valuation range.  

When you negotiate terms, certainly, when you get to the contract stage, it is best to try and accumulate all of the points to negotiate at one time. You can never achieve that ideal scenario, but what you don’t want is to negotiate a number of points at different times, because then you find yourself in the position that we described earlier where it’s death by a thousand cuts because you’ve made a concession here, you’ve made another one there. You’ve made another concession a week later. You are much better off bringing all of these issues together and agreeing, deciding between, you know, deciding yourself, which ones you are willing to give way on and which ones you want to stand firm on. Because that’s also a delicate balance and it can be very useful for both sides to agree the ones that are red lines that can’t be crossed, but to potentially concede on a number of other points. Otherwise, you can find yourself giving too much way because you are progressively slipping down that slippery slope of further and further concessions without getting anything in exchange. 

ANDREAS: Hmm. Let’s jump a bit, and we covered this in passing, and I just want to give you the opportunity to like mention a bit more. Once you’ve done the deal, let’s say it’s through, you haven’t slipped too much from what you are planning to, you’ve got a good valuation, the management team is happy, work starts. How does this usually look like? 

RAMI: Well, to be honest, typically the vast majority of that work is led by the CEO, not by me, but what happens is that the integration is prepared during due diligence. So, as we work through the due diligence process, we will agree a new organization chart, we’ll agree a new brand, we will work, and at least the high-level budget that we might review. We’ll work on a team from both companies who will work together on the integration, so, there’s an equal representation from both of the businesses in a scenario where we’re acquiring a bolt on and we’re clear about what we are communicating to employees with the notion that we want to communicate. 

As concisely, but as frequently as possible, I think we’re more likely to run into trouble by under-communicating than by over-communicating. And then we’ll agree a regular checkpoint every month or maybe every couple of weeks to monitor progress. There’s this generally, you know, accepted rule of the first hundred days, so we try and have the majority of the actions required for integration completed by the end of month three. 

So, the first hundred days, or the you know, the first three months are really the time when you want to make a lot of the big decisions, which includes the brand, how are we gonna market, what the organization chart looks like and what a budget is going to be for the combined businesses. The same principle holds for a standalone investment, uh, obviously, but then there isn’t the concern of having to integrate with a new, with a new business. So, in some ways it’s a little bit easier. Although, for a new investment, I will typically be more actively involved with the CEO and agree some clear objectives, both financial and operational, in terms of the business, which we’ll communicate to the management team as well, obviously. 

ANDREAS: Okay, so the first 100 days are kind of to see where this is going. I mean, I guess you get to know each other better. You start to work with each other. And then is it right to assume that your personal involvement fades out a bit after that or,  

RAMI: Yes, yes. So, it’s important once a deal has been agreed and there’s been some level of planning during the due diligence, once the main targets and objectives are also agreed upon signing, then my role is really one of how do I support the CEO to help him or her achieve those objectives. And in many ways, I would rather for them to come to me rather than pester them because it’s important to be actively involved in the early stages, it’s equally important to know when to stay in the shadows and to leave the CEO to get on with it. Particularly in the case of a complimentary acquisition where really it’s the CEO of the acquiring business who needs to make his presence felt and he doesn’t want me in the background confusing things. It’s very important to kind of respect the space of the CEO. 

ANDREAS: And then, so the first a hundred days over. The first 1000 days are over. You said earlier, sometimes, businesses, you sold them within a year. Others, you’re still involved 12 years later. What is your exit criteria?  

RAMI: You know, I don’t have one, Andreas. I don’t really have one unless I’ve agreed something with a CEO whereby, you know, they say to me, look, I want to do this for the three or four years, I want to do this for six or seven years, or I, I want to just keep doing this forever. I don’t really have one. I think my exit criteria is probably opportunistic.  

The ones, the investments which I’ve held for short periods of time, typically less than a couple of years, have, with the exception of one, have all been turnarounds. They’ve all been distressed or semi distressed businesses. One was a corporate disposal, and that was sold to the management team because they came to me and they said, listen, we’d like to do a management buyout. And I was, you know, I was okay with that. So, it’s a little bit opportunistic in terms of my exit criteria, but the opinion of the CEO is quite important. 

If I’m happy with the progress of the business and things are working well with a CEO, their opinion is going to carry a lot of weight.  

ANDREAS: Hmm. So, then you kind of decide together with the CEO what is the future of the company?  

RAMI: Exactly, exactly. So, coming back to what I said earlier, there isn’t the set, you know, five, four or five year investment horizon that many LPs dictate upon private equity firms. So, it could be less or it could be more.  

ANDREAS: Hmm. I wanna switch gears a bit and go away from the processes, the kind of the hard skills and dive a bit more into kind of the soft skills that make you successful at what you do. You mentioned earlier that you’ve built a network of people that kind of you trust that trust you, that where you get most of the deals from and what, in your opinion, is the key contributor to having a successful network?  

RAMI: I think the most important thing, and the thing that’s indeed the most important to me is, is my word. So, I do what I say as long as the other side honours their side of the deal. I’ll always do what I say, and I don’t need a contract to hold me to that commitment. And I think people recognize that.  

So, there’s been a number of transactions which I’ve done, where I’ve agreed fees with, you know, a banker or someone who is involved in the transaction on a handshake, and I’ve always honoured those commitments without having to use a contract. So, because what I say is so important to me, I think that’s probably the one thing that gives people in my network confidence in continuing to deal with me. 

ANDREAS: And how did you start growing that network? Was it, you know, like kind of “referrals”, in quotation marks, because you were so honest with your word? Or how did you start, how did you go about building that network?  

RAMI: Well, I would probably say that I’m not a very effective networker, Andreas. In fact, I’m probably terrible because I don’t attend many investment forums. I don’t attend many network events. So, as a network, I’m probably at the bottom of the class. Regardless. Over time, obviously as you do more deals and you, you, you know, you’re out in the market a bit more often, people ultimately find out about who you are and word spreads. I would say that the network that I have today, I could have probably obtained or developed rather many years ago if I’d been more active in promoting it.  

I think attending a lot of industry events, meeting a lot of companies, working with a lot of investment banking firms and you know other sectors, all helps to build a network. And I think the one thing I would say though, in terms of a network is that you never quite know who you’re going to meet, and by that I mean you could meet people in the most unlikely events or circumstances who could well end up having something in common with what you’re looking to do. And it could be the beginning of a very fruitful relationship for both of you. So, it doesn’t just need to be investor forums, it might be a kickboxing ring or something. I’m picking a real life example in my case, just to make a point that, you know, the more fun you can make it and the more diverse your network is, certainly I think the more fulfilling it would be as an individual.  

ANDREAS: What other things do you consider important in, I’ll say building a brand, but I noticed that you’re not really actively trying to like push something of a brand. But like in being a good private equity investor, operator, what other things do you consider important to, to do that well?  

RAMI: Now as you say, I haven’t really sought to promote my brand in any way. I think ultimately your reputation precedes you. And being referenced by other companies or other bankers is encouraging, and I think probably comes back to the point I made earlier about honouring what I say. 

I think being clear about what you stand for and the types of deals that you’re looking for is important because people want to know who they’re dealing with and they want to know what you’re looking for. I’ve come across a number of individuals who are just a little bit too opportunistic and at some point, you’ve gotta focus on something, and you have to stand for something.  

So, you know, there are a number of sectors or things that I’ll very clearly say really aren’t for me in just the same way that I’m very specific about the types of deals that we’re looking for. So, the more accurately you’re able to describe what you like to do, how you do it, and what you’re looking for, the more confidence that’s going to give the people, anyone you deal with. Because it’ll demonstrate a level of self-knowledge about yourself as an individual and your enterprise that isn’t often found. 

ANDREAS: If I kind of were to start out as a junior, and you might relate this to your own career development or just what you’re looking for when you hire people, when you work with people, what are you looking for in someone that is starting out in a career or like is in their mid-career and just wants to evolve their career? Is there anything that comes to mind?  

RAMI: I’m going to come up with another proverb, Andreas, and I think this is another old one, which goes something along the lines of, you hire for attitude and train for skills. So provided the personality, the business ethic, the work ethic of the individual is right for you, then I’m much less concerned about the type of skills. Now, clearly, if I’m looking for someone to help negotiate or to be involved in financial services in some way, I’m not going to look for someone with, you know, a retail background or engineering background, or possibly engineering actually. So the training is much less important and much less significant to me than the attitude and the personality of the individual, which of course is extremely hard to gauge, particularly in a number of interviews, which is why there’s so many firms using psychometric testing and other things. But I, I would say that’s the energy and the drive and the commitment of an individual is much more important than their professional background. 

ANDREAS: It’s funny, I have actually heard this exact phrase on the podcast before. I know I have. I can’t point it where, but this is a bit of a common theme. This is important because yeah, as you say, skills can be trained. I’ve witnessed this firsthand in very successful people. And I know it might be very hard to answer, if you want, give it a try.  

What are some cues that, how you could pick that up in a person? Do you have any, or is this just a gut feeling working maybe with them over some time in the different part of your network? You know, that might also be true, right? How? I realize it’s a very, very different question.  

RAMI: No, no, it’s, it’s, it’s okay, Andreas. No, it’s fine. I I think it’s a perfectly legitimate question. I’m, I’m trying to compose myself in order to give you as clear an answer as I can. The kind of person I would typically look for is the kind of person I could see myself spending some time socially with, and that’s important because I have in my working experience, come across individuals who are exceptionally smart, who are really, really talented, but they were assholes, and nobody wanted to work with them. 

There were times where I thought maybe it was just me, and then I discovered that everybody else they were dealing with couldn’t stand them either, and that’s the one kind of person you absolutely want to avoid because they end up becoming a cancer in your team, in the organization, however large or small that might be. So that’s the really brilliant but exceptionally hard to work with individual I think is the one I would want to avoid, because, well, my best definition of hard to work with is, you know, someone you would consider an asshole, because you need someone to get along with the rest of the team and that isn’t something that you can train someone for. 

The other test, as I said earlier, is someone who I could see myself spending time socially with, and in the same spirit, someone who I could see getting along well with the rest of the team who might ideally also, bring a level of diversity to the team, because it’s nice if there were more women, if there were people from a different, you know, nationality from all walks of life. As international as I could make the team and as diverse as I could make the team, I think the better. 

ANDREAS: Hmm. Yeah. It also came up in a recent episode that it was very focused on career that… be interesting, right? Like a don’t be an asshole. And I read this more and more like we have a no asshole policy, right? This is an important part. And the other one, be interesting. You know, like have hobbies, Even in private equity, that you can’t actually talk about with people. 

RAMI: Right, exactly. It’s not against the law to have a life outside of work. In fact, it’s encouraging because it just makes you a more human person. You know, back to your earlier points about dealing with management, they don’t want someone who’s one dimensional who just talks about Excel, PowerPoint, and board meetings. And I’m characterizing just to make my point, I’m not suggesting private equity people are all like that. So yeah, it makes you more interesting.  

ANDREAS: Of course. Yeah, absolutely. I’ve loved this conversation. It’s a very new topic for me. You might have noticed it in my questions.  

RAMI: Not at all. It was very good questions. 

ANDREAS: Thank you so much for taking the time. It’s been really enlightening. Do you have anything that you kind of want to get across? Maybe on the image problem, maybe on anything else. 

RAMI: The last thing I would say is I think private equity can and is a force for good. And I think collectively we probably need to do something to help it, um, move forward at the risk of otherwise be suffering more regulation. But thank you for your time, otherwise. 

ANDREAS: Maybe this episode can contribute. I do hope so. And I’d like to do more private equity episodes in the future. Maybe we can get on some people and just show how good private equity can be.  

RAMI: That’s a good idea.  

ANDREAS: Thank you Rami, for your time.  

RAMI: Thank you. Thank you. 

ANDREAS: Hi again, this is Andy. Thank you for listening to the episode. I hope you enjoyed it.