Libby covington and Morgan Stone, with the Association for Corporate Growth – Houston, join us to talk about their organization of mergers and acquisitions professionals.
Please excuse any typos in this hasty transcript.
Matt Register: Hey guys, welcome back to the show, Texas Business Radio. Texasbusinessradio.com is the web site. A couple of ways to get in touch with us. 844-814-8144 is our 24 hour call in line. Get your calls in, we’re going to get your questions answered. You can also send us an e-mail to the web site Texasbusinessradio.com or use #TBR on Twitter. Either way will work. Doesn’t really matter to us. Get your questions in here. I’m your host Matt Register. Jay Curry had to step out for a minute. He’s going to join us here shortly. We’re talking about mergers and acquisitions today. Mergers and acquisitions is what I do for a living. I happened to be pretty excited about it. I hope you are as well. But the Association for Corporate Growth is the trade association that M&A guys are a part of. Now this is buyers, this is sellers, this is service providers. Anybody that kind of operates in that mergers and acquisitions space, ACG are the folks that you need to get to know. Now we have a room full of folks, we have the current President of the ACG Houston Libby Covington here. We also have Morgan Stone, who is the Executive Director of ACG Houston. Ladies welcome to the show. Libby how are you doing today?
Libby Covington: Good. Thank you. Thanks for having me.
Matt Register: And Morgan, tell me a little bit about ACG. What do you do? Who do you do it to?
Morgan Stone: Sure. ACG is, it’s actually a global organization but we run the Houston chapter. We’re basically a networking organization for professionals that service the middle market M&A world. So like you said, investment bankers, private equity, attorneys, accountants.
Matt Register: Service providers anybody like them.
Morgan Stone: Yeah, wealth managers. Yes.
Matt Register: So middle market, defined middle market because that means different things to different people. Right?
Morgan Stone: Sure. I mean, I guess everyone kind of defines, yeah, like you said, middle market differently. But what would you say the range, Libby, in terms of…
Libby Covington: I would say, you know, maybe 20 million in revenue up to, you know, a billion. I mean, so it’s very, it’s very large.
Matt Register: Sure.
Morgan Stone: I think Pitch Book defined middle market, yeah, caps off at a billion.
Matt Register: Nope and I don’t disagree with that. So, you know, it’s basically on the low end, anything above what a business broker would, would be involved in. And anything below what a lot of these big bulge bracket firms, these billion dollar investment banks are interested in is the middle market. And within that middle market you have groups that specialize in the upper end of that and the lower end of that. And because it’s quite different selling a 20 million dollar company versus a 900 million dollar company. Right?
Libby Covington: Exactly.
Morgan Stone: Exactly.
Matt Register: So tell me a little bit about some of the things that you guys have going on here in Houston. Libby I know we were talking during the break about some of the initiatives you guys are starting up. That, that is really quite, quite remarkable. Right?
Libby Covington: Right. Right. So, we have a couple of things. We get together monthly and we have luncheons. We have CEOs speak at those, we have panels of private equity, we talk about industry trends, we talk about market trends. We also have recently started a corporate peer group for just people that do M&A within operating companies of corporations. Public companies, private equity backed, that, that’s really getting off to a strong start. We also do a capital connection, where we get our private equity and investment bankers and all people in the deal flow together once a year. That’s going to be in March, in 2018, here in Houston. It alternates between Houston and Dallas. We’re excited about that. We have a golf tournament coming up in September, where people get together and talk about deals on the course. So we’re looking forward to that. But we’re really just keeping busy with making sure that all of the people that are in M&A, which is really very busy right now, are getting together and talking about deals.
Matt Register: And know who each other is. Now you just rattled off a list of events that’s pretty extensive. OK. We were talking about the corporate development peer group. These are guys that traditionally in Houston have not necessarily been a part of the ACG. These are employees of large public companies that are on the mergers and acquisitions teams tasked with going and purchasing acquisitions for their company. That’s, they’re not quite investment bankers because they’re only working for their one company but they certainly are, can benefit from some of that networking. Correct?
Libby Covington: Yeah and they want to get together with each other to talk about, you know, best practices in deal execution. So we’re having them get together, their on their second meeting, they had one in May, their having another one in August. To really walk through case studies, talk about things like what happens when you buy, you know, family owned businesses. What happens when you do cross-border deals, all these type of things. These are kinds of things that they can learn from each other. They’re not competitors, most of the time. So they really want to share information and learn from each other. So, and, and really networks, so they can be a resource to other. ACG is really a resource organization. We want to be a resource to all of our members and make sure they have things that they need to help them in their daily jobs.
Morgan Stone: And we make sure to get feedback. I mean, that’s one of the cool things about the corporate development peer group is we ask “Okay, what do you want to hear next time?”. Something that came out of our last discussion was post acquisition integration and deal sourcing. So that’s something that we’re going to focus on in the future.
Matt Register: Yeah, that’s good. And, you know, by the way, that’s where every deal gets made or broken. Right? Is in the, it’s pretty easy to get to the closing, it’s not quite as easy to make it all work. Right? Once…
Libby Covington: And when you’re at a strategic like they are, that’s what really matters. That’s were the value lies.
Matt Register: Yeah. No. That’s right. I mean, you know, in my business the closings the end of my deal. Right? It’s the beginning of theirs. So that’s interesting and that came out of, tell me a little bit about how that came about because it came out of an idea that was developed out of the St.Louis chapter. Right?
Libby Covington: Right. Right. So, ACG is an international organization. We have 52 U.S. chapters. And we were talking about ways to diversify our membership. And someone suggested we call the President of St. Louis and we did. And he started telling us about, they’ve been doing this for 10 years, they have had so much success and he told us basically the blueprint for how to do it well. And so we’re taking off and following that. But they, they have a lot of, the thing about ACG is every city is little bit different.
Matt Register: Sure.
Libby Covington: Because in Houston, for example, we have heavy energy, we have, you know, certain things. In Dallas, it’s different. In, in St. Louis it’s really heavy corporate. And so they don’t have a lot of private equity firms there and that’s why they started this corporate development peer group. And the members were so thrilled that they had an opportunity to get together because there is no other professional organization for M&A people in companies. That they, it took off. And so I think 14 chapters are doing it now. We might be the 15th.
Matt Register: Wow.
Libby Covington: They have a corporate development peer group.
Morgan Stone: And one thing that’s important about that. Is that we keep it just corporate development. So it’s a smaller, you know, 14-15 people in the room. There will be no service providers.
Matt Register: Yeah, nice. That’s, that’s fascinating. Now the big event every year is the big “Capital Connection”. And like you said, it alternates between Dallas and Houston. Right? Now it’s in Houston, here next March.
Morgan Stone: March 28 and 29 at the Marriott Marquis downtown.
Matt Register: And guys if you’ve never seen 400 private equity groups in the same room. It’s quite a remarkable event. Right? There’s guys coming in from all over the world to, to attend this. As an investment banker, that’s probably the most valued, you know, valuable event of the year. Right? Is going to that. Tell me a little bit about what you have coming up this year for, for “Capital Connection”.
Morgan Stone: Well, we’re still in the early stages of planning but in 2016, and, when it was in Houston. And I know that Dallas did a great job. And in 17 we had over 100 private equity groups. And we, you know, we do a deal source, kind of, at the beginning of that, were investment banks and private equity have a chance to meet one on one. So…
Matt Register: That’s perfect. That’s. Now tell me a little bit about your golf tournament coming up because that’s coming up pretty soon in September.
Morgan Stone: Yes, September 18th. It’s on Monday and it’ll be at 9:00 a.m., shotgun start. And we have probably close to 144 participants and it’s a lot of fun. You know, we have a lot of hole sponsors that do fun games. So, it’s way more than just the 144 golfers. It’s…
Matt Register: But you need sponsors, you need players. Right?
Morgan Stone: Yes, of course. Registration is available on our website, ACG.org\Houston.
Matt Register: All right. ACG.org\Houston. By the way guys, if you’re driving, can’t take notes, don’t worry about it. We’re going to have links to everybody we’re talking to right there on Texasbusinessradio.com. Well good. Hey Ladies, thank you very much for joining us. This has been exciting.
Morgan Stone: Thank you for having us.
Matt Register: What’s the easiest way for somebody to get in touch with you Libby, should somebody want to.
Libby Covington: I would say, reach out to me through Cap Street, where I work. We’re a private equity fund here in Houston and our Web site is CapStreet.com.
Matt Register: CapStreet.com. Libby Covington, who…
Libby Covington: You’re also on the ACG web site.
Morgan Stone: Oh, I am. Okay. I didn’t know that. I didn’t know that. All right.
Matt Register: Got it.
Libby Covington: And one more thing, Matt, I wanted to mention, we forgot to mention, is that we have a new event coming up in February called M&A Awards.
Matt Register: Oh, okay.
Libby Covington: So we we should have talked about that earlier but we’re going to actually give awards to Houston based M&A deals. So anything that has to do with, if Houston was a seller or a buyer of a company and so forth. We’re going to be doing this, so look for more information on that, on our Web site too. It’s going to be February of 18.
Matt Register: Wonderful. Interesting. All right. Libby, Libby Covington, President of ACG Houston and Morgan Stone, Executive Director of ACG Houston. ACG.org. Ladies, thank you very much for joining us. We are out of time. We got to go to break, pay a couple bills. We’re going to be back right after this. You really don’t even have time to go anywhere. We’ll be back quicker than that. We’ll see you on the other side of the break.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.