Satori Capital has announced its investment in Purple Land Management (“Purple”). Based in Fort Worth, Texas, Purple is a tech-enabled provider of land services that aims to transform the land services industry with cutting-edge technology and data management.
“Purple doesn’t look anything like a traditional land services company,” said Satori co-founder Sunny Vanderbeck. “Most consist of one or a few landmen manually searching records at a county courthouse, with no technology integration or support services. Purple, on the other hand, uses a cloud-based data platform with digitized title records and GIS map integration that provides customers with near-real-time access to their data on any device.”
Purple uses technology to increase efficiency, reduce costs, and improve communications by keeping customers continually informed. Through Purple’s proprietary Overdrive application, customers can check the status of a title or lease, map the progress of a drilling project, or monitor cumulative production of a well, leasehold, county, or basin.
In addition to its technological advantage, Purple also offers its customers the benefit of a full-service team, with hundreds of professionals located in 11 offices across the country in basins including the Utica, Marcellus, Permian, SCOOP/STACK, Bakken, and Rockies. This should give Purple ample resources to take on complex and time-sensitive assignments, and the company’s geographic reach can minimize travel expenses for customers.
As with all Satori investments, the partnership with Purple aligns with Satori’s purpose: to create, fund, and inspire businesses that elevate humanity. In addition to the many benefits it provides to customers, Purple strives to create a rewarding culture for its team members, offering generous benefits and wellness programs and empowering team members to create extraordinary outcomes for customers. With its “Give More Than You Take” philosophy, the mission-focused company is also committed to supporting its communities with charitable activities and helping to reduce the country’s dependence on international energy resources.
Purple’s decision to partner with Satori reflects the alignment of the two firms in seeking to expand Purple’s business while maintaining its successful practices and forward-thinking culture. “Our goal at Purple has always been to push the envelope in the oil and gas industry, and that’s been a key part of our success over the last eight years,” said CEO Bryan Cortney. “Now, to take our vision to the next level, we need a strategic partner – one that shares our values and our focus on the long term – and Satori Capital is an ideal fit. Satori’s unique funding structure sets us up to be nimble, to grow our high-value products, and to give more than we take to our team members, clients, and country over the long haul.”
Sunny Vanderbeck Joins Board of Conscious Capitalism, Inc.
Satori Capital co-founder Sunny Vanderbeck has been named to the board of directors for Conscious Capitalism, Inc. As one of 18 board members, Sunny will serve a two-year term helping to set the strategic direction for the organization.
“It’s truly an honor to be selected to serve an organization I believe in so fully, alongside like-minded CEOs and business leaders,” Sunny said. “I look forward to sharing my own experience with creating and funding conscious companies with this extraordinary group.”
Conscious Capitalism, Inc. was formally organized in 2010 with the goal of supporting and nurturing conscious businesses and promoting the Conscious Capitalist Credo, which begins: “We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity.” The organization produces transformational events, workshops, publications, and academic research and supports a growing network of Conscious Capitalism chapters around the world which bring together business leaders, entrepreneurs, coaches, consultants, and others interested in advancing the Conscious Capitalism movement.
A discussion by Geoff Campbell and Aleksandra Corwin of Round Table Companies about why the stock market does not represent the true power of business includes insights from Satori Capital co-founder Sunny Vanderbeck.
Don’t Confuse Capitalism with Capital Markets
To many, the stock market is synonymous with the economy and, as a result, with capitalism.
But is it?
Increasingly, those within the Conscious Capitalism orbit say no.
“Stocks go up, and stocks go down — but none of that describes business. It describes the ways a business is financed,” said Sunny Vanderbeck, managing partner of Satori Capital, a conscious finance firm. “Public stock markets often result in a non-value creating Kabuki dance, which has nothing to do with capitalism.”
Capital markets are all the sources of equity and debt in the aggregate — they are the way businesses obtain long-term financing. But they don’t say anything about what makes a business successful or how it creates value.
Satori Capital Receives Third P&I 'Best Places to Work' Award
For the third consecutive year, Satori Capital was named to Pensions & Investments’ “Best Places to Work in Money Management” honor roll. The award evaluates each nominated company’s workplace policies, practices, philosophy, systems, and demographics, and conducts an employee survey to measure the team’s experience.
“All of the firms being recognized this year are leaders when it comes to creating a great place to work,” said Amy Resnick, editor of Pensions & Investments. “It was great to see reflected in the survey comments how significant it is for employees to feel valued by their employer. It shows what really makes a company a best place to work.”
A profile about Satori in the December 11 issue of Pensions & Investments highlighted several firm programs and offerings, including flexible scheduling, well-being coaches, and “Satori Sweats,” which features team workouts and provides an allowance toward a gym membership. The article also noted Satori’s emphasis on communication, feedback, and coaching, as well as its commitment to its purpose.
“We have a clear sense of who we are, why we are here, and what we aspire to do,” said Randy Eisenman, co-founder and managing partner of Satori Capital. Citing Satori’s deep engagement with many of its portfolio companies, Eisenman added, “We aim to be true strategic partners. This requires a workplace that is transparent and service-oriented and a recruiting process that is led by our values.”
The Pensions & Investments award is one of several Satori has received for workplace excellence. In addition to previous honors from P&I in 2015 and 2016, the firm was included on the Dallas Business Journal’s “Best Places to Work in North Texas” list for 2017 and was named to FW Inc.’s list of “Best Companies to Work For in Fort Worth” in both 2016 and 2017.
Satori Capital One of Fort Worth's Best Places to Work
Satori Capital was once again included on FW Inc.’s list of Best Companies to Work For in Fort Worth. This is the second year Satori has been recognized with a high ranking in the “Small to Medium Companies” category, placing third out of 17 honorees on this year’s list.
A profile about Satori included in FW Inc. magazine enumerated many of the benefits of working at Satori, including company-paid gym memberships and health screenings, chef-prepared daily lunches, meetings opened with meditation, fitness coaching, flexible hours, and more paid time off than any other company on the “Best Companies” list. Also cited was Satori’s Optimal Living initiative, which helps employees be their best mentally, emotionally, physically, and spiritually.
The article featured Satori’s investment team director, Jon Gard, who spoke about his experience at Satori. “I was tired of accepting a world with two separate lives: Jon Gard the professional and Jon Gard the husband/father/friend. Satori has allowed me to seamlessly merge these into one aligned and purposeful life… Our culture is like rocket fuel for the mind, body, and soul! I love my team members and cannot imagine working anywhere else.”
The FW Inc. award is one of several Satori has received for workplace excellence. In addition to winning the Fort Worth award last year, the firm was named a “Best Place to Work in Money Management” by Pensions & Investments magazine in both 2015 and 2016 and was included on the Dallas Business Journal’s “Best Places to Work in North Texas” list for 2017.
Sunny Vanderbeck Honored in 'Heroes of Conscious Capitalism'
Satori Capital co-founder Sunny Vanderbeck was recognized in Conscious Capitalism, Inc.’s inaugural list of “Heroes of Conscious Capitalism.” The 28 honorees were selected in tribute to their efforts to “embody the tenets of conscious capitalism.”
Sunny was recognized for the impact and positive influence Satori has created as a successful investment firm that operates in alignment with the principles of conscious capitalism. Sunny’s frequent speaking engagements and interviews on the topic of conscious capitalism were also noted as a positive force.
“I am honored to be included in such a remarkable group and to receive recognition for the values that are so integral to Satori,” Sunny said. “Our team works incredibly hard to live our values in every transaction, partnership, and interaction with our stakeholders, and this honor reflects that effort.”
The “Heroes of Conscious Capitalism” list includes CEOs from Unilever, Campbell Soup Company, PepsiCo, The Container Store, and other well-known companies. To read more about the “Heroes” program and view profiles of each honoree, visit ConsciousCapitalism.org/heroes.
Geoff Campbell and Aleksandra Corwin of Round Table Companies featured two Satori success stories in a discussion of why companies are “choosing their sources of funding with increasing care” and investors are “increasingly putting their money to work for businesses that strive to make the world a better place.”
Not All Money is Created Equal: The importance of funding businesses with conscious capital
There comes a time in the life of a business when it needs money to grow—and while money can be fuel, it can also be fire. Investors come with strings attached, and business owners who understand the power of companies to change the world for the better are choosing their sources of funding with increasing care.
Old and new businesses alike raise money for a variety of reasons—to expand services and offerings, invest in infrastructure, open new locations, or develop new products. Small manufacturers in the Midwest take out loans from regional banks, brand name retailers partner with private equity firms, while tech start-ups in Silicon Valley look to venture capital funds.
These billions of dollars available as sources of funding have one thing in common. The financiers who control them are increasingly putting their money to work for businesses that strive to make the world a better place. This is in part a reaction to the values of the Millennial generation, which believes what Conscious Capitalists have known for a long time—that a business built to benefit everyone and exploit no one, has the best potential to creating lasting wealth and value.
Satori Capital Receives North Texas 'Best Places to Work' Award
Satori Capital was named to the Dallas Business Journal’s “Best Places to Work in North Texas” list for 2017. The DBJ’s Best Places to Work program, now in its 15th year, recognizes companies that create outstanding cultures and achieve high levels of employee engagement and satisfaction.
“Our ability to fulfill our purpose and create value for all our stakeholders depends on having a work environment where our talented team members can thrive,” said Randy Eisenman, one of Satori’s founders and managing partners. “This award underscores our commitment to building the kind of culture that attracts and retains top performers and allows them to play to their unique strengths.”
The DBJ award is one of several Satori has received for workplace excellence. The firm was named a “Best Place to Work in Money Management” by Pensions & Investments magazine for 2015 and 2016 and ranked highest in the small companies category on FW Inc. magazine’s “Best Companies to Work For in Fort Worth” list in 2016.
Companies included in the Dallas Business Journal’s 2017 “Best Places to Work in North Texas” list were selected based on information submitted by company representatives and on extensive employee surveys.
'Dallas Business Journal' Interviews Sunny Vanderbeck
The Dallas Business Journal recently interviewed Satori Capital co-founder Sunny Vanderbeck about the firm’s long-term approach to private equity investments. The article highlights Satori’s commitment to building businesses over the long term, rather than seeking quick divestitures of the companies it acquires.
Why Sunny Vanderbeck wanted to build a fund with ‘an indefinite life’
Sunny Vanderbeck was an Army Ranger, a team leader at Microsoft, and the founder of a dot-com company before starting his investment firm Satori Capital at the height of the financial panic in 2008.
So, it’s safe to say he’s never taken the conventional approach.
While everyone was pulling money out of a system that had proved to be too short-sighted, Vanderbeck and his co-founder, Randy Eisenman, sought to convince investors to put their money into the long game.
Most of Satori’s investments don’t have time limits, unlike the typical private equity firm that aims to exit the companies it acquires within three to five years. Vanderbeck expects some of Satori’s companies to live on past his own lifetime.
Satori Capital Conscious Capitalism CEO Scholarship
In the spring of 2017, Satori Capital launched the Satori Capital Conscious Capitalism CEO Scholarship. The scholarship fund was created to provide the CEO of an up-and-coming business with the opportunity to attend Conscious Capitalism, Inc.’s 2017 CEO Summit.
The CEO Summit is designed for visionary CEOs who conduct their businesses in a different way from the norm. These CEOs focus foremost on fulfilling the deeper purpose of their organizations and creating value for all of their stakeholders, and they cultivate cultures that support people in learning, growing, and flourishing. The Summit features speakers, workshops, and networking opportunities designed to support them on the path. Access to an event like this can have a lasting impact in spreading and promoting the values of conscious capitalism.
After reviewing multiple impressive nominees, Satori announced the scholarship recipient in July of 2017: Jason Ballard, CEO of TreeHouse, Inc. During the evaluation process, Satori was inspired by quotes like this one in Jason’s scholarship entry:
“This is a moment when it is arguable that the entity with the most power for change for good or ill is not government, is not NGOs, and is not any one person. The entity invested with the most ability to create change in the modern world is the for-profit corporation. This means that businesses, business leaders, and entrepreneurs have a responsibility not before seen in history to take ownership for and leadership in the kind of world that their enterprises create.”
Two additional nominees were so impressive that Satori gave special acknowledgement to their entries: Elyse Dickerson, CEO of Eosera, and Abe Kamarck, CEO of True Made Foods.
Satori Capital Invests in The Lovesac Company
Satori Capital announced today a $10 million investment in The Lovesac Company. Satori, a Dallas/Fort Worth multi-strategy investment firm committed to the principles of conscious capitalism, served as the anchor investor in the current bridge round of financing. Mistral Equity Partners, which has provided growth capital to Lovesac since 2010, also invested in this bridge round.
Lovesac is a “new economy” e-commerce furniture retailer and high-end lifestyle brand whose most popular products include modular couches (“Sactionals”) and durafoam bean bags (“Sacs”). Lovesac’s Sactionals and Sacs are flexible, durable, washable, and shippable on short notice by FedEx and UPS.
“We are delighted to partner with a company that is so beloved by its customers, so forward-thinking in its solutions, and so values-aligned with the way we conduct business,” said Satori co-founder Sunny Vanderbeck. “Lovesac is re-shaping the industry paradigm with an innovative e-commerce model, and its products are the perfect solution for new families and others seeking furniture that will adapt with their evolving needs.”
Lovesac’s CEO and founder, Shawn Nelson, is a sustainably minded visionary entrepreneur who holds numerous patents in the furniture space. He has received Ernst & Young’s “Entrepreneur of the Year Award,” and he won Richard Branson’s reality TV competition, The Rebel Billionaire. Nelson’s stated purpose for Lovesac is to “inspire mankind to buy less furniture — by investing in more of ours.”
'Private Company Insights' Features Sunny Vanderbeck
The National Association of Corporate Directors recently featured Satori co-founder Sunny Vanderbeck in an article in its Private Company Insights magazine. The article focuses on Satori’s long-term mindset and use of a stakeholder-centric approach to generate above-market investment returns.
A Stakeholder-Centric Approach to Private Equity Investment
Sunny Vanderbeck, a managing partner and co-founder of Dallas-based Satori Capital, is trying to prove that a stakeholder-centric approach to private equity investing can generate returns at or above market expectations.
Rather than impact investing, which backs businesses with specific social or environmental agendas and is often believed to generate below-market returns, Satori Capital focuses on how portfolio companies operate. This includes everything from how a company treats its employees, customers, and other stakeholders, to how the board and executives stay focused on the long term. Satori Capital takes this approach to running its own business, and Vanderbeck believes this model can generate healthy returns by investing in like-minded companies.
North Texas Company Leads the Pack on Corporate Wellness Trends
Many corporations, large and small, offer wellness programs to help you stay in shape, but what changes might you see in 2017? Experts predict corporate wellness trends for 2017 will include components for mental and spiritual well-being, as well as technology-driven incentives.
“There’s a shift going from the physical health to the total well-being of the employee,” said Robyne Gaudreau, with Viverae, a workplace wellness technology company.
One North Texas company many would say is in front of the trend is Satori Capital, an investment firm with offices in Dallas and Fort Worth.
“Our vision was to have the next generation of corporate wellness. We had, as individuals and leaders, for a number of years, done corporate wellness programs, and we thought there was an opportunity to really build the next generation – corporate wellness 2.0,” said Sunny Vanderbeck, co-founder and managing partner at Satori Capital.
Vanderbeck and his leadership team created what he says is a “whole person approach to well-being,” offering programs, tools and resources to help become healthier in four dimensions: mental, physical, emotional and spiritual. The team of 25 participates in weekly group meditation, journaling, energy rituals, tread desks, walking meetings, health coaching with Larry North and receives nourishing meals (high protein, low carb, organic and “Less-Meat Mondays”) during the workday. They also have access to Satori Sweats, which encourages group fitness as a way to stay active and create connections and a sense of community outside of the office.
“This is not a benefits program. This is something that drives performance at our firm,” Vanderbeck said. “We’re in the investment business, so the more effective and efficient we are, the better decisions we make, the better our business works, so there is a bottom line to all of this. And how wonderful is it to be in the position to help people become the best versions of themselves?” he added.
A healthier employee means a healthier bottom line for companies that offer wellness programs, according to Gaudreau. “Those benefits may include reduced health-care spending in the future. It may include increased productivity, reduced absenteeism and, in fact, recruitment is an advantage as well,” she said.
“Our team doesn’t get sick, doesn’t have issues, so our health-care costs are rising at a rate much lower than other companies,” Vanderbeck said.
Cami Miller, an investor experience analyst at Satori, says the holistic wellness program changes the landscape of “corporate America.”
“I have a photo of me four years ago and a photo of me now, and I look at myself and I don’t even recognize where I was,” Miller said, of her physical fitness. “It’s a seamless transition from my life outside of the office to the office, where my goals are supported and everyone’s talking about it and are holding me accountable. It’s a part of our everyday conversation,” she adds.
Source: North Texas Company Leads the Pack on Corporate Wellness Trends | NBC 5 Dallas-Fort Worth
Satori Capital was named a Best Place to Work in Money Management for 2016 by Pensions & Investments for the second consecutive year.
“Employees at these top-ranked firms most often cited their colleagues, the firm’s culture, and the benefits as the things that make it a great place to work,” said Amy B. Resnick, editor of Pensions & Investments.
“There is no trade-off between being a great place to work and being a great investment,” said Randy Eisenman, co-founder and managing partner of Satori Capital. “As is the case with our firm, we look to invest in companies with a highly engaged group of employees.”
Pensions & Investments partnered with Best Companies Group, an independent research firm specializing in identifying great places to work, to conduct a two-part survey process of employers and their employees. The first part consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies.
Pensions & Investments, owned by Crain Communications Inc., is a global news source of money management. P&I is written for executives at defined benefit and defined contribution retirement plans, endowments, foundations and sovereign wealth funds, as well as those at investment management and other investment-related firms. Pensions & Investments provides coverage of events affecting the money management and retirement businesses.
Satori Capital Wins Top Spot in 'Best Companies to Work For' Awards
Satori Capital received a “Best Companies to Work For in Fort Worth” award from FW Inc. magazine on November 9, 2016. The award ranked the top 16 companies in Fort Worth, Texas, for employee satisfaction and engagement. Satori ranked highest in the small companies category.
“We’re delighted and humbled to receive this recognition of our culture and our focus on our team members’ well-being,” said Randy Eisenman, one of Satori’s founders. “We’ve built our culture very deliberately, so an award like this is a great affirmation of that effort.”
Some of the benefits offered by Satori that impressed the judges included company-paid gym memberships, biennial health screenings, monthly Optimal Living advisor visits, flexible schedules, generous time off, chef-prepared healthy lunches daily, on-site guided meditations, and stress management support.
The November/December 2016 issue of FW Inc. includes a multi-page feature on Satori that highlights several team members’ thoughts about working at the investment firm.
“People rarely feel as if they’re making sacrifices to be here in their lives,” said CFO Willie Houston, referring to the company’s flexible schedules. Associate James Gorski talked about the firm’s culture, saying, “We celebrate learners, reward honest communication, seek a purpose higher than making money, and, most importantly, strive to create lasting value for all of our stakeholders.” Faith Geiger, Satori’s stakeholder engagement manager, summed up the firm’s approach to its team members by saying, “When we hire people and when we on-board, we try to take a whole-person approach. We explore – what do they want to bring to the workplace? What makes them thrive?”
This is the second award Satori has received for its culture and workplace excellence. It previously ranked number one in Pensions & Investments magazine’s Best Places to Work in Money Management for 2015.
Eight other companies, from nonprofits to publicly held businesses, competed for the top spot in the small companies category. Rankings were awarded based on an analysis of employer-provided benefits and anonymous surveys completed by employees. The contest was administered and judged by an independent research firm, the Best Companies Group, that specializes in identifying great places to work.
Jason Forrest of the Forrest Performance Group defines “running toward the roar” as those moments in life when you face your greatest challenges “to realize what was crucial in your courage and fatal in your fear.” His Run Toward the Roar series in FWinc. magazine features entrepreneurs who have overcome obstacles and inspire others by using their challenges as a catalyst for growth and change. Jason interviewed Sunny Vanderbeck, managing partner of Satori Capital, on the topic of conscious capitalism for the July 2016 issue.
Profit is what you create, not what you take.
In college, Sunny Vanderbeck was a world away from the disciplined Army Ranger he would become. He was 20 pounds overweight, smoking two packs of cigarettes a day, and just plain unhappy. It was time for something completely different. He quit school, enlisted in the U.S. Army, and served as a Ranger for four years. As Sunny describes it, “Apparently, I jumped in the very, very deep end of the pool.”
Sunny’s low-key description of what was anything but a low-key experience feels like the essence of who he is: refreshingly understated, seemingly unflappable, quietly confident. And, courtesy of the Army, persistent. He says the experience taught him that “the difference between a good outcome and an extraordinary outcome is that moment when you want to quit, and you just don’t quit.”
I think of such moments as “run toward the roar” opportunities. They are the times when we feel we have the most to lose, but actually have the most to gain. The idea comes from big male lions—whose role is to provoke fear with their intimidating teeth and deafening roars. What the hunted don’t know is that the real danger lies with the smaller, quieter lionesses. In the animal kingdom, the lion’s roar sends prey scattering away from the startling noise—right into the path of the waiting lionesses, the true hunters. If gazelles knew to run toward the frightening sound, they would have a better chance of survival. The roar doesn’t represent the real danger.
Investopedia Influencer Series Features Sunny Vanderbeck
Investopedia, a leading financial education website, featured Sunny Vanderbeck, co-founder and managing partner of Satori Capital, in the new Investopedia Influencers series. During this Q&A, Sunny offered wisdom and insights for both beginning and advanced investors.
Q: What is your investing philosophy?
At Satori, we include all of the traditional things you’d expect as an investor. For example, in the private equity business, we look at market share, profitability, strategy, and so forth. When we invest in other funds, we look at alpha, Sharpe ratio, and structural arbitrage. We find a lot of value in all of those economic or financial buzzwords and very tangible things.
What makes our investing philosophy different, though, is that we take an additional data source. We think the non-financial dimensions of business are as important as the financial or tangible dimensions. Said another way, inside a hedge fund, let’s say there are two similarly situated funds and one is among the “Best Places to Work,” while at the other, portfolio managers throw chairs at analysts. We believe that over time the one with the great culture will outperform. One reason is that a great culture encourages great ideas as well as both taking and uncovering risk.
Blue Zones Project is partnering with employers across Fort Worth to create healthier work environments. The Blue Zones Worksite® Pledge promotes evidence-based actions and lifestyle principles to empower employees to be happier, healthier, and more productive. Benefits to employers include increased team member engagement, productivity, and potential savings in healthcare costs.
Satori Capital was recognized by the Fort Worth City Council on March 29, 2016 as one of the newest Blue Zones Project Approved Worksites. By implementing healthy evidence-based options for employees, such as weekly group meditations, extensive fitness benefits, and nutritious meal offerings, Satori is helping to improve the community’s well-being and working hard to maintain status as a great place to work!
Satori Capital Successfully Divests California Products Corporation
Satori Capital is pleased to announce that California Products Corporation (“CPC”) completed a strategic business combination with Nicoat during the fourth quarter of 2015. The divestiture generated cash-on-cash returns for investors that exceed typical private equity results, and it created an outstanding internal rate of return (IRR).
Consistent with our strategy based on conscious capitalism, our investment resulted in a successful outcome for all stakeholders including:
• Customers: Customers of the companies that CPC acquired during our investment period will continue to have access to the brands with which they have long been familiar, thereby ensuring the longevity of the legacies that were important to the divesting owners. In addition, CPC’s chief operating officer will continue to serve in a similar role in the combined business to ensure customers receive CPC products with at least the same quality as those that they have received during the last 90 years.
• Suppliers: CPC’s primary suppliers are multinational providers of chemicals and related materials. CPC’s relatively small size limited its ability to impact the behavior of suppliers during our investment period. However, as CPC’s scale increases through its combination with Nicoat, it will continue to seek opportunities to develop long-term relationships with suppliers that will benefit both parties and other stakeholders.
• Employees: The CPC leadership team plans to continue reminding team members that they are empowered members of the company. The leadership team also hired key members from companies it acquired, thereby ensuring for continuing team members that their culture is well-represented by the company’s ongoing leadership.
• Community and Environment: CPC’s products are environmentally friendly water-based acrylic paint coatings and products that assist with environmental remediation and containment. We anticipate that the combination with Nicoat will provide additional potential distribution channels that may allow the broader use of environmentally friendly products.
• Investors: By sourcing the investment opportunity on a proprietary basis and emphasizing value creation for all stakeholders, CPC’s leadership team generated financial returns for Satori’s investors that we believe not only exceed typical private equity returns but that also achieved the impact of capital those investors seek.
CPC is a rapidly growing, industry-leading, sustainably run company that provides products and services to customers that enhance the community and environment. Its leadership team and board operated the company with a long-term perspective, a commitment to enhancing relationships with all of their stakeholders, and a significant personal financial stake in the business. Those are some of the qualities that we expect to find in a Satori portfolio company.
We thank you for your ongoing support and encouragement, and we look forward to working on other compelling investment opportunities with attributes similar to those of CPC. If you know a business that would benefit from our approach, please contact one of us.
CEOs and Trust: Why Collaboration Wins Out Over Command And Control
Rugger Burke, a principal at Satori Capital, penned this CEOWORLD magazine article on conscious leadership.
“Can’t we all just work together?” When former Ford CEO Alan Mulally asked a group of executives this question, Mark Fields was paying attention—and it’s a question that makes all the difference now Fields is CEO of Ford.
Let’s examine the roads Ford and Volkswagen have traveled this year. This September, Martin Winterkorn resigned as the CEO of Volkswagen in the wake of the revelation that the company had equipped 11 million diesel cars with software designed to fool emissions tests. Winterkorn claimed he had no knowledge that the cheating software even existed.
Satori Capital Takes First Place in Alternatives Category
Satori Capital was named one of Pensions and Investments Best Places to Work in Money Management for 2015. Satori was one of 34 companies named and placed first among alternative investment managers.
The list of Best Places to Work in Money Management is compiled based on data collected by Buck Consultants LLC. The winners were chosen based upon survey responses submitted by both employees and employers to questions related to categories chosen by Pensions & Investments editors. The leading companies received high scores in areas such as employee relations, social responsibility, and work-life balance.
One team member wrote, “We strive to be the best possible partners we can be to our stakeholders as well as think about the impact our business will have on the world over the course of generations.”
Rugger Burke, a principal at Satori Capital, authored this article that was picked up by Thin Difference: Leaders Connected by Purpose.
Every successful CEO has a mantra. Steve Jobs built Apple with “Think Different.” Jeff Weiner of LinkedIn borrowed his from Duke Coach Mike Krzyzewski: “Next Play.” — translation: don’t linger on success; keep striving.
Unlike a mission statement broadcast far and wide to the external world, a company’s mantras serve as an internal driving force. Repeated in the halls and every meeting, they answer the questions before they’re even asked. What would Steve (or Jeff) say? Not only do a leader’s mantras echo throughout the company’s culture during their tenure, but these words are often their greatest legacy.
The word mantra itself means “instrument of thought” — in Sanskrit, “man” refers to thought, while “tra” refers to a tool or instrument. In the realm of business, a mantra serves as combination focal point, challenge, and test. When the engineers and designers at SpaceX or Tesla Motors encounter an obstacle or suggest a new idea, Elon Musk invokes his “First Principles” mantra, asking, “What are we sure is true?” When people say something can’t be done, ask them why not — and ask them to try anyway. Within the boundaries of nature and physics, anything is possible.
YPO Global Pulse Index Commentary by Sunny Vanderbeck
In this President & CEO article about the Young Presidents’ Organization (YPO) Global Pulse Index, Sunny Vanderbeck, managing partner of Satori Capital and co-chair of the YPO Entrepreneurship and Innovation Network, provides commentary about the results.
The index is a measure of confidence in the current and expected economic environment, and is based upon CEO projections collected through a survey of YPO’s network of 23,000 CEOs in more than 130 countries.
Satori Capital is pleased to announce that it completed a majority investment in SunTree Holdings, LLC (“SunTree”). Based in Phoenix, Arizona, SunTree is a producer of branded and private-label nuts and dried fruit including roasted and salted nuts, trail mixes, and chocolate and yogurt-covered nuts. SunTree’s annual revenue has doubled since 2012 from approximately $50 million to more than $100 million.
“SunTree is a quintessential Satori portfolio company,” said Sunny Vanderbeck, managing partner of Satori Capital. “It is a rapidly growing business led by a sustainably minded team providing ‘better-for-you’ snacks in an industry with significant tailwinds.”
Satori’s investment in SunTree is an example of Satori’s strategy to employ the principles of conscious capitalism and to participate in the shift in consumer demand toward healthy snacks. SunTree serves discerning customers including big-box retailers and national grocery stores.
“We chose Satori Capital as our partner because its long-term perspective and deep operational expertise enable it to build sustainable, industry-leading companies over an extended time horizon,” said David Turner, founder and chief executive officer of SunTree. “Satori’s investment will enhance our ability to continue providing creative and innovative food products to new and current customers from our existing plant, which has the highest Safe Quality Food (SQF) rating in the industry and the current capacity to double production.”
The November issue of Ignite magazine, the publication dedicated to connecting and inspiring YPO-WPO’s global leaders, featured 21st century challenges and solutions for evolving business leaders. Sunny Vanderbeck, managing partner for Satori Capital and co-chair of the YPO Entrepreneurship and Innovation Network, was interviewed about the importance of having a transition plan that will ensure the sale of a business reflects the values and desired outcomes of the seller.
When most entrepreneurs first start a business, they do not think about the day when they will sell it. The truth is that someday, someone else - whether it is a competitor, family member, or investor - may own and run the company, and the most successful exits require considerable planning. With advanced planning, clear objectives and values alignment, it is possible to sell the business and maximize your financial rewards without selling out or compromising your principles.
The Power of 10: A Practice for Engaging Your Voice of Wisdom
Rugger Burke, a principal at Satori Capital, authored “The Power of 10.” The following press release was issued in celebration of the book’s publication.
When people meet Rugger Burke for the first time, they tend to associate him with words like “purposeful,” “calm,” and “present”—but it hasn’t always been that way. In part, his presence is the result of a practice, one set out in his new book describing a journey of transformation. “The Power of 10: A Practice of Engaging Your Voice of Wisdom” was released on Oct. 6, 2015.
Flip the calendar back five years to the day Burke stepped onto a sailboat to join a captain, his wife, and one other crew member to sail across the Pacific. Looking for a break from life, Burke sought relief in sailing away from it all. The preceding 18 months had provided a trifecta of psychological stressors: a career change, his mother’s battle with cancer, and, most important, the end of his marriage. “There were days I could barely get out of bed,” says Burke. The once high-flying lawyer had reached a crossroads.
Until then, his focus had been on building and achieving—acquiring one more thing or climbing to the next level. He lived the mantra: work hard and success will follow. Of course, this strategy works until it doesn’t. While Burke was winning the game of law (high-profile clients, big cases) and money (nice house, expensive cars, incredible vacations), he was losing the game of life. Aiming at success, he found satisfaction eluding him.
Burke puts it this way: “You see, success is all about I, me, my. The prize for winning is being alone; you have to beat everyone else. Imagine a footrace. Instead of jogging along in conversation or admiring the scenery, you only have one thing in mind: be first to the finish line. It’s not even run as fast as you can. It’s only about winning.”
When his wife filed for divorce, everything else in his life fell away. It was time to make a change.
That process began with a trip to a cabin in Oklahoma. There, alone on New Year’s Day in the middle of a blinding snowstorm, he penned what would become the resolutions he would live by, ones that later became the basis for the advocacies in the book. The goal: to begin living with positive intention rather than living in avoidance (i.e., living in fear of failure or rejection). The next step was to put those resolutions into action through facing down his most basic fears: the ocean, sharks, and loss of control. It was the beginning of a journey that would change his life.
Over the weeks at sea, he contemplated the course of his life and, more broadly, all our lives. What is the source of real happiness? How can you have both success and satisfaction? And maybe most important, how can you learn to make the right choices—ones leading to that life? The result is the book that follows.
Satori Capital Invests in Nomacorc to Catalyze Next Phase of Growth
Satori Capital is pleased to announce its investment in Nomacorc Holdings, LLC (“Nomacorc”). Based in Zebulon, North Carolina, Nomacorc is a global leader in the manufacturing and distribution of wine closures. Nomacorc provides more than two billion closures per year to more than 5,000 wineries in 47 countries. Domestically, the company’s closures are placed in one of every three wines within the top 500 products by volume.
Nomacorc shares Satori’s commitment to creating value for all stakeholders and employs a partner-centric approach to developing relationships that cultivate a strong and healthy business ecosystem. In addition to deeply understanding and consistently responding to customers’ needs, Nomacorc fosters a culture of technical innovation and is dedicated to offering environmentally friendly closure solutions to winemakers across the world.
Satori completed its investment in partnership with Bespoke Capital Partners, a private equity firm formed in 2014 by Rob Berner and Mark Harms. “Satori’s extensive operating experience and unique ability to invest for the long-term provide the ideal combination to catalyze Nomacorc’s next phase of expansion,” said Mark Harms, co-managing partner of Bespoke. “We look forward to working with Satori as partners to assist the Nomacorc team in executing its global growth strategy.”
Satori Capital Successfully Divests Its Investment in FWT
Satori Capital is pleased to announce that FWT, LLC (“FWT”) completed a strategic business combination with Sabre Industries, Inc. that resulted in an outstanding outcome for all stakeholders.
Highlights of the FWT and Satori team’s accomplishments:
Customers—FWT has a 56-year track record of providing outstanding quality and personal customer service. Members of FWT’s leadership team will serve in similar roles in the combined business to ensure customers continue to receive the quality and service they rely on for their mission-critical transmission needs. In addition, customers will benefit from the more efficient systems, processes, and geographical presence that the combined entity offers.
Suppliers—Throughout Satori’s investment period, FWT deepened its transparent and trusting relationships with its suppliers. These unique and deep partnerships allowed the company more flexibility and scale in serving its customers. Those suppliers will now have access to a larger organization through which they can more easily impact the quality of product in end markets that are critical to the nation’s electricity infrastructure.
Employees—FWT created a welding school to challenge and enhance the skills of existing team members while developing reward programs that fostered a family culture. Consistent with a long-term perspective, FWT did not terminate employees during an industry downturn, thereby positioning it well for a significant increase in demand.
Community and Environment—FWT created hundreds of new jobs by opening a plant in a strategically important location (Ohio) and partnering with local governments to develop mutually beneficial programs. During the investment period, the company continuously reduced waste and per-pole environmental impact. In addition, FWT’s products frequently connect new sources of renewable energy to the electrical grid.
Investors—By emphasizing value creation for all stakeholders, FWT’s leadership team generated financial returns for Satori’s investors that substantially exceeded typical private equity returns and also achieved the impact of capital those investors seek.
FWT is a rapidly growing, industry-leading, sustainably run company that provides products or services to customers that enhance the community and environment. Its leadership team and board operate the company with a long-term perspective, an eagerness to preserve and enhance relationships with all of their stakeholders, and significant personal financial stakes in the business. THAT is a quintessential Satori investment!
We thank you for your support and encouragement, and we look forward to working together on similar investment opportunities. If you know a company that would benefit from our approach, please contact one of us.
California Products Corporation Acquires Latexite International
Satori Capital is pleased to announce that California Products Corporation (“CPC”) recently completed the acquisition of Latexite International (“Latexite”). Headquartered in Baltimore, Maryland, Latexite manufactures sports surface coating products for tennis, basketball, and other multi-sport surfaces. CPC is a Satori Capital and Delos Capital portfolio company.
CPC’s acquisition of Latexite is the latest example of CPC’s ongoing acquisition strategy. “We completed the purchase of Latexite just six months after acquiring The Muralo Paint Company,” said Peter Longo, CPC’s chief executive officer. “We continue to seek opportunities to acquire regional coatings manufacturers interested in accessing the significant resources a business combination with CPC provides.”
This strategic acquisition supports Satori’s interest in optimizing value for all stakeholders. “Our long-standing customers will continue to have access to all of the great products they are accustomed to while benefitting from the resources and additional products that a world-class organization like CPC provides,” said Chris Rossi, a member of Latexite’s leadership team who will join CPC. “This is a great outcome for Latexite’s owners, customers, and its other stakeholders.”
Longhorn Health Solutions Acquires Hallmark Medical Supplies
Based in Austin, Texas, Longhorn Health Solutions (“LHS”) is a service-oriented distributor of durable medical equipment (DME), consumable medical supplies, and medication therapy management (pharmacy products) to homebound or bedridden Medicaid and Medicare recipients in Texas.
Hallmark Medical Supplies (“Hallmark”), based in Houston, Texas, provides durable medical equipment to Medicare patients throughout Texas. The acquisition enables LHS to serve a wider geographical area and provide additional products to improve the quality of life of the vulnerable patients it serves.
With Hallmark, LHS expands its Medicare eligibility to the Austin, Houston, San Antonio, and Beaumont markets in addition to adding oxygen and continuous positive airway pressure (CPAP) products to its existing offerings.
“This acquisition demonstrates Satori’s commitment to supporting entrepreneurs who lead companies that generate long-term value for all stakeholders,” said Sunny Vanderbeck, managing partner at Satori.
Based in Andover, Massachusetts, California Products Corporation (“CPC”) is a manufacturer of high-end, water-based acrylic paint, tennis court and track coatings, and environmental remediation and containment coatings. CPC sells almost exclusively through independent paint dealers and maintains a top-two market position in almost every market it serves.
The Muralo Paint Company (“Muralo”), a family business founded in 1894 and headquartered in Bayonne, New Jersey, manufactures paints and coatings that retailers sell in more than 20 states. The acquisition is the first of what CPC’s management team expects to be several strategic acquisitions.
“The acquisition further entrenches CPC as a nationally recognized producer of environmentally friendly paint and coatings, and it allows us to provide additional products in new geographic markets,” said Peter Longo, CPC’s chief executive officer. “It also provides us with the opportunity to achieve significant efficiencies in our state-of-the-art manufacturing facility.”
Consistent with a family business environment, the team at Muralo operates with an innate sense of the stakeholder orientation that is consistent with CPC’s approach and is a fundamental principle of Satori’s founding philosophy of conscious capitalism. This business combination ensures that Muralo’s multi-generation customers will continue to have access to the products they cherish and to receive outstanding customer service.
Jim Norton, formerly Muralo’s president and chief executive officer who has joined the CPC team, said, “I am pleased to be joining an organization whose commitment to quality, service, and customers mirrors my 40-plus years in business. I look forward to the continued support of our existing customer base and the longevity of the Muralo legacy.”
Willie Houston Joins Satori Capital as Chief Financial Officer
Satori Capital, a Texas-based multi-strategy investment firm founded upon the principles of conscious capitalism, today announced that Willie Houston, who most recently served as senior director of financial operations at TPG, has joined the firm as chief financial officer. In this capacity, Mr. Houston assumes oversight of all financial and compliance aspects for Satori’s private equity business and for Satori Alpha, the firm’s alternative portfolio management platform.
“Along with his vast experience at TPG, one of the world’s leading diversified private investment firms, Willie brings keen judgment, operational experience, and deep financial acumen to Satori,” said Randy Eisenman, managing partner of Satori Capital. “He joins the firm at a time of impressive performance and increasing recognition that Satori’s focus on long-term value creation for all stakeholders represents a distinct competitive advantage. Willie shares our passion for this approach, and the fact that we were able to attract an executive of his caliber speaks volumes about Satori’s presence in the marketplace and potential.”
CEO features chief executives from the corporate and not-for-profit sectors. The show explores what it takes to make a company successful in today’s global marketplace, asking questions about leadership style and ethics.
On the October episode of CEO, Satori Capital Managing Partner Sunny Vanderbeck tells host Lee Cullum how Satori helps portfolio companies steer clear of common roadblocks to growth and explains why they look to invest in companies with a conscience. “(Satori Capital believes) profits aren’t a reflection of what you can get away with, what you can extract, but they’re a reflection of the value you create for a customer, for the community you’re in, for your employee,” he says. Vanderbeck also predicts business trends he says will be revolutionary.
Sustainability in the Boardroom: Reconsidering Fiduciary Duty Under Revlon in the Wake of Public Benefit Corporation Legislation
“Sustainability in the Boardroom: Reconsidering Fiduciary Duty Under Revlon in the Wake of Public Benefit Corporation Legislation,” by Rugger Burke, a principal at Satori Capital, and Samuel P. Bragg, was published in Volume 8 of the Virginia Law & Business Review.
On July 17, 2013, Delaware joined 19 other states in establishing the public benefit corporation. This important legislation redefines the law of corporate fiduciary duty in Delaware, home to more than 50% of all publicly-traded companies in the United States and 64% of the Fortune 500.
Satori Capital’s managing partner, Sunny Vanderbeck, chimes in on the discussion of how to overcome five of the biggest challenges growing businesses face as they mature in this Fortune Magazine article by Verne Harnish.
Companies often encounter barriers as they mature. Here are five big ones and how to break through them.
1.) Not knowing your ideal customer
Customers aren’t all equally valuable; some can even be unprofitable. So CEO Scot Lowry of digital-marketing firm Fathom, in Valley View, Ohio, had his CFO draft a profit and loss statement for each. That helped him phase out the costly customers — and identify the ideal ones, such as health care and financial services firms that need very customized service. “Our strategy is based on deep customer intimacy,” he explains. “We have to focus on select clients to deliver on this.”
Satori Capital Invests in California Products Corporation
Satori Capital is pleased to announce its investment in California Products Corporation (“CPC”). Based in Andover, Massachusetts, CPC manufactures environmentally friendly specialty chemical coatings such as tennis court and track coatings, high-end consumer paints and stains, and specialized environmental remediation coatings. CPC generated more than $75 million of revenue during 2013 and plans to grow through acquisitions, geographical expansion, and by capturing market share in select product markets.
Satori completed its investment with co-investor Delos Capital, a private equity firm with significant experience in the chemicals sector. “Satori’s operating experience allows it to understand the challenges faced by executives who are leading rapidly growing businesses,” said Matt Constantino, founder of Delos. “We look forward to working with Satori to assist the CPC team during its growth.”
The following article, written by John Grafer, principal at Satori Capital, was featured on Inc.com by the Inc. Business Owner’s Council.
Do private equity firms deserve your distrust? Some do. They invest in your company, strip out costs, pursue short-term results, and flip your company to the next owner as soon as possible to maximize returns for their investors regardless of the consequences for the other stakeholders; the employees, the customers, the suppliers, the community, and you. Employees may be under-compensated, customers may feel like they didn’t receive what they paid for, suppliers may believe they were taken advantage of, the community may be unhappy with your practices, and you may end up feeling like you work for the man.
Satori Capital Welcomes Dr. Kern Wildenthal as Operating Partner in Healthcare Sector
Satori Capital, a Dallas-based private equity firm, today introduced Dr. Kern Wildenthal as an operating partner in the healthcare industry. Wildenthal will assist Satori with identifying, investing in, and accelerating the growth of sustainably run businesses within the healthcare sector.
“We plan to leverage Kern’s extensive operating experience and network of industry relationships to help accelerate the growth of our portfolio companies,” said Sunny Vanderbeck, managing partner of Satori Capital. “His experience leading one of the world’s most reputable medical organizations uniquely qualifies him to partner with management teams of healthcare companies as they face challenges associated with rapid growth.”
Wildenthal is a seasoned executive with a long track record in leading rapidly growing healthcare institutions. He served as president of the University of Texas Southwestern Medical Center for 22 years. During his tenure, the institution more than quintupled in size, and total endowments rose from $40 million to more than $1.4 billion. Wildenthal currently serves as the president of Children’s Medical Center Foundation.
Find Your Purpose... and be it in Thought, Word, and Action
Rugger Burke shares his thoughts with business leaders and entrepreneurs on how they can uncover their core purpose and the core purpose of their businesses.
There are three questions Rugger asks companies when considering them for investment and they are questions every entrepreneur and business leader should ask themselves: What are the great gifts, skills, and capabilities that you have? What does the world need? What is it you really love to do?
Learn why it’s the best form of a sustainable competitive advantage in the full article below.
Private Equity Forum Presents The State of The Deal Market
Satori’s Rugger Burke appeared on a panel entitled The State Of The Deal Market at the Private Equity Forum on February 20, 2014. Joining Satori’s general counsel and principal were Sean Roberts, vice president for Huron Capital Partners and Dan Ryan, head of business development for Milestone Partners. The event was held at the Tower Club in Dallas from 11:30am-2:00pm.
The American Bar Association Journal’s “Law News Now” features articles on lawyers’ travel around the world. The February, 2014 issue covered Satori Capital’s principal and legal counsel, Rugger Burke’s adventure by sailboat across the high seas.
Destination: North Pacific Crossing: Hilo, Hawaii to British Columbia
After closing their first investment deal, the staff of the newly formed Satori Capital went out to dinner in Dallas to celebrate. Rugger Burke, the general counsel and principal, joined them, but not for long; he had a plane to catch. Soon, he’d be sailing 2,450 nautical miles across the North Pacific in a sailboat smaller than a city apartment. And he wasn’t completely sure he’d make it back.
Satori Capital Acquires Ranger Wireless Solutions, Provider of “6-1-1” Customer Care
Satori Capital, a private equity firm that partners with companies operating with a sustainable approach, has acquired Ranger Wireless Solutions, a technology-enabled service provider to the wireless telecom industry. Ranger Wireless’ patented service connects roaming wireless subscribers to their provider’s customer care center when they dial 6-1-1. As the exclusive dedicated provider of 6-1-1 customer care services, Ranger Wireless serves more than 40 carriers in the United States and Canada, and connects nearly 11 million calls each year. The 6-1-1 service is free of charge to customers of wireless carriers.
“Satori has been looking to acquire a portfolio of IT and telecom service providers, and Ranger Wireless serves as an excellent platform to realizing this vision,” said Sunny Vanderbeck, managing partner for Satori. “As the domestic leader in wireless customer care, Ranger is positioned well to expand its offering internationally as consumer expectations are increasingly global.”
Plans for Ranger Wireless include providing additional outsourced services to its blue-chip customer base of wireless telecom providers. Although many of Ranger Wireless’ forthcoming growth initiatives will be organic, the company and Satori are actively seeking acquisition opportunities in the sector.
Heading up Ranger Wireless will be John H. Ofenloch Jr., who has been named president and chief executive officer in conjunction with Satori’s acquisition. Ofenloch has more than 20 years of technology management experience, with a focus on telecommunications, Internet services, and integrated optic manufacturing. “It costs wireless carriers hundreds of dollars to acquire a single customer,” Ofenloch said. “Ranger’s 6-1-1 service not only helps wireless carriers retain their customers, it provides a great service to wireless users, immediately connecting them to customer care free of charge.”
Like all CEOs of Satori-backed companies, Ofenloch is dedicated to running Ranger Wireless in a sustainable manner. This means working consciously to improve its relationship with all of its stakeholders, including employees, shareholders, suppliers, customers, strategic partners, and the community.
Impact Investing: Profit with a Purpose
Sunny Vanderbeck, managing partner of Satori Capital, was a featured panelist on the topic of “Impact Investing: Profit with a Purpose” at the Credit Suisse Global Megatrends Conference held at the Ritz Carlton in Dallas, Texas on Monday, November 4, 2014. Sunny and co-panelist Cat Alexander, a consultant who specializes in impact investing, were moderated by John Goldstein, managing director and co-founder of Imprint Capital Advisors.
Sunny Vanderbeck spoke to the CEO Clubs Texas chapter on Thursday, September 26 on the topic of “Selling without Selling Out.”
CEO Clubs International is based in New York and is the world’s oldest and largest international non-profit business association for CEOs and entrepreneurs with thousands of members worldwide in 18 countries and USA Chapters in Dallas, Boston, NYC, Baltimore and Miami. CEO Clubs Texas holds events with exciting venues and speakers in Dallas/Fort Worth for CEOs and top executives to come together, learn and enjoy. CEOs working together and creating lasting friendships and business relationships while sharing solutions and challenges help businesses thrive and make life more enjoyable.
Profit is Not a Dirty Word on Blog Talk Radio
Sunny Vanderbeck was the featured guest on Andres Rauch’s Blog Talk Radio series. The interview was geared toward answering the question, “Are you looking to create sustainable shareholder value with a purpose for greater giving?” Sunny spoke on best practices for how to build organizations with sustainable business practices that are better managed, more innovative, less risky and better positioned to deliver superior performance over the long-term with greater giving.
Sunny Vanderbeck spoke at the Jane and Pat Bolin Innovation Forum on Friday, April 19, in the Brown-Lupton University Union auditorium. The Neeley Entrepreneurship Center brought Vanderbeck to TCU as part of the Richards Barrentine Values and Ventures Business Plan Competition as the keynote speaker for the Jane and Pat Bolin Innovation Forum. The Bolin Innovation Forum was founded in 2011 to bring transformational thought-leaders to Fort Worth to benefit Neeley School students, faculty, staff and the DFW community.
Wall Street rarely applauds compassion. In fact, for years Costco was derided by analysts, who felt the company paid its employees far too much money. Its reward for such largesse was a price-to-earnings ratio that traditionally lagged behind Walmart and other retailers who weren’t nearly as generous to their staff. Criticism from the likes of Deutsche Bank analyst Bill Dreher, who told the Wall Street Journal in 2004 that “Public companies need to care for shareholders first,” was not uncommon at the time.
Increasingly, though, investors are starting to come around on the Costcos of the world, recognizing that a company that invests in its employees, clients or even society at large doesn’t necessarily do so at the expense of profits. In fact, in many cases, these decisions create a more sustainable business model and drive value that is ultimately reflected in performance. Costco, it’s worth noting, has a price-to-earnings ratio today that sits above 20, making Walmart’s stock, trading around 13x earnings as of press time, look undervalued by comparison. In investment circles, people will toss around the acronym ESG, which stands for “environmental, social and governance” criteria that may go into an investment decision. It’s different from the SRI strategies, or socially responsible investing, that tend to make value judgments against sectors considered to be sin industries.
Acquirers too are beginning to search for the hidden value that tends to elude recognition on a company’s balance sheet. If you ask Advent International’s David Mussafer about the firm’s investment in lululemon athletica, one of Advent’s biggest wins in recent years, he’ll recount a hike the firm’s partners took with the company founder, which revealed more about the opportunity than any boardroom meeting or dataroom visit could possibly uncover. Meanwhile, the sale of Zappos to Amazon was spurred in part by Amazon’s desire to capture company’s culture. In hindsight, Zappo CEO Tony Hsei, in an excerpt from his recent book, revealed that the sale was also motivated by management’s efforts to preserve the culture from its VC backers, who, amid the downturn, were “only concerned with maximizing profits.”
David Wolfe, a principal at marketing consultancy Wolfe Resources Group, co-authored ‘Firms of Endearment,’ a book that explores the transforming marketplace in which more and more companies are guided by a “stakeholder relationship management” model. The strategy, Wolfe describes, is centered on a company’s ability to deliver social value through recognizing the ‘stakeholder status’ of customers, employees, suppliers and the community at large. Essentially, it’s about recognizing a wider band of constituencies whose fortunes are tied to the company, and creating a true alignment of interests between all of the relevant parties. The end result is often better all-around performance for the company. The catch is that it requires business leaders to trust their guts in terms of good business decisions even if numbers aren’t available that immediately validate a particular strategy.
“The business schools have placed too much emphasis on ‘the quantifiable’ to the exclusion of the unquantifiable factors that can make a significant difference,” Wolfe states.
In M&A, that’s why analysts tend to trust cost synergies over revenue synergies.
Wolfe adds that businesses employing the model espoused in his book seem to “intuitively grasp” the idea that it’s the factors not necessarily counted by Wall Street that often add the most value.
Of course, it will always be impossible to quantify karma. Ventura, Calif.-based Patagonia Inc. is an organic outdoor clothing and apparel company that has made it a point to take a lead role around environmental causes. The company has launched initiatives to form a national park; it has provided more than in $35 million in environmental grants to grassroots programs; it co-founded an alliance credited with saving over 34 million acres of wildlands; and helped launch the initiative “1% for the Planet,” in which companies sign on to donate at least one percent of their revenues toward environmental causes. Beyond the philanthropy, Patagonia uses only organic materials in its merchandise, and many of its products provide “footprint” data, disclosing the environmental impact that went into producing each particular item.
All this, of course, goes back to the company’s mission statement: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Patagonia is a private company, so its financials are not publicly available. However, a visit to any one of Patagonia’s 26 locations makes it clear that the company’s message resonates. At a recent visit to the outlet stores in Freeport, Maine in May, Patagonia had around a dozen or so patrons lined up at the storefront before it opened; across the street, at J. Crew, a line never formed.
Patagonia’s approach is in stark contrast to a company like BP, whose response to the biggest oil spill in US history was to threaten clean-up workers with termination for wearing respirators. The oil giant has also reportedly turned away photographers from documenting the damage, all in the name of either protecting its image or limiting its liabilities. The effect, however, has only created more ill will, to the point that someone co-opted BP’s Twitter identity, @BPGlobalPR, and quickly amassed over 100,000 followers with hundreds of tweets that gave a voice to people’s perception of the the company. When BP hired Dick Cheney’s former flak, for instance, a tweet quickly followed from the fake PR team documenting that their boss made them watch an autopsy video “as a team building exercise.”
BP, whose very survival is being questioned, is all of a sudden the poster child for non-sustainability.
But how do buyers looking to acquire the “sustainable” companies manage to carry on the karma and continue to extract value post close? Wolfe notes very bluntly that it’s not easy. At the same time, he points to the Container Store as one example. The retailer, which at one point was ranked as the No. 4 best company to work for by Fortune Magazine, reportedly pays wages 50% to 100% above the industry average to its sales staff. The company, as Fortune pointed out, also has a “family friendly” shift that starts later and ends at 2:00PM, allowing for parents to take their kids to school. When Leonard Green & Partners acquired a control-stake in the company in 2007, it did so with the promise that the co-founders would be able to manage the company in the same way they had been prior to the sale. Even amid the downturn and pronounced consumer pullback, the retailer has maintained a spot on Fortune’s top 100 places to work, a sign that Leonard Green has kept its promise.
Private equity, however, doesn’t always seem like a logical fit for a “sustainable” company. The same way the asset class tends to shy away from biotech or other R&D heavy industries, a sustainable business strategy can take a while to fully gestate, as loyalty from employees, suppliers and clients is measured over years, not quarters. Moreover, as Wolfe points out, exit options may be limited; unique cultures require the right steward to thrive.
Sunny Vanderbeck launched Satori Capital with Q Investments veteran Randy Eisenman last year. A veteran of Microsoft, who founded Data Return, Vanderbeck has seen first hand the value of a sustainable business strategy. Through Satori, he and Eisenman wanted to develop a private equity firm that could provide an outlet for business owners who want to sell, without selling out. On the firm’s website, the strategy is summed up as “conscious capitalism.”
Vanderbeck recognizes that the PE model faces some challenges when it comes to providing an ideal location for these types of companies. PE, for instance, is typically viewed as a temporary destination, a midpoint from where a company is and where it will be five to seven years later when it’s time for the sponsor to show a return to its limited partners. This doesn’t always sit well with family owners who may have a longer-term outlook.
For this reason, Satori has deviated from the traditional fund structure. The firm’s debut vehicle, which is targeting $175 million, has a traditional ten-year fund life, with a couple of extensions. The fund breaks new ground, however, in its ability to carve a company out of its portfolio and designate it as a ‘core’ holding. LPs, following a third-party valuation, would be given the option to cash out completely, achieve partial liquidity, or remain invested in the company following the transition. Satori, at the same time, is given the option of converting its carry to equity. The firm would be able to do this with as much as a third of its portfolio.
Vanderbeck notes that this structure is important when it comes to communicating both to LPs and potential target companies how Satori is different from other private equity firms. “We’re business owners. We’re not buyers and sellers of businesses,” he says. “It allows us to have a credible conversation with management, and show them that we can be a long-term capital partner.”
Meanwhile, Vanderbeck believes the opportunity set is only going to grow. He points to Goldman Sachs’ GS Sustain program, which was established in 2007 by the investment bank to integrate a sustainability framework within their equity research. Also, in 2006, the United Nations instituted the Principles for Responsible Investment after coordinating with leading institutional investors to better align capital with the broader objectives of society. The result was an archetype on how investors can incorporate environmental, social and governance issues into their mandates.
Perhaps the biggest motivator for companies toward a more sustainable model are the examples set by those who never thought to consider karma in their business strategy, because nobody wants to run the next BP.
Dallas PE firms target $2.35B
“Private equity firms worldwide landed a total of only $246 billion for their investment funds in 2009, the lowest total since 2004.That’s not stopping some local private equity managers from jumping into the fundraising party, anyway.”
The Outthinker: Mavericks that Out Innovate the Competition
“Private equity firms worldwide landed a total of only $246 billion for their investment funds in 2009, the lowest total since 2004.Thatâ€™s not stopping some local private equity managers from jumping into the fundraising party, anyway.”