Investor Glenn Oken on Respect, Fairness, and Fun in Private Equity

Glenn Oken began his private equity career in 1989, when private equity was not yet much of an industry. One day, he looked around the conference table at his firm at the time and at other practitioners in the industry, and suddenly saw their shortcomings. “I saw a bunch of numbers guys and deal guys,” says Oken. “I did not see meaningful ownership in the hands of guys with engineering degrees and a strong track record as operators in the C-suite.”

In 2007, he co-founded Mangrove Equity Partners in an effort to build an operationally focused team and create a culture of his own.

Glenn is known for his forthright approach to partnerships with business owners and their advisors. He’s participated in 138 transactions in 60 industries, and insists on candor, flexibility, and a true partnership mentality — all while having fun in the process.

Read on to learn more about how Mangrove works with its portfolio companies and why Axial is an integral part of their deal flow machinery.

How does your team’s experience in operations help your portfolio companies? 

It is a blast to watch an owner or operator, especially of an industrial manufacturer or service company, interact with one of our Mangrove operating partners. The dialogue is operator to operator, engineer to engineer.  The respect and sense of value-add is totally different relative to the reaction owner/operators have to financial engineers.

I have seen Matt Young and Roger Bates, two of Mangrove’s operating partners, do everything from fix a robotics line on a first visit to a company to convert a plant to cellular manufacturing. They do whatever a company needs to move the needle and build value.

Mangrove’s internal operating team has a very broad and sophisticated skill set deploying management methods such as Six Sigma, Lean, TQM, and 5S — you name it — but you will never hear them use these terms. They’re great at listening, learning, and quickly finding small victories and ways to prove their value. They earn the trust and respect of people on the plant floor and in the CEO’s office. Without enthusiasm and buy-in at the company, all the tools in the world are for naught.

You put great emphasis on cultural fit and respect for employees at both Mangrove and your portfolio companies. Tell me more about that.

Cultural fit is of tantamount importance. It is vital that we respect and honor the culture at the entrepreneurial and family businesses with whom we partner. We often find that our involvement encourages alignment of interest, common purpose, healthy communication, and a sense of responsibility and reward. All of this serves to help companies and their people thrive.

We would not have the relationships that we have with our portfolio companies were it not for a very concerted effort to be consistent and our insistence on finding the right types of people to join the family.

We have a blast with our portfolio companies. We really want them to have fun as we build value together. We sure want that internally too. We really want to like each other and respect each other’s capabilities, personalities, and character.

Mangrove team members Hunter Reichert, Matt Young, Kyle Wright, and Glenn Oken

What differentiates Mangrove from other private equity firms?

One of Mangrove’s core values is “Do The Right Thing.” For example, in a prior investment, the seller (our management partner) had a well-defined, contractual earn-out. After taking advantage of an opportunistic add-on opportunity, it became obvious to us that the earn-out contract would have disadvantaged our partner. So, we proactively went to him with a proposal to deviate from the original earn-out mechanism to ensure he was treated fairly.

Our main priority is to align our interests, ensuring that both the company and its people derive maximum benefit from the partnership. That’s what partnership is about. Life is not a zero-sum game to us. Sadly, I think that this approach is rare.

How do you stay competitive in this kind of deal environment?

Of the 138 transactions we’ve completed over the years, almost every one of them involved an intermediary. We have always understood that intermediaries are our lifeblood and behaved accordingly. We try to be helpful to them in any way that we can and preserve their position in every dialogue that we have with their client. If a deal is not right for us, but we happen to have a trusted friend for whom it is a perfect match, we freely introduce that intermediary to that alternative fund.

We also see taking advantage of tools and networks like Axial as essential because it provides a broad and efficient way to learn about new intermediaries and to communicate Mangrove’s activity and differentiators to old and new friends.

Since becoming an Axial member, Mangrove Equity Partners has been introduced to 847 unique sellers. How have you taken these introductions and leveraged them for the firm?

[pull_right]Axial’s network and functionality brings great efficiency to our deal sourcing efforts.[/pull_right] Axial’s network and functionality brings great efficiency to our deal sourcing efforts. We are in the process of negotiating right now with a potential portfolio company that came to us through Axial. It’s something we’re making an integral part of our deal flow machinery, constantly checking and seeing what is coming across the transom through Axial, and communicating to the expansive Axial network our initiatives for platforms and add-ons.

We’re currently looking for platforms on Axial, but it would seem that any middle market fund would find Axial helpful in finding add-on acquisition targets as well.

What’s one piece of advice you think every business owner should hear prior to a transaction?

Business owners should care very deeply about having partners who can bring something more than just cash. Look for people who can roll up their sleeves and tap into a sophisticated tool set from their own experience.

My definition of partnership is wanting as much for the other person as you want for yourself. That should be evident from the very first phone call a business owner has with an investor. You’ve got to have the right tools, as well as the right intentions from everyone in the firm, from the founders to the analysts.

Mangrove introduced a video that highlights their differentiated approach to partnerships. Click here to view their story.