Ben Humphreys: Senior Operating Executive at Monomoy Capital Partners on Targeted Transformations for Expansive Returns

"If everything is a priority, then nothing is a priority," says Ben. “By keeping that list short and making sure that we drive each individual item to conclusion as quickly as possible, we find that we end up with better results.”

Ben Humphreys is a Senior Operating Executive at Monomoy Capital Partners, a private investment firm focused on the middle market. The firm recently closed Fund V, exceeding its initial $1.6 billion target to close at an admirable $2.25 billion.

Ben has journeyed through many of the world's elite organizations, including investment firms like BlackRock and Cerberus along with enterprises like General Electric. Leveraging rich experience as both operator and operating partner, Ben takes a hands-on approach to partner with portfolio management and transform companies at Monomoy.

On this episode of the Brilliant People Podcast, Linnea Jungnelius, Global Head of Marketing & Strategy at Acertitude, sat down with Ben to share his toolkit approach to value creation. The show covers Ben’s strategic frameworks for organizational change, recruiting winning leaders, building strong partnerships, and what allows him to show up and be his best self.

Monomoy’s model for building businesses

Linnéa: Ben, welcome to the show. To kick things off, paint a picture of Monomoy so we can have that framework for reference for the rest of the conversation.

Ben: It is great to be here, Linnea, and happy to do that. Monomoy was founded in 2005 and today has a little over $5 billion in capital under management. We invest in middle-market consumer and industrial businesses and look to maximize value for our investors by investing in businesses with strong underlying performance where we can partner with management teams and family owners to drive real operational value creation.

Linnéa: And you're a part of a large operating team there, which serves as a real accelerant for your portfolio companies. What are the main tenets of your model at Monomoy?

Ben: Monomoy has one of the largest operating teams in the middle market. There are many different operating team models across private equity. I think Monomoy differentiates itself in a couple of ways.

First, our operating team partners with our investment team to form an integrated deal team. We get involved very early in the underlying underwriting of businesses we choose to invest in and seek to answer four key questions.

Key questions

1. Does the business have a reason to exist? This really goes to the underlying quality and sustainability of the business's cash flow.
2. Can we grow the business? Rising tides lift all boats, and it's much easier for us to execute our operational value creation plan on a growing platform.
3. We're looking for businesses where our unique capabilities allow us to address problems and help the company, the management team, and family owners fix and address those problems to make the business better after we've left it
4. We're always focused on exit, even at the earliest stages of an investment, and we seek to avoid industries or sectors that will make it very difficult for us to achieve a return for our investors on the backside of what we hope will be a lot of value creation work.

After that initial investment, we're focused on building the business's foundations. This means making sure that we have the right management team in place, that the business has the right business processes, and that the right technology is used to use data to make accelerated decisions. And so, that's a critical area of focus for us. Without strong foundations, it's hard for businesses to achieve an operational value creation plan.

We're focused on governance. So, first establish a delegation of authority. This is really to empower and allow management to accelerate decision-making. Then, we look to supplement the management team with independent directors with domain expertise that can help them to understand their markets, their customers, and their suppliers more effectively and provide advice to Monomoy and the board of directors.

Most importantly, we're looking to execute plans that are both good for the company and good for the ecosystem in which the company operates. So, making sure that we have sustainability of our operations, making sure that we have a strong health and safety record, and that the labor conditions in the companies that we invest in are sound, and then making sure we have an inclusive work environment.

Value creation toolkit vs. playbook

Linnéa: You've described your approach to value creation more as a toolkit rather than a playbook, which is a word we hear tossed around a lot. What do you mean by that?

Ben: Yes. A lot of companies use a playbook approach, where they seek to replicate the same tactics with every company they invest in. And a lot of them do it very well and deliver outstanding returns for their investors. So, it's not a criticism of that way of delivering value. Our toolkit approach is an attempt at being more targeted with how we deliver value creation to the portfolio. I think this quote has been attributed to Mark Twain, "If you only have a hammer, everything looks like a nail."

When I look at and decompose the underwriting of value creation, around 25% comes from pricing, 20% from strategic sourcing, and 20% from labor optimization and then there's a long tail of value engineering, working capital optimization, unit economics optimization, and so on. When tackling this diversity of potential levers for value creation, ensuring we're very targeted in applying the right tool to the specific problem at the portfolio company is very important.

I also think that the toolkit enables us to be focused. If everything is a priority, then nothing is a priority. What we've found is that it's very important to tackle the three to five things that are most critical for value creation. The toolkit allows us to address the company's specific problems and make sure that we're focused on the most important levers for value creation.

Linnéa: I hear that a lot. Focus on the most important matters. Do you find that your ideas walking into a deal, stemming from due diligence, frequently remain the priorities post-deal? Or do they tend to evolve as you learn more?

Ben: I'd like to think that we're right most of the time when we're doing diligence, but that list can evolve over time through the course of investment. It's not chiseled in stone; it's written in pencil.

But if we don't have a limited list of actionable things, it's easy for the company and the management team to get paralyzed. By keeping that list short and making sure that we drive each individual item to conclusion as quickly as possible, we find that we end up with better results.

I do think the fact that we have this integrated deal team approach helps. I think the fact that we're involved early in the initial underwriting gives us an advantage in making sure that we have a higher batting average in identifying the three to five most critical things. Some of our competitors do a great job with a different method, where the investment team will make an investment and kick it over to the wall to the operating team. Not criticizing them, but it is just different for us.

Collaborating closely with management

Linnéa: You've got the benefit of a lot of perspective. You've been exposed to many companies, teams, and models at Monomoy and elsewhere. When things do go wrong, where do you see that tend to happen?

Ben: Ninety percent of the time, things go wrong because we don't have the right management team.

When I decompose that challenge, it's infrequent that we hire management teams that are incapable, that are not smart, that don't have domain expertise. It really comes down to communication and the relationship that they form with the sponsor.

Some managers view the sponsor as a once-a-quarter obligation. That might work in some contexts where you have an investment-focused orientation to value creation. Our operating focus, I think, requires a different relationship with management.

Now look, we don’t try to run companies from our offices in New York or Greenwich. We want empowered, independent executives who are leading their businesses. However, we believe we have unique capabilities that help management teams accelerate value creation and so we look to partner with managers who see Monomoy's value.

When we don't have that level of partnership, we have challenges. One of my most challenging experiences working with a CEO was a situation where we decided to invest in an ERP implementation. The business was performing fantastically well, executing on all cylinders.

Because of the business's performance, I stood back and let the team go, obviously not wanting to hold them back. I didn't lean into the ERP implementation. And the ERP implementation, to say the least, was challenging. That ultimately resulted in a transition with the CEO.

The learning for me is that I'm looking for those partners who want to engage with Monomoy and leverage all the capabilities that we offer. That's not to say that we want to run the company, and that's always the fine line that we need to balance. But when things go wrong, it's almost always because we don't have the right management team.

Building personal connections with portfolio management

Linnéa: Right, partnership is the keyword there. And as you said, over-communicating helps partnerships thrive. Is there anything else you do to forge better partnerships early on, particularly as you start to work with a new portfolio company?

Ben: With the CEOs I partner with today, I feel we have incredibly strong personal relationships that allow us to work effectively through the most challenging business issues.

I also had experience as an interim CEO at one of our portfolio companies and I’ve had many CFO experiences throughout my career. I think those experiences help me be a bit more empathetic to what our CEOs and management teams face on a day-to-day basis.

Financial sponsors and private equity sponsors can be demanding and impatient. I'm probably part of that group. I do think that the best relationships are forged out of a strong personal connection and operating partners who have empathy for the challenges on a day-to-day basis that the management team is facing. That combination yields the best outcomes.

Linnéa: That empathy piece is something I've heard others who've been in an interim role describe as a key takeaway too. So, that's good advice for people who haven't been an operator before; be more empathetic and try to look at things from that angle.

Sometimes changes must be made to the management team, although that's never the desired outcome. What lessons can you share on getting the right team in place if that happens?

Important lessons for sourcing talent and unlocking performance

Ben: Well, Linnea, I think this is where you and your team at Acertitude come in. You've been incredible partners for us, and I expect you will be incredible partners as we go forward. So, obviously, having the right recruiting capability for talent outside of the organization is critically important, and making sure you're working with partners who think the way you think and who understand your culture is super important in making sure you get the right management team.

Another area in which I've recently started to have more success is thinking about talent more portably across our portfolio. We have tremendous talent at the next level down in our portfolio, not just at the senior-most leadership levels. Giving some of those leaders the opportunity to step up in more senior roles in other portfolio companies where their capability and skill set are portable has been a real accelerator for us. I wouldn't say we're perfect at it, but we've started to do that more and more frequently.

And I found that to be an incredible accelerant to getting roles filled and getting people I know and trust into those roles. There's nothing like having worked with someone for a couple of years to know their strengths and weaknesses and to be able to understand your relationship with them and how you work. And I think that's all critically important.

From a process perspective, we do many of the same things I think everyone else does at this point. We hire the best executive search firm. We use a combination of behavioral assessment, psychometric assessment, and case study to shepherd people through the process as quickly as possible.

I really think we're trying to find those people who view Monomoy as great partners and someone who will be an accelerant to their personal and organizational success. And to me, that X factor is the key thing that I'm looking for when we're trying to make a decision to hire any member of the senior management team.

Linnéa: You hit on something super important: fit and that idea of “we’re in it together,” whether it's about the partnership with the talent pool or the search firm that you work with.

I think the lessons you shared about building partnerships apply here, too, whether it's with the management team or the level or two below that. I think the reason you are able to make those chess moves is because of that trust, that known entity. You know how they might complement or supplement other people and teams. Thinking about it in that holistic way is so critical.

Ben: I think that's a great articulation; that fit component. Again, I keep bringing it back to that X factor of fit for us, which is people who want to be a partner and engage and work with our team.

That's not to say they want us to run the company on their behalf, but they want to ask for help and advice and help us deliver resources they may not have natively in the company on an accelerated basis. Those are all the things that we can deliver to a management team. Some great managers want that, and others want to be left alone and check in every quarter. And so, we obviously look for the former rather than the latter.

Empathy is powerful

Linnéa: Exactly. Alignment is one of the ideas that I think I'm hearing. Once you get the right team members in place, how do you grow their strengths and enable them to thrive? Is there anything else you took away from recently being interim CEO?

Ben: I think this notion of being empathetic and understanding, having walked a mile in their shoes so to speak, is an important part of that.

Whenever possible, I try to eliminate non-value-added interaction. For instance, I'm not looking for a whole slew of reporting to fill the file. We want to have reporting that's meaningful and tied into the three to five things that really drive the business forward.

We want to make sure that our management teams have every possible resource they need to execute their plans. And to the extent that we have resources in our network, who are on our team that they wouldn't have access to normally, we want to make sure they get access immediately, and they're there to help them. So, I think those are the critical things that we try to deliver.

On a personal level, I always try to remember my experience when working with management teams: these are hard jobs with a lot of pressure. These people are wired to want to succeed and it's not a straight line up to the right, even in the best of companies. Recognizing that management teams are going to have setbacks, things are going to go wrong, and being supportive, not overreacting, in those moments is critically important. It’s about making sure that we help to course correct when things go wrong in an empathetic way.

Time management for busy people

Linnéa: One thing I want to pick up on that you mentioned is value-added interactions; how to make the best use of your time, especially when engaging with people. Because we are dealing with this limited time window to create value in private equity, that intensifies both the focus and pace required to succeed.

So, how do you make the best use of every day, every hour on the calendar, from a macro strategy perspective and even down to how you prioritize your personal calendar?

Ben: I love this question. It's so important. Because in private equity, we're not permanent capital. We have a limited time where we are stewards of a business, and we're on the clock the day we close to deliver on behalf of our investors to build and leave a better business for employees, customers, and suppliers. And so, the pace of change just has to be faster than it is in publicly run organizations that have the benefit of time. And so, this is where I would go back to those three to five things.

We have to be critically focused and organized around making sure that we execute the three to five things that most matter to the business at that time. Those three to five things will change over time. They'll mature. Hopefully, we'll complete some and add a new one, two, three, or five to the list. But that's how I try to organize my time and the management team's time in our interactions. I can't say I always get it right. But that's at least the thinking that goes into the macro-organization of time. On a micro level, calendar management is a disaster for me.

Linnéa: Haha, you and everyone.

Ben: I'd love some tips on this. I've read all kinds of books on it and how you're supposed to organize it. I color-code my calendar and it looks like the rainbow.

I have four businesses that I focus on today. They're all fantastic businesses with great teams. But prioritizing on a day-to-day, minute-to-minute basis is super hard because I want to make sure that I'm giving my all to help them be as successful as they can be. I don't always get it right.

I think I'm way better at macro. From an industry perspective, we collectively are way better at it than the micro. Any time management gurus out there who end up listening to this, I would appreciate the tips on how to organize my time on a day-to-day basis a little more effectively.

No substitute for “walking the halls”

Linnéa: We talked about time. Another component of this job as an operating partner is you're involved with four companies. I'm sure not all four businesses are in the same place. And to have that personal connectivity and to operate at pace requires travel and spending time with people in those locations. How do you handle all the travel? Do you have any hacks around that?

Ben: First, I think that the insight there is super important. I'm a huge believer that there's tremendous value in in-person interaction.

I know in COVID, technology allowed us to interact virtually. And it's not to say there's no benefit of virtual interaction. It is so much more impactful from a relationship perspective, from an actual factual, tactical perspective, to walk a plant floor and talk to someone who's operating on that floor versus seeing a presentation on Zoom or watching a video. So, you're a hundred percent right. I think private equity operating partners done well requires being on the road.

I guess I would start with my travel hacks. I'd like to thank my sponsors, United, Marriott, and National Rent-A-Car. No, just kidding. But I think having partners that allow you to get upgraded occasionally makes your life a lot better if you're 200 days a year on the road and 90 plus flights a year.

My only advice would be to never take an evening flight in the summer. 6:00 A.M. flights are the only ones that leave and land on time. I don't really have the travel thing figured out. I don't fly privately, so I'm back on the bus in coach like everybody else, and so those little upgrades every once in a while from United, thank you very much, are super nice and helpful.

Qualities of standout operating partners

Linnéa: We've talked about operating partners needing high energy, needing empathy, and needing great communication. Adding to that list, are there any other defining qualities that you think make for an extraordinary operating partner?

Ben: You've hit on a few of them. I think that a successful operating partner starts with humility. Our job is to make the management team successful, period, full stop. That sometimes means you get blamed for the rain, no praise for the sun.

As an operating partner, you've got to enjoy watching your teams be successful, get the limelight, and be celebrated. You've got to be comfortable with that. You’ve got to get energy from that. You've got to be excited by that.

There are a lot of people who are incredibly talented executives who become operating partners and then lose personal energy because, suddenly, they don’t get the credit anymore. There's a degree of comfort with being personally disassociated with the credit for an outstanding investment. That is critically important.

I also think that templates only go so far. In the private equity operating partner universe, there's been an attempt to try to reduce the operating partner role to a series of templates that people then fill out that magically yield the answer. Of course, there's value in the templates. But I don't think anyone necessarily has a materially better template than anybody else. I think the best operating partners just think differently and execute differently. When we try to reduce the differentiated capability to a template, I don't think you get the best work out of operating partners.

Diverse engagement models

Linnea: Now, there’s one other thing I want to dive into with Monomoy, which is that you have a group of generalist operating partners. What are your thoughts on a generalist versus functional specialist and hybrid model for different firms?

Ben: As you point out, there's no set model.

A number of firms use a specialist approach, organizing their operating team around functional expertise. So, they'll have a commercial team; supply chain or sourcing team; finance team; digital or technology team; on and on and on. There is nothing wrong with that approach. That can yield fantastic returns, and there are lots of firms that do extremely well leveraging that approach.

What we find, and what I believe, is that it's difficult to scale that approach in the middle market, where you don't necessarily have issues across your portfolio that functionally specialized teams are capable of solving. The generalist model allows you to bring a broader suite of capabilities to what is inevitably a broader suite of potential problems.

So, as you articulated, we're organized as a generalist model. We also leverage a lot of incredibly talented data, finance, FP&A, associate, senior associate, and vice president level resources to sit with the CEOs, with the CFOs, help them organize data, and develop insights from the data, all with the purpose of being able to make decisions faster.

We think combining generalist leadership with a data and analytics focus is a killer combination. Again, we don't have a monopoly on how this is organized, but in the middle market, I think that brings the best of all worlds. We will use third-party partners in highly specialized situations to bring in specific functional expertise if it's required that we don't have on a one-off basis.

Businesses shine when people shine

Linnéa: Let's pivot to a more personal topic as paying attention to the whole person often unlocks performance differences. We like to say that businesses shine when people shine. What factors in your life allow you to show up as your best self every day?

Ben: I think you know this story because we've been friends for a long time. I got into private equity with the strong encouragement of my wife, whom I'd been married to for over 20 years.

I started my career at GE, I loved GE, I still love GE. During the late days of Jack Welch and the early days of Jeff Immelt, GE was just a magical place to grow up in and learn and receive training. I never imagined I would leave.

Then I had a boss who took a job at Cerberus Capital, and he offered me the opportunity to go with him. And I sort of turned to my wife and said, "Christine, I'm never going to leave GE, right? And she's like, "You're crazy not to go to Cerberus and take this opportunity and go into the private equity universe."

Without my wife's strong encouragement and probably telling me to do it, I would never have been on the career path I am today. Our relationship and partnership have been central to any professional success I've had. I'm super fortunate and blessed to have a lovely wife who is supportive of my career.

And we have three lovely kids. When I'm traveling all over the place, she makes sure that they're getting everything they need. They're fantastic. I have so many friends who've had challenges with children. I mean, it's hard raising any kids and I'm sure we'll have our challenges in the future, but knock on wood, our kids have been great.

Linnéa: That’s awesome. But, Ben, you're forgetting one very important member of your family… man's best friend. You have to tell the story of how he came into the picture.

Ben: Yes, our dog, Bear. There must have been at least a hundred billionaires in the room when I managed to get Bear at this charity auction. And there were some fantastic things being auctioned off, like LeBron James hosting you at his house. But in any event, Bear was the first live auction item they brought out to bid; a two-month-old golden retriever.

Jokingly, I'm showing off in front of my friends. In any case, I bid on Bear. First bid out of the gate. There was another bid in the crowd. Again, continuing to show off, I was the third bid. I figured with a hundred billionaires in the room, there's no way I'm winning this dog. And going once, twice, three times, all of a sudden, Bear's mine. They bring a two-month-old golden retriever to my feet in the middle of Cipriani in downtown Manhattan. I had a Blackberry at this time. So, I'm trying to send a picture of Bear to my wife, who can't believe I've done this and still thinks I'm playing a joke on her.

In any case, I get home eventually with the dog and carry him through the front door. And my daughter, who must have been five or six at the time, and my son, who must have been 18 months old, greet me with my wife at the door. And my wife looks at me and says, "That's not a dog, that's a bear." And so that's where Bear's name comes from.

So, for anyone with little kids thinking about a dog, I'd highly recommend a golden retriever because there's nothing better for kids than a dog, and no dog is better for kids than a golden retriever.

Inspirational sources

Linnéa: Are there any sources that you draw inspiration from?

Ben: Some of my favorites are:

• The Drive podcast with Peter Attia
• All-In podcast with Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg
• Pivot podcast with Kara Swisher and Scott Galloway
• Sigma Force, James Rollins's techno-thriller book

I think they're a fantastic mix of people. The thing I love about Chamath, Jason, David Sacks, and David Friedberg is their ability to disagree with one another and love each other at the same time. We just don't have enough of that at work or in society more broadly, and they're trying to create a platform where people can disagree and talk rationally. I think it's just so needed and so welcome.

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Defining Brilliance with Ben Humphreys

Linnéa: We'd love to finish our Brilliant People Podcast by defining brilliance in six different ways. So, please fill in the blanks...

Ben:

	Purpose is...	delivering for our investors.
	Leadership is...	empowering and aligning the team to accomplish great things.
	Success is...	building great companies.
	Brilliant leaders...	have integrity, they're accountable, and they're empathetic.
	Brilliant operating partners...	relentlessly drive for results, are humble, and are great partners to their management teams.
	I perform at my best when...	my hair is on fire.

Linnéa: That was such a great way to wrap it up, Ben. What a great conversation and great insights. Thank you for joining us today.

Ben: Thanks so much for having me. It's great to be here.

Linnéa: Thank you to Ben Humphreys of Monomoy Capital Partners for joining us on today's episode. I hope all of you walk away inspired by the powerful reminder of the limited time we have to achieve what matters and to make the best use of every day and every person we surround ourselves with. And thanks to you, our listeners, for tuning in.

That's it for this episode of The Brilliant People Podcast. I'm Linnéa Jungnelius. If you found this conversation valuable, be sure to subscribe, rate, and review the show, and follow Acertitude on LinkedIn for the latest insights on how to lead and perform at your best.

Until next time, stay brilliant at work.

For more Brilliant People content, check out the insights from American Securities Commercial Excellence Operating Partner Jerry Hughes.