On this week’s Bell Board Podcast Trailhead Media CEO John Murrow talks about the pros and cons of having an equity fund as a business partner. Trailhead Media is backed by Viking Global Investors.
What’s Viking like as a partner?
Having Viking is a partner has been really good for us. In the beginning, it gave us the confidence to be able to go into a seller and say, look, we’ve got Viking behind us. When we’re ready to close, we’re going to close. We’ve got the money. We don’t have to take this to to somebody or whatever. It has caused us to be more disciplined…there is very strict underwriting…So we can’t just go buy anything for whatever we want to pay for it just to have it. So we have to be disciplined. There’s a lot of reporting on a monthly basis that has to be done, which keeps us honest and keeps us disciplined….They’re very attentive, attentive to what is going on in the market…If things are trading at 6 to 8 x, they’re going to want us to get 6 to 8 x. If things are trading at 10 to 12 they want us to get 10 to 12. So they’ve been really good partners for us. What we’ve done would not have been possible without them.
What does private equity misunderstand about the billboard business?
You own a business and you’ve hired salespeople or operations people. They don’t grow on trees…it’s hard to find a very good outdoor salesperson. And I think I think that’s what private equity doesn’t get sometimes. It’s not all about the bottom line. It is to them because that’s where their money is sitting. But to us running the company, it’s not just as easy as…get rid of that person or…get rid of that thing over there and increase my bottom line…Viking referred us to a company to come in and look at our accounting function, and they thought that we had too many people. And this company came in, and after about three months of auditing and looking at reports and everything else, they came back to us. We can’t save you any money. If anything, we’re going to cost you more money. And I don’t know that we can increase any efficiencies.
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