A CEO’s Life After a Sale
What do the names Tom Kemp, David Nussbaum, Andy Goodenough, Tom Rogers, Michael Wood, and mine have in common?
We all happen to be ex-CEOs of publishing companies backed and then sold by private-equity firms.
What is a former CEO to do anyway?
Seems like a dream situation, right? But deciding on the next path for a former magazine CEO is not that different from what many people face when they change careers or jobs, finding the right people to work with, in the right industry, with an interesting challenge.
I faced that issue a little more than a year ago, when my equity partner Frontenac Company and I successfully sold 101communications to 1105 Media Inc., a new company backed by two other private-equity firms, Nautic Partners and Alta Communications, and its CEO Neal Vitale.
You can become a CEO at a public company or a division of one. I’ve gotten more calls from headhunters in the last year than in the last ten years combined. But even if the right spot opens up, it can mean you have to be willing to relocate. Having worked for a private-equity firm, it is hard to go back to the world of public companies, where quarterly performance is the only game in town, and corporate politics often run rampant.
You can become a CEO or executive chairman at another private-equity backed company. That’s not as easy and straightforward as it sounds. First, you have to decide which private-equity firm to hook up with. It can be an arduous process. Before Cam Bishop formed Ascend Media, he worked with several private-equity firms before finding one with the right chemistry for him. I’m lucky that I’ve had a long and fruitful relationship with Frontenac, so I’ve got a ready, willing and solid financial partner. But then you have to find a company to buy. Again, not easy. It depends what’s for sale, who else is bidding, where it’s located. It’s fine to participate in an investment bank auction, but there is only one winning bid. It’s much better to privately approach a company where the owner is thinking about an exit.
At the same time, the reality of a private-equity backed adventure is that it usually has a three-to-five-year life span. It means going through a sale process once again, which is stressful and can even be harmful to your health. And, even more difficult, you have to deal with the emotional upheaval of building something and then letting it go just as it begins to take off, as well as the challenge of managing a work force that is nervous about the looming exit and what it might mean to their employment security.
On the Board
You can become a board member of a publishing company, mentoring younger CEOs. Private-equity firms particularly want former CEOs to serve on their boards. I just joined the board of a company backed by a New York-based private- equity firm and agreed to do it largely because I thought the CEO was talented and open to counsel and criticism. So my involvement could be interesting and impactful. Public boards are a little more problematic, what with Sarbanes Oxley, and the limited number of public publishing enterprises.
You can go to work directly for a private-equity firm. Tom Kemp has done that with Veronis Suhler Stevenson. And James Finkelstein, former owner of New York Law Journal, has partnered with Avista which recently acquired the Minneapolis Star Tribune. In this role, the former CEO no longer is a hands-on business operator, but plays deal maker, board member, and investment supervisor;all interesting, but all different from the nitty-gritty challenge of the publishing business. The role is more like a non-executive chairman in a public company.
You can retire, of course.
That’s a real benefit from a successful private-equity backed transaction. One former publishing CEO reportedly said he planned to visit every major golf course around the world as part of his retirement.
Then there is the path I’ve taken so far: Serving on a couple for-profit boards; mentoring some young friends who’ve started magazines or a Web business; chairing the board of a nonprofit that helps fight poverty in my local community; teaching a class on the media business at USC Annenberg School; spending a lot more time with my wife and kids; thinking about writing a book. And of course, writing this column.
Nevertheless, whenever Frontenac calls with a new publishing company to buy, I’m at least willing to listen.
Jeffrey S. Klein is chairman of 1105 Media Inc., a b-to-b publisher.