Himalayan Heights w/ CVC's Rob Lucas

**Hugh MacArthur** (0:04)
Today on Dry Powder, I'm joined by an industry legend, Rob Lucas, Chief Executive Officer of CVC.
What you may not have heard about Rob is that he's also an accomplished Mountaineer who has climbed the Seven Summits and K2. And fewer still have heard how those high stakes expeditions have shaped his views on leadership.

**Rob Lucas** (0:21)
When you set out on an investment, the one thing you know is that it's not gonna turn out as you planned. It might be better, it might be worse, but it's not going to be as you planned. Well, it's exactly the same setting foot on a mountain.

**Hugh MacArthur** (0:34)
On today's episode, I'll ask Rob what Mountaineering has taught him about investing, from building teams that perform under pressure to planning for the unexpected.

**Rob Lucas** (0:42)
You've got to be able to have a group of people who, when the chips are really down, can make the right calls.

**Hugh MacArthur** (0:49)
We'll also explore how CVC's uniquely entrepreneurial culture plays out across its regional offices, and perhaps most surprisingly, we'll see how that same entrepreneurial ethos has led CVC to develop one of the most distinctive carry structures in the industry.

**Rob Lucas** (1:02)
Our executives are going to be real beneficiaries if the business succeeds and grows, but they will also be hit financially, substantially, if that business fails.

**Hugh MacArthur** (1:15)
I'm Hugh MacArthur, Chairman of Bain's Global Private Equity Practice, and this is Dry Powder. Rob, it's terrific to see you today. Welcome to the show, and thanks very much for being on.

**Rob Lucas** (1:26)
Thanks, Hugh. It's a pleasure to be with you.

**Hugh MacArthur** (1:29)
What would you say, to begin with, are the hallmarks of a CVC private equity deal in the buyout space?

**Rob Lucas** (1:35)
Well, perhaps the best way of trying to answer that question might be just to give you a couple of examples of investments that I see as very much characteristic of CVC.
I would choose, back in 2019, a business called Ontick, which is an aircraft instrumentation aftermarket business. This business sat within a UK conglomerate at the time. It was a little bit of a neglected asset, but the key for us was that we had very deep contacts. We'd known about this business for a long time. Obviously, we've been deeply established in the UK for many years. And we knew the senior management, we knew the owners of the business, we knew a lot of people around it. And we identified this as a potential opportunity. It wasn't for sale, but we made the approach. So I think that would be very characteristic, a real hallmark of a CVC deal. We then worked for a long time behind the scenes to really develop our understanding of this business using a lot of experts in the background, and then made an approach to the business.
At that point, the business was interested in engaging, but of course, being a public company needed to seek alternative views on value and to test the market. So we then moved into overdrive. We were way ahead in the process. We got all the debt, all the equity, and literally James and I went around to the business on a Friday, met with the chief executive of the parent company, put a pile of documents about 50 cm high, I would say, on the table, and said, this is your deal. It's all here. All you need to do is approve and sign this. But you have until Sunday evening in order to do this, or we're not here. I would say that's very characteristic of a CVC deal. We presented a very high quality deal to the board. We were way ahead of anybody else at the time. And the board met on the Sunday afternoon, and they agreed to do the deal with us. And so it's trying to find ways to really understand businesses much better. It's about then really moving fast and trying to achieve a competitive advantage. We all work in a very competitive environment. You really have to have something that is differentiated from the competition there, and then really work hard to drive that through.

**Hugh MacArthur** (4:07)
I love the productivity. I love the creativity in sourcing and driving deals to conclusion and avoiding the competition. I also want to tie that to your talent model and get you to talk a little bit about how some of your highly localized teams, you have a team in one country that's doing things there, you have a team in another country that's doing things there. How does that talent model and that team model help you avoid competitive auctions and surface more unique deal opportunities like the one you just described?