🎥 Apax's Andrew Sillitoe and Mitch Truwit - buying complexity for value in the middle market: AGM Live from SuperReturn

Welcome back to the Alt Goes Mainstream podcast. We were live from Berlin, which becomes the “capital of private capital” in June as the private equity’s industry leaders make the annual pilgrimage to the city for one of the marquee private equity conferences, SuperReturn Berlin. Much of the SuperReturn conference is centered on fundraising. GPs take up every available space — from hotel rooms, to Tiny Space cabins lining the parking spots on Budapester Strasse outside of the InterContinental conference venue — to conduct meetings with LPs. With Prosek Partners’ and former Bloomberg TV journalist Deirdre Bolton as my producer and her team, we took over a Tiny Space cabin to hold big conversations with some of the industry’s leading alternative asset managers. Our first conversation was with Apax Co-CEOs Andrew Sillitoe and Mitch Truwit. Apax is one of the pioneers in the private equity industry. The firm’s rich history dates back to the 1970s, when its founders, Alan Patricof (US), Sir Ronald Cohen (UK), and Maurice Tchénio (France), came together to establish the first US-UK partnership firm in private equity. During that time period, the firm backed Steve Jobs and the first iteration of Apple. The UK and US firms merged in 1981, laying the foundation for Apax. Today, Apax stands at over $80B in aggregate funds raised. The firm underwent its second leadership transition in 2014, when Andrew and Mitch were elected as Co-CEOs, succeeding Martin Halusa, who became Chairman. Apax sits in an interesting position. They are a scaled platform that focuses on the middle market. They operate across three sectors, Tech, Services, and Digital / Consumer, infusing a digital DNA and value creation team into everything they do. Their platform spans “a mile wide and a mile deep,” which is what much of the conversation between Andrew, Mitch, and me unpacked. We had a fascinating discussion about the current state of private equity and the middle market, why Apax focuses on “density-driven business models,” why the firm focuses on carveouts in the middle market, what’s underappreciated about the middle market, why it’s important to “buy in the right neighborhood and fix it up,” and how the firm’s core values of “having impact through insight and tenacity” drive every decision they make. Bios Andrew Sillitoe has been Co-CEO of Apax since 2014. He is Chairman of the Apax Global Investment Committee and the Digital Investment Committee, amongst others. He is also a member of the Apax Executive Committee. He has been based in London since joining the Firm in 1998, focusing on Tech & Telco investments. Andrew has been involved in a number of investments including Inmarsat, Intelsat, King, Orange Switzerland, TIVIT, TDC and Unilabs. Prior to joining Apax, Andrew was a consultant at LEK. Andrew holds an MA in Politics, Philosophy and Economics from the University of Oxford and an MBA from INSEAD. Mitch Truwit is Co-CEO of Apax, based in New York. Prior to joining Apax in 2006, Mitch was the President and CEO of Orbitz Worldwide between 2005 and 2006 and was the Executive Vice President and Chief Operating Officer of priceline.com between 2001 and 2005. Mitch serves as a Board member of Openlane and Trade Me. Prior boards include Advantage Sales & Marketing, Assured Partners, Dealer.com, Bankrate, Garda World, Hub International, Trader Canada, Boats Group and Quality Distribution Inc. Mitch is a graduate of Vassar College where he received a BA in Political Science. He also holds an MBA from the Harvard Business School. Thanks, Andrew and Mitch, for a fascinating conversation and for sharing your expertise, wisdom, and passion at the intersection of investing and operating in private equity. Show Notes 00:00 Meet Apax’s co-CEOs, Andrew Sillitoe and Mitch Truwit 00:39 Andrew on Industry Change and Apax’s Evolution 01:12 Private Equity: From Cottage Industry to Scale 01:26 The Purpose of Private Equity 01:44 Apax Growth and Professionalization 02:07 Values and Venture Roots 02:36 Mitch’s Journey from Operator to Investor 03:30 Building the Operating Platform at Apax 04:10 Defining the Middle Market 04:45 Why Sub-Billion EV Works 05:00 Exit Options and Liquidity 05:32 Capability Gaps in Management Teams 06:04 TRADER Corporation - Canada App Turnaround 06:50 Apax’s Digital DNA and Carve-Outs Approach 07:28 Choosing the Harder Path 07:55 Digital DNA and AI Wave 08:34 Top Line Growth Lever 09:26 Add-ons and TAM Expansion 10:28 ECI Roll Up Example 11:05 Integration vs. Not Just Buying 11:27 Market Structure and Selling Well 12:50 Fund Size Discipline 13:42 Returns Over AUM 15:12 Global Pods Micro Investing 17:11 Scale Specialization Flexibility 18:34 Future Proof Investing in AI Era 21:54 Moat and Investment Committee 23:58 Why Middle Market Is Underloved 25:09 Next Decade Alpha and AI 26:54 Impact Through Insight Tenacity 28:01 Apax Culture: An Obligation to Dissent 29:07 Aspirational Brands 30:04 Wrap Up Join over 16,800 Substack subscribers & followers and 44,000 LinkedIn and podcast followers who are thought leaders and executives from top private markets firms and wealth management like Blackstone, Apollo, Ares, KKR, EQT, Carlyle, Blue Owl, CVC, TPG, Brookfield, Vista, Goldman Sachs, J.P. Morgan, BlackRock, Fidelity, iCapital, Franklin Templeton, Nuveen, Hg, Permira, Stonepeak, Hamilton Lane, StepStone, Partners Group, General Atlantic, Hightower, Focus Financial, Corient, Cerity Partners, and more. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit altgoesmainstream.substack.com