Steve Young Takes His Quarterbacking Expertise Into M&A with HGGC

Steve Young, one of the great legends of the NFL, jogged towards the football on the field at Los Angeles’ SoFi Stadium earlier this month, and kicked it towards the goalpost. The ball flew shallow, skimming the bottom of the post—but ultimately, bouncing up and through for a field goal.

On Jan. 22, Young, former quarterback for the San Francisco 49ers, member of the Pro Football Hall of Fame and co-founder of middle-market private equity firm HGGC, displayed to a select group of ACG Los Angeles members and guests the realities of both sports and dealmaking. Sometimes you win, sometimes you lose. But in every case, leaders—both on the field and at the dealmaking table—can deploy their skills, instincts and trusted teams to pursue the greatest chance of success. And when done right, that ball will make its way through the goalposts.

Steve Young and other members of the HGGC team, including CEO and co-founder Rich Lawson and executive director Junior Bryant, gathered senior PE leaders for unique on-the-field experiences, letting attendees test their own skills with a field goal-kicking contest and football target practice.

We are partnership investors deeply rooted in a values-based culture of teamwork and collaboration. We buy good businesses in the middle market with the goal of transforming them into great companies.

Rich Lawson

HGGC

Off the field, Young sat down with the group for an intimate discussion about his experiences both on and off the field. For Young, the synergies between his experiences as a professional athlete and M&A dealmaker are clear, and deploying the lessons learned as one of the league’s top quarterbacks to his role at HGGC remains key to success.

A Leader in Collaboration

With an all-star team at its helm, including Lawson, as well as Partners and Co-Chief Investment Officers Steven Leistner and David Chung, HGGC from the get-go approached the middle-market M&A landscape with a collaborative mentality.

“We are partnership investors deeply rooted in a values-based culture of teamwork and collaboration,” Lawson tells Middle Market Growth. “We buy good businesses in the middle market with the goal of transforming them into great companies.”

At SoFi Stadium, Young emphasized the goal of HGGC’s culture. “We decided we wanted to do partnership investing,” he said. “Across the table is our partner. It could be a financial sponsor, a founder or a management team. That’s our partner.”

He added that 30-35% of every dollar invested with HGGC has come from those partners across the table, deepening the collaborative nature of the firm’s approach to dealmaking. “The seller is actually the buyer,” Young explained. “That’s how we look at the world, and that’s how we look at private equity.”

Today, HGGC is focused on the technology and tech-enabled business services, financial services and the consumer sectors. Since its beginnings in 2007, the firm has completed 600 portfolio investments totaling more than $71 billion in total enterprise value. The firm is among its own largest investors, having committed more than $400 million.

For Young, who has now been in dealmaking for longer than he was in the NFL, his athletic experience has been paramount in developing HGGC’s vision. His focus, as he told the crowd, is to take the most valuable lessons from his time in football and recreate those values in the world of private equity.

We decided we wanted to do partnership investing. Across the table is our partner. It could be a financial sponsor, a founder or a management team. That’s our partner.

Steve Young

HGGC

Quarterbacking the Dealmaking Process

During the Q&A session, Young made clear that the lessons in leadership and teamwork he fostered throughout his 15 seasons in the NFL extend deeply to his middle-market dealmaking approach.

For instance, as a quarterback, one must strike a balance between taking the lead and embracing the group. “If you think about my experience in football, there is this creative tension between the independent, singular player, and the team,” he said, adding that while it can be tempting for leaders to focus on their own successes, “you have to subsume yourself at some point and go all-in with the team.”

The concept of the huddle has become a particularly important metaphor he’s taken from the field into his family and professional lives. The act of putting heads together—both literally and figuratively—to develop strategy and course of action has been instrumental in HGGC’s partnership-forward investment strategy, Young noted.

That collaborative approach has not always been easy within the world of private equity, however, an area that Young described as “a hornet’s nest of attribution.” HGGC made it its mission to combat that legacy within PE, and instead approach the dealmaking field as a team—not only within the firm itself, but with its portfolio companies and their employees, clients and customers. “Let’s recreate that team mentality in private equity, and push the rock up the hill every day to try to do what we were doing in sports,” Young said.

The world of athletics is informing HGGC’s growth and evolution in more ways than one.

Today, the firm’s investment strategy is not necessarily focused on sports—earlier this month HGGC partnered with financial services holding company Wealth Partners Capital Group to invest in registered investment advisor True North Advisors, for example, a transaction aligned with one of the firm’s focus areas of financial services.

Also among its most recent transactions is the add-on acquisition of eight Planet Fitness locations to portfolio company Grant Fitness Partners, a deal announced last December.

And sports are beginning to more deeply enter the fold for HGGC’s path forward. Girls’ sports—flag football, in particular—is squarely on Young’s radar these days, due in large part to his role coaching his daughters’ flag football team. His interest in youth sports, as well as women’s’ sports, just might make their way into HGGC’s business development pipeline: Young noted that HGGC has a few projects in the works specific to youth sports, and women’s athletics might not be far behind (“I’m unafraid to invest in women’s sports,” Young declared).

In the beginning, Young may have shied away from sports investing. But in recent years private equity has elevated its interest in the market, from investing in sports leagues to sports equipment and gear to sports technology.

Young said he realized it’s time to embrace his identity as a footballer in a new way with HGGC. “Just in the last two or three years we’ve started a sports thematic investing arm of our firm,” he said, adding that he has now begun to reassure himself of the value of this opportunity: “This is our expertise. Don’t run from it.”

Carolyn Vallejo is Middle Market Growth’s digital editor.

Pictured above from left to right: ACG LA President Jalal Taby; HGGC Partner, Chairman and Co-founder Steve Young; and HGGC CEO and co-founder Rich Lawson.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.