New Mountain Capital's Steve Klinsky - building a business that builds businesses

Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode is with a private equity pioneer who has seen the industry evolve in the forty plus years he’s spent in private markets.

We sat down with Steve Klinsky, the Founder and Chief Executive Officer of New Mountain Capital, which he started in 1999, and has grown to over $55B AUM with an investment platform that spans strategies across Private Equity, Credit, and Net Lease Real Estate.

Steve was the Co-Founder of the Leverage Buyout Group at Goldman Sachs from 1981-1984, where he helped execute over $3B of transactions for Goldman and its clients. He then joined Forstmann Little and Co. as an Associate Partner and General Partner, helping to oversee seven private equity and debt partnerships totaling over $10B in capital.

He has since built New Mountain Capital into a leading alternative asset manager that has charted a growth path. Yet the firm has remained true to its roots and mindset of its “family business background,” which has informed how New Mountain has partnered with both GPs and LPs, and it's a DNA that is central to their recent rollout of a wealth solutions business.

Steve and I had a fascinating discussion about the evolution of private markets and how to build a leading alternative asset manager that helps build businesses. We covered:

• How private markets have changed since Steve began in the industry.
• What it means to build “great businesses.”
• How the mindset of the “family business background” has helped inform investment strategy and deepening LP relationships.
• How Steve and New Mountain have navigated scaling the firm while focusing on generating returns for LPs.
• How New Mountain has approached launching new strategies.
• The why and how behind launching a wealth solutions business.

Thanks Steve for coming on the show to share your wisdom and expertise on private markets.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at [email protected].

We thank Ultimus for their support of alts going mainstream.

Show Notes
00:00 Message from our sponsor, Ultimus Fund Solutions

01:23 Podcast Theme and Opening

02:03 Guest Introduction: Steve Klinsky

04:00 Steve's Early Career in Private Equity

05:39 The Evolution of Private Equity

06:55 Forstmann Little & Co. Experience

07:36 Founding New Mountain Capital

08:08 New Mountain's Investment Philosophy

08:25 Family Business Influences

08:56 New Mountain's Cultural Values

09:13 Working with Entrepreneurs and Management Teams

10:15 Scaling New Mountain Capital

13:35 Investment Strategies and Talent

14:45 Opportunities and Challenges in Private Equity

15:03 Mid-Market Focus and Growth Opportunities

16:10 Impact of Industry Growth on Mid-Market Firms

16:50 Product Innovation in Private Markets

18:40 Synergy Between Investment Strategies

20:20 Growth and Future of New Mountain Capital

21:10 Engaging the Wealth Channel

21:40 Building the New Mountain Brand

23:07 New Mountain's Edge and Performance

24:20 Engaging the Wealth Channel

25:50 Customization and Differentiation in Wealth Management

27:17 Strategies for Wealth Channel Engagement

27:39 Productization for the Wealth Channel

28:05 Industry Evolution and Consolidation

28:40 Wealth Channel vs Institutional Channel

29:44 Institutional Side of Private Markets

29:59 Historical Perspective on Institutional Changes

30:47 Challenges and Investment Strategies for the Wealth Channel

32:03 Investment Lessons

34:48 Common Threads in Successful Investments

35:53 Leveraging AI and Technology in Investments

37:56 Value Creation in Services Businesses

38:42 Effective Value Creation Levers

39:38 Growth and Team Building at New Mountain

41:04 Starting New Mountain in 1999

43:00 Navigating Market Turbulence

44:57 Private Markets vs Public Markets

45:53 Lessons from Private Markets for Public Investors

47:47 Importance of Price in Investing

49:24 Building a Strong Team

50:05 Global Investment Strategies

50:47 Future Investment Excitement

51:58 Focus on Wealth Channel

52:13 Growth in Secondaries and Continuation Vehicles

52:42 Industry Evolution and Firm Growth

53:11 Conclusion and Final Thoughts

Editing and post-production work for this episode was provided by The Podcast Consultant.