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Spencer Fleischer

Spencer Fleischer

President, FFL Partners – Venture Capital and Private Equity (San Francisco)

A global investment banking leader and private equity fund innovator, Spencer Fleischer is President at FFL Partners. FFLP was recently awarded the 2012 HEC-Dow Jones Private Equity Performance Ranking's top spot for the world's top PE firm in terms of aggregate performance based on all funds raised between 1999 and 2008, answering the question of which firm is generating the best performance, globally. Read on to find out about Spencer, his career and core characteristics that he feels are essential to have as an equity partner in today's environment.

Dave (D): How was FFL Partners conceived and initially funded?

Spencer (S): FFL was founded in 1998, when Tully Friedman left Hellman and Friedman, one of the earliest US Private Equity firms, to form a new firm with the idea that a more active engagement with portfolio companies, in particular smaller private companies, could improve their performance and produce better returns; to produce returns more through growth than leverage. He invited me to join him, and that's exactly what we have done. We raised our first fund from a number of institutional investors in the US and Europe, and now are on our third fund with capital contributions from all over the world, mostly from endowments, foundations, pension funds, insurance companies and other large asset managers. We have a handful of individual investors who have been with us since the start.

D: How did you size and segment the business opportunities where FFL Partners are currently playing?

S: We set out to invest in sectors we individually knew well and where we thought we could find growth and low capital intensity, producing high returns on invested capital, i.e. Primarily in service sectors (health care, business services, financial services) and in some consumer niches. Although we have experience in global markets, we decided to stick to the US because being local is a huge advantage, and this market is big enough. We have surrounded ourselves with very accomplished business executives and collectively we provide a great resource for our companies. Large companies usually don't need as much input, and generally businesses with less than $500mm in enterprise value are where we can be most effective. All the same, it is a wide range, and we've done 5 startups, and have invested in transactions with enterprise value up to $1 billion.

D: How has your business background and the connections you made prior to forming FFL partners contributed towards its growth and achievements to date?

S: Relationships and reputation are at the core of our success. Each of us had successful careers before starting FFL, in my case almost 20 years with Morgan Stanley in the US, Europe and Asia. Without that experience and the connections I made, our business would not have been possible. Knowing who to call, and having old friends and colleagues in many industries, is essential.

D: When evaluating new opportunities, what are the core attributes of the company and its people that you are looking for?

S: We look for an industry niche that can produce above GDP growth, companies that are well positioned competitively in that niche, highly engaged management, but not necessarily perfect teams (we can add to the management team) and good returns on capital in the business. Evaluating people is very important, establishing their motivation, how well they work together, how capable relative to their competition, and how commercial they are. Integrity is vital of course.

D: What core character traits do you feel is necessary to be a funder and serious equity partner in today's market?

S: You have to be thoughtful, candid, quick to decide and to commit, willing to address difficult issues, and humble in your style.

D: How do you feel culture is instilled in an organization?

S: Culture is established by the example of the leaders and by the hiring decisions you make. It is important to be explicit and clear about your values. We talk about this often. In our firm, we tell people we expect them to have a point of view, to express it, to be willing to be wrong, to work as a team, and to work hard. We hire many athletes because they often have the self-discipline, teamwork, competitiveness and objectivity that we want.

D: Casting your eye to South Africa, what do you observe as being the fundamental differences between its funding market and the enabling of new businesses in comparison to the market that you are involved in?

S: There are well-established and world-class private equity firms in South Africa, both domestic and global, so the bigger difference is at the venture stage, where the industry is better developed here.

D: Where do you see South African entrepreneurs being most challenged in how they scale and go to market globally?

S: As a big generalization, South Africans as individuals do well in business internationally. The country produces confident, energetic and entrepreneurial people and they show up in senior positions across the world. The difficulty for entrepreneurs is probably a function of distance and competition: it's much harder to make an impact in big markets and to break through the noise.

D: What do you feel is necessary for South African ventures wishing to go global to attract the attention of international venture capital and private equity funders?

S: I can't really speak to venture capital. But regarding private equity, the clear first advice has to be to talk to the domestic firms and to those global firms with a South African or African strategy already established. It is highly unlikely that a PE firm would make a once-off investment in South Africa if they have not already decided to invest in Africa. If the South African company is looking for capital to expand their business model in another country, as opposed to looking for capital to deploy in South Africa, the answer may be a little different.

About Spencer Fleischer

Before co-founding FFL in 1997, Spencer Fleischer spent nineteen years with Morgan Stanley & Company as an investment banker and manager. He served as Head of Investment Banking in Asia, Head of Corporate Finance for Europe, Head of UK Corporate Finance, Head of Investment Banking in Los Angeles, and Head of Corporate Finance in San Francisco.

Spencer earned a M. Phil. in Management Studies at Oxford University, where he studied as a Rhodes Scholar. He graduated from the University of the Witwatersrand in Johannesburg with a B.A. (Hons) degree in Economics.

For further information on Spencer and FFL see

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