Notice: Trying to access array offset on value of type null in /var/www/wp-content/plugins/cta/classes/class.cta.render.php on line 492
William Vogelgesang—Episode 36 - Westgate Career Coaching
William Vogelgesang

William Vogelgesang

William Vogelgesang is co-founder of EPOCH Pi, an investment banking company serving purpose-based impact companies. Businesses that exist to provide financial as well as social returns while endeavoring to create value for all stakeholders. He has experience in a broad array of businesses including areas of capital formation and realization. He also serves on a number of corporate and non-profit boards.

Transcript

Maureen Farmer

In my conversation with William Vogelgesang, we discuss the world of mergers and acquisitions under the lens of the B Corp structure. Corporations that are certified for for-profit benefit corporations that are focused on social and environmental performance. There are more than 2200 B Corp companies around the world and Bill's firm EPOCH Pi is one of them. I hope you enjoy the show.


William Vogelgesang is co-founder of EPOCH Pi, an investment banking company serving purpose-based impact companies. Businesses that exist to provide financial as well as social returns while endeavoring to create value for all stakeholders. He has experience in a broad array of businesses as well as an areas of capital formation and realization. Bill serves on a number of corporate and non-profit boards and previously worked for 14 years at Candlewood partners (a middle market investment bank) and South Franklin Street Partners (its private equity affiliate) where he was co-founder. He spent seven years as Managing Director and principal of Brown Gibbons Lang & Company. He served as chairman of BGL's management committee and was active in corporate finance, mergers, acquisitions, and restructurings. Prior to that, Bill spent three years as a principal and Chief Financial Officer of a hazardous waste recovery and recycling company. Bill is chairman of conscious capitalism of northeastern Ohio.


Bill, thank you for joining me on the Get Hired Up Podcast!

William Vogelgesang

Thank you for having me. I'm looking forward to the conversation.

Maureen Farmer

Me too.


I'm going to read a tiny little bit about your organization, just to get give the listener a sense of what your organization does. And I'm taking this from your LinkedIn profile company page. EPOCH Pi is a different kind of investment bank. They help values and purpose driven companies execute mergers, acquisitions, and sale transactions, raise capital, and more. EPOCH Pi incorporates proprietary culture and integration planning tools—that proprietary culture and integration planning tools are very fascinating to me—And they do this to maximize value and outcomes for business owners and management teams by determining the best strategic options and identifying the most aligned partners. Their holistic approach ensures companies survive and thrive long after a transaction. So they continue to have influence, inspire, and exemplify how business has the power to effect positive change. They envision a world where capital market transactions contribute to the long term sustainability and support of a quadruple bottom line. People prosperity, planet and purpose. I love that. Thank you. Thank you. It's a little strange hearing it read to you. But yes. 

William Vogelgesang

Thank you. Thank you. It's a little strange hearing it read to you. But yes.

Maureen Farmer

Yeah, it is a very unique business. And I was fascinated to learn that your organization is a B Corp investment bank, and why don't we start there? And tell us a little bit about how you got here?

William Vogelgesang

Sure. You know, it really started around 2009, I stumbled into an article by John Mackey, the founder, then CEO of whole foods on this subject of conscious capitalism. So 16 page article, and I read it, I found it just fascinating. It resonated with me, and I think put words to things that I intuited, but didn't, didn't really know how to pull together. And that was kind of the beginning. And I took that back, polluted the minds of a few of my associates at our old firm, Candlewick partners. And we just sort of thought, wow, this is interesting, this is a really powerful business model. And, you know, we want to find a way to sort of participate in this new movement. And the movement really has, you know, the conscious capitalism talks about four pillars, they talk about stakeholder orientation, a higher purpose, conscious culture and conscious leadership. The thing that I think I found so empowering is, is that I remember back 100 years ago, when I was in graduate school, a professor saying that very few people are motivated by money. Now, being a finance person, you know, I found that hard to believe in reading, you know, studying finance and economics. But in reality that that, you know, the studies do say that exact same thing.

Maureen Farmer

Money is—I perceive it as an outcome of something rather than a pursuit of...right?

William Vogelgesang

I think people in the conscious capitalism community talk about money being essential to business. The lifeblood of business, much as air is to we humans, you know, we can't live without air and a business can't survive without money, and profits. But just as air and breathing are not the purpose of our human life, you know, making money is not necessarily the best purpose for business. People are motivated by a purpose that's larger than them being a part of something. That's what motivates them. And so as a result, companies that have a higher purpose, that are trying to create value for all stakeholders, and have a conscious culture run by conscious leaders, which I think is a way of saying that, you know, that the organization sees its interconnectedness with all things those companies actually outperform. So there was a book written in the 2008 timeframe called Firms of Endearment, written by Rajendra Sisodia, and others. And it it looked at 20 some public companies that had these characteristics, and the thing that hooked me is that over a period of 15 years, those companies outperform the S&P 10 times. And so when you begin to peel that back, it makes a lot of sense, right? Companies with with these principles have lower turnover, they have higher engagement, right? Employee engagement scores, etc. And that higher purpose in my view is really the glue that holds this together. So these companies, you know, like a higher purpose, Whole Foods used to talk about whole person, whole planet. So they were trying to educate people on healthy eating, and manage their, their supply chains to do as little damage to the planet as possible. Google talked about organizing the world's information and making it available to everyone. Southwest Airlines, talks about democratizing air travel and connecting families. And so, you know, these, these companies have a larger vision. And that sort of is a cohesive force around the suppliers who they tend to treat better and the customers who love you know, what they do, and their employees who are, you know, proud to work for the company? For the most part. I mean, none of this is perfect, right? I mean, humans are flawed, and companies are just aggregates of humans.

So, but anyways, we found that to be a powerful model, and we set out to try to serve those people. And one of the things that we learned along the way, Kip Tindell, who is the CEO, the Container Store, told a great story about driving his banker at JP Morgan, Chase, crazy. They literally talked to over 50 buyers. And he kept saying, Well, no, that one's not right. You know, and the next one, not right either. And what he was looking for was a cultural fit, right. And we heard that too, from the CEO of then Fairmont minerals, which has now been acquired, but was publicly traded company that they, you know, we're looking for the right financial partner, that understood the company and its culture. And so we said, wow, there's, there's something there. And as finance people, you know, we didn't really know diddly about culture. So we got certified in the application of a couple of different culture tools, really is a way to sort of understand that culture could be measured. And the culture, you know, could be put in a sort of tangible terms, and it wasn't this squishy thing that couldn't be analyzed. And then we, we use that with some help from some others, to develop sort of our own tool that we use with our clients. As one of the metrics, you know, price in terms of financial transactions are critical. But there are other things that are important. And for many of our clients, values, alignment, cultural fit, are really critical. So many people in in our community will say, you know, you can copy my product or my service, but you can't copy my culture and my culture when so anyways. And that's, that's sort of how we, we've backed into using culture as one of the variables that we help our clients assess when they're looking at counter-parties to a transaction.

Maureen Farmer

I appreciate the granularity of the answer, because a lot of people talk about culture and, and values. And it means different things to different people. And when you have specific tools that you can use, that will uncover the values alignment and the cultural perspective of the client of the acquisition of the company, of the employee who you are recruiting into your organization. That brings a degree of clarity that is fundamental to the success of everyone you talk about, you know, people prosperity, planet and purpose. You know, everyone in that ecosystem needs to be congruent in terms of what the expectations are.

And often, what I've seen Bill, in my career is very few people take the time, and I might have been one of them at the time. Very few people take the time to ask the questions that are important to them, whether they're a client, or an employer or an employee, and we walk away with a blueprint in our mind of what what a particular organization represents, or how they operate. And then they're disappointed once they've been on boarded into the organization to learn, you know, and I've heard this time and again, this is not what I was expecting. This is not what I was expecting. I have heard that time and time again. And I look at things like turnover and engagement. And at Westgate, we're very interested in one particular aspect of, of turnover engagement. And that's at CEO engagement. And you know, when you think of the CEO, and the CEO can be a proxy for any leader in the organization. But when there is turnover, it impacts the organization and the entire ecosystem for a long period of time. And not only does it have a negative impact on the ecosystem, as a whole, it also has a huge impact personally, on and again, we'll use SEO as a proxy on that person's family, because there's been a missed expectation, incongruent values, whatever it might be, meaning that they, you know, now we have to start all over again. And with and I don't know what the stats are on merger, mergers, acquisitions, I remember reading something not long ago that many m&a integrations don't work because of the misalignment of that culture and values.

William Vogelgesang

No, that's exactly right. The research is really bleak. And there's a lot of it over the last 30 years. But, you know, most of it says that upwards of 60, to maybe as high as 90, don't, business combinations do not realize their intended outcomes, ie they, you know, they don't make as much money as, as they had thought. There's obviously a myriad of reasons, but sort of the overarching one is failed integration. And when you look at why integrations fail, cultural incongruence does have a large, or a large contributing factor to that. And, and we we sort of think that's because nobody at the tape, who's negotiating a deal has really any background in in culture and values, right? financial transactions are put together by accountants and tax attorneys, and lawyers, deal lawyers, and bankers. And we have historically just sort of turned the whole deal process over to them, and said, they're the experts, let's get out of the way. And they know how to make it work legally. And they know how to make it work financially, at least, you know, at the start, but they don't have any skill set in actually running a business or the challenges of melding two very different businesses together.

And so I think we sort of envision a future where there will be experts on cultural assessment, values assessment, and integration who are at the table before a deal is signed, working out, you know, where the problems will occur, because there will always be problems and developing plans to address those cultural incongruent ease before the transaction is, is negotiated. And that's what, you know, we work primarily in private transactions. And that's, that's the way we drive our clients and the buyers, or sellers to, you know, to think about this, let's have these discussions ahead of time. Because while there are some things that maybe you can't overcome, significant differences in values are hard to overcome, you may have two organizations that just could never really understand each other, because they have such very different values. cultural issues usually can be worked around, you know, whether whether you're centralized or decentralized, whether you know, it's a meritocracy, or fairly top down organization, you can actually work through those things, you just have to know that those are that those differences exist and have a plan in place. And maybe, you know, maybe certain departments aren't merged on day one, maybe it's a longer period of time, et cetera. You know, we think that those are solutions to avoiding a bad outcome in a transaction. And you know, this is by the way, all that we have done has been borrowed. I like to say, you know, from the likes of BCG and McKinsey McKinsey in particular, who 20 years ago was writing on how important this was, and no one did anything about it. And we sort of just picked up their work and perhaps operationalized it but you know, it's I think it's the right solution and especially for our clientele, where they may have a unique mission that they want to make sure is preserved post transaction or a culture that they think is critical and they want to make sure it isn't squashed by perhaps a larger buyer.

Maureen Farmer

Bill, can you give us an example of the types of things that the seller wants to preserve or...

William Vogelgesang

So most of the time, it's cultural, that the company has a unique culture that has proven efficacious in, you know, the exercise of its day to day business. And the culture is, as described by some people as the way we do things when people aren't looking. If you, if you take that apart, you're really, you know, you're you're changing the operating plan of the business. And things will start to, you know, function less, less formally or less beneficially. And then there's more extreme cases where, you know, someone says, Well, we know that the certain ESG aspects of your business are important, and important, your customers etc. And we don't intend to change that. And then down the road, someone new is put in place, whatever, and, and you have these wholesale changes. And people regret ever doing the deal after that. So those are fairly simplistic, but they can be there as varied as the different companies involved. And it's just hard, you can't ask for no change, right? Because change, change is constant. But you hope that that the change is consistent with the brand promise that you've made, and that has, you know, is really part and parcel to the value of the business.

Maureen Farmer

Based on your research, would you say that a number of these successful integrations included an integration specialist who understood culture and how to manage that change?

William Vogelgesang

I don't know if I'm the best person to, to answer that in a definitive way. I think there are people out there, we have been early on, we tried to find some integration, people that we could partner with, you know, because we sort of felt that we did in our process was, you know, just the tip of the spear, and that you really needed experts to help the company manage that integration. And what we found was fascinating. In Europe, the big accounting firms that do a lot of the integration work, have culture specialists there in the US, not so much interesting as it is largely tactical people who know how to merge accounting systems, make the head cut changes, et cetera. And there's less emphasis on on the cultural aspects, which is, you know, that's it's kind of consistent with the evolution of business philosophy, I think Europe and Scandinavia are, are, you know, maybe 20 years ahead of the US in terms of movement along this path. 

Maureen Farmer

It's fascinating. I know, this is a not related to mergers and acquisitions directly. But I'm particularly interested in assessment tools of every kind. And I recall a conversation I've had with a colleague, whose expertise is is graphology, which is the the study of human handwriting. And it's used for a number of reasons, it's a multi purpose tool. But a lot of European organizations are using handwriting analysis as part of an assessment tool for not just new employees, but promotions inside organizations. And your comment reminded me that this is very much the case in European countries, not so much in Canadian and US companies. It's absolutely fascinating. It has the same degree of scientific validity as many of the other assessment tools have. And it's been in practice now, since the 1800s. There's an entire history behind it, but it's been proven to be, you know, pretty effective at predicting certain types of behavior that are really, really important in leadership roles. And so it seems like the Europeans do have a bit of an advance on some of these more esoteric, you know, tools and practices that help their organizations be more successful.

William Vogelgesang

Yeah, I mean, that's our observation in this...especially regarding this impact and the ESG investing space, they're further along in the evolution.

Maureen Farmer

And speaking of being further along in the evolution, I would love for you to talk a little bit about your journey through becoming B Corp certified. Because when I think of investment banks, I don't think of B Corp. So I would love to learn a little bit more about that.

William Vogelgesang

Yeah, well, we are definitely an odd duck in the investment banking community, we did it because in our old firm, we were fairly traditional lower middle market investment bank. And what we found is that the community we were trying to serve is very skeptical of all things, Wall Street, and there's a great deal of mistrust. And so we would run into people that say, well, it's just just a market vertical for you, but you're really no different. And so we felt like we needed to actually walk the talk. And we wanted to be a B Corp. And we wanted to have a different messaging than is typical in the investment banking community. And that was a bridge too far for some of our other partners. So we, we in a very friendly basis, just sort of spun what we were calling the conscious capitalism group out of Candlewood and formed EPOCH, and then proceeded to establish ourselves as a certified B Corp.

Maureen Farmer

And that's not an easy journey. I have done a little bit of investigation, we actually had a gentleman on the podcast, not that long ago, talking about the process to B Corp. And there's a lot of rigor involved with that.

William Vogelgesang

There is a lot of rigor. And you know, it's good, because there's so much greenwashing going on that, that you need, you need some way to certify that what people are saying or is actually being done. And whether it's B Corp, there's you know, more and more companies are, are beginning to report on different ESG metrics, and having those actually examined by you know, third parties is also a very rigorous process. So all of this sort of having to prove that you do what you say, it does not come easily.

Maureen Farmer

And how long did it take for you to go through that process?

William Vogelgesang

It seemed like years. My partner carried most of that load. She could probably tell you in days, but I want to say that all in all, it was maybe a six month process for us. And part of it, you know, part of our struggles were small firm, right? So we have to do everything, run the business, as well as try to meet the requests.

Maureen Farmer

When you became a B Corp certified, did you begin targeting new types of clients? Or how did that integrate in with your operations plan for business development and new projects and things like that?

William Vogelgesang

Well, if the B Corp was consistent with what we were saying, right, so there wasn't any sort of evolution for us. And I'd say the evolution came when, you know, we were still at Candlewood and trying to figure out what our value proposition was to this marketplace. So we didn't experience any kind of a transition, because of being certified as a B Corp.

Maureen Farmer

I'm sure it was very attractive, though, to your clients.

William Vogelgesang

We did get a lot of good feedback, you know, essentially, oh, you're for real. It's, it's still a murky area, because well, there are other B Corps that very much like the fact that we're a B Corp. When they engage us. There are companies that align with a lot of the messaging that we talked about, but themselves are not B Corps. And you know, so they look at traditional investment banks as well. So there isn't, it's not a bright line.

Maureen Farmer

And so Bill, tell us a little bit about some of the types of businesses and companies that you like to work with.

William Vogelgesang

Well, we are attractive to companies, you know, that share this philosophy. Take a look at our website, and a lot of people will either say, Wow, that's really cool, or what are they doing? And so, those who don't resonate...

Maureen Farmer

Self-select out!

William Vogelgesang

That's right. Well said, you know that's kind of where, how it gets differentiated.

Maureen Farmer

I mean, obviously values alignment is very, very important, regardless of whether you're a B Corp or not. That's important for success. I'm thinking, do you specialize in a particular industry or...

William Vogelgesang

A lot of renewables, obviously, sustainable agriculture, a lot of tech companies, because they are founded by Millennials or Gen z's, who just naturally come by this philosophy. We joke that they came out of the womb with this belief system, unlike the baby boomers who, you know, sort of discovered it along the way. And so they get it. And then there are just old line businesses that run their business with this kind of philosophy. We're working right now within the fastener industry, which is, you know, hundreds of years old, but a really cool company with a stellar culture. And as a result, you know, phenomenal customer affinity scores, etc, and wants to make acquisitions of other companies. So it can be, you know, what we call sort of old line industries that prioritize culture and want to maintain the culture through a transaction and understand, you know, that our process can can help them in that regard. So it can be, you know, across a variety of industries. But all companies sharing that sort of philosophy of business having a higher purpose than than simply making money,

Maureen Farmer

I have a new appreciation for money since I started my business 12 years ago, and this is how I look at money, however you want to call it, I look at it as a tool to do things is how I see it. And it means so many things to so many people. I mean, people's relationship with money can be quite complicated. But I see it as a very simple resource that is used to do good things. I worked with a gentleman in in the Houston area. And I worked on his project for a few months. And in the work that we do, we do a lot of questions, we asked lots of questions. And this particular questionnaire was a written one. And I remember reading it, I was at the cottage one time and was working on his project. And he was in a similar industry as your similar profession and had worked with a lot of the really big banks and had created unique product and product lines. And he said that as a child, he grew up, and I won't get too specific to be to protect his identity. But he worked in a his mother was a single mom, and she worked in an industry that is dominated by men at the time. And he used to go to work with her. He she was a single mother and he used to go to work with with his mother, and she would do all of these different functions. And he would trail along behind her. And he said that he learned from her his work ethic, and he learned the importance of money and resources and how to manage them very, very carefully. And he moved into the world of finance and banking and banking products as a way to help clients and people create wealth, but not just for the sake of creating wealth, but for the sake of creating wealth to do good things. And I was always really touched by that. Because, you know, a lot of people believe that, you know, the financial reward the money, the almighty dollar is the ultimate goal, where I see it as an outcome of doing good work that can be used just like compound interest to do better things, you know, time and again.

William Vogelgesang

No, I completely agree with you. If you have a choice between having money and not having money, I think we all will take the money, right?

Maureen Farmer

Because you need the money. To do things. And that's my point. It's a tool. It's a resource.

William Vogelgesang

Yes, I agree with you. And I think you can quickly get into sort of philosophical debate about what drives people to amass money that, you know, their great grandchildren can't spend. And there's nothing wrong with that. But, you know, there's some evidence that it's not necessarily healthy, to be driven by simply a math thing, you know, tremendous wealth. If it happens as a result of some something like changing the world, you know, Elon Musk style, controversial individual, but nonetheless, most, the really successful entrepreneurs didn't start that world changing business to make a lot of money. They they probably figured if they were successful, they would. But they were driven by something else, whether it was, you know, Bill Gates, who Steve Jobs or many, many others. And of course, there are lots that wanted to just make a lot of money. But you know, those are personal philosophies, where there's no universal rights and wrongs.

Maureen Farmer

It's a fascinating topic, intriguing. Well, Bill, I would like to ask you a couple of questions before we finish the conversation. Love to know a little bit about your career and what has surprised you most so far?

William Vogelgesang

Wow, well, one—that I've gotten where I am.

Maureen Farmer

Where did you think you would get Bill?

William Vogelgesang

I didn't think I would be a banker to tree huggers and do gooders, which is how we jokingly describe our business—that way to people who can understand what we're doing. Yeah, so you know, I started off, was a big outdoors person, and I was going to be a geologist, and then I met my first college level organic chemistry, which was the first of seven chemistry courses in my geology program. Right, and I wanted to go to the Colorado School of Mines for my masters where, you know, if you have anything short of a 3.7, or a 3.9, you can't get in. And, and so I thought, Well, my, my B wasn't, wasn't a good signal that that I was, I was gonna get to the Colorado School of Mines. And so ended up in economics, finance. And along the way, I was on a scholarship, I won a scholarship with General Motors, and which was fascinating work for him in the summers, but ultimately, worked for him for a year after school and then decided that wasn't really for me and went back to graduate school and got out. While I was in school, my father passed away. So I ended up moving back to Cleveland, and sort of the 11th hour to help my mother with, you know, unwinding to houses, etc. and got into banking, and found myself working at Citi Corp. in what was the early days of the leveraged buyout industry, and then short stint with a private group that was buying companies, and then I started my own my own firm. And so, you know, I've sort of been in this corporate finance world for for most of my career, and it wasn't, you know, until 12 years ago, that I shifted or found an affinity for this, you know, conscious capitalism or impact investing world. And along the way, you know, I think I had had seen, you know, how many struggles our world has, and how effective at least in my mind, government was solving so many of those problems, we certainly need government to create a level playing field and regulations, etc. But I just felt like business was probably our only chance of really finding solutions to a lot of these, these issues. And, and so this whole conscious capitalism, you know, stakeholder capitalism, Michael Porter at Harvard, has, calls it shared value, goes by many names, was, was really an answer. And so that just sort of drew me into this. And we were early in, in trying to work within the financial markets. This, this movement really took hold in the consumer product space, any B to C sort of business. And again, primarily because of the millennials and the Gen z's, you know, research says, two thirds of them want to work for invest in buy from companies whose values align with them and with their values. And so this really, this whole movement, I think, is is been perpetuated by this, these new generations. But I certainly, you know, I spent most of my career just trying to make more money like everybody else and And so I don't think 20 years ago, I thought I would would be doing this. So I probably thought I would be playing golf.

Maureen Farmer

And do you like to play golf?

William Vogelgesang

I do enjoy golf, but I'm not good enough in golf to really truly enjoy it. I worked at it really hard for a couple of years and never got below a 13 handicap. So I thought well, it's not in my future.

Maureen Farmer

Maybe not as a player anyway!

The last question I have for you is one of restaurants. Wo we on the podcast—we're collecting an annual list of restaurants from our podcast guests from around the world and would love it if you could give us the name of one or two restaurants in your area.

William Vogelgesang

Edwin's! It's a fancy social enterprise. So they take people who have struggled, many of whom have been incarcerated. And they teach them the restaurant business, whether it's in the kitchen or front of restaurant or as servers, and their food is fabulous. And of course then, you know, their goal is that they leave and go to work and continue their career. It's a fascinating business model. The name of it is Edwin's in Shaker Square, which is a near a suburb of Cleveland. And then we have a couple of favorite Italian restaurants: Mama Catena's in Euclid, Ohio, eastern suburb of Cleveland, and Bruno's which is on the west side of Cleveland.

Maureen Farmer

We'll make sure that those are in the shownotes for people if they want to look them up. That's great. And so Bill, how can people get ahold of you if they want to have a chat with you about your your work?

William Vogelgesang

Sure. My business number is 216-472-6650. Our website is www.epochpi.com. And my email is just wwv@epochpi.com.

Maureen Farmer

And again, we'll make sure that those are in the show notes as well for anyone who's interested in connecting with you. Well, Bill, look, thank you so much for taking the time today to talk about your business and and your career. It's been an absolute pleasure, and I hope to get to do it again.

William Vogelgesang

That's great. Well, I've really enjoyed it. You have a wonderful day.

Maureen Farmer

Thank you. Take care!