October 28, 2016
Interviewed by: Privcap
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Career Talk: From Law to Carlyle Group

The partner who leads Carlyle’s middlemarket investment group discusses his career beginning, how he transitioned from law to private equity, and what impressed him during his initial talks to join one of the largest private equity firms in the world. He also relates the tale of the “one that got away”  Vitamin Water

The partner who leads Carlyle’s middlemarket investment group discusses his career beginning, how he transitioned from law to private equity, and what impressed him during his initial talks to join one of the largest private equity firms in the world. He also relates the tale of the “one that got away”  Vitamin Water

Career Talk: From Law to Carlyle Group
With Rodney Cohen of The Carlyle Group

Don Lipari, RSM US LLP: I’m with Rodney Cohen, Managing Director at the Carlyle Group, and Co-Head of their middle market platform. How are you, Rodney?

Rodney Cohen, The Carlyle Group: Doing well, thank you.

Lipari: I really want to lay a foundation of your career evolution. You went to Franklin & Marshall, got a BA there. You then went on to Columbia Law School and graduated in 1990. You started your law career at Anderson Kill. And in three years, you quickly realized this isn’t for me. Let’s start with why law in the first place.

Cohen: I think probably like many people in college, I wasn’t positive what I wanted to do. I knew I had an interest in business, and at that point, I wasn’t sure exactly how to express that and how to go after that. It’s a pretty broad category coming directly out of college. Law seemed to be something that made sense, applied to everything that I wanted to do and be involved in, and so it just seemed like a very logical next step.

Lipari: What was your experience at Anderson like that caused you, within two years and two months, to say, “Okay, I’m moving on.”

Cohen: I really like the people, and I think if I was going to continue on with a law career, the people I was practicing with were great people. So really it was not that. I always had this entrepreneurial bug.

Lipari: So you do some consulting for a few years, and in 1996, you decide to join Pegasus. Pegasus was founded in ’95, and you’re one of the first few guys to join Pegasus. What led you to Pegasus?

Cohen: Someone that I worked for when I was working as a lawyer was very friendly with the person who was starting the firm. And actually, he was the one that introduced us.

Lipari: He did not bring you in as a lawyer. He brought you in as an entrepreneur, as a businessman.

Cohen: Correct. And at that point, when you’re starting a firm there’s the business of operating the firm as well as the business obviously of going out and finding transactions. And so for me, it was just kind of an interesting blending of my skill set at that point in time.

Lipari: All right. So you’re at Pegasus for 14 years. Talk a little bit about the Pegasus years.

Cohen: At different phases in your life you envision yourself, “Will I ever move? Is this where I’m going to stay?” And I must say I actually really thought that – I always joked to people that I’d probably be buried there. But this opportunity came along and it was incredibly compelling to come over the Carlyle Group.

Lipari: Talk about what attracted you to the Carlyle Group.

Cohen: So it was probably one of the more interesting experiences, I must say, in my life. I’m not sure that Carlyle was out there aggressively looking for this position to be filled. I think it was something that they had thought about, but again, there wasn’t a mandate out there.

So the first time I came in, I met with David Rubenstein and it was one of the more interesting interviews I’ve probably ever had in my life. I can’t remember how long it went on for, but quite some time. And I just had an incredibly positive feeling about him. I was intrigued. I was intrigued with what he built. I immediately sensed his entrepreneurial spirit and I think I related to that. He asked me to meet Bill Conway. Bill and I had, I think, one of the more interesting sessions that I’ve ever had with anyone in an initial sit-down and talked for hours.

Philosophy – not just investment philosophy, life philosophy, what’s important to you. What are you trying to achieve, etc., etc. And there was something incredibly genuine about both of them. The day that I was meeting Bill it was pouring rain outside and I’d never been to, I guess, that area in D.C. and I wasn’t really sure about getting a cab. And I had a train to catch and etc., etc. And Bill looked at me and said, “Come on. I’ll help get you a cab.” And took this little umbrella outside, and here was Bill Conway in the middle of Pennsylvania Avenue in the pouring rain getting soaked, trying to put the umbrella over me and opened up the cab door for me.

Lipari: talk about finding your lane within Carlyle Group, who was doing mega deals. And you’re here to focus in the middle market.

Cohen: Carlyle really started as a $100 million, small entrepreneurial buyout fund. People forget that, and they forget what the roots were. But probably the first 70 deals that the firm did were squarely in the marketplace that I address, size wise.

So when I sat and talked to them about those deals, we were talking about Carlyle’s history. It resonated with everyone. Everyone understood what that opportunity was, and what was really exciting was that the firm had now developed out a global footprint.

So here I am sitting with this opportunity to take my interest in these middle market transactions, the firm’s history and credibility in that space with this unbelievable opportunity to Velcro it to a much, much bigger platform. I think we bring an incredible, incredible set of possibilities to the table for those companies that you don’t typically find in a smaller firm.

We are not a smaller firm. We’re a much larger firm, but this is an area that the firm understands really well, has understood really well, as executed on really well and all we were doing was rededicating resources and capital to that space…

Lipari: To a different segment of the market.

Cohen: Correct.

Lipari: We’ll use a fishing reference – is the one that got away that you wish you’d gotten into the boat.

Cohen: Oh boy. The story that I always tell, I had an opportunity a long, long time ago and sat with an incredible, incredible entrepreneur, and listened to what then, was the story of Glaceau going into this idea of vitamin water. And boy, Darius – who created the company – and his father, just two classic entrepreneurs. And I will never forget sitting in Queens talking to them in their little office and discussing with them these boards that they had about coming up with this product called vitamin water. And my entrepreneurial instincts said this is a winner. I think the company was doing $500,000 or $600,000 in revenue in the Glaceau Water.

Lipari: This is really early days.

Cohen: Oh, I mean, there was no vitamin water. There were labels that Darius had drawn and boards, but there was nothing there. And sitting with him and talking about valuation at that point and yes, I’ve gone back and done the calculation about 7,000 or 8,000 times, and we missed one. It really got away. We don’t do venture. I don’t do venture. Venture is a very, very different business and unfortunately, it was just too early for us.

Lipari: The one that you got in the boat that you’re going to tell your grandkids about. When they look at your and they go, “Pop pop, tell us about your career.” Which is the one you’re going to tell them?

Cohen: I would say I probably got the most personal satisfaction out of saving assets that were being discarded. And it’s happened a couple of times in my career where I don’t want to pin it on just one, but a couple of times, I’ve worked with teams of people who are very, very creative about seeing assets and understanding different industrial industry – pieces of the spectrum. And a few times in my career, I literally have been able to walk in and re-imagine an asset with a team that I trust and see something there that no one else sees. And literally, we’re talking about scrap value. And I think that creativity, that creating something out of nothing, the reemployment of people or the ongoing employment of people, the repurposing, the change this to this, the recognition of changes in the marketplace. Those are the deals.

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