Five Questions With… Brian Conway, Managing Director, TA Associates

1. TA Associates has been extremely busy lately. What does that mean for the firm and the industry?

It looks like things have snapped back and everything is rosy but that’s not the case. Several of our deals happened to close around the end of the third quarter, and we’d been working on them for nine to 12 months, and they all happened to come together at the same time. Our deal activity is actually down—we’ve done 12 deals in the last two years and we normally do 10 to 12 deals a year. That said, I think things are better now than they were a year ago, and even than the beginning of the year.

2. Has TA developed new relationships with lenders in this environment?

Not new relationships, but many of our old relationships with New York lenders, regional lenders and specialty lenders have come back to life. They’re at 3x senior, not 4 or 5x senior, and they’re at 4x total debt when you include any mezzanine, but they are lending, and you can get deals done. The deals we’re doing now are much less leveraged. The typical TA deal in the past had 3x to 3.5x leverage at closing. I think the deals we’ve closed to date average 1.4x leverage at close.

3. You’ve been at TA for 25 years. Have you ever thought about starting your own firm?

No, actually. TA is a place where the average managing director has been here 18 years, so people tend not to leave. It’s a meritocracy, so if you’re doing well, there isn’t a limit to what you can do. I really enjoy working with my partners. I’ve had offers to leave and join other firms but I’m pretty typical in that I’ve stayed at TA over two decades—maybe a little above average.

4. Are members of the executive committee grooming younger members to take over leadership of the firm?

I would say that’s always true. For example, Ajit Nedungadi, who runs our international effort, is 12 years younger than I am. He’s somebody who’s got a great track record, he’s got management responsibility, and he just joined the executive committee. The other managing director in our London office, Jon Meeks, has a terrific record and has been very productive. One of our best investments ever, Tempur-Pedic, was co-sponsored by a senior partner, Andy McLane, but his co-sponsor was Managing Director Jeff Barber, who at the time I think was a vice president. They’re the next generation.

5. What’s the number one lesson you’ve learned in your career?

I know you don’t want a truism but I’m going to give you one anyway. I would say the number one lesson is that people or management matter the most. You might fall in love with a particular market or business model, but if you can get a great management team in a company, they will figure out where the best market is, and if you partner successfully with them, then everybody makes out well and it’s good for the employees, for the customers and for the shareholders. I would say relative to TA’s strategy, one lesson is growth matters most. Our best investments are ones where the company has grown. We made 12x our money on Asurion, and if you look when we first got in to when we got out, earnings grew 12x.

Edited for clarity