Written by James Bishop
Rami Cassis talks with The Private Equity Podcast about professional diversity, flexible investments, and the high-growth sectors of the future
In conversation with Alex Rawlings at The Private Equity Podcast, Rami discusses how the private equity sector can change for the better, what the key characteristics of a successful leader are, and what the future holds for investors. The podcast also touches on how his family and personal endeavours have shaped his professional life, and he reflects on lessons he’s learned throughout his extensive career.
Alex Rawlings (AR): Hello everybody and welcome back to the Private Equity Podcast. Joining us today is Rami Cassis, the founder of Parabellum Investments. Welcome, and thank you very much for sharing your insights today.
Rami Cassis (RC): Thank you, Alex. Thanks for having me on.
AR: So, as we always kick off, if you could give us a 60-90 second breakdown of you, please.
RC: Sure. So, I’m a growth investor that takes on quite a hands-on approach to all of the businesses that I invest in and acquire, I typically tend to acquire a controlling interest in all of the businesses I have in my portfolio. My career path has been slightly unusual from many others in private equity. I grew up in industry, so my background is in engineering and physics. I did aerospace engineering and mathematical physics. I worked in oil and gas, in business consultancy for a couple of years. And then in IT and software, mainly in operations, online management roles. I then resigned and left the corporate world and founded my own family office, which is what Parabellum Investments is, in 2012.
The transition from corporate to kind of mid-market was difficult, but I had a great apprenticeship through the years that I worked in industry, and risking your own money of course helps the mind to focus. So, I’ve managed and led companies in a multitude of geographies in a multitude of sectors – in tech and mining, in fashion, and my current portfolio includes a bunch of tech digital transformation firms. I recently acquired a fashion business because it’s been a deep, personal interest of mine and I have mining interests that haven’t yet been announced because we’re still digging, so I I’d like to make sure we announce the right thing.
Other than that, I’m a professional kickboxer. I’ve been in and out of fights – in the ring, of course – for many years, I have another one coming up towards the end of the year. But really my focus is always on driving growth in the businesses that I get involved with and oversee, typically as chairman.
Hopefully that was no more than 90 seconds!
AR: Well, I’ve never timed it, and I shan’t start, Rami! So, that’s really interesting, quite a diverse background, quite a diverse portfolio, from mining to tech, two opposite industries— regarded as. So, what one mistake do you see private equity firms or portfolio companies making and what actions would you suggest to correct them?
RC: Yeah, it’s always a difficult question because it sounds like one is pontificating and that’s the last thing I wish to do, but I want to answer your question honestly. So, I think private equity has an image problem. I think private equity has an image problem and I don’t think there is enough that is being done about it.
So, under that overall heading, I think there’s a couple of things that I would say are specific to the private equity industry. I think the industry is dominated by lawyers, bankers, and accountants and, although I have lots of respect for those professions, I think there is insufficient professional diversity in the sector.
I think there’s probably a little bit too much of management by investment committee, or by boards, or by contract, and that really isn’t reflective of the nature of the engagement between us as individuals and as people. So, bringing the diversity – and I don’t mean just gender diversity, although it would be great to have to have more women in this sector – but I’d like to see more individuals coming from a background as diverse as marketing, as HR, as maybe a bit more tech, in order to bring the diversity of how we look at life and how we look at businesses in a different context.
The other thing I think is also representation of, or manifestation of, the problem that I’m about to describe is around zombie firms, but it comes down to this: private equity tends to not like admitting its mistakes. So when, in a portfolio, we are faced with a firm that is underperforming for whatever reason, the industry will generally hold on to its poor performers, because it doesn’t want to crystallise a loss that will then compromise its next fundraising show.
So, I think it needs to take a healthier attitude, maybe take a leaf out of venture capitalism who are quite ruthless in how they cut loose from some of their poorer investments. So I’m not advocating giving up on companies, but I’m advocating taking a view that’s a little bit more ruthless where the focus of the management team and the private equity firm can be another asset, but also importantly for the employees and the clients of the firm that’s underperformed, cut them loose in the sense where they find a better home for them or an opportunity for those employees and the clients of that firm to flourish rather than artificially inflate the quarterly valuation that’s reported up to the LPs, with a view to ensuring that it doesn’t, as I said, damage the next road show of fundraise.
And then the last point I’d make, which is a follow-on from what I’ve described is, you end up having some of these zombie firms in which all they could afford to do is support and service the interest rate on the loan that the private equity firm has put into the company. That’s not a very exciting place to be, and I think it just supports the statement that I made earlier.
AR: Makes sense. So, you mentioned about diversity and that’s quite an interesting topic at the moment. Usually, you know, fundamentally pushed on a gender perspective. You mentioned about different kind of job titles and therefore different experiences. What’s your take on either what kind of private equity is missing that maybe those people can bring in or equally the other way around of what you feel that those people would bring to this industry?
RC: Because I think the level of engagement between management teams and its private equity owners tends to be quite one dimensional – it’s around board reporting, it’s around financial performance. They’re the key metrics that really drive the nature of the engagement between private equity and the management teams. And I think there’s a lot more to life than those considerations. So, having someone from HR will be able to provide more than just lip service, which is often what I hear in board meetings, about employee morale and employee engagement in the same way that being able to look at marketing in a different way may well drive more business leads, may well drive a greater market share because there’s a greater interest in the firm.
So, I think that the diversity brings with it a more rounded and representative view of life than what is typically the case today. Yes, we talk about HR and we talk about marketing in board meetings, but often that dialogue is limited to a few individuals. And it always comes after we’ve gone through finance, and I just don’t think that’s a healthy way to look at how one might be able to develop a business. Or at least it doesn’t produce all of the opportunities that I would expect to have by considering what we can do better in terms of marketing, what we can do better in terms of design, and what could be done better in terms of how we engage with employees and stakeholders.
AR: I definitely think there’s a change that can happen within private equity and across various different areas, and one of which is certainly marketing. I think, especially at the private equity level, I think marketing’s one of the most underutilized areas of all the business functions to grow and promote a business and create an identity. And there are a few firms that are making those changes and, and are embracing marketing, one of which is one of our companies that we work with heavily actually, which is MiddleGround Capital – a real differentiator with regards to how they go to market. So, what’s your typical kind of view of the typical buy and sell private equity model?
RC: I think the three-to-five-year cycle is a concern for many clients and for many employees. I’ve had a number of clients intent on meeting me because they worry that, although Parabellum Investments is a family office, it behaves in some ways like a private equity firm, but it’s my money and I’ve held onto assets for a lot longer than five years.
But there is a concern in the market, both in terms of employees and clients, that the three-to-five-year cycle is not something they want to be associated with because it drives a certain number of behaviours. Particularly when you get to the end, when you start approaching the three-to-five-year horizon, it begins to drive management’s considerations in terms of what investments they will and won’t make based on the private equity firm’s consideration of what money they’re willing to put into a firm.
And I think— so generally, it dries up investment as you get closer to that window. And I think what it also does is cause concern in the mind of clients who are worried about what the next owner is going to take as a view in terms of pricing, in terms of contracts, and in terms of service levels.
So, my view is, on the typical buy and sell model, is that I think there should probably be more flexibility. Now it’s easy for me to say this, given a lot of private equity firms derive their funding from LPs who have a very clear mandate in terms of how long money can be deployed for, so I don’t have a silver bullet to fix that problem, Alex. But I’m just generally not keen on the three-to-five-year model based on the conversations I’ve had with numerous clients and employees who begin to get a bit anxious as we start approaching that milestone, you know? And are we selling tomorrow or are we selling next year?
AR: Is that because you, I’m gonna guess, don’t favour a shorter model? You know, we just had someone, Brad Nathan, on the podcast from Lynx Equity Partners and they have basically an indefinite hold strategy which may be too far the wrong way from your perspective, but are you more kind of an advocate for ‘hold until necessary to sell’ as opposed to ‘hold until the fund tells you to sell’? Is that kind of what you’re promoting there?
RC: But, you know, that’s an interesting point. No, that’s actually not what I’m saying. In an ideal world, you might. I would agree that you would want to hold onto investments longer because it just takes time for payback and for people to see the fruits of their labour.
However, there may well be circumstances where it makes sense to sell in less than three years, because there’s a tremendous opportunity for the portfolio firm to partner up with another trade buyer, and that might provide a super opportunity for the employees. It might provide the private equity firm with a pretty good return, and it might be something that the clients will also support.
So, I think I’m advocating a model that isn’t so rigid. Because there are circumstances – and I have had deals, Alex, where I’ve bought something and sold it within a year or a year and a half – so it really depends on what happens in the market, what happens at the time, and what’s specific to that firm.
I realise that it’s harder to legislate from an LP perspective. Again, I’m in the enviable position of not having an investment committee because I decide what I do with my money. But when I think about what works for clients and what works for employees, clearly the longer the better, but there might be circumstances in which a much shorter hold period is favourable.
AR: Makes sense. And you mentioned obviously the diversity of sectors that you operate in. You mentioned obviously tech to the mining industry, which I know you’re not gonna release yet until you’ve—
RC: Yes, until I know what’s underground!
AR: But what sectors are you seeing that are really kind of high-growth and high-potential?
RC: I think the three sectors… And I was looking for an article before this podcast, just to try and make sure I’m correctly quoting it, but I couldn’t find it. I think the three sectors that in my mind have the greatest scope for continued and really strong growth are number one, farmer and life sciences. So, I’m bundling them together, and I think…
Well actually, before I answer that question, the growth in my mind is coming from two drivers. It’s either government spending on legislation – which I’m not going to comment on because I can’t and, you know, it’s too broad – or consumer spending. And when I think about consumer spending in the coming years, I think people are going to want to spend money on either their quality of life or their wellness, health, and longevity. So, in my mind, those consumer spending habits are going to drive growth in the following three sectors.
Pharma tech/life sciences, because it speaks to people’s wellness, people’s health.
Luxury, which I think is the fundamental point of— well, not the fundamental point, I think it’s a differentiating factor in how people view their quality of life. People will like to continue to spend money on luxury items because it makes them feel good. And I think we all understand some of the benefits and some of the powers some of the great luxury brands have to LVMH or Kering.
So, luxury is the second. And the third is related to the first two and that’s, I think, financial services because the way people engage with their money is going to change. They will want greater autonomy, greater planning, and probably greater intimacy with their bank, and that means a whole bunch of things for different people. But having the ability to engage with our money more freely, to be able to spend it and plan for it is important. So, in my mind, it’s life sciences, luxury, and financial services.
AR: Interesting. I wouldn’t have guessed you would’ve said, as somebody who invests heavily in tech, I was expecting you to throw that to the bid there rather than certainly the financial services, but interesting take.
RC: But by tech, actually, Alex… In answering your question, I’ve viewed it as a vertical, so I’ve looked at industries as sectors. I think all three of those sectors have tech embedded in them, particularly life sciences, but financial services, of course, and maybe to a lesser extent luxury in terms of how you engage with your brand and how you might be able to view yourself wearing or carrying something that you’ve acquired. And luxury is something I know reasonably well given obviously my recent Hervia acquisition and the mine I’m not yet talking about. But, in my mind, tech is endemic in all of those sectors. I think it’s endemic in our world. But I was answering specifically in terms of industry.
AR: It’s interesting you said actually… I’m very close friends with a tech recruiter and we were speaking about his, as he puts it, his ‘sector’. And in one of the answers he gave me a pretty similar perspective. He said, “technology’s in a sector in its own. Technology sits across all sectors and aids the development of those industries. It just gets called that because we don’t know what to put it in”. So, you know, pharma tech, healthcare tech, whatever, comes into that. So it’s interesting, you know, if we think about financial services as FinTech, I probably would’ve said, “Okay, makes sense”. But I think because you framed it as financial services, that immediately kind of made me think of old school banking etc. but you’re absolutely right with how tech sits in every industry.
RC: Yeah, I completely agree with your friend. In my mind, it’s a hygiene factor. Now, it’s implicit that tech is everywhere we look. So, yeah.
AR: Absolutely. So, you’ve mentioned, well, I suppose one sector which is getting obviously— well, tech sector if we put it as a ‘sector’ from a perspective of the economic climate at the moment, you know, if we look at a lot of the tech stocks have, right or wrongly named that way, have taken a bit of a hammering. What are your insights into the current and forthcoming economic climate and the sectors that are most at risk from a private equity perspective?
RC: That one’s a difficult question for me to answer Alex, because it requires a little bit of crystal ball-gazing, which I know a lot of people like to do. I’m less keen on it. An interpretation of some of the macro environments – I think the weakness in tech is relatively temporary and it’s a reflection of some of the lack of consumer confidence and concerns about interest rates.
But in terms of the sectors that I think are most at risk, notwithstanding the current explosion in travel and leisure this summer – and I think that’s because we’ve all been trapped in our homes for the last two years – I think over the course of the next two or three years, given the rise in interest rates, despite the higher inflation, I think property and property development is going to be at risk. Because I’m concerned about people’s ability to continue to support and service their current property debt. So, property for me is a sector that is a risky one. And I have a number of investments in property, so it’s not a sector I know particularly well, but know it well enough to be dangerous.
And the other one I think, in my mind, is travel and leisure because as discretionary spending reduces, given people’s squeeze on incomes, there is likely to be— I fear for the industry in that I think there may well be another downturn in travel and leisure, simply because people will have to deploy their money on other priorities like food and paying the mortgage.
Perversely, it’s the reason why luxury tends to do well in this downturn because it is more dependent on higher income earners. But as an overall sector I think, in my mind, property and travel and leisure are most likely to suffer.
AR: Makes sense, especially with cost of living rising for the main B to C type level industries to take the biggest hit.
What three attributes do you believe make a top performer, Rami?
RC: Okay. So, the first one by a country mile is self-awareness, and the reason I say that is because I think if you’re a good manager, you’re going to know the things you’re— and I’m assuming a good manager is what you are calling to be a ‘top performer’, but I guess it could apply to any other set of circumstances. Self-awareness because it should focus the individual on concentrating on the things that they do well, but also recognise their weaknesses. Now, nobody likes to call them that it’s, everybody’s politically correct and calls them ‘development areas’, but let’s call them weaknesses and areas where they need help, areas where they need the support of others.
So, self-awareness allows you to focus your energy on things you are good at whilst relying on others, trusted others, to develop the areas where one is poor at. And I think that is the first one.
The second one is empathy and communication. Empathy, because nobody likes to work for an asshole. I’m not sure if I’m allowed to say that on your podcast.
RC: But it’s important to know what goes through your colleagues’ and your team members’ mind and having some sense of engagement with them and appreciation for what it is they’re going through, whether it’s personal or professional, because everybody likes to keep professional from personal. But, in reality, we all know that doesn’t quite happen in practice.
And communication because people want to know where they’re going. They want to know what the future looks like. They want to know what’s in your head. They want to know what the plans are so they can plan for themselves, but also have the opportunity to debate something if they don’t necessarily agree. And even if they don’t ultimately agree, I think most people will appreciate the fact that they’ve been given the opportunity to voice their concerns. So that’s number two.
And I think number three is discipline and resilience, which is probably one that everyone includes in their three, and that’s because, you know, shit happens. And, you know, life doesn’t always go as planned and we are going to be facing a number of obstacles, whether they’re macro-obstacles that nobody has control over, or whether they’re quite specific to one set of circumstances but being able to work and grind your way through those, I think is of fundamental importance. And demonstrating that as a leader I think gives confidence to the rest of the team that we’ll be okay in one way or another, we will find a way. There’s an old saying – ‘I’ll either find a way or make one’. And I think it’s something along those lines.
AR: The first point you mentioned was self-awareness, which I completely agree with.
What I tend to find is that, especially as I’ve grown the business here is, we obviously get feedback from team members and people around us and sometimes not always accurate and sometimes a reflection of themselves. But how have you… I mean, you obviously come from industries, you mentioned now running obviously a family office investing your own wealth, but obviously as a private equity strategy, how have you found that ability to be able to find areas, because being completely self-aware, I don’t think anyone is that. I tend to have gone down the road and realised something because someone said something to me, or realised I’ve been doing something my whole career and I’ve got that wrong. What are the areas that you’ve worked on, I suppose, personally that’s helped kind of make you either more self-aware or has enabled you to be able to identify areas of improvement?
RC: Okay. That’s a deeply personal question, which I’m happy to answer, but let me be blunt. I think over time I have realised a number of things that I’ve done wrong and I kind of sit alone sometimes and think about things as I’m sure all of us do at some point. And I think one of them was— so when I look back at my mistakes is when I realized actually I could have done this better.
So, to be quite specific for example, I think my ability to work in teams has improved over time because my approach tended to be more confrontational than it needed to be in the past. And that has raised barriers in some of my colleagues and others that I’ve worked with completely unnecessarily because there was a much nicer and easier way to deal with the disagreement. And although, so I think part of me likes confrontation— used to like confrontation a little bit more than I should. So although I won’t necessarily back away from one, I won’t be looking for one either. So that’s an area of self-awareness that I think I’ve grown personally as an individual over the years.
But it’s also helped me the fact that I have business activities in, I mean, 12 or 14 countries. I’ve lived and done business in, well, probably more than that. Meeting people from different cultures and different backgrounds helps to smooth those edges that I’ve personally had over the years.
But, fundamentally, I think coming back to your question, my own self-awareness journey, if I can call it that without sound sounding introspective, has come from examining the things that have gone wrong in my life and in my deals. And what’s made it easier in some ways, perversely, is when you’re investing your own money, often at least at the beginning money that you can’t afford to lose, it really does focus your mind.
AR: Absolutely. Absolutely. Well, I appreciate the insight there. What, as a family office investing your own wealth, what do you love about the private equity kind of model and what do you dislike about it?
RC: So what I love about the model is, firstly, the ability to be able to oversee a process from end-to-end. And by that I mean from the early stages of an engagement in potentially negotiating a deal, an acquisition, through to executing that transaction, then working with a management team in terms of agreeing a strategy and then hopefully supporting them, which is really my role and all of our role as private equity professionals, in supporting the management team to fulfil and implement that vision. Through ultimately to a sale that hopefully, you know, makes sense and works for all of the stakeholders. So, the ability to see that entire life cycle I think is super cool and it’s quite unique to the industry.
The other thing that I really love about the industry, and is maybe perhaps slightly more specific to my own circumstances, is the tremendous diversity both in terms of the industries that I come across, that I work in, as well as the geographies. So as I mentioned earlier, you know, I’ve got deals and interests in North and South America, in Europe, in the Middle East, in Australia, and in Africa. That’s pretty cool. And having exposure to such geographic diversity, I think is fantastic. And again, it’s the kind of thing that is quite unique to the industry because there are deals everywhere.
Now, what I dislike about the industry is, well firstly, what I dislike about my own life in private equity – nothing. I mean, I’ve been fortunate enough to be able to create my own environment. I work with like-minded individuals whose company I very much enjoy. There’s no politics. There’s no posturing. If somebody thinks I’m full of shit, they’ll tell me. And sometimes I’ll agree with them, sometimes I won’t. But there’s no politics.
What I generally dislike about the industry is something I alluded to earlier, Alex, and it’s around the little bit of the financial engineering and the management by board meetings and a little bit of the posturing around deploying money that is actually LP money rather than one’s own money. That in itself isn’t an issue, but I feel there’s a little bit of posturing linked to investment committees, the slightly sanctimonious approach some of these investment committees can take. And the fact that… maybe I just don’t generally like board meetings, that might be part of the problem, but I don’t think you can manage a company via a board meeting.
AR: What would you— so let’s say private equity investors are listening here. What do you swap that board meeting with? How do you take that?
RC: I don’t think I would replace… You couldn’t replace the board meeting. You obviously need a board meeting to ratify and apply and make decisions. I think there needs to be a way to be a little bit more hands-on as an investor. Without overstepping the mark and getting in the way of the CEO, because it has to be clear that it is the CEO who decides who calls the shots, so to speak. But I think often decisions are made purely based on financial models without sufficient knowledge of the sector, without sufficient knowledge of the clients. And I’ve been in meetings where other colleagues are private equity professionals. I’ve advised the CEO to say X or Y to a client. And I mean, I’ve been in the CEO’s position and there are some things you just, given the circumstances, you are not able to say to a client.
So I think what I would like to probably propose is perhaps, without sounding sanctimonious, and that’s gonna be really difficult, is to develop a more in depth, intimate knowledge of the sector that the private equity individuals get involved in know about. So that they’re a little bit more in more informed, that they’re able to have more valuable conversations with the CEO and the management team, so that they’re able to give them perhaps some guidance and some advice. Because, more often than not, that guidance and advice is purely based on financial reporting.
The board meetings of course must stay, but I think they could be much more valuable and informed if all of the participants in the board meeting took a more intimate and active interest in the company they’re overseeing.
AR: Makes sense. Like it. I think, yeah, the more the private equity investors know about their industry, know about the C-suite and the role that they play, and I suppose when to step in and when not to. I can’t remember what private equity investor said— which one it was that said it to me, but he said, “We pay our executives a lot of money, and I don’t pay them for me to tell them what to do, I pay them for them to tell us what to do.” So, I think there’s, you know, an element of sticking in your lane and knowing where you sit there.
RC: Yeah, but there has to be an informed, useful dialogue. And I think – forgive me for interrupting you Alex – yes, the management team is paid for the private equity firm to be telling them what to do. But that, to me, sounds like the wrong kind of one-way dialogue because, unless you are able to have some contribution to that dialogue, you just end up becoming a post box. But anyway, sorry you were going on to the next question.
AR: That’s okay. No, that’s what it’s all about. So, what are your influences? What do you read? What do you watch? What do you listen to?
RC: Okay. So, I don’t read anything other than my emails. I tend to watch sports documentaries and I listen to a lot of house music. So, we’ll exclude all three of those.
I think firstly, the biggest influence in my life is probably my nine-year-old daughter, Leticia. I think I stay young through her eyes. We do a lot of cool stuff together, including watching TikTok videos. I hope my ex-wife isn’t watching. But I see the world through her eyes, and I genuinely feel as though I manage to stay young and active – well, not active as I’m active regardless – but I still manage to stay young and see all through a different lens through her.
That’s I think number one. In terms of some of my other influences, it’s my sport, Alex. So, I’ve been doing competitive kickboxing on and off for many years. I’ve had a number of pro fights. I have another one coming up towards the end of the year. Being so active physically and training as hard as I do, I think is just, for me, I find is a fantastic boost, mentally, morally, and that has an impact and consequences in terms of the way I engage and the way I think, and the clarity of thought that I think I have as a result of being in such good physical condition.
And the third thing that I think that influences me is the tremendous diversity of the portfolio I’m fortunate enough to oversee. It is from tech, IT services, all the way to fashion and mining across the globe and that constantly forces you to keep an open mind and look at problems in a different way. So, I’m faced sometimes with problems in the fashion business that you wouldn’t necessarily have had in tech and vice versa.
So, was it Paris fashion week, in June? But then I was in a board meeting for a tech firm three weeks later, that diversity forces you to really keep an open mind and look at life in lots of different ways.
AR: And sport’s an interesting one. I think there’s a lot that business can learn from sport, and probably vice versa as well, potentially. What, within the sports that you’ve undertaken, fighting being obviously one of them…
RC: With my black eye, but yes!
AR: What have you learned from that, that you’ve taken into the business world?
RC: I think discipline and resilience is probably the most valuable thing that I’ve learned because there are times when you train really hard where you just wish you were somewhere else, or there are times when you’re in the wrong end of a fight and you also wish you were somewhere else. So grit, determination, and discipline I think is probably the most important thing that I’ve learned through sport as well as continuing to apply yourself.
And I’m one of these kids that was always the last one to understand what the hell the teacher was saying in class and everybody else had moved on while I was still working out what the hell they were talking about an hour ago. And I think over the course of the years and through applying myself, you improve yourself as an individual. And I think I’ve seen that in sports. I was one of the multitude of skinny kids that decided to try and do something about it. So yeah, that’s probably what I learned.
AR: Excellent. And if anybody wants to reach out to you after this Rami, how do they best get in touch please?
RC: Probably through the guys at Transmission Private, or otherwise I’m happy to give you an email or something, that’s perfectly fine, they could email me directly.
AR: Yeah, perfect. We’ll put all of that in the show notes and we’ll stick your email in there if anybody wants to reach out. Well Rami, thank you very much for joining us, really appreciate your insight. Again, I always like a different perspective and, you know, different insight into private equity, especially investing your own wealth from there and obviously having worked in operating roles as well. So, thank you very much for coming on and sharing your insights today.
RC: Thanks for having me, Alex, that’s very nice. Thank you so much.