About MIKE ANDREWS
Bio: Michael Andrews is an Operating Executive with broad experience across energy (OGP, utility, generation and infrastructure), industrial, value-add distribution, energy related cleantech companies and UAS/Data Analytics industries. His career has been spent navigating Teams through high-stress situations (turnarounds & rapid expansions).
The roles he has filled include Member of Global Operating Committee and SEC registered insider of a Fortune 500 company, CEO / Board positions with various private businesses and Managing Partner of a private investment firm he founded.
He is Founder and Managing Partner of Hawkstone Capital Group a private investment firm aligning Founder Owners with Operating Executives in majority stake buyouts. Andrews brings 25 years of experience in portfolio business management and mergers and acquisitions to his clients, where he holds various C-Level positions and Board roles.
Michael Andrews is the former Executive Vice President of General Cable Corporation, a Fortune 500 Company, and President of General Cable’s Energy and Infrastructure Group, a portfolio of nine businesses generating $1.4 billion in annual revenue. He was part of the Senior Management Team that took General Cable from $1.45 Billion to $6.5 Billion in revenue and their stock from $3.00 to $80.00. He also led international mergers and acquisitions and global asset investment planning closing on several transactions in excess of $2 billion in annual revenue, including the acquisition of Phelps Dodge Wire and Cable, a company with operations in ten countries on four continents, and managing $80 million in annual capital expenditures respectively.
He has been a member of the Government Affairs Board of National Electrical Manufacturers Association (NEMA) and an active speaker at energy, infrastructure and sustainability conferences sponsored by organizations such as Goldman Sachs, Merrill Lynch, RBC, Sterne Agee and The Cleantech Group.
Andrews holds a Bachelors of Business Administration in Management and Operations and a Masters of Business Administration in Finance and Marketing from the Carl H Lindner College of Business at the University of Cincinnati.
Alan: I’m with Mike Andrews. Today he’s the Founder and Managing Partner at Hawkstone Capital, and also serves as the CEO of Paper Airplane. Mike, welcome to today’s show.
Mike Andrews: Thanks, Alan. Thank you for having me.
Alan: So, Mike, the guests coming on the American Dreams, we often want our listeners to understand their path in life, what brought them up to where they are today. And so if you can give us your background of your journey in life of how you landed in the roles that you have currently,
Mike Andrews: I’ve actually taken a fairly interesting path kind of changing careers four different times since college so but was born and raised in Cincinnati, Ohio, to school at the University of Cincinnati. After graduating, I went to work for a commercial bank in Cincinnati called Fifth Third Bank. Several years after that, I went back to school, got my MBA and made the first career change. So I was with Andersen Consulting now Accenture years, and then through a very odd, I went from financial services to manufacturing. So I went to work for a company called General Cable Corporation, which was headquartered in Cincinnati, Ohio, was a manufacturer of copper aluminum wiring. And I went there because they had that the year before I started, they’d essentially gone bankrupt and were taken off of public exchange and made private, acquired by a private equity group. And the person they brought in to run the company changed the organization structure to create these strategic business units. So a little mini p&l. And that was really appealing to me, they were interested in hiring me to run one of their businesses. So I started at that point, had a little $50 million p&l, and then almost 15 years later, I ran a $1.6 billion portfolio of companies, nine businesses rolled up into a group we called energy and infrastructure. And I did that for them globally. I then was traveling the planet for a while and was running all of their international m&a. And the thing that kind of took me from that career path to then Hawkstone were really two different events. The first was going back to the early 2000s, when oil and natural gas started rapidly rising. There was a lot of investment made into alternative energy, renewable energy, energy efficiency, smart grid technology. And originally as a function of the role I had a general cable, we started actively looking for growth opportunities in those markets. And so going all the way back to 2003. We did about $10 million dollars a year in wind farms. When I left in 2009, we did over $400 million a year. And it was during that period of time that I began actively speaking at energy conferences, both fossil fuel based, but also clean tech. And on the clean tech side, when I would go in and speak at different conferences. They’d asked me to do the CEO roundtables. So I would meet with the collection of four or five CEOs of fairly early stage, predominantly water and energy related clean tech companies. So companies that have some sort of fantastic product or technology created by some scientist or entrepreneur. But many of them were challenged to build a business around the product or technology they had developed, and then figure out how to bring that product of technology to market profitably over a sustainable period of time. So that was one aspect of how I how and why I left general cable. The other one was one of the businesses that reported to me was a test group. So we did accelerated cable life testing and partial discharge failure testing of medium voltage utility products. So essentially what that means is, we could put a piece of cable on tests and we could run that test and figure out where along that cable there were faults in the cable. And so in what was happening is, you know, utilities and most industries do preventative maintenance, right. So based on some schedule, some spreads. sheet it says, This is the time we should replace this asset, whether it’s a motor, or a roof, or a piece of wiring cable, without really understanding how that cable or how that asset is performing, right, so not using data to drive your decision making. Well, so if you think about those two things that were occurring at the same time, I began getting very actively involved, both personally and professionally, kind of along those two lines. So I started looking into and going to impact investing events and clean tech events. from a personal perspective. Well, in 2009, I decided to leave general cable and started my own company called Hawkstone Capital. So originally, Hawkstone was a merchant bank working exclusively with water and energy related clean tech companies. Going back to that CEO roundtable I talked about where, what we would do is I would invest some of my own money into an early stage company, and then provide some sort of support or role, whether it be a board role, an advisory role, sometimes to be interim CEO, or president, and help that company kind of build the business, the processes, the manufacturing systems, the sales channels, and then how to bring that product to market profitably. So I did that for a number of years. And during that time, in following this kind of parallel path, I remained very actively involved and interested in data driven decision making, right. And in going back to the example I used of the utility product, and the preventative maintenance, versus predictive maintenance that they were doing, and when we would get products. So what would happen is utilities would do preventative maintenance. And when they replace that cable, they’d send samples back to us to test. And what we found was that a very large percentage of the product they’re sending back to us was perfectly good cable that would have lasted decades longer. And that in aggregate as an industry, they are wasting millions, if not 10s of millions of dollars in unnecessary capital expenditures, because they didn’t know how the cable is aging. And, every asset age is different, right? So from a utility wiring cable, it’s the environment it’s in, it’s how hot the cable is run. It’s the elements it’s exposed to. And so and that applies to all large infrastructure assets. Well, back at that point, you know, drones weren’t even commercially available. But Fast Forward 10 years, and now, drones are becoming commercially available. And so what’s happening is, people are using sensors on drones, to gather data from anything basically, but large infrastructure assets that can then be analyzed and provide data driven information back to the client so they can make upgrades to their infrastructure. So the idea being that, taking companies from preventative maintenance, to predictive maintenance, using data driven decision making, and what we do at Paper Airplane, is we put sensors on drums. But we can also use data for many data gathering devices. So it could be satellite data, could be fixed wing data, could be hand, handheld devices, or drones. And we gathered data from that asset, where we can assess and inspect it, to provide information back to our client, to allow them to make better business decisions with the whole idea of being How can you help companies lower operating costs, extend the life of their asset and reduce their environmental footprint?
Alan: So Mike, in the world of you know, that you the sandbox that you play in Hawkstone Capital, are you using just your money or do you manage other people’s money or how I was all that focused on?
Mike Andrews: Sure. So when Hawkstone originally started, it wasn’t a merchant bank using my own personal money. So again, making small investments into early stage cleantech companies and then getting actively involved. In the development and building of that business, and then began helping companies raise money to further invest into the company. And Hawkstone took a bit of a slight change in mission, several years into that where we started, then raising capital for other companies. And, now, it’s actually in the last four years has shifted its mission, again, slightly to provide a solution to three macro level trends. And these are trends that we’ve kind of looked at and developed over the years. But they’re essentially, it’s not rocket science. But there are three macro level trends occurring today, at least in the United States. One is that there are over 12 million privately held companies in the United States that they estimate 70% of which will change hands in the next 10 to 15 years. And if you, if you look at the survey data, over half of them would say they’d rather sell to another operating executive, as opposed to a competitor. So that’s one macro level trend. The second macro level trend is this explosion of family offices, many of which looking to make direct investments into individual companies. And the third, and it’s something that we’ve discovered over the last few years, is that there’s this entire population of people out there, just like myself, who spent two thirds of their career in large corporate America got out of it for whatever reason, that would love to find a small private company, to bring that fortune 500 experience to, to execute a growth strategy. And so we’ve set the line Hawkstone, around, providing a solution to those three macro level trends. So for all intents and purposes, we’re an independent sponsor, private equity group, so we don’t have a fully committed fund. But we take, we have, we see opportunities come to us companies that are either for sale, and again, looking to sell to another operating executive, or an operating executive that has a thesis or an acquisition target, but needs help developing a strategic plan and a business plan and financial modeling, and then putting that in front of investors that we know are interested in that type of an investment. That’s how Paper Airplane came about as well.
Alan: Size wise, how big of a company do you want to work with?
Mike Andrews: Well, we feel if you look at the Hawkstone Capital website, we’ve got to say we’re in that one to $6 million EBITDA range. And really, we focus there for two reasons. First and foremost, because that’s the area where we found the owner of the business has a very stakeholder approach to selling the business. You know, it’s still small enough that not that, they know every person in the company, but they’ve hired every person in the company. And they tend to take more of a stakeholder view. So stakeholder being not just the highest price they can get for the business. But what’s the impact going to be on the employees I hired to my clients to the community that they’re in. And they’re more likely to sell to another operating executive as a very clearly stated strategy than a competitor just because of the risk of that competitor shutting that business down and absorbing them.
Alan: Then what’s your exit? What’s your plan, though? People that are joining you? How long do you want to be associated with the company?
Mike Andrews: So the one thing that I really like about our structure the most is that 100% flexibility to the strategy, the terms the exit, and we can do each individual acquisition differently based on what the primary it’s really what the exit strategy is for the investors. So for example, whereas some private equity funds will look at a very standard kind of five year plus to one year add ons, and then they need to be out based on LP agreements or how they’ve raised capital with family offices. There are some that will just wait for the right time to exit. There was some to say we don’t want to exit, we want to keep building this. And so we don’t go into any opportunity with an exit strategy in mind.
Alan: You know, you’re in a, you’re in a field with the big data AI. They’re continuing to change the world and then you added drones. Where do you see this industry going with drones impacting the world in the future?
Mike Andrews: For me personally, I think there would be some people who might challenge this thought. But you know, for me, you know, drones are simply a mechanism, gathering data. So we’re not going to ever become a manufacturer of drones. I think there are plenty of large companies out there that are developing drones. And what we’re finding, what we see is that it’s almost like flat TVs, every six months, there’s a better, cheaper, more capable model that hits the market. So for us, it really is just the mechanism for gathering data. More importantly, are the sensors that are being developed in order to gather more and more accurate information about assets that you’re inspecting, or assessing, right. And we can mount different types of sensors on any kind of drone. And I would go so far as to even add to that, that, you know, there are plenty of companies out there developing processing software. So part of the whole idea is taking very unstructured data, structuring that data, so you can then analyze it, where we see the value. And the way we sell to our clients is a solution oriented approach so we say that we’ve talked about, we’re not a manufacturer of drones. But we’re an expert in what drones are available in the market and which one best serves our purpose for a specific project. We’re not going to be a manufacturer of sensors, again, plenty of sensor manufacturers out there. But we are experts on what sensors are available based on the project or our clients requirements. And we’re even a developer of software for processing. Because, again, there are several companies out there that do that. So the way we approach our client is say, if you want better information, and you appreciate data driven decision making, to accomplish those three things I talked about with lowering operating costs, extending the life of assets and reducing your environmental footprint, then let us choose the best data gathering device. We have partners that do fixed wing data gathering, right, we have our own set of drones, we have our own set of pilots, but we also work with clients who have their own set of pilots. And we’ll train them to make sure they’re gathering the data properly to give us what we need to analyze. We’ll use third party processing software to kind of structure the data. But from there, the data analytics, the machine learning, the algorithms that are developed to identify anomalies, or to show somebody information about that asset that helps them make a better business decision. That’s where we spend our time and where we’re focused.
Alan: Mike, I really appreciate you coming on the show today and sharing you know your story of Hawkstone Capital, how it came to be and also Paper Airplane.
Mike Andrews: Alan it’s my pleasure, thank you for having me on the show.
Alan: Thanks for being with us today.
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