Episode #194: Doug McCormick, “I Generally Believe People Underestimate The Duration Of The Time That They Will Be Invested”

Episode #194: Doug McCormick, “I Generally Believe People Underestimate The Duration Of The Time That They Will Be Invested”

 

 

 

 

 

Guest: Doug McCormick is a Co-Founder and Managing Partner at HCI Equity Partners and oversees the origination, management and development of the firm’s investments. He joined the HCI team in 1999 and has served as a Managing Partner since 2006.

Before joining HCI, he worked in the Investment Banking Division of Morgan Stanley & Co., where he was involved in the completion of numerous mergers and acquisitions and acquisition-related financing transactions. Doug previously served as a Captain in the U.S. Army’s 25th Infantry Division, receiving numerous awards for performance and achievement.

Doug serves as a board member of Team Red White and Blue and Bunker Labs, both veterans service organizations, and is a Henry Crown Fellow.

Doug is the author of the book, FAMILY INC.: Using Business Principles to Maximize Your Family’s Wealth.

Date Recorded: 11/20/19

Run-Time: 51:56

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Summary: In episode 194 Meb and Doug kick off the conversation about thinking about a family as a business. Doug discusses the idea that people effectively have two businesses, selling labor in the marketplace, and converting income into financial assets. Doug expands on that by covering the family CFO framework, and that the job of the family CFO is much like a corporate CFO in that they must manage risk and liquidity with the family’s balance sheet. The pair also get into entrepreneurship and thinking about the role entrepreneurship can play in wealth generation.

Meb and Doug then get into common mistakes people make, such as underappreciation of a long horizon. They then transition into approaching conversations about wealth with Family, starting with acknowledgement that wealth without management, values, and education can be a liability.

As the conversation winds down, Meb and Doug cover some ground about Doug’s day job as a private equity investor and some best practices for private equity allocators.

All this and more in episode 194, including Doug’s most memorable investment.

Links from the Episode:

  • 0:40 – Introduction and welcome to our guest, Doug McCormick
  • 1:46 – Inspiration for writing his book Family Inc.: Using Business Principles to Maximize Your Family’s Wealth (McCormick)
  • 3:38 – The concept of why your family is a business
  • 5:58 – Valuing human capital and understanding head of family as a CFO
  • 9:29 – How does the human capital structure change the investment process or asset allocation
  • 13:22 – Entrepreneurship
  • 17:01 – Views on budgeting
  • 18:55 – Hedging your family wealth and insurance for the bad times
  • 21:34 – Thinking about creating retirement plans that replace long lost defined pension plans
  • 24:18 – Biggest mistakes people are making in operating their families
  • 27:57 – Implementing family business strategies
  • 31:39 – Education for families in terms of family financial planning
  • 33:05 – Doug’s work as a private equity investor
  • 34:09 – How HCI Equity Partners vets investment ideas
  • 36:08 – What differentiates HCI from their competition
  • 40:23 – Common problems HCI runs into as a private equity investor
  • 42:02 – Is the landscape harder as more folks have cash on the sidelines
  • 43:02 – HCI’s deal flow
  • 44:59 – Best practices for asset allocators looking to explore the PE space
  • 47:37 – What Doug is excited about
  • 49:06 – Big changes to Doug’s beliefs over the last 20 years
  • 50:21 – Most memorable investment
  • 51:10 – How to people connect with Doug: familyinc.com, @doug_mccormick

 

Transcript of Episode 194:

Coming soon.