IVCA Profile: 2013 Golder Award Recipient Ted Koenig, CEO and President of Monroe Capital

IVCA Profile: 2013 Golder Award Recipient Ted Koenig, CEO and President of Monroe Capital

November 20, 2013

Continuing our series of honoree profiles for the 2013 IVCA Annual Awards Dinner, we turn to the Stanley C. Golder Award recipient – Theodore L. “Ted” Koenig, the Founder, CEO and President of Monroe Capital. Mr. Koenig is a well-respected member of the investor community. He represents the spirit of the Golder Award, which “honors individuals who have made profound and lasting contributions to the private equity industry in Illinois.” The IVCA Annual Awards Dinner will be December 9th, 2013.

Ted Koenig, has been the Chairman, President, Chief Executive Officer and Managing Director at Monroe Capital LLC since February 2011. Mr. Koenig founded Monroe Capital in 2004. Nominator Bill Chapman, Managing Director of Baker Tilly Capital, said this about Mr. Koenig – “I have known Ted since his days as a partner at Holleb & Coff. Ted has made a huge impact on the Chicago investment landscape from his time as a prominent transactional attorney, to his leadership at Hilco Capital – as President and CEO – and to his founding of Monroe Capital.”

Previous to Monroe Capital, Ted Koenig organized Hilco Capital LP and had served as its President and Chief Executive Officer after its inception in 1999. Mr. Koenig has over 24 years of experience in structuring, negotiating and closing transactions on behalf of asset based lenders, commercial finance companies, financial institutions and private equity investors. Prior to founding Hilco Capital, he spent 13 years at Holleb & Coff as a Partner and Co-Chairman of H & C's Corporate Law, Mergers/Acquisitions and Business Finance Groups. Previous to Holleb & Coff, Mr. Koenig was an Associate in the Mergers/Acquisitions Group at Winston & Strawn in 1986.

He serves as a Director of The Bargain Shop Holdings Inc., Trim Trends Holdings LLC  and Arnold Defense & Electronics LLC. Mr. Koenig is on the Dean’s Advisory Council for the Indiana University Kelley School of Business and the Board of Overseers, Chicago-Kent School of Law. He also serves as the Vice-Chairman of the Board of Trustees of Allendale School. He is a Director of the Commercial Finance Association and the Turnaround Management Association. He is also a past President of the Indiana University Kelley School of Business, Chicago Business Alumni Club.

Ted Koenig has published numerous articles in these areas and has appeared as a featured business finance expert in news media articles and televised business programs. He received the 2012 Middle Market Thought Leader of the Year award by The Alliance of Mergers & Acquisition Advisors (AM&AA) and Grant Thornton LLP. Mr. Koenig is a C.P.A. He holds a J.D., with Honors, from Chicago Kent College of Law and a B.S. in Accounting with High Honors from Indiana University.

The IVCA spoke with Ted Koenig regarding the honor of the Stanley C. Golder Award, his distinguished history and his perspective on the investment industry.

IVCA: Given the name on the Golder Award, Stanley C. Golder, what does the honor mean to you in context to the history of the man himself and the context of his place in the history of private equity? 

Ted Koenig:  As a young professional, the name Stanley Golder represented accomplished excellence in the private equity community. His personal and professional reputation and that of his firm, Golder, Thoma, Cressey and Rauner, was something that the entire PE community strove to emulate. I am extremely honored to be considered for an award that bears his name. 

IVCA: As a founder of Monroe Capital, what are your general feelings about the state and atmosphere of Venture Capital and Private Equity in our post-recession economic climate?

Koenig: I think the Venture Capital and Private Equity business has become harder in the post-recession environment. It is much more difficult to engineer LP returns using financial leverage in a low interest, more limited leverage economic climate. Revenue growth, EBITDA growth – as well as purchase price multiple expansions – are much harder to achieve.  As a result, VC and PE returns will be harder to come by. I think the firms that focus on operations and operational improvements will end up out performing others going forward. 

IVCA: You are both a C.P.A. and an attorney. Where do those two disciplines intersect most closely, and where are they farthest apart?

Koenig: My accounting and legal training have shaped my risk averse personality and my professional career path to a great extent. But for the handicap of my education, I probably would have been a private equity investor – and probably not a very good one over a long cycle, since there are very few deals that we see at Monroe Capital that I cannot find at least some redeeming equity features or upside to get excited about.  

IVCA: You have been called on to provide expertise in the media and the lecture circuit regarding your work. What question comes up the most in that journey, and how has the answer to that question evolved over the years?

Koenig: That is a hard question to answer.  I get asked a lot about trends in PE, debt financing, leverage and deal activity. The firm – as lenders to the PE world – are at the epicenter of the middle market transaction universe. We review over 1,500 deals per year, both from PE sponsors and non-sponsors alike. We have over 180 companies in our loan portfolio, mostly all as a result of buyouts. We have worked with over 200 different private equity sponsors. We see many forms of deal structure, and lots of different bells and whistles.   

It seems that when the market is hot, pricing and leverage win seven times out of ten. But when the market is more challenging, both in a good and/or bad way, certainty of close wins ten out of ten times. Over the last business cycle, deal professionals and company sellers – and their advisors – have become much more focused on certainty of close. 

IVCA: There are obviously layers of complexity in the opening and closing of funds and transactions. In your long experience with those negotiations, what do you find to be the most simple core element to achieving success for that type of discipline?

Koenig: We have always focused on providing a very consistent lending product to the middle market, both in good economic cycles and bad. It is very important to do what you say you are going to do and then deliver on what you propose, absent changes in circumstances. We have guided our company on those beliefs and developed some very strong relationships with deal professionals over the years. 

IVCA: As a graduate of Indiana University, you've served as a leader on their alumni associations here. What is the key to the Midwest financial ethos that makes it advantageous as a calling card for business?

Koenig: Chicago is and has always been a business mecca for graduates from schools throughout the Midwest. There are large contingents of alums from many Midwest universities in very influential positions in our business community. The great thing about the Midwest business community is that it is very results driven, and pretty much a meritocracy.  There is a strong correlation between hard work and success. There is little room or patience for people that have inflated views of themselves or their academic backgrounds. People succeed with solid academic history – but also with strong communication skills, and a practical approach to problem solving.   

IVCA: With technology changing virtually every day, what is your advice on the best way to keep up with emerging markets in tech? And how does an investor get the right information to avoid the tech bubbles?

Koenig: Technology is a tricky subject. It is very hard to predict where it is going and it’s constantly changing. We have tried to surround ourselves with smart advisors and it seems that younger people actually have a better feel in this area than the ‘older, wiser generation,’ which I am now a part of, unfortunately. [laughs] My guiding principal in this area has been to rely on common sense. If things don’t make good sense – such as an outrageous company valuation for lack of an apparent profitable business model – then eventually most people will figure that out and economic return on investment will come back into play. Bubbles will come and go in all asset classes, not only technology.

IVCA: One of the more humbling aspects of business success is the ability to give back to the community. What personal give-backs are closest to your heart, and how has that involvement changed your life?

Koenig: Unfortunately, many of us are very engaged with our businesses, our families and our careers. It is hard to spread yourself thin in all these areas, even with the best intentions. I try to find a couple of organizations where I can provide a meaningful difference with my time and resources. There are so many worthwhile causes and charitable organizations – I try to focus most on those that involve making the lives of children better.

I have been blessed with a wonderful family of four children. They are our future and it is a shame that many do not have the advantage of health, education or the ability to grow up in homes with parents that love them. I find that the more work I do in these areas, the more I am grateful for how fortunate I am. 

IVCA: Finally, is there any other message you have for the IVCA, within the honor of receiving the Golder Award?

Koenig: Yes, I believe awards are a manifestation of behavior and results. Nobody achieves great behavior or results by themselves. I have been blessed to have partners and associates in our company that are the best in the business, and most of us have worked together for over 10 years.  We have seen good business cycles and bad. My team has been there every step of the way right alongside me, sometimes in front and sometimes in back. I have come to rely on our team to make things happen as we continue to grow and expand our business. Of all the great things that we have achieved to date, we have done this together – and they make it exciting and fun for me to come to work every day. 

The 2013 IVCA Awards Dinner, presented by Kirkland and Ellis LLP, will take place on December 9th, 2013, at The Four Seasons, 120 E. Delaware Street, Chicago. Individual tickets are still available, click here for information.