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December 4, 2020 Article 6 min read
How does an investor in his early thirties open a private equity firm during the great recession, navigate a pandemic, and not just survive but thrive? Here’s how Aterian Co-Founder Michael Fieldstone turns companies in transition into success stories.
Man standing next to a wall of windows

In naming their private equity firm, Michael Fieldstone and his partners wanted something unique — something that would symbolize their vision for the organization. They landed on Aterian — a stone tool used tens of thousands of years ago in the Sahara Desert to make other tools. “That’s what we’re trying to do with our portfolio companies: provide the tools for each company to succeed,” he says. “You’ve got to chisel away at and continuously improve them, so Aterian was a natural fit for us.”

Michael started his career as an investment banker, and after stints at Apollo Global Management and Sun Capital Partners, Inc., he co-founded Aterian Investment Partners in 2009 — during the worst recession in decades — with two partners and a small investment team. Over the next decade, the team grew to its current size of 20 transaction and operational professionals.

Aterian is a ‘small end of the middle market’ private equity firm focused on companies with an enterprise value of $30 to $300 million. A typical Aterian investment is a business with a solid customer base and good opportunities in its marketplace that’s going through some type of transition. Such developments at times are out of the company’s control and created by unexpected market turbulence, over-leverage, or mismanagement. Other times, these transitions are intentional at the ownership level — such as carveouts or noncore assets of PE firms or debt funds or, most typically, family/founder situations in which succession planning or a partner is sought after to capitalize on further growth opportunities. “Working with companies in transition can sometimes be a roller coaster ride, but this is our specialty,” says Michael. “We seek to build strong relationships with the leadership teams in the portfolio companies while creating sustainable growth plans that we support financially and with additional human resources.”

Michael says when recruiting, Aterian looks for skilled people who care, who have a strong sense of ownership, and can quickly align with the direction the organization is headed.

“You need passion for the job and a sense of purpose. At Aterian, our purpose is to help our portfolio companies get better and in doing so create opportunities for all stakeholders. People who really enjoy doing that do great at our firm. That’s the most important part for us — the passion, the hustle, the fire to want to do this — it’s infectious.”

Building a strong sense of ownership and purpose is also very important at Plante Moran. People outside the firm are surprised with the multigenerations we have working at the firm. Occasionally, I’ll hear someone say, “I imagine the younger staff don’t want to work.” I disagree. As with Aterian, our staff want to serve clients — and they’re willing to put in additional effort. They just need to understand why they’re doing it, why it matters, and why it’s important. If you can create the vision, you create a great client service team.

Having the right people with the right attitude in place opens the door for effective teamwork. Michael describes the culture at Aterian as “collaborative and highly transparent.” The firm has Monday morning meetings where the team talks about everything that’s going on, and when an important investment decision is up for discussion, everyone on the team is given an opportunity to add input. Michael explains how this transparency curbs personal biases that can affect investment decisions, provides opportunities for firm training, and helps maintain a cohesive team. He adds the culture of transparency extends outside of the Aterian team to the portfolio companies and the firm’s lenders, supporting its reputation in the marketplace.

Michael says because he works with companies in transition, there isn’t always a strong collaborative culture in place initially at the portfolio companies, “but building it can be the most fun and rewarding part of the job.”

“We call it ‘cracking open the coconut’” he explains. “When you crack open a coconut, you hit it over and over without knowing when it’s going to open up. Then suddenly it opens. We see this when working with our companies. All of a sudden, you’re sitting in a meeting and things start gelling and people are being proactive, problem-solving, and being solutions-oriented. You’ve cracked open the coconut — you have that culture where everybody’s working as a team.”

Getting to this level of achievement calls for patience and a good measure of another character trait Michael feels is important to model for the teams in Aterian and its portfolio companies — resilience.

“Within a firm, within a company, or within a project, you’re always going to have times where you’re not going to get to where you want to be. You have to have the resiliency to go back out there and keep going at it. As a leader, I think it’s really important to show that you’re not going to get discouraged, that you’re going to keep going at it, that you’re going to prevail.”

Showing resilience builds credibility and trust with others and shows them how to get places they didn’t think they could go to on their own. It can also be an important factor during major economic upheavals and times of uncertainty like the current COVID-19 pandemic. “It’s important not only internally but at the portfolio company level to inspire people to think about the future — to take bold actions to keep up with ever-changing markets and their innate secular trends.”

More from Michael:

The last question we ask before making an investment decision:

“We look around the table and ask each other, ‘Is this an industry and company we want to wake up to and be a part of every day?’ It’s a really important question because we get so involved with each one.”

On building a team using “force multipliers:”

“We buy distressed companies with potential and then work hard to improve them using what we call ‘force multipliers’ — talent from Aterian combined with trusted partners from outside our organization to accomplish greater feats than they could operating as individuals.”

On work/life balance:

“We’re all in a way alpha-workaholics — we love what we do. But we’ve got to take a step back and know that we’re not really good at our jobs either unless we have some balance. We make sure we have an environment where we can do the hard work but also be active with our loved ones to help make us better at what we do.”

On leading through a pandemic:

“A major challenge is having less in-person face time to read a situation firsthand. Although difficult in practice, over communication — even if virtually — is critical to keep connectivity and focus and make sure we don’t talk past one another.”

Leadership personality profile

Your leadership approach in one word: Collaborative

The leadership quality you most admire in others: Clarity of thought and being able to communicate your vision effectively

Your best piece of business advice: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you will do things differently.” — Warren Buffett

What you look for when you hire: Integrity, smarts, determination

To be an effective leader, you cannot: Be inconsistent.

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