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Stephen Woodsum '79: Far-sighted approach yields Summit's peak

By Kari Richardson

Stephen Woodsum '79 likes to take the long view.

When he and partner E. Roe Stamps launched their Boston-based private equity and venture capital firm in 1984, they opted not to name it after themselves. Instead, they decided to call it Summit Partners, reflecting their hope that the company would outlast them and be led someday by a new group of managers.

That wish came true in 2000, when Woodsum, Stamps and Greg Avis, who had joined the company shortly after its founding, turned Summit's daily management over to five partners who had been with the firm for at least a decade. Woodsum still holds an interest in Summit Partners, and continues to serve on its board of directors.

"We've always built our firm with an eye toward the long term," Woodsum says. "That's somewhat unusual in our industry."

Indeed, Summit Partners takes a far-sighted approach in almost every area in which it does business. 

To find their next investment opportunity, Summit employees scour trade shows and trade magazines for established companies with opportunities for growth. Woodsum estimates that the company researches 1,000 to 2,000 firms to find just one likely investment.

Most of the companies in which Summit Partners invests are already doing quite well, and Woodsum notes that many of the entrepreneurs who run them are skeptical about working with private equity investors.

"If you can even get them on the phone, most of these entrepreneurs say, 'No thanks. I am already making a lot of money and don't need your help,'" Woodsum says. "It's very difficult to convince them that we can be helpful in shaping their long-term strategy, building their management team and board, and enabling them to achieve their liquidity objectives through IPOs or mergers."

Here again the firm's long-term view comes into play: partners pride themselves on building relationships. Over time, some of these entrepreneurs decide their companies could grow more quickly with the addition of capital and industry expertise.

"It's a very labor-intensive way of doing business," Woodsum says. "But it provides extraordinary investment opportunities."

Since its founding, Summit Partners has raised more than $11 billion in private equity, venture capital and subordinated debt funds. During Woodsum's 16-year tenure as managing partner, the company averaged more than a 60 percent compound annual net return for investors.

Woodsum began his career in the mid-1970s with the private equity arm of First Chicago Investment Corp. (now Madison Dearborn Partners), and earned his MBA through the Part-Time program at Kellogg. Night school can be taxing after a full day of work, but Woodsum says he found his studies uplifting. "I was a double major in marketing and finance and I was using what I was learning every day," he says.

That knowledge proves useful in Woodsum's work at Summit and beyond. While he still acts as an adviser to the company, Woodsum devotes much of his time and leadership energy to nonprofit organizations. He favors those that "help disadvantaged kids and families pursue the American Dream," such as The Boys & Girls Clubs of Boston, Jumpstart for Young Children, and City Year, an organization that recruits young people for a year of public service.

And while he works on these philanthropic endeavors, he rests easy knowing that Summit Partners is in good hands.

"I have great confidence in the team that is now running Summit," Woodsum says. "They have done a terrific job in managing the firm in a very challenging environment and have positioned Summit for continued success in the years ahead."

 

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