Doosan GridTech: sell-side advice through a complex carve-out

Louis Garoz-Ferguson: […] So today we're joined by Steve Levy, who is the CEO of Doosan GridTech. GridTech builds the software and controls behind grid-scale battery storage. Its plant controller and analytics platform run […] storage across the United States and Australia for utilities, developers and independent power producers. The company was founded in 2011 as 1Energy Systems and became a part of Doosan in 2016 inside Doosan Enerbility, the energy arm of Korea's Doosan Group, founded in 1896. Steve brings deep operating experience across US and Asian energy markets, from scaling technology teams to leading Doosan's global battery storage business strategy. Steve, thanks so much for taking the time. Seems as though the most advantageous and beneficial time for us to have a brief conversation and dialogue about your experience working with Kadenwood, where GridTech stood before entering into a formal process with us, and just sort of your overall sentiment and feelings towards the results and just the overall process working with us.

Steve Levy: Yeah, I'd be happy to. It's good to see both of you live on our little channel here. You know, when I think back, you know, to last spring, a year ago spring, we first started talking and, you know, the process or the project was just getting started internally here […], and at that point in time, the decision was made to look to spin out the assets of the company. So looking for a partner, and, you know, there's all sorts of partners you can go after. I was looking for a company, and it's hard to find that company through interviews and things of that nature, that understood the agile side of what we were trying to do. And also the enormous hill to climb […] in getting out of some of these contracts […]. So I found that the spirit within Kadenwood's management team not only understood what we were up against, but was ready for the challenge. And I can tell anyone who would ask that, you know, the difficulty that we presented to your management team, you never shirked away from. In fact, you got very creative. We've met several really interesting opportunities, in my opinion […]

Ruben Schwagermann: Looking back to your decision-making process, who to work with. Obviously, seeing the size of the mother company, you could have gone to a bulge bracket bank. What made you go with a boutique? And specifically us?

Steve Levy: Well, you know, if you look at Doosan GridTech inside of a […] Doosan Group, we're a boutique. And, you know, I could have gone with […]. At that point in time, my opinion, you know, I had made up my mind that I wanted to go with somebody that wanted to partner and not just come in and try to do this massive— They like to do spreadsheets. They love to get into your head with spreadsheets and, you know, the financial wherewithal of a company. But this one's different. This one, I felt from the very beginning, needed a very different partnership. And I felt like Kadenwood was the right— you know, from a risk perspective, was the right risk to take, and I haven't been disappointed. […]

Louis Garoz-Ferguson: If we could touch on some of the folks that we brought as introductions to you, and sort of, you know, what transpired with those individuals and those groups. I believe we entered into process at the end of November of last year, and I think within a week or 2, we were already to market. […] But if we could talk about some of the groups that we brought […] and then also the way that we pivoted, and how we were, you know, immediately back out to market and getting on the phone with people and moving things forward.

Steve Levy: Yeah, I think that gets back to the agility of your team. And the focus of your team, you don't get depressed, you don't get, you know, down when something goes south. […] We felt like we had a very strong close coming […]

Ruben Schwagermann: Could you shine some light on […] what has happened since […]?

Steve Levy: Yeah, so we, you know, we've talked to several companies since then, and, you know, the spirit of cooperation with Kadenwood has always been positive. The types of companies that you've brought to the table met all of our expectations. […] Another company that I think, Ruben, you presented to us. I'm trying to think of when it was that they came. You brought them to the dance, so to speak. Perfect match. […] The one thing about a power plant controller, it's the only piece of a power plant that's sticky. You can take a battery and you can bring a container in and you can take it out and put somebody else's in. Not being simplistic, but that's the case. It's an asset. It's just a commodity. When you talk about software controls that actually makes decisions on where the energy is going to go to and from, you don't want to touch that. In fact, you won't even allow the software provider to upgrade it. That's how difficult it is. No one wants to touch it once it's working, and the only reason you would touch it would be for safety reasons. […]

Louis Garoz-Ferguson: Okay, so I think one thing that would be good to sort of touch on is where did you feel we made the biggest difference in the process, and overall negotiations?

Steve Levy: You know, a lot of times it's not a specific item. It's the way you conduct yourselves in talking with these potential buyers. I get nothing but compliments from them about your services and your interactions. Very professional, very responsive. There's nobody more responsive than Ruben, and I'm not just saying that because he's on the phone here, but I've said it many times that I don't know when he sleeps, and I've heard that from my client— well, from these leads that you brought to us, they say the same thing, and they appreciate that. And what that built up was trust. And a hell of a lot of respect. I've talked to other companies that are talking to you about doing business with you, and it's interesting to hear their questions about you as well. And some of them have shared that they've had similar experiences that we have seen. […] And, you know, this has been a journey.

Ruben Schwagermann: Final question to wrap this up, Steve. For anyone that might be watching. What would your response be to any other executive or principal that is looking to engage us and ask for your advice?

Steve Levy: You know, it's— I don't want to sound repetitive, but, you know, as far as what I've experienced with exactly those questions from some of the referrals that you've had me talk to, you know, it's really a trust issue, right? You said it at the very beginning, you're a boutique-size firm. But I see that as an advantage. I think the monolithic […] of the world are companies that are very difficult to work with, very policy-driven, and they can't think out of the box easily. We suffered from that. […] So, you know, if you want to be working kind of in an adroit scenario, this is the right size firm to make things happen, in Kadenwood. And your people are really smart. Got to work with Harlan in the early, early days. He really helped build a lot of my confidence in your team. The way he conducted himself, his listening skills were as good as anybody I've ever worked with when you don't know the person, right? You're about to go on a call with potential buyer of your company, and here's this guy for the first time we're meeting during the call. So he was well prepped. He was ready to go. I felt like he was part of Doosan. And I tell that story internally here all the time. I told the chairman of the board, I said, you ought to look at these guys […]. So you're efficient. I feel you're very trustworthy. Listening skills with everybody I've met inside of your firm are at the top of the game. You guys do that better than anybody. And creativity is there when I've asked really you, Ruben, to take some of the stuff, the slides that I put together, whether they be my slides or AI-comprised slides, you've always been able to tear it down pretty quickly. And within 2 or 3 business days, I get a response. And that's very reasonable because we were really— I think we had 200 slides at one time. […] We got it down to 20 slides, then we got it down to 15 slides. Good luck trying to do that with a […]-sized corporation. That's hard. And with working with Ruben, and I don't know who Ruben was working with on the backside, but that's up to you guys, I saw great results. We felt like the creativity was flowing both directions.

Louis Garoz-Ferguson: Again, Steve, thanks so much for your kind words and taking your time to do this. […] Again, thank you.