In this episode we speak to Jim Strang, Chairman of HGCapital Trust.  The Trust has an outstanding track record investing in business-to-business software companies.  We discuss the evolution in private markets over Jim’s career, the benefits of specialisation and the reasons behind Hg Capital’s success. Show notes: [01:15] Jim discusses his early career [02:12] HgCapital Trust’s history [03:41] The benefits of specialisation [05:56] The importance of controlling the capital structure [08:02] Characteristics of typical Hg investments [10:07] The growth model [11:29] End market fragmentation [13:29] Being highly selective [16:25] Having the flexibility to own the best businesses over the long run [18:07] Replicating Hg’s success in the US [19:58] Why Hg is an attractive owner for entrepreneurs [22:35] Sustaining Hg’s culture and using greater scale to drive operational improvement. [25:25] Objectively assessing each company’s potential [27:03] Low loss rates and a few major successes [27:57] Why things typically go wrong [30:22] Leverage and the capital structure [33:33] Valuing private companies [38:43] M&A in a higher interest rate environment [40:54] Trust your gut