We’ve received a number of positive responses about our special series on add-ons. One partner at a NY-based private equity firm particularly liked our focus on why the right culture matters. “The key is retaining talent,” he wrote us. “Even when it’s not apparent where they’ll be a fit. We had one executive who had…
Last week we began a check-list sponsors tick off when sifting through acquisition candidates for their platform companies. Many items are company and sector-specific. How will product lines complement each other? Will different brands confuse customers? If so, can you benefit from synergies by maintaining separate identities? But one private equity partner highlighted the most…
At a loan conference some years ago we referred to middle market loans as the Rodney Dangerfield of capital markets. These small, illiquid instruments were the poor step-child to high-yield bonds and large leveraged loans. But at Creditflux’s inaugural New York conference on private credit this past June, it was clear the situation has changed….
The process of identifying successful add-ons is a complex one. Each sponsor has developed over the years a different style and methodology depending on their investing approach. As we’ve noted, it’s also very sector-specific. Not every portfolio company needs to, or should, have the same acquisition strategy. One partner walked us through two scenarios. “We…
Last week we began our series on acquisitions by platform companies of private equity sponsors (“add-ons”) by examining the various roles they play in enhancing value of the underlying businesses. This week we take a closer look at how different sponsors view and implement this strategy. For many firms, it starts with management. “For us,”…
“It’s been a relatively slow year for us,” one managing partner related to us recently. His middle market private equity firm had just completed a successful fundraise, but was finding investing opportunities scarcer than last year. “We’ve only completed four new platform buyouts.” Then he smiled. “But we have done eighty-seven add-ons.” The prevalence of…
News reached us over the weekend of a new trend in baseball. Apparently several Chicago Cubs relievers are applying copious amounts of perfume as a good luck charm. Turns out players from last year’s Kansas City Royals did the same thing. And they won the World Series. The Cubs manager tweeted, “Aroma still matters.” A…
So far in this special series we've examined the implications of lending to companies owned by private equity sponsors - and those that aren't. But there's a third category of owners that don't get much attention, and growing in importance.
So-called "fundless" sponsors - also called independent, or non-traditional sponsors - act as a hybrid of three parties. They combine the deal sourcing of investment bankers with the targeted allocation of capital by limited partners, and the expertise of GPs who perform a multitude of functions...
Given all the benefits of having a private equity firm as your partner, why would you even finance a company without one? We put that question to Brett Hickey, the CEO of Star Mountain Capital, who specializes in this sector. “There’s a lot of hype around non-sponsored transactions,” he told us. “It’s definitely buyer beware….
In our continuing special series on the value of private equity sponsors, we turn our attention to what motivates a family-run, privately-held, or even public company to sell to a private equity firm. On the face of it, it would seem challenging to convince businesses owned by families for decades to give up control to…