LOI best practices
LOI best practices: • Include baseline financials for the target company and explicitly state that your valuation is based on this
Get in the arena
"You miss a 100% of the shots you don't take" is a quote by legend Wayne
The Value of Quick No's
“A quick no is the second best answer,” said an independent sponsor when chatting with prospective investors. It’s so
Tack Excess Cash onto EV in Stock Purchase
In a stock purchase, tack the available cash of the business onto the purchase price and ask the seller to
The Best Way To Start As An IS
The best way to start as an independent sponsor is when your (PE or FO) employer doesn't want
PE Funds Aren't More Likely To Close
A seller may think a PE fund with committed capital is more likely to close than an IS. I disagree.
Non-Circumvention for Investors
NDAs with prospective investors should include a non-circumvention provision. I have sadly seen it happen twice that a (larger,
Zone-Skipping EBITDA
Zone-skipping is a foundational principle in lower-middle market PE. Scaling EBITDA into the next zone unlocks higher valuation
When to socialize with investors
When to socialize your deal with investors: You should have 2-3 investors that you can ping whenever about whatever.
Bankers Can Enhance Your Value Prop
Use the sell-side banker to enhance the value proposition of your bid. Instead of circumventing the banker or downplaying
Post-Closing Mgmt. Options
Post-closing your company can be managed by: (1) The pre-acquisition incumbent (2) Yourself (3) Newly hired professional management
Own vs. Buy
There are many businesses that I would like to own, but that I wouldn't like to buy. They
Board Meeting Cheat Sheet
This is my board meeting cheat sheet. For some reason I am unable to memorize these lines, which are good
2nd Tier Cities As Competitive Advantage
Most people in Milwaukee, Wisconsin, are probably not contemplating a career as an independent sponsor, and, if they do, they
Measure → Monitor → Manage → Master
KPIs: Measure → Monitor → Manage → Master Data is crucially important, and whatever you look at regularly you’ll start caring about.
PE fund vs. Deal-by-deal?
"How do you make more money; by raising a PE fund or doing it deal-by-deal as an
Minority Recaps Enabled By Flexibility
The vast majority (99%+) of independent sponsors deals are majority acquisitions, but in the off-chance that you're
Equity Sources for Independent Sponsors
Independent sponsors raise equity from a variety of investors. Here is an overview of the main types of equity investors
Independent Sponsors = Service Providers (to Investors)
“We’re actually just a service provider. Instead of looking for deals that I really like, I look for deals
Opportunity Outside USA
I'm fascinated by the opportunity at hand for independent sponsors outside the US: There’s definitely some deal-
Reverse Earn-Out
Reverse earn-out: a seller note that is forgivable if performance declines. It’s usually named as a “seller note”
Tariffs Impact Businesses Very Differently
Tariffs impact businesses very differently. In stark contrast to my nosediving public equity portfolio, here’s a somewhat positive real-
12 Keys for Above-Market Terms
12 factors that can help independent sponsors negotiate above-market terms with their equity investors: 1. A low valuation. Creates
Show the pipeline
Saying you’re going to do add-on acquisitions is table stakes. Doing deals is what dealmakers do. Instead, show
