Family Offices always want to "collaborate" on deal flow
"We would love to collaborate on deals with you," says every Family Office in the world. Of course
Fundraising
82 posts
3 X-Factors of a Deal
The 3 x-factors that get me especially excited about an investment: (1) Low entry. It's hard to
How to structure carry
How to structure carried interest as an independent sponsor: Standard PE is 20% after a pref (8-10%). Most sponsors
Too much debt chasing too few deals
"Dealflow is getting harder and harder," say several SBICs. Private credit (incl. SBIC) was all the rage in
Investor bringing lender
“My deal has $1.6m of EBITDA. I was looking for a conservative, non-PG senior note, of maybe $2m,
Timing debt vs. equity
Socialize deals early with lenders, maybe even before the LOI. Gauge their appetite, get feedback to form a sources &
How to Invest in SMBs (Without Buying One Yourself)
* How to build an SMB investing strategy * Ways to generate deal flow * What to look for during diligence * What life
Send a test wire
Send a test wire. If you're wiring a significant sum for an investment or distribution, send $5.00
Family Offices + Independent Sponsors = Strong Match
James warns that when 1 LP represents 80-90% of the capital in a deal, the sponsor is no longer
Ensuring 5-year exit timeframe
How can LPs be sure that independent sponsors will actually exit in ~5 years? 1) debt maturity. Most deals have
Rollup without additional equity
UK-based Sam Turner overcame a challenged first deal by pivoting the business model and eventually built a thriving facilities
Independent sponsors have become a real force
Independent sponsor royalty Michael Kornman details how he built NCK Capital out of Dallas with his brother Grant, acquiring 5
Raise convertible debt
Instead of raising debt + equity, raise convertible debt from equity investors. Instead of being at the bottom of the waterfall,
Mixed feelings about virtual data rooms
I have mixed feelings about investor portals / virtual data rooms (VDR). Yes, they are useful for organization and real-time
Catchups are usually included in the waterfall
Catchups (100%) are almost always included in the waterfall. The exception is when the carried interest is set significantly above-
HNWIs live everywhere
One of the best parts of raising capital from retail/HNWIs is meeting genuinely interesting people. Last week I had
Warrants + Independent sponsors = 💔
Warrants + Independent sponsors = 💔 A warrant is like a stock option, giving lenders the right to convert a portion of the
Sunglasses when pitching investors
Don't wear sunglasses on your first Zoom call with a prospective investor.
$5-20m = Hard place
"Between $5-20m of EV is the hardest place to get a deal done."- Banker
Fundraising deal-by-deal = Tough
Fundraising on a deal-by-deal basis can be tough & tedious. I have met several sponsors who ended up
Sell-side banker isn't fundraising counsel
No, the banker representing your seller should not be your fundraising counsel. The lack of committed capital is the biggest
Please roll the closing fee
Most independent sponsors (GPs) roll their entire closing fee (1-2% of EV) into the deal, and often they'
The Rise of Family Offices
The rise of Family Offices is an enabler of entrepreneurial private equity: (i) Compared to institutionals, FOs have flexible mandates
Monster IS deal raised €350-400m of debt & equity
Independent sponsor deals aren't confined to the lower-middle market and <$10m EBITDA. This monster deal raised
