This Article is About
equity advisor
minor league baseball teams
minor league baseball team
baseball basketball
sports apparel
private equity
million dollars
How To Identify A Business Segment To Buy As A Private Equity Advisor
Join 1000's of Authors at StreetArticles Today!

Have you ever wanted to be a private equity advisor? Well, I can tell you how to start. Once you have met the baseline criteria (have been in the c-suite of a $100M grossing business) you must define the industry segment that you wish to target for acquisition. I have over 20 years of successful senior leadership and entrepreneurial experiences with multiple successes with mergers and acquisitions. Below is a narrative that discusses the things to think about when targeting a business segment for acquisition. This is the first step to becoming a private equity advisor.

I was talking to a group of sports executives about how they could become private equity advisors and potentially bring deals to venture capital firms. In our discussion, I was rather impressed with the money that some of the minor league affiliate teams in baseball, basketball, and hockey could make.

Mickey, the minor-league baseball affiliate spoke first, "So are you saying that as the owner of a minor league baseball team, I can only bring a minor league baseball team to the table?"

"No, Mickey," I answered. "But as your background is baseball, I would imagine that you would want to look at businesses that had something to do with that." I thought a moment before going on. “At first you want to be as specific as possible. For example, you may want to target high-end sports apparel and uniform makers that sell to primarily minor league baseball teams and have an annual business of between 35 million and 200 million dollars, rather than just sports t-shirts manufacturers."

Mickey nodded in understanding.

"Do you think you could develop a list of about 50 companies that met those requirements in say six months time?" I asked. "Possibly," he said slowly.

"You might have an opportunity to broaden your scope over time," I continued. "Remember your are trying to identify your industry segment to develop a deal thesis. You want to be able to put it into written form, so that I can present it to one of the private equity companies I represent. Then they will be able to help you narrow your choices."

Larry, the minor league basketball team owner, broke the silence next, "So if I could identify 50 sports merchandise companies that make sneakers, I might be able to develop a presentable thesis, right?"

"You have the right idea, Larry," I answered. "You definitely want to focus on an industry that you are experienced in. At least 10 years of experience is a good starting point, and it should be fairly recent, like the last one to five years. If you ran a plastics company 20 years ago, that would not be a good choice."

Larry was making written notes on an index card. "I know a guy that owns a sports memorabilia company, ProAllStars…" Larry's face reddened as if he had given away the secret to eternal life. "They seem to have good underlying trends and growth," he added quickly.

"Exactly the kind of business you want to focus on," I interjected.

"You want to be able to identify changes and underlying trends in the segment that will drive growth. For example, the sports merchandising company that you mentioned, having multiple professional sports that it services, with good options for men and the growing segment of women's apparel and jewelry. That may be the compelling issue that private equity money is going to favor."

Larry and Mickey nodded, but Wayne, the minor league hockey team owner spoke, "Would more special characteristics be better?" he asked.

"Yes, I said. "Knowing the size, geography, and capabilities of the target company would be helpful."

They all nodded in unison.

"Get your list of companies together with the reasons that you can think of as to why they are relevant to your strategy. I can help you identify more reasons why a PE company would be interested in acquiring them if you need the help."

Mickey was rubbing his hands together.

"Don't get too aggressive on company size," I said. "Most PE firms will be comfortable with a target that is 75% of the largest company that you have run. And keep your revenue range pretty narrow, no more than four times the small end."

I stood erect and looked around the table assessing them for understanding.

"So," I said. "If you want to become a private equity advisor, you have to first identify a segment. Try to be specific, at least at first, so you can develop your deal thesis. Focus on an industry where you have at least 10 years of experience, within the last one to five years. Focus on industries with good trends, and try to identify changes that will drive growth going forward. Add in as many characteristics as you can, and then start listing your potential targets and compelling reasons to buy. "

Larry read from his index card, "No larger than 75% of my largest profit-and-loss sheet and with a narrow revenue range, large end no more than four times the small end."

"Yes," I said. "If you get your list together, then I can review a-private-equity-initial-contact-checklist with you."

"And that will close the deal?" Wayne asked.

"No," I answered, "In private-equity-negotiation-the-start-of-a-conversation is just the first contact with a company's primary decision maker. You are nowhere near a deal yet. It really takes about one to two years to pull off one of these things, so let's not get ahead of ourselves. First come up with your deal thesis that identifies a growing industry segment. We will discuss the other stuff after this, okay.”

Mickey, Wayne, and Larry all nodded.

"Good. You get started. I will talk with you in a week to keep you directed and give guidance as necessary."

"Sounds good'" said Wayne. Mickey and Larry nodded.

"I will talk to you in a week." And our conversation was over.

Thanks for reading.


Street Talk

Want to sell your business? Contact me. J.

Reply
  about 1 decade ago
You May Also Like
Tests Of Value Creation for the Private Equity Advisor
Finding and creating value creation opportunities is necessary to get a private equity firm to supply the venture capital necessary to acquire a business. As a private equity advisor, you first create a list of potential targets and then you develop ways to create value for your targets. After 20…
By:  in  Business  >  Venture Capital   Aug 29, 2011  
1
  Likes: 1

So Youre A Private Equity Advisor, Now What?
Okay, you met one of the two criteria to become a private equity advisor, which is to have been in the c-suite of a business that grossed over $100 million dollars a year, or to know someone who has. (Again, for those starting with this page, knowing me qualifies you.)…
By:  in  Business  >  Venture Capital   Sep 03, 2011  
1
  Likes: 1

Selling You, the Private Equity Advisor, to A Venture Capital Firm
Once you have a company that has agreed to sell or partner with private equity and venture capital money, it is your job as a private equity advisor to sell your leadership to private equity investors. I have over 20 years of successful experience as a senior leader and entrepreneur.…
By:  in  Business  >  Venture Capital   Aug 29, 2011  
1
  Likes: 1

Private Equity Negotiation: The Start Of A Conversation
“Hello, this is John Larkin.” “Hi, John, my name is Jay Pullman and I represent Mirandello investments.” “Yeah, Barbara, my secretary has been told me that you have called a number of times.” I had made 13 calls to Barbara over the course of seven weeks trying to speak with…
By:  in  Business  >  Negotiation   Aug 29, 2011  
1
  Likes: 1

A Private Equity Initial Contact Checklist
I had just dialed the first number on my list of acquisition targets. Today I was a private equity advisor. It was my first day on the job. My heart was racing as I imagined my conversation with the CEO of my first conquest. The phone was picked up after…
By:  in  Business  >  Negotiation   Sep 06, 2011  
2
  Likes: 2

Private Equity Industry Segment Tests
If you want to be a private equity advisor there are certain criteria and experiences you have to have. Being in the c-suite of a company is the first criteria. Having done that for a company that had 100 million dollars in gross income is the second. Identifying a specific…
By:  in  Business  >  Venture Capital   Aug 29, 2011  
1
  Likes: 1

How to Outline A List Of Value Creation Opportunities As A Private Equity Advisor
Once you have a list of potential target companies as a private equity advisor you must begin to outline potential opportunities for improving the value of the target company. I have over 20 years of experience as a successful senior leader and entrepreneur and I believe that for a private…
By:  in  Business  >  Venture Capital   Aug 29, 2011  
1
  Likes: 1

Who Can Get Houston Astros Team Apparel In North Dakota?
It is very frustrating to me and possibly others who cannot buy my favorite baseball team's apparel. I would like to dive into some of those frustrations with some detail. Please excuse me if this seems like a rant about poor choice in my region. Regional Team is Not My…
By: Chris9 in  Recreation and Sports  >  Baseball   May 04, 2011  
0
  Likes: 1

Fresno Grizzlies: Proud Affiliate Of the 2010 San Francisco Giants World Series Champions
In 2010, the Fresno Grizzlies minor league baseball team, as AAA affiliate of Major League Baseball's San Francisco Giants, reached the pinnacle of professional success when the Giants won the World Series for the first time since the team moved to San Francisco in 1958. It was, in fact, the…
By: Mark Siegel in  Recreation and Sports  >  Baseball   Dec 05, 2011  
0
  Likes: 0

Forex Trading Hawe Chash
When considering investing for the first time, you may have run into several different types of ways of gaining profits, each with their own advantages and disadvantages. While Forex may be the lesser known type of investing, it is seemingly the one with the most advantages. Forex investing is the…
By: Makowski Piotr Dariusz in  Business  >  Venture Capital   Feb 26, 2016  
0
  Likes: 0

Beneficial Facts About Marijuana That Ought to Be Learned When Opening A Dispensary
Several decades ago, medical marijuana had been already used medically by our forebears. Today, its utilization has been upgraded and is used for the management of severe medical ailments. Examples are the chronic painful sensations, cancer, and more. Despite having all of these medical advantages that are received from pot,…
By: Dash Thomas in  Business  >  Venture Capital   Feb 04, 2015  
0
  Likes: 0

Questions to Answer When Determining If You Are the Right Person to Lead A Private Equity Buyout
Once you have a company that has agreed to do a deal with you and a private equity company, you still have to sell you and your leadership team to the private equity investors before they will agree. Venture capital money is not likely to go where there is any…
By:  in  Business  >  Venture Capital   Aug 29, 2011  
1
  Likes: 2

Commercial Lending
Is your commercial note coming due? As commercial mortgages expire some property owners are discovering their bank will not rewrite the loan upon maturity. This may have less to do with the client and their ability to pay the mortgage, then the bank itself. New federal regulations have placed excessive…
By: Michael Dudek in  Business  >  Venture Capital   Oct 01, 2014  
0
  Likes: 0

The Top Three Points to Keep Away From When Opening A Dispensary
Discrepancies will have to be decreased when opening a dispensary. The more amount of failures that you commit, the greater number of damages that you may most likely face in your business venture. This means that, substantially less cash for you. For that reason, a dispensary entrepreneur have to always…
By: Dash Thomas in  Business  >  Venture Capital   Dec 18, 2014  
0
  Likes: 0

Article Views: 2603    Report this Article