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Selling You, The Private Equity Advisor, To A Venture Capital Firm
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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. I have had the opportunity to present multiple deals to private equity investors and I have learned a number of criteria that will help seal the deal. These deal sealing suggestions will be discussed below in a narrative form.

It had been a week since I last spoke to Mickey, Larry, and Wayne. They are executives with minor league sports teams. They have been attempting to take advantage of their experience and skills to see if they can acquire a related business with private equity money. They are normally in high spirits, but as I approach the trio today, they seem more subdued.

"Hey guys," I said. "Why the long faces?

Larry spoke first, "I finally spoke to the CEO of ProAllStars."

ProAllStars is a sports apparel and memorabilia store that Larry has been fixated on acquiring. Many people try to launch private equity deals based on one contact.

"So how did it go?" I asked

"I spoke to him." Larry rubbed his hands as if trying to warm them.

"I told him of my desire to partner with or buy his company. I told him that I would need to get a 30% improvement in five years time."

"That's right," I said nodding. "What was his response?"

"He laughed," Larry said looking into his lap. “I did not know what to say.”

"Larry," I said with a firm tone. "You are already an executive of a large business. What do you do to make it profitable?"

Larry's eyebrows pulled together and then relaxed.

Mickey spoke, "I guess Larry was having the same issue that I had when I spoke to WeightLossTribune, I froze. I had not thought of being a private equity advisor as just being an extension of what I do already. I was sort of thinking it was a whole new career."

I looked around the table. “All three of you guys have over ten years experience of running profitable businesses that gross over 100 million dollars. It is not a new job. You do what you do in your current roles, but not only will you have to sell the acquisition target on why to sell to you, you will have to sell it to the private equity investors."

They sat listening, so I continued,” Private Equity investors are really taking financial, operational, and market risk on every investment. They are not going to throw money at a deal because you think it looks good. They will only invest if they feel you can perform. You have to sell them on your team’s leadership skills."

"I had an outline I was working on," said Wayne.

"Good," I responded. "You need to have a rough outline when you talk to the investors. Don't be too set in stone though, as every outline is not suited for every opportunity. You have to be a bit flexible."

"If it will get a deal done," said Mickey. "I will be flexible."

"Right. You know who the CEO will be for the take over target, but don’t write the names of the other leadership members in stone. Also, when your selling your idea to investors, please use your history and experiences to tell why you are the right person for the job. You need to have the been there, done that attitude."

"So," said Larry, "when we are selling our deal to private equity investors, we are not selling an idea as much as we are selling our ability to get the returns to 30% in 5 years."

"Yes," I said. "And the best way to do that is to have a loosely formed idea of senior leaders you will fill each position, CFO, COO, you know?"

"But the most important position is me, the CEO," said Larry.

"Right, I said."

They nodded.

"So, Larry," I said. "To follow-up, you spoke with the CEO, right?"

"Yes."

"You told him your plan?"

He nodded.

"He said he was not interested?"

Larry nodded again.

"You got his direct e-mail and contact information?"

"Yes," he said and nodded.

"Good. This is when the conversation starts," I said. "When he says no. Now that you have made contact, you have to follow-up with e-mails once a month. Ask him if anything has changed, or if he knows of an organization like his that would be interested.”

"Okay," Larry said.

"The important thing to take away from this meeting is that when talking to private equity investors, you have to be able to say why you are ideally suited. You all have experience. You know what you are doing. Sell them on you first, then have a loose team to fill in the other roles, but be flexible."

"No questions?" I asked.

There were none. This time before I left, I got them all to talk about the success that each of their perspective teams was having, both in the wins-losses side of things as well as financially. Once their spirits were out of the dirt, I told them I would see them in a week, and then I left.

Thanks for reading.


Street Talk

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  about 7 years ago
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