David Haarmeyer’s Post

For any entrepreneur looking at how the original founders of private equity firms got started and built an industry is a great case study. Legendary but rarely seen as the peers to an Elon Musk or Bill Gates or Jack Ma or Pony Ma etc. Now, sadly, will see a period of retrenchment but the moats are so powerful that many will rebuild capitalism in this rarefied form. https://lnkd.in/eC9qnziV

“Oakley strives to be different, focusing on helping companies to grow, working with management and taking a conservative approach to debt. The group is known for working with founders, often family-run enterprises which are keen to move to the next level but need outside support.” "Oakley Capital shares have delivered returns for investors who bought in 2022, but there is more to come. An attractive stock for new and existing shareholders." joanne hart writes about Oakley Capital Investments the Mail on Sunday’s Midas tipster column. Get the full story 👇 #listedprivateequity #investing https://lnkd.in/eGYQhmFh

Private equity firms use this controversial method to get a *much* better return for their money. Here’s how a leveraged buyout works (made simple). Imagine there’s a private equity (PE) firm looking to buy a tech company called Gizmo Ltd (Gizmo) for £100 million. Here are some financial details about Gizmo: • Annual revenue: £15 million • Annual tax (at 33%): £5 million So, this gives you an annual net revenue (annual revenue - tax) of £10 million. Let's walk through two different ways the PE firm can buy Gizmo. 💰 Option 1 — Cash Acquisition   The PE firm could give £100 million of its own money to buy Gizmo, and take 100% of the shares of the company. That way, the PE firm would receive the £10 million per year (its annual net revenue), which represents 10% of the amount of money it put in. So, it would take *10 years* for it to be repaid in full. 💼 Option 2 — Leveraged Buyout Gizmo owns some valuable assets (things like data centres, office equipment and the intellectual property of its tech). The PE firm could put in only £10 million of its own money to buy 10% of the shares of Gizmo. For the other 90%, it raises the remaining £90 million using a loan from a bank. This loan is secured against those assets of Gizmo mentioned before — so if the PE firm can’t repay the bank at any stage, the bank can take sell those assets to get its money back. The bank charges an interest rate of 10%. On the £90 million borrowed, this would be £9 million a year, which the PE firm will pay from Gizmo’s revenue. So, if we go down this route, the company's financial information looks like this: • Annual revenue: £15 million - £9 million (interest payments) = £6 million • Annual tax (at 33%): £2 million Now, this gives you an annual net revenue (annual revenue - tax) of £4 million. There is a big interest payment now. But because 90% of the sale price is being funded by the borrowing, the PE firm is receiving £4 million a year on the £10 million it initially put in. So, it’s now making a 40% return — it’ll take *only 2.5 years* for it to be repaid in full. PE firms opt for the leveraged buyout approach because it gives a higher rate of return. Leveraged buyouts are controversial (and PE firms get a lot of bad press for using them). This is because of the borrowing being secured on the target company’s assets. So if a PE firm fails to keep up with the interest repayments, the newly bought company suffers. It can lead to assets being sold or — worse — mass staff layoffs. 💌 Found this post helpful? Sign up for LittleLaw for FREE: https://lnkd.in/e_PbNmmm

If you’re raising capital for the first time, there’s a very easy framework to follow to increase success. I call it the R.A.I.S.E. framework: 1- Roster. Take the time to showcase and articulate the track record / relevant experience of your team. If you don’t have an extensive track record, invest in adding to the credibility of your team. Recruit partners, advisors, board members that can help boost your chances of getting a “yes”. Having a stacked roster will 1) have more investors saying “yes” quicker, and 2) increase the size of deals you can do. 1/8th of a watermelon is always better than 100% of a grape. 2- Analyze. I’ve reviewed hundreds of deals, spoken to hundreds of first-time fund managers, and met with hundreds of investors…. The #1 thing I’ve realized is that you have to be able to remove personal bias from the deal / opportunity you’re raising money for. Look at it objectively, model it out, examine it from multiple angles. Is it really a win for investors? Or do you as the operator / business owner disproportionately benefit from it? What’s the current “risk free” rate of return investors can get by putting their money somewhere else? Most “deals” I see, the operator / capital raiser is too heavily motivated by acquisition fees, “selling” the deal to investors, or other structures that have the operator making lots of cash before investors do. If you want investors saying yes, you need to take the time to structure things in a “no-brainer” way… otherwise you will waste months if not years trying to fund opportunities that don’t make sense. 3- Investor Terms. Most don’t know where to start when it comes to investor terms or deal structure. A few simple questions to get you started:  How do I make money in the deal? How do investors make money in the deal?  How long is the deal going to take?  What is the risk in this deal for myself? For investors?  What’s the exit strategy?  What does the debt look like on this deal? What does the equity look like on this deal?  Acquisition fee? Management fee? Carried interest? Fund or syndication? Debt vs. Equity? I’ve modeled out dozens of deal structures and projections this year alone. Figuring out the ideal scenario, and being able to back it up are instrumental steps to showing YOUR due diligence as an operator. Dive into google sheets, excel, etc. to start to paint a picture of what you’re raising for with numbers. (continued in comments)... 😏

MISSING SKILLS IN PRIVATE EQUITY DEALS Let’s face it. Business owners view private equity (PE) partnership only as a last resort. Only if they don’t have the support from their family and friends to continue bootstrapping. Only if they are not able to find a good joint venture partner to share the cost of their growth plans or bring in the expertise they lack. Yet, even then, they prefer a straight bank loan agreement to our contentious purchase agreement. Their lack of interest is largely because the PE funds fail to deliver an expert support beyond equity injection. This is exactly where private equity needs to differ from a bank loan or any other funding resource. Being associated with vulture capitalism in the past, thanks to the likes of Milken and Boesky, is already a heavy cross to carry for the PE funds. Now we have a new mess created by former sell-side investment bankers and greedy MBAs with no legs to stand when it comes to sector-specific expertise or strategies.   We should "build trust" with our experts (and their sector-specific track record) in deal origination teams to leave a good first impression, "grow it further" during negotiation of shareholders agreement by being resourceful, and "prove it" with boosting support and guidance of our operating partners. All the way to the exit! We must be able to explain to them where and why their financial statements bleed and how we can help to turn it around or make their business better and bigger by growing horizontally or vertically. For this cycle to work, we are expected to know all the necessary components, dynamics and risks (CDR) of the sectors we target better than the business owners. Yes, there might be cases that they only need our equity injection and we could take the passenger seat but we must have the experience to know whether they can drive safely or we should take the wheel. CDR is often different for each sector. Entirely different for technology, energy, manufacturing, transportation, retail, real estate, healthcare or food. Within each of these sectors, there are many segments that we might deal with too. Telecommunications, for instance, will require different expertise and ever-changing economics for fixed, mobile, cable or satellite networks. Across these platforms, there will be different CDR sets for products like voice, data and video, or different tools like cable (copper, coax or fiber), microwaves, switches, routers and antennas. We need to know what we are talking about. It’s our money and our name too. There are thousands of PE funds but very few are specialized in certain sectors with track record and equipped with experts. This is where we must deal with the real threat and number one obstacle. We have no room for error when we get the chance to prove to target company that we can be more supportive than family or friends, more accomplished than JV partners, and more versatile than banks in handling their challenges.

In line with insights from this PitchBook article, we've observed a noticeable increase in secondary #deals. This strategy enables #investors to liquidate their positions and offers new investors an opportunity to access these #assets, potentially at a discount. However, it's important to note that the #secondarymarket may still be in its early stages. There appears to be significant #growth potential, driven by the increasing demand for #liquidity and efficient #assetmanagement. Marie Kemplay, #venturecapital, #privateequity, #financing, #exits

Cambridge Wilkinson spins out BCB Equity Partners, an Independent Private Equity Firm NEW YORK, March 14, 2024 /PRNewswire/ -- Cambridge Wilkinson ("CW" www.cambridgewilkinson.com) is pleased to announce the spin out and full support of an affiliate, BCB Equity Partners ("BCB" www.bcbequitypartners.com), an independent private equity firm which will pursue control and buyout transactions in the lower middle market. The geographic focus of BCB will be North America initially. BCB will be led by distinguished Wall Street veteran David Barcus as CEO; the Co-Founders of Cambridge Wilkinson, Rob Bolandian and Howard Chernin, will serve as Co-Chairmen. BCB will pursue companies with EBITDA ranging from $5MM to $50MM, targeting enterprise values of $20MM to $250MM in six verticals: Consumer Goods, Basic Manufacturing, Retail, Mining and Energy Services, Renewables, and Transportation, Distribution and Logistics. Mr. Barcus joined Mr. Bolandian and Mr. Chernin at BCB, following a 30-year career in leveraged finance, project finance, and high yield capital markets. He was previously affiliated with independent sponsor firm MTN Capital Partners, along with prior roles at Raymond James, BBVA, Knight Capital, BNP Paribas and Bear Stearns. His long and varied experience has included work on six continents, where he raised both debt and equity capital for a variety of transactions. For much of his career, Barcus has focused on both conventional and renewable energy as well as heavy industry, and he has also closed a significant number of consumer products, logistics, retail, and manufacturing transactions. BCB will draw heavily on the combined demonstrated expertise and experience of CW and its founders Mr. Bolandian and Mr. Chernin in capital markets and deal origination, structuring and closing transactions. Prior to Co-Founding CW, Mr. Bolandian honed his investing experience as a C-Suite Executive at a Forbes 400 multi-billion dollar Single Family Office, while Mr. Chernin has had extensive experience in private debt markets and building and managing several operating businesses. Over its 10-year history, CW has closed multiple billions in transactions, has 40+ bankers and originators across the globe, and maintains a deep investor network across credit and equity. BCB will seek to complete transactions by leveraging CW's network of investors, as well as the personal contacts of its partners. www.bcbequitypartners.com   www.cambridgewilkinson.com All securities assignments are completed through Avalon Securities, Ltd. a FINRA member and SEC registered broker-dealer. Rob Bolandian, Co-Founder & Global Head of Investment Banking RBolandian@cambridgewilkinson.com Howard Chernin, Co-Founder & COO HChernin@cambridgewilkinson.com David Barcus, CEO at BCB Equity Partners DBarcus@bcbequitypartners.com

Cambridge Wilkinson spins out BCB Equity Partners, an Independent Private Equity Firm NEW YORK, March 14, 2024 /PRNewswire/ -- Cambridge Wilkinson ("CW" www.cambridgewilkinson.com) is pleased to announce the spin out and full support of an affiliate, BCB Equity Partners ("BCB" www.bcbequitypartners.com), an independent private equity firm which will pursue control and buyout transactions in the lower middle market. The geographic focus of BCB will be North America initially. BCB will be led by distinguished Wall Street veteran David Barcus as CEO; the Co-Founders of Cambridge Wilkinson, Rob Bolandian and Howard Chernin, will serve as Co-Chairmen. BCB will pursue companies with EBITDA ranging from $5MM to $50MM, targeting enterprise values of $20MM to $250MM in six verticals: Consumer Goods, Basic Manufacturing, Retail, Mining and Energy Services, Renewables, and Transportation, Distribution and Logistics. Mr. Barcus joined Mr. Bolandian and Mr. Chernin at BCB, following a 30-year career in leveraged finance, project finance, and high yield capital markets. He was previously affiliated with independent sponsor firm MTN Capital Partners, along with prior roles at Raymond James, BBVA, Knight Capital, BNP Paribas and Bear Stearns. His long and varied experience has included work on six continents, where he raised both debt and equity capital for a variety of transactions. For much of his career, Barcus has focused on both conventional and renewable energy as well as heavy industry, and he has also closed a significant number of consumer products, logistics, retail, and manufacturing transactions. BCB will draw heavily on the combined demonstrated expertise and experience of CW and its founders Mr. Bolandian and Mr. Chernin in capital markets and deal origination, structuring and closing transactions. Prior to Co-Founding CW, Mr. Bolandian honed his investing experience as a C-Suite Executive at a Forbes 400 multi-billion dollar Single Family Office, while Mr. Chernin has had extensive experience in private debt markets and building and managing several operating businesses. Over its 10-year history, CW has closed multiple billions in transactions, has 40+ bankers and originators across the globe, and maintains a deep investor network across credit and equity. BCB will seek to complete transactions by leveraging CW's network of investors, as well as the personal contacts of its partners. www.bcbequitypartners.com   www.cambridgewilkinson.com All securities assignments are completed through Avalon Securities, Ltd. a FINRA member and SEC registered broker-dealer. Rob Bolandian, Partner & Global Head of Investment Banking RBolandian@cambridgewilkinson.com Howard Chernin, Partner & COO HChernin@cambridgewilkinson.com David Barcus, CEO at BCB Equity Partners DBarcus@bcbequitypartners.com

Cambridge Wilkinson spins out BCB Equity Partners, an Independent Private Equity Firm NEW YORK, March 14, 2024 /PRNewswire/ -- Cambridge Wilkinson ("CW" www.cambridgewilkinson.com) is pleased to announce the spin out and full support of an affiliate, BCB Equity Partners ("BCB" www.bcbequitypartners.com), an independent private equity firm which will pursue control and buyout transactions in the lower middle market. The geographic focus of BCB will be North America initially. BCB will be led by distinguished Wall Street veteran David Barcus as CEO; the Co-Founders of Cambridge Wilkinson, Rob Bolandian and Howard Chernin, will serve as Co-Chairmen. BCB will pursue companies with EBITDA ranging from $5MM to $50MM, targeting enterprise values of $20MM to $250MM in six verticals: Consumer Goods, Basic Manufacturing, Retail, Mining and Energy Services, Renewables, and Transportation, Distribution and Logistics. Mr. Barcus joined Mr. Bolandian and Mr. Chernin at BCB, following a 30-year career in leveraged finance, project finance, and high yield capital markets. He was previously affiliated with independent sponsor firm MTN Capital Partners, along with prior roles at Raymond James, BBVA, Knight Capital, BNP Paribas and Bear Stearns. His long and varied experience has included work on six continents, where he raised both debt and equity capital for a variety of transactions. For much of his career, Barcus has focused on both conventional and renewable energy as well as heavy industry, and he has also closed a significant number of consumer products, logistics, retail, and manufacturing transactions. BCB will draw heavily on the combined demonstrated expertise and experience of CW and its founders Mr. Bolandian and Mr. Chernin in capital markets and deal origination, structuring and closing transactions. Prior to Co-Founding CW, Mr. Bolandian honed his investing experience as a C-Suite Executive at a Forbes 400 multi-billion dollar Single Family Office, while Mr. Chernin has had extensive experience in private debt markets and building and managing several operating businesses. Over its 10-year history, CW has closed multiple billions in transactions, has 40+ bankers and originators across the globe, and maintains a deep investor network across credit and equity. BCB will seek to complete transactions by leveraging CW's network of investors, as well as the personal contacts of its partners. www.bcbequitypartners.com   www.cambridgewilkinson.com All securities assignments are completed through Avalon Securities, Ltd. a FINRA member and SEC registered broker-dealer. Rob Bolandian, Co-Founder & Global Head of Investment Banking RBolandian@cambridgewilkinson.com Howard Chernin, Co-Founder & COO HChernin@cambridgewilkinson.com David Barcus, CEO at BCB Equity Partners DBarcus@bcbequitypartners.com

LPs stay bullish on PE (via PitchBook): https://ow.ly/fuFN50QlkgE #privateequity #privateinvestments #funds #pitchbook