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High Road Capital Partners Keynote @ Deal Sourcing Conference

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David Teten
David Teten

How to Win: The Five S’s of Deal Sourcing Robert J. Fitzsimmons Managing Partner, High Road Capital Partners The Capital Roundtable Dealsourcing Conference May 26, 2011

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High Road Capital Partners Keynote @ Deal Sourcing Conference
How to Win: The Five S’s of Deal Sourcing Robert J. Fitzsimmons Managing Partner, High Road Capital Partners The Capital Roundtable May 26, 2011
Why is Deal Sourcing Important • Large inefficient market (11,000 deals in Large, (11 000 2010) • Quality versus quantity versus probability • One deal a year can be the difference between top quartile and back of the pack il db k f h k • Back end is useless without the front end • Investment strategy drives sourcing strategy
The Five S s of Deal Sourcing S’s • Sources • Strategies • Signature Si • Spreading the word • Statistics
Sources • Companies • Owners • Intermediaries di i • Advisors • Deal aggregation websites • Fundless sponsors • Friends & family
Companies Revenues Total Number S Corp C Corp $10 – 50 mm 126,228 73,682 52,546 $50 – 100 mm 16,517 , $100 – 250 mm 9,695 $250 + mm 7,485 50 mm + 33,697 14,192 19,505 Source: IRS data, 2008
Companies/Owners – How many are relevant based on industry, size, profitability – Considerations • Reaching the right person • Getting their attention • Getting to yes • Getting to a closing
Intermediaries • Intermediaries – Sell-side investment bank – Sell side broker Sell-side – Buyside investment bank – B id b k Buyside broker
Non traditional Non-traditional sources • Professionals (1.1 million attorneys, 500,000 (1 1 attorneys 500 000 CPA’s, 650,000 financial planners/stock brokers) • Deal aggregation websites/services (a handful, but growing) • Fundless sponsors (est. 100 – 200) • Friends and family (unlimited)
Strategies • Direct vs. indirect vs • Inverse relationship between size and representation • Investment strategy drives sourcing strategy
Investment Strategies • Value buyer • Buy and build • Cost C cutting/efficiency generator i / ffi i • Capital markets arbitrage • Family business transition • Turnaround
Sourcing Strategies • Direct • Indirect – Companies – Intermediaries – Owners – Advisors – Fundless sponsors – Deal aggregation sites – Friends & family
Strategies • Reputation x share of mind = deal flow • Build reputation (signature) – Ni h expertise Niche ti – Get things done – Easy/honorable to deal with • Grow mind share (spread the word)
Signature • Varies by market but you must be consistent market, • What do different audiences want? – Companies: highest price take care of employees price, – Owners: highest price, take care of company, help me achieve engagement/disengagement objective – Intermediaries: certainty of close, speed to close, no retrading, easy to deal with – Advisors: fit with client, easy to deal with, recognition – Fundless sponsor: certainty to close, no retrading
Spreading the word • Email • Phone • ACG/Capital ACG/C i l Roundtable/industry events d bl /i d • Meetings • Press (press releases, interviews) • Social media
The Deal Flow Cycle Inbound Deal flow Emails Filter Press releases Completed deals Networking Calling programs C lli Outbound
Statistics • Deal flow funnel/waterfall – Top down, bottom up • Industry stats – Comparison of self to market
Keys to Success • Consistent focused deal sourcing effort Consistent, (strategies, sources) • The right message to the right audience (signature, spreading the word) • F db k l Feedback loop, adjust efforts as needed dj ff d d (statistics)

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High Road Capital Partners Keynote @ Deal Sourcing Conference

  • 2. How to Win: The Five S’s of Deal Sourcing Robert J. Fitzsimmons Managing Partner, High Road Capital Partners The Capital Roundtable May 26, 2011
  • 3. Why is Deal Sourcing Important • Large inefficient market (11,000 deals in Large, (11 000 2010) • Quality versus quantity versus probability • One deal a year can be the difference between top quartile and back of the pack il db k f h k • Back end is useless without the front end • Investment strategy drives sourcing strategy
  • 4. The Five S s of Deal Sourcing S’s • Sources • Strategies • Signature Si • Spreading the word • Statistics
  • 5. Sources • Companies • Owners • Intermediaries di i • Advisors • Deal aggregation websites • Fundless sponsors • Friends & family
  • 6. Companies Revenues Total Number S Corp C Corp $10 – 50 mm 126,228 73,682 52,546 $50 – 100 mm 16,517 , $100 – 250 mm 9,695 $250 + mm 7,485 50 mm + 33,697 14,192 19,505 Source: IRS data, 2008
  • 7. Companies/Owners – How many are relevant based on industry, size, profitability – Considerations • Reaching the right person • Getting their attention • Getting to yes • Getting to a closing
  • 8. Intermediaries • Intermediaries – Sell-side investment bank – Sell side broker Sell-side – Buyside investment bank – B id b k Buyside broker
  • 9. Non traditional Non-traditional sources • Professionals (1.1 million attorneys, 500,000 (1 1 attorneys 500 000 CPA’s, 650,000 financial planners/stock brokers) • Deal aggregation websites/services (a handful, but growing) • Fundless sponsors (est. 100 – 200) • Friends and family (unlimited)
  • 10. Strategies • Direct vs. indirect vs • Inverse relationship between size and representation • Investment strategy drives sourcing strategy
  • 11. Investment Strategies • Value buyer • Buy and build • Cost C cutting/efficiency generator i / ffi i • Capital markets arbitrage • Family business transition • Turnaround
  • 12. Sourcing Strategies • Direct • Indirect – Companies – Intermediaries – Owners – Advisors – Fundless sponsors – Deal aggregation sites – Friends & family
  • 13. Strategies • Reputation x share of mind = deal flow • Build reputation (signature) – Ni h expertise Niche ti – Get things done – Easy/honorable to deal with • Grow mind share (spread the word)
  • 14. Signature • Varies by market but you must be consistent market, • What do different audiences want? – Companies: highest price take care of employees price, – Owners: highest price, take care of company, help me achieve engagement/disengagement objective – Intermediaries: certainty of close, speed to close, no retrading, easy to deal with – Advisors: fit with client, easy to deal with, recognition – Fundless sponsor: certainty to close, no retrading
  • 15. Spreading the word • Email • Phone • ACG/Capital ACG/C i l Roundtable/industry events d bl /i d • Meetings • Press (press releases, interviews) • Social media
  • 16. The Deal Flow Cycle Inbound Deal flow Emails Filter Press releases Completed deals Networking Calling programs C lli Outbound
  • 17. Statistics • Deal flow funnel/waterfall – Top down, bottom up • Industry stats – Comparison of self to market
  • 18. Keys to Success • Consistent focused deal sourcing effort Consistent, (strategies, sources) • The right message to the right audience (signature, spreading the word) • F db k l Feedback loop, adjust efforts as needed dj ff d d (statistics)