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Private Equity

10 Days to LOI — How Investor Jacques Gliksberg Quickly Found and Closed an Add-on Deal

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Raised in Panama, Jacques Gliksberg spent the early years of his career focused on international, corporate, and investment banking with a focus on Latin America.

After receiving an MBA from the Kellogg School of Management at Northwestern University and spending the early part of his career in banking and private equity, Jacques formed Nexus Partners, a long-term holding company.

One way Jacques is driving growth for his portfolio companies is through strategic acquisitions. In September 2016, Nexus Partners portfolio company Crown Linen purchased Laundry Plus as an add-on acquisition as a result of a connection made on Axial. With this acquisition, Crown Linen grew to 5 facilities located throughout Florida, making it the leading industrial laundry operation in the state.

Read on to learn more about why speed is key to Jacques’ deal process and why he doesn’t measure success by an investment’s exit price.

You’ve been using Axial to find add-on acquisition targets for a few years now and recently closed the deal with Laundry Plus. How did you come across the opportunity?

CROWN LINEN<>LAUNDRY PLUS

I had set up an Axial campaign looking for commercial laundry services a while ago. Frankly I was just browsing my deal inbox on Axial when I came across the teaser for Laundry Plus. From the two paragraph description of the business, I knew exactly which company it was. I did not know they were for sale until it came to me through Axial, but I knew the company from my previous research.

I quickly spoke to my management team and we agreed that it was something that made sense to pursue. Within 12 hours, I had signed the NDA and been in touch with the broker. Then we had an LOI executed within ten days.

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That’s a very aggressive timeline. How is it that you and your firm can move so quickly on a deal?

Plain and simple: we don’t pursue deals that we’re not interested in. We are a very lean organization so we don’t have the resources to just put feelers and bids out there that we don’t care about. So, when I sign an NDA with a company that I think is interesting, I look for additional information and only really push forward when I truly want to make the deal happen.

Our screening process up front is more diligent than that of a larger investment shop that has the luxury of analyzing a ton of deals. We’re also investing our own money. We do very few, but very focused deals. I’m less concerned about short-term performance — much more of my attention is paid to the longevity and staying power of a business.

How does that focus on speed affect your conversations with business owners and bankers?
Well, when we are speaking directly with a company, we make sure to bring its management team into the conversation early. In that discussion, we’re really focused on the business itself and what we can achieve over the next 10 to 15 years. Other investors may wait to have these conversations further down the line, but we find it important to establish a peer-to-peer dialogue right off the bat.

When we speak with investment banks and advisors who are sharing deals with us, they know that I’m going to give them an answer quickly. If it’s a yes, it’s a very serious yes. If it’s a no, it’s a very quick and respectful no.

How does your process differ when looking for add-ons vs. platform investments? 

I actually think that finding add-on acquisitions is easier than finding platform investment opportunities. For add-ons, we have a very narrow focus and we look for very specific industries that can fill a need. Those needs could be a product or geography, and it doesn’t take us very long to make that determination for our existing portfolio because we already have expertise in that industry.

When looking for platform investments, on the other hand, I may not be looking for something specific. With those, I’m looking for new ideas, new products, and new industries. When I see something intriguing, I have to do a lot of work learning about the industry, the business model, and the business itself. I may need to evaluate if the management team I have on board at that time has the right expertise before moving forward with a deal.

What’s one piece of advice you think every business owner should hear when preparing for a transaction? 

If you’re looking to sell, make sure that selling is really what you want to do. Once you’ve determined that, be realistic about who the potential buyers are and what the business is worth. I say that because a lot of owners begin the exit process, then when it’s time to pull the trigger, they get very emotional or even get cold feet. It’s only natural — they’ve dedicated so much time and energy to building the business that they want to see to it that it’s worth the same amount to the buyer as it’s worth to the owner.

What’s the most satisfying aspect of your job as an investor and operator?

 

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Growing the companies. It’s a lot of hard work, perseverance, and patience. I’m simply not going to rush to cut costs for the company and sell it three years later.

I don’t measure success only by internal rate of return (IRR). I measure it by what we can achieve at the company, whether that be sales volume or customer count. It’s never just one thing.

I am proud of the fact that I can buy a company with 20 employees and over the course of 10 years, grow it to 800 employees. That provides me more satisfaction than selling it for twice the price.

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