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How to Win as a Generalist Family Office in the Lower Middle Market

My guest today is Ken Heuer, Principal at Kidd & Company, a principal investment firm with a unique approach to designing businesses that transform their industry segments. Combining intensive research and hands-on involvement, Kidd & Co creates highly successful businesses that generate world-class investment returns.

Ken Heuer joined Kidd & Company in 2008 and participates in all facets of the firm’s activities, including sourcing new opportunities, investment strategy development, conducting technical, financial and market due diligence, maintaining relationships with debt and equity co-investors, and overseeing strategy execution for existing investments. Previously Ken was a Managing Director at Spencer Trask, an early-stage venture capital firm, where he worked with companies in the life sciences, healthcare, information technology, software and communications sectors. Prior to Spencer Trask, Ken was an investment banker at JPMorgan, where he worked on numerous capital-raising and M&A transactions. Ken received a BS in Civil Engineering from Lehigh University and an MBA from New York University, where he was a Stern Scholar. Ken currently serves on the Board of the New York Chapter of the Alliance of Merger & Acquisition Advisors (AM&AA).

I speak with Ken about the many bubbles and crashes he seems to have been a part of and rode to success over the years (internet in the 90s, real estate in 2008, and the pandemic) and also how Kidd & Company functions as a “generalist” investment firm, with perhaps fewer dollars to invest, but bringing in much higher returns than some megalithic private equity organizations.  Kidd focuses on outsourcing the less desirable functions in their businesses to allow the principals to focus on what they enjoy – which has provided very successful exit opportunities in a number of industries.

This podcast is brought to you by Axial, (www.axial.net), a trusted online platform for business owners & their M&A advisors to use to safely and intelligently explore and execute capital raises, acquisitions, and exits with strategic buyers or professional financial sponsors. I am your host, Peter Lehrman, Founder and CEO of Axial. In every episode, we will explore the vast world of small business M&A. We will interview both the proven and emerging owners, operators, investors, and advisors whose strategies and methods have been put to the test. 

If you have enjoyed this episode, check out Axial.com for more.  There are recorded Axial member roundtables, downloadable tools for dealmakers, quarterly lead-table rankings, and lots of other useful information. To join Axial as an acquirer, an owner considering an exit, or as a sales-side M&A advisor, you can get started for free at Axial.com.  Feel free to reach out to me directly at Peter@axial.net with questions, suggestions, or show topic ideas.

Discussion points:

  • How Ken got into banking and M&A – Business school in the late 90s, JP Morgan, early-stage venture capital in NY, then Kidd & Co. 
  • Ken knew it was time to leave the early-stage venture when it became just a long line of “sick patients” to triage
  • The “fashionable” focus on family offices and scorn for private equity – how Kidd invests their own capital, holds or sells, and is seen as the kinder, gentler option
  • Some of the fundamental differences between private equity and family office-type orgs
  • Deciding to hold or sell – Kidd prefers to recycle capital into another earlier stage investment
  • Larger firms are victims of their own success – Kidd puts fewer dollars to work, but 8-10 times the returns of larger firms 
  • The story of the 2010 RV company in Cincinnati OH and how they left Kidd for an investment banker, but came back 9 months later, preferring Kidd & Co approach
  • What it takes to be a good generalist firm – professionalizing and scaling the less desirable functions like marketing, preserving what is great and what that company loves to do
  • Executive recruiting, networking, finding seasoned execs for acquired businesses
  • Will the next ten years see more focus on talent/sourcing? 

Resources:

Ken Heuer LinkedIn

Kidd & Co Website

Email Ken

Peter Lehrman LinkedIn

Axial Website

Learn More About Joining Axial

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