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Advisors, CEOs, CFOs, Corp. Development, Family Offices, Lenders, Private Equity

Top 10 Articles of 2018

What are the hottest topics in the middle market? Below, we count down from #10 to the #1 most read Middle Market Review story of the year.  

10. The Lies Our Industry Tells Itself: Private Equity

When you ask private equity firms for their differentiating value proposition, the answers are usually nearly identical: “We partner closely with our portfolio companies, have great operating partners/advisors, invest in better data/systems, and unlock growth strategies.” This “unique value proposition” is really the exact opposite. Read more >

9. How a Beer Entrepreneur Found His Partner in a Family Office

It took Brian O’Connell two years to scrape together $350,000 from savings, friends, and family, but in 2011, he quit his job and Renegade Brewing opened in a 3,000 square foot facility. “Our slogan is ‘offensively delicious.’ Our beers are intentionally very flavorful. We don’t necessarily care if everybody likes them or not. It’s a take-it-or-leave-it attitude.” The first year in business was slow enough to make Brian wonder if “leave it” might be the customer consensus, but things soon picked up. By 2015, Brian was looking for outside capital to help him execute on his growing vision. Read more >

8. 4 Ways CEOs Kid Themselves About an Exit

One of the most dispiriting things for a good banker, all of whom are trying to help their clients achieve their best outcome (I promise), is to meet a CEO or owner with crazy valuation expectations. A surprising number of people fall prey to fantastical “what if” thinking. The way to keep yourself grounded is to be realistic about your own context, by which I mean the industry, size, growth rate, and overall health of your business. Read more >

7. Why Barbecues Are More Important Than Balance Sheets for This Corp Dev Team

My favorite way to think about cultural fit is, “Do they pass the barbecue test?” And what that means is, would you have that guy over to your house for hamburgers and a beer? If the answer is yes, that’s a pretty good indication that it’s probably going to fit. Read more >  

6. The New Class of Independent Sponsors

Today, independent sponsors are a proven asset class in the middle market. Ten or twenty years ago, however, it was a different story. “We’ve seen a big change in terms of what 2009 looked like for an independent sponsor and what 2018 looks like for an independent sponsor.” Read more >

5. Big Players Love the Lower Middle Market

The M&A environment continues to be as competitive as ever. Looking for relief from high valuations and hotly contested auction processes, many private equity firms and strategic acquirers are moving down market. It’s no secret that companies purchased at lower entry valuation generally achieve better returns because of their potential for multiple expansion. Read more >

4. 5 Lessons From a Failed Search Fund

When a new venture fails, it’s always worthwhile running a post-mortem to look for lessons. This equally applies to financial ventures — in this case, a search fund. Jim (not his real name), a US military veteran working in the financial services industry, got interested in search funds after watching a buddy from the military successfully take over a small business using an SBA loan and some additional investors. It got him thinking — could he and his friends help other veterans find, buy, and run healthy small businesses? Read more >

3. Search Funds: The New Path to Entrepreneurship

With the increasing number of small businesses up for sale over the next five years — and with current taxes, financial performance, and attractive multiples favoring strong investment returns — the conditions for acquisitions are opportune. Traditional corporate and financial acquirers are eager to take over these businesses. But another method for finding and financing a business is also seeing unprecedented growth: the search fund. Read more >

2. Family Offices on Axial: Spotlight on Wildcat Capital Management

Wildcat Capital Management was established in 2011 by Len Potter and David Bonderman to principally manage the personal investments of David Bonderman, co-founding partner of TPG Capital. We currently have AUM north of $2.5 billion. We consider ourselves an “institutional family office” — we hope to bring the same level of analysis and value-add to companies as traditional private equity but with the full flexibility of family office capital. All of the members of our original investment team have private equity backgrounds. Read more >

1. Lower Middle Market Too Hot to Touch

The M&A market as a whole remains white hot and the lower middle market is no exception. Sellers are undoubtedly benefiting from today’s strong market conditions. “The market is as robust as it’s ever been. We are seeing high valuations. Average purchase price multiples are at at an all-time high in mid seven times EBITDA.” Read more >

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