Private Equity Investment Overview
Cascade Partners, Huron Capital Partners, and Superior Capital Partners are private equity firms with distinct investment focuses and capital allocations. Learn about their backgrounds, investment strategies, and completed investments. Explore the diversified landscape of private equity investments, from focused industry sectors to various asset types and fund sizes. Understand the roles of private equity firms in different stages of businesses, transaction types, and levels of involvement. Discover the nuances of private equity investment and its impact on businesses.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Presentation to Michigan Business Brokers Association November 1, 2012 Cascade Partners Mac Gerlach Huron Capital Partners Chris Sheeren Superior Capital Partners Scott Hauncher
Intro: Cascade Partners Established: 2012 Location: Southfield, Michigan and Bannockburn, Illinois (Chicago suburb) Capital: $20 million of deployed capital (in process of raising a $50 million fund) Considering a SBIC license Investment Focus: Both a private investment and an investment bank firm The private investment activities are focused on Debt and equity investments Minimum of $1MM LTM EBITDA Value Added Manufacturing, Healthcare, and Business Services The investment bank is a registered broker/dealer, with a significant portion of the practice dedicated to assisting with acquisitions for larger corporate clients Other 1 Please visit our website (www.cascade-partners.com) to learn more
Intro: Huron Capital Partners Established: 1999 Location: Detroit Capital: $600 million in committed capital The Huron Fund I L.P. (2000): $72 million The Huron Fund II L.P. (2005): $185 million The Huron Fund III L.P. (2008): $350M Investment Focus Service, manufacturing and distribution companies in the U.S. or Canada Revenue up to $200 million EBITDA of $5 million or more; add-ons of any size Other 2 Completed 60 investments since 2000
Intro: Superior Capital Partners Established: 2007 Location: Detroit Capital: $60 million in committed capital Investment Focus Special situation investments in the lower middle market Underperforming, underfunded, or distressed companies based in the U.S. or Canada Revenue of $10 million to $150 million EBITDA of $0 to $7 million; add-ons of any size Other Currently managing 5 platform investments in the following industries: Auto Aftermarket, High-Ed Publishing, Specialty Chemicals Adhesives, User- Interface Electronics, Gourmet Desserts Completed 12 investments since 2008 3
What is Private Equity?
Private Equity Comes in All Shapes and Sizes Industry focus: targeted (e.g., healthcare) versus generalist Asset type focus: real estate, private company stock, distressed assets, public company stock, options, derivatives, currency, debt, etc. Size: funds of all sizes small funds <$5mm to mega funds >$1 billion Investment horizon: from less than 2 years to well over 10 years Control: minority versus control equity Stage: from seed capital to later stage buyouts to turnarounds / special situations Transaction type: buyouts, recaps, buy-and-build, family successions, carve-outs, industry market-entry initiatives 5 Involvement: active operators, active managers, passive investors
Type of Equity Varies by Stage of Company Equity Funding by Stage of Company Typical VC Fund Typical PE Fund Late Stage Private Equity (Buyouts, Growth, Turnaround, etc.) Growth Equity Later Stage VC Early Stage VC Seed Equity Company s History (Time) 6
Contrasting Private Equity and Venture Capital Private Equity Venture Capital Stage of Company Late stage growth to mature Early stage Revenues Long history None or short history Cash Flow / Earnings Yes, stable and predictable Typically none (near-term) Company Profile Growth Slow to moderate High to hyper Concept/Market Risk Low to none Medium to high Industries Very diverse, traditional High tech, high growth Portfolio Cos. Per Fund Usually <= 10 Usually >= 10 Private Equity Venture Capital Investment Type Purchase existing shares Purchase new shares Uses of Capital Shareholder liquidity; growth Growth; fund losses/R&D Use of Debt Typical Little to none Deal Profile Valuation Methodology Mechanical / analytical Driven by stage of company/market IRR Targets 20% to 30% (equity) 30% to 40%+ 7 Investor per Company Often one (some clubbing) Many (syndicates more common) Primary Deal Source Intermediaries Direct (fewer intermediaries)
How Private Equity Funds Work Economics to LPs: Return of capital (+ preferred return in some cases) LP LP LP LP Percentage of all gains Investors Incur partnership expenses Limited Partner LPs make capital commitments to the Fund via a Limited Partnership Agreement GP calls capital as needed to fund investments General Partner manages the Funds The Fund Economics to GP: The Fund makes investments directly into companies (typically through blocker corporations) Annual management fee Carry on gains Share of transaction & portfolio monitoring fees Portfolio Company 1 Portfolio Company 2 8 Portfolio Company 3 * The above structure/example is generic and specific details will vary between funds
Raising Capital for an Equity Fund Long, time consuming process Highly dependent on relationships, track record, match of strategy and market dynamics, LP capital availability (allocations), etc. Types of Investors: Wealthy individuals / families Non-bank financial institutions Pension funds Insurance companies University endowments Foundations Corporations (more common for VC) Fund of funds 9
Creating Equity Value Three Ways to Create Equity Value Enterprise Value Equity Value = (EBITDA x Multiple) - Debt Grow Increase The Exit Multiple Reduce Debt Sustainable EBITDA Ways To Create Value Efficient production Economies of scale Expense management Grow revenue Synergistic add-ons Buy/structure right Maximize capital efficiency Capital expenditures Working capital Sell non-core assets Tax shields Growth prospects Diversification Trend line Infrastructure Management Accelerate Value Drivers 10
Were Seeking Acquisitions . . .
Targeted Industries: Cascade Testing, inspection, certification, standards development and QA services Pharmaceuticals, Nutraceuticals , Medical devices, Food , Water Manufacturing and/or marketing companies Components to the automotive, heavy truck, aerospace and/or defense industries Products that are hot forged, aluminum casted or hot stamped Fasteners for aerospace industry Dispensers or closure systems for the packaging industry Coolers suited for oil and gas compression/storage Engine instrumentation and control electronics Energy measuring products and metering systems Progressing Cavity (PC) pumps B2B services and software companies relying on proprietary IT infrastructures within a well-defined vertical/nice market SaaS software providers targeting well-defined vertical markets Back-office/finance and administrative BPO providers performing specific tasks such as payment processing, AR and AP processing and other labor-intensive tasks 12
Targeted Industries: Huron Coffee Roasting/Distribution Seeking add-ons for Ronnoco Coffee (based in St. Louis) Mostly direct-store-delivery, C-Store channels, but will consider other markets Plastic Films Seeking add-ons for Bloomer Plastics (based in Bloomer, WI) Highly engineered films for both industrial and consumer applications Prefer tuck-ins , but will consider new locations Short-haul Trucking (Food Grade) Seeking add-ons for Cardinal Agri-Logistics (based in Jacksonville, IL) Focus on liquid food-grade products (e.g. corn oil, soybean oil), but will also dry bulk food products 13
Targeted Industries: Superior Automotive Aftermarket Seeking add-ons for Rostra Precision Controls, Inc. (based in Laurinburg, NC) Electronic transmission and accessory components including electro-mechanical parts, sensors, switches, solenoids and actuators Will consider other end markets such as heavy-duty, motorcycle, off highway/recreation, etc. User-Interface Solutions Seeking add-ons for Nelson-Miller, Inc. (based in Los Angeles, CA) Membrane switches, rubber keypads, graphic overlays, metal nameplates, dome arrays, touchscreens and control panels Prefer tuck-ins , but will consider new locations Gourmet Desserts Seeking add-ons for Dianne's Fine Desserts (based in Newburyport, MA) Frozen thaw and serve desserts sold to the foodservice industry, national restaurant chains and in-store bakeries 14
Contact Us CASCADE PARTNERS Mac Gerlach (415) 596-3127 macg@cascade-partners.com HURON CAPITAL PARTNERS Chris Sheeren (313) 962-5805 csheeren@huroncapital.com SUPERIOR CAPITAL PARTNERS Scott Hauncher 313.596.9603 shauncher@superiorfund.com 16
