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- [00:00]
A
This is Scott Becker with the Becker Business in the Becker Private Equity podcast. We're thrilled today to be joined by Jeremy Jacobitz. Jeremy founded a firm called Grange Park Partners. He really fits a very particular niche within the deal market business. Tremendous, brilliant person. Jeremy, I'll talk to you about the deal market today, what you do, Grange Park Partners and a lot more. Can you take a moment and tell us about your background and what Grange Park Partners does and, and what you do for clients?
- [00:30]
B
Yeah, absolutely. And thanks so much, Scott for having me on. So I've been in the private equity investment banking and broader M and A space my entire career. I started out doing investment banking right out of school for a couple of years and then moved after that to private equity roles, both at a mid market private equity fund as well as at a large single family office. I started Grange Park Partners in July of last year and what we do is M and A execution. So first question we always get asked is, are you an investment bank? And the answer is no. Our role is really to act as a deal team or kind of an outsourced head of M and A or corporate development for a business typically in the middle market, a founder family owned business that needs to get through a transaction process. Our role is to really kind of be the quarterback for the deal and manage the entire process from start to finish. We help, we help get a company prepared, we help them choose the right advisors, and we help facilitate the diligence process all the way through close.
- [01:17]
A
Jeremy, you've done a tremendous job with clients on the buy side and the sell side since you founded Grange Park Partners. I have to ask you, how does what you do fundamentally different than what investment bankers do?
- [01:30]
B
That's a great question, Scott. It's something that I get asked all the time. So my role has nothing to do with trying to find a buyer for a business. So if you think about how the, how the broader process works, an investment bank's job for a client, for a client that they're working with on a sell side deal is to help them find a buyer. So the banker will come in and they'll put together the marketing materials for the business and they'll go out and talk to buyers and create a very competitive auction process that yields the best valuation and yields the best deal for, for the client. My role is kind of before the banker really gets involved. So as I'm sure you know, Scott, there's lots of great companies out there in the middle market that are run by talented entrepreneurs and know how to run a business really well. But when it comes time to do anything transaction related, oftentimes these businesses, they don't necessarily have the bandwidth internally or even the sophistication to necessarily get to that right banker and do everything that has to be done to work through the banker's process. You know, it's really, when you're thinking about getting through an institutional bank sell side process, it's really a full time job for somebody in the company to manage that. You first off, you have to kind of, you have to get to the right bank and you know, getting to the wrong bank, which we can talk about, could be a detrimental outcome for you. But you have to get to the right bank and you have to work with them, you provide information, you have to help them create the marketing materials and you have to be, you have to be ready to respond to diligence requests throughout the diligence process the entire time. A lot of companies do not have the bandwidth internally to manage that. And so that's what we do. So our role is really to support the banker in their process and, and make it more efficient for both the seller that's trying to run a business while they're also going through the sell side process and also make it more efficient for the bankers that they have everything that they need from the, from the, from the seller side so that they can go out and do their job, which again is marketing the business to buyers.
- [03:01]
A
Thank you so much. And talk for a second, Jeremy, about what do you see common mistakes that founders make, family owned businesses make during our anticipation of a mergers and acquisition process. People are going to go through a deal process. What are some of the basic mistakes that people make?
- [03:18]
B
Yeah, sure. So I think one of the biggest mistakes is just not having the right investment banker in the first place. I've seen personally in my career as a private equity investor, I've seen plenty of companies being sold by brokers or intermediaries or bankers that weren't necessarily equipped to sell that business. So oftentimes a company will, when they're trying to figure out how to get sold, maybe they'll get introduced to a broker or an investment banker that their friend used. But just because it was recommended to them doesn't mean that they're the one who's best suited to advise them on the process. So it's getting to the right banker is tremendously important and you really want to be with a banker that knows your industry very well, that knows the buyers that are interested in your type of business and Ultimately, that is what yields the best result. Not having that could mean you spend six to eight months in a process that doesn't get you anywhere. So I think not having the right banker is number one issue that I see a lot. And in addition to that, just, you know, generally advisors, you know, like other advisors also not having the right ones could also be, could yield to a worse result. I mean, you know, when you think about lawyers, oftentimes a company will be using a corporate lawyer that Maybe was the CEO's friend for some amount of time, but maybe that firm isn't really, you know, an M and A firm and they don't really do a ton of M and A volume. And having an M and a lawyer is hugely important. Somebody who understands the process and everything that has to go into it. Not having that could also really cause a lot of issues in a deal. So I think that's the first bucket that I see, not having the right advisors. Another thing that I see a lot of is there's oftentimes a disconnect between, between what what companies think a buyer is going to want and what buyers actually want to see. So you know, some of the big things that I've seen is like, you know, a client will say, hey, we have this huge customer. And we think that's great because you know, 80% of our business comes from that one customer. There's just one customer you have to manage. Well, in reality, any private equity buyer that sees that, you know, customer concentration is going to be a big issue for a lot of them. And obviously there's ways to present it and to frame it, but you know, there's not always an alignment between what the seller is, you know, preparing for and what the buyer is actually going to care about. So I think having alignments and having a better, I think for a seller to have a better understanding of, of what actually a buyer cares about would help them prep better. And then I think just most importantly, not having capacity or bandwidth internally to manage through the process, I think is a huge killer of deals in many cases. You know, like I've seen personally, many deals die in the diligence process just because, you know, the company looks good and the deal looks good and everything like that. But you know, once you get into the cadence of all the third party advisors plus the buyer asking all their questions and the diligence requests, you know, oftentimes the sellers can't keep up. They're trying to run their business at the same time and not having the capacity, the bandwidth to manage that is also, you know, can, you know, I've seen, like I said, I've seen many deals die for that reason. And those are really three things that I try very hard at the start of any engagement to help manage. So part of what we do at Grange Park Partners is we make sure you have the right banker. We get you prepped beforehand so your numbers are organized, your data is packaged the way it needs to be. We make, we understand, because we've been on the private equity buyer side before, we understand what a buyer cares about and we make sure that that's kind of coming out to the forefront and you're prepared and the thesis is well articulated for what a buyer wants to see. And then of course, we also provide the bandwidth so that, you know, we kind of act as a deal team or head of M and A for a client so that they can work with the banker and be on top of diligence requests and make sure that kind of everything is flowing and the timeline stays on track.
- [06:25]
A
Thank you so much. And take a second in a deal process, what separates companies that get premium valuations from those that don't?
- [06:33]
B
So a couple items come to mind. First off, having well prepared numbers and data ahead of time is, is a huge part of that. You know, it signals a lot of credibility. You know, when you come in, when you come into a process as a buyer and you start getting numbers from a company and data that just kind of doesn't make sense. It's not clean, it's not well presented or well organized. It doesn't necessarily, you know, tie with maybe some of the high level figures that were shared with you beforehand. That's a huge red flag every time. So, you know, I think having your numbers well prepared beforehand and if that, you know, oftentimes that means doing your quality of earnings like earlier on in the process that you can really substantiate everything that you talk about and you know, in your, in your conversations. I think that's a huge one. You know, another one I think of all the time is, you know, having a really clear and well articulated thesis for why your business is an attractive business and you know, what the growth plan would be for the next buyer. Obviously that's something that the banker helps you flesh out. But even getting to the banker and you know, communicating to that, to them so that they can communicate that to the buyer is a challenge for many business owners too. You know, I mean, like I said, you know, many, many if you're running a business, you may know and if you're just, if you're an entrepreneur running a business, you know how much, how much maybe how profitable the business is at some high level and how much cash it can be taken out of the business at the end of the year. But you don't necessarily know what is a private equity or an institutional buyer like about your business and being able to articulate to them and be able to speak the language of buyers and be able to create alignment between what the buyer is looking for and what you think your business provides, I think is another really easy way to get free valuation. And then another area that I see, particularly in the middle market when you're talking about founder and family owned businesses, is having management depth, I think is hugely important. So if your key man risk is something that a lot of private equity sponsors will talk about all the time, especially in platform acquisitions, what's the infrastructure of the business below? The founder is the founder, the main sales guy, the main operations guy, is he basically running the entire business on his own with not a whole lot of infrastructure below him and what's going to happen if he retires or if he decides to leave the business? So I think being able to demonstrate that we have great numbers, we have a thesis and we have a continuity plan from a management perspective beyond, you know, where the business is today. Those are three easy ways that I've always seen really increased valuation and yield a better outcome.
- [08:39]
A
Thank you. And I couldn't agree more. Having some depth in your management team, some depth in your customer ranks, not being so customer concentrated, so, so important. Take a second. You also do some work on the buy side. Talk a bit about that and what that looks like.
- [08:56]
B
Yeah, absolutely. So we do exactly like you said. Everything we talked about now is mostly on the sell side. We also do buy side work. So on the buy side we'll support both businesses and business owners as well as independent sponsors who are looking to do acquisitions. So in that case, it's a very similar offering. We kind of act as a deal team for the acquirer and manage the day to day execution of the acquisition. So everything from going through all the information in the data room, building out the financial model, hiring all the third party advisors, quality of earnings, working with tax, working with legal, really everything that has to get done. And essentially we kind of, like I said, we build out the model and you know, in some ways the Villages memo or the IC memo for if you're an independent sponsor and kind of underwrite the deal the same way a private equity deal Team would have. So in either, in either case, it's a deal team offering that we manage the entire process, the entire transaction process, start to finish on either a sell side or a buy side deal.
- [09:47]
A
Thank you. Anything else you want to share with the audience today? Jeremy, you've done a remarkable job of building a business. You, you feel a real market need anything else you'd like to share with the audience say?
- [09:58]
B
I would just say I think in general M and A transactions are tough and you know, everybody knows, everybody who's in a business today as likely heard, you know, has a friend or, or a relative or knows somebody that sold out to private equity and had a wonderful outcome. And I would say that is absolutely true. You know, finding the right partner, you know, selling your business, transitioning it, it's obviously it's a huge decision. If done right, it can be an incredibly financially rewarding decision. Especially, you know, we're talking about rolling equity and, you know, participating in the next deal. I think it's a hugely, hugely attractive opportunity. At the same time, you know, it's easy to see the press release where we talk about the success of the deal, but everything that happens before then is extremely challenging. And I would say, you know, for a company that's never gone through it before, making sure that you're prepared ahead of time and you know what to expect going into it, you have the capacity to manage through it and you have the right advisors alongside you and somebody quarterback in the entire process. And I think is hugely important. And that's really a lot of what we try to provide for our clients here. We work with great businesses, great founders who have, like I said, phenomenal businesses. And our goal is really to help, help them maximize the value of their transaction.
- [11:03]
A
Jeremy, I have to tell you, I know the deal market really well. I love the spot you fill in the deal market. I think it's a real asset, can be a real help for both sellers, founders and others as well as for buyers, for investors, Emerging sponsors, you really probably the depth and clarity for a team they need to get things done. I thank you so much for joining us today on the Vector Private Equity and the Vector Business podcast. We love what you do. Thank you for joining us.
- [11:30]
B
Thanks, Scott, for having me. I really appreciate it.
- [11:35]
C
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