13 Jan @Adventur_es — An Interview with a #PrivateEquity #Investing Group
This is a brief interview with private equity group Adventur.es. The views expressed here are those of Adventur.es and not InvestmentBank.com or its affiliates. We would love to hear your insight in the comments section below.
Can you please provide a brief history of your firm? Its founders?
Adventur.es was founded in 2007 by Brent Beshore with capital he had amassed from two successful companies he built up while in his 20s. The firm initially invested in several early stage communication-related companies, and, as returns further built up the capital stack, began investing in late stage companies with the acquisition of a recruitment firm in 2010. We’re headquartered in Missouri and now have over 65 active investments throughout North America.
Tell us about your typical deal? Size? Industry? Geographic locale? Can you please provide an example?
The ideal opportunities for us are North American-headquartered companies with $1 million to $5 million in net owner earnings and $5 million to $80 million in gross revenues. Their owners are looking to divest 51 to 100 percent of equity, and have a plan for leadership transition (can be several years in the future, if desired). We’re industry agnostic, though we typically avoid real estate-oriented investments and commodities.
In 2015, we closed three late stage companies – two manufacturers and one construction firm. Each organization possessed strong niche expertise and a stable position in their respective market.
How are your deals typically structured? Are you most often a majority investor or a minority investor? Do you prefer to keep existing management in place or do you simply take over the existing business with your own management?
We typically make majority, control-oriented investments. The structure is dependent on the seller’s priorities and timeline.
We strongly prefer to keep existing management in place when it’s healthy. Culture is critical to us (see the “No Asshole” policy on our website), and we’ve found that radical leadership changes can put that at risk. In instances where we do need to place executives in key positions, it’s a careful, collaborative process to ensure the culture stays intact.
What makes you different than other private equity firms? How does your differentiation make you a better buyer in a crowded market?
Financially, we invest our own money (no LPs) and are currently unlevered, which keeps our decision-making simple and our structure options wide open.
Culturally, we are known for avoiding the typical private equity stereotype. We have a strict “no asshole” policy. We wear jeans to work. We talk in plain language. We just want to get the right deals done with the right people. No games. Honest effort.
Operationally, we provide several competitive advantages to our portfolio companies. Because of the industry variance in our portfolio (from construction to digital PR to recruitment), we can bring a lot of “lessons learned” to the table. Additionally, given our leadership team’s backgrounds, we are more comfortable with technology than many other firms, which can be helpful in advancing productivity in certain situations.
What do you look for when you are courting target companies? What separates a good company from a great company? What are mistakes you have seen from targets that, if remedied, could make the process smoother for all involved?
We equate matching sellers and buyers to the marriage process. You need to date for a while. Just because one or both sides realize it’s not the right fit does not mean there’s something wrong with either party. It’s hard work to find the right person – or company.
If we’re interested in a company based on an initial overview, we request a management call. Even if the numbers are perfect, there’s no reason to spend more time on it unless we have rapport with the seller.
As far as mistakes sellers make, there are two groups that fail with us pretty quickly. The first are those that didn’t do any research; if we’ve taken the time to review your company, we expect that you will do the same if you seriously intend to sell. The second group are those that want to pitch us on what could be with more money, but cannot articulate why things are the way they are now; you have to have the house in order first.
The final mistake constructive to point out is those sellers who have not thought through what a transaction could mean for them (i.e. structure, tax implications, transition time period). We’re happy to help talk through it with them, but that means that the seller has to be transparent about their needs and expectations. We find that some sellers are intentionally vague to appear flexible, but in the end, have expectations or demands that, if known in the beginning, could have saved significant time for both sides.
What added value do you bring to the process? How can you further assist sellers in preparing them to be ready for exit?
As previously stated, we talk in plain language and generally try to make things as easy as possible. If you receive an indication of interest from us, it will include an explanation on why we’re interested, how we’re valuing the company and why, and anything that needs to be explained about the structure (i.e. tax considerations). We never try to hide behind big numbers with lots of footnoted disclaimers because, in the course of due diligence, that’s where things would tend to fall apart anyway.
We’re also extremely flexible on exit timelines. We are open to transactions in which an owner won’t be retiring for 5 or 10 years, as well as those where a family member may be interested in maintaining a long-term equity position. All details are determined based on the situation at hand.
What is your typical investment horizon? How does your mission and goals for the fund impact your investment decisions and how you treat sellers’ businesses both short and long term?
Adventur.es intends to be a permanent home for companies with defensible market positions. Our intended investment horizon is somewhere between 15 and 50 years. Or, in the private equity context, forever. Since we don’t have to return capital to limited partners, we can make that commitment.
Given that time horizon, we do not get overly concerned with short term goals. It allows leadership to think about the systemic health of their respective organizations more so than just top line numbers. We believe that this provides them with a strong competitive advantage over “flip” strategies, and is how traditional family-held companies have survived and thrived for decades.
Tell us about your buy-side process including the time it typically takes from initial engagement, through indication of interest, due diligence and through final close.
Once we know about a prospective company, we are quick to review the high level numbers. If there’s interest, we’ll ask for a management call within one to two weeks. If things continue beyond that, we’ll move at the pace that makes the seller most comfortable. From the signing of a Letter of Intent, we can typically close in 45 to 60 days.
Tell us something interesting about your fund, its founders or managers that is typically not widespread knowledge.
Well, our founder and CEO Brent Beshore has almost died by a lion, rhino, and a great white shark. I guess that’s pretty weird.