Kevin Swenson

This is a good thread on getting an independent sponsor deal done. What it is like jumping off the cliff and growing your wings as you fall. 👇 @PseudonymBear is also a very smart, personable guy IRL with a good background....and has a good partner...and good structure on the deal. Not doing it solo, which is even more challenging. I've talked to many searchers that want to move up to being an IS, and often they want to do it b/c of reduced liability and no PG. There are some real expenses you rack up doing an IS deal. You must also be prepared to turn off management fees if the business needs to invest in other avenues or support debt. I often say that management fees are a wet-weather creek. Try running a firm if you have no income coming in. Yes, if you have multiple deals, it evens out but don't model out what it hypothetically can be and take that to the bank. It's not contractual like a 2% fee for a fund. If you have never purchased a business before or at least owned a business, it might be best to not do a IS deal at first. Anything is doable but I have seen and heard of many strikes on getting a deal done. I've had an uptick in IS's reach out recently for advice. Also been seeing an uptick in threads like this. I was thinking about doing a workshop for a day for experienced independent sponsors, and also, newer ones could share notes. DM if you interested, both experienced and new. No cost, and no selling courses or programs or anything. Just sharing notes, and I'm sure we will all learn something from each other. Just a little about us for those that don't know us to help stimulate involvement in the offer above. I'm the founder of a firm called @lpfirstcapital . Prior to starting LPFC I was an entrepreneur and had a holdco with multiple businesses. LPFC has completed 14 platforms and an additional 50 bolt-ons, with our first exit last fall when we sold Flow Service Partners. We focus on buy-and-builds in service-based industries. We have a range of capital sources that are mostly focused on family offices, SBICs, institutional LPs, other PE firms and non-bank lenders. We just got nominated and are finalists for "Independent Sponsor of the Year" along with "Deal of the Year" by iGlobal. There were not any resources to learn from when we started, and I would like to make something so there is an easier onramp for capable independent sponsors. DM if you want to be part of that "sharing notes conference/workshop"

3 tips to do to get more off market deals from former owners👇 One of the most productive ways to find off market add on opportunities in buy-and-builds is get them from former owners that sold to you. Many of our 63 acquisitions as an independent sponsor have come from former owners connections. Many of our best deals have come from this source. It’s almost impossible to make those type of relationships that owners have in an industry…so it makes sense to leverage those relationships. Here are some best practices: 1. Ask the owner have any relationships that they feel could be a good fit for the platform. Put that on a spreadsheet. 2. Ask the owner to make introductions to those on that list if they are interested. This has a higher hit rate than anything else b/c the owner that just sold to you may know others. Big tip, tell the owner that even if they say they are not ready yet, push for an intro call so we can get to know them. Tell them we are okay making a win-win now or 4 years from now. Also remind the owner that each purchase increases the value of their rollover dollars. 3. Set a reminder to go back to that spreadsheet once every six months. Often the first pass is not 100% effective of course…it could be that they are not ready, and it could be that they want to do it next year. It could be that they want to hear about how we as a buyer behaved the first year and if we are good to work with. It’s key to keep on following up b/c that list is gold. 4. Also ask the owner who the best competitors are , or if they know of any other players in other markets that they respect a lot. Put that on a list. You might have to reach out here. Tip, ask the owner if they know anyone that can make an introduction, such as supply reps or any other 3rd party rep to make an introduction. This is better than reaching out cold. Set this on a reminder also. You can ask around the team members and former owners, and often someone will have a route for a warm intro. 5. Ask the owner of all the supply reps, industry consultants, industry contacts, if they know, and put that on a list. Ask the owner to make an introduction to them. Then talk to those reps and offer finders fee on deals they send to you that close. You might put that on a reminder also, but we have not done that in the past. 6. Make video testimonials and other marketing material from owners. Use this on outbound info to any lead for is thinking about selling. It will increase your effectiveness on converting any lead. Hope that helps anyone thinking about doing add-ons to their existing company. I’m sure there are other ways you can leverage existing networks and relationships for more add-ons…any other ideas to add here?