Deals Sourcing Platform

    Our proprietary platform for deal origination is modeled on the algorithmic, data-driven process used by quantitative hedge funds.

The five steps in our process:

1) Aggregate data. On an ongoing basis, we maintain a rich database of targets, based on free, commercial, and proprietary sources. We particularly use web scraping, social media, and other non-traditional tools to obtain this data.

2) Extrapolate data. We benchmark against public company financials and other data in order to fill in the inevitable gaps in the data we collect.

3) Synthesize. Specifically when analyzing private companies, we filter our target universe with two primary tests leveraging the 75+ signals that private companies emit about their status:
a) Is the company an attractive investment?
b) Is the company potentially interested in taking outside capital?

4) Solicit. Once we have created a shortlist of potential investments, we then solicit those particular targets to take in capital from our client.

5) Execute. We work with our clients to close a transaction.

In the private company universe specifically, we find that most companies are not motivated to take in outside capital unless the company experiences a trigger event of some sort. For example, a company may not be interested in acquiring an outside investor until the CEO has a 60th birthday, and starts to think about retirement, succession planning, and liquidity. The challenge is that many trigger events are private and not readily observable. However, our proprietary algorithm and data gathering infrastructure identifies these trigger events and makes predictions as to the likelihood that a given company will take in outside capital.

Sample signals which indicate a company is likely to sell or take in outside capital

    Status of major equity owner

  • Large corporation shedding subsidiaries
  • Major owner with one time tax incentive to divest, e.g. due to tax law charge
  • Death, disease and divorce (the Three D's)
    Status of CEO

  • Serial entrepreneur seeking his next adventure
  • Older CEO seeking retirement
  • CEO getting tired / acknowledging limits of his or her competence
  • Death, disease and divorce (the Three D's)
    Corporate performance

  • Rapid growth, which may require additional working capital
  • Underperforming/distressed
    Industry/economic trends

  • Consolidation in industry--Aside from competitive pressure, seeing a competitor make a large cash gain from exiting also prompts a CEO to think about liquidating his or her own equity.
  • Competitors raising capital, which creates competitive pressure to raise capital as well
  • Large short-term opportunities, e.g., the chance to buy another related company
  • Growth sector