The process can take on various looks:
- Reinvigorating business
Clifford prefers to work closely with the entrepreneur-owner, purchasing 60% to 70% of the business. This allows the owner to “take some off the table” for possible distribution to charities and family members. As part of the new partnership, SignificantPartners™ often brings additional strong financial backing totally focused on helping the entrepreneur take the business to the next level of growth. In many cases, it re invigorates the owner’s personal enthusiasm for the business to have new partners who are highly motivated — committed to doubling, tripling, or even quadrupling what the entrepreneur has already achieved. SignificantPartners™ make the difference by bringing sufficient capital and additional high level management support into the mix.
- Investing $100 million a year
We see over and over again this type of formula working to everybody’s advantage. Our group has earmarked $100 million per year to invest in businesses to which we feel we can add significant value. There are cases where we build a relationship with the owner — the most important part of the transaction for us — but because of certain factors we can’t get involved more heavily to help grow the business as we’d like to. So we make a traditional investment.
- Partnering with private equity firms
- No-cost assessment for the business owner
We prefer to add value beyond simply writing a check. We’re entrepreneurs, not bankers. In cases where we feel the relationship is strong and the opportunity is big but we don’t have the skill set to help offer the entrepreneur everything it takes to go to the next level, we turn to a small circle of very high-quality private equity investment firms. The goal here is that the private equity firm will make the lead investment, allowing our group to co invest alongside them. Many of these private equity firms have grown extremely large. (Evidence: the recent announcement that the Chinese government is investing $3 billion in Blackstone Group LP’s newest fund.) Private equity firms have now become primarily buyout firms which are active in leveraged buyouts, venture capital, growth capital, and angel investing. They primarily buy successful companies, bringing in new management teams to support what the entrepreneur has successfully started, and offering lots of capital for a growth strategy. We work with a handful of these groups, which allows us to approach a business challenge with more of a rifle shot than a shotgun blast — zeroing in quickly on a real solution.
Many business owners rightly feel that finding out how much the business is worth, and then finding a credible group to help review the options, is extremely time-consuming, frustrating, and costly. Our group charges the entrepreneur business owner no money, because we want to be the principal acquirer or merger partner that grows the business. Other more traditional
investment banking firms charge large monthly retainers of $10,000 to $50,000 a month plus legal and accounting fees. This is not what Significant Partners are about. Our goal is to identify successful entrepreneurs who want to consider new partnerships — to provide immediate cash off the table, growth strategies via an expanded management team (with a “golden Rolodex”), and significant capital to take the business to the next level.
