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The 50 Best Private Equity Firms for Entrepreneurs

Private equity firms have been called all kinds of nasty names over the years: asset strippers, corporate raiders, vulture capitalists. Don’t be deterred by these labels. The PE firms making headlines over high-profile corporate bankruptcies such as Toys “R” Us are rarely the same investors who back small businesses. In fact, more and more companies are taking private equity investment. In the U.S., the number of PE-backed businesses is up 25 percent compared with 2014, according to research firm PitchBook. So don’t forget to call PE firms something else: business builders.

PE by the numbers
$752 billion Amount of uninvested capital that PE companies have at their disposal. That’s a record, up from $469 billion in 2014.
Source: Preqin
25% Increase from 2014 through 2018 in the number of private equity-backed U.S. companies, up from 6,177 to 7,737.
Source: PitchBook
10.1% Revenue growth at PE-backed middle-market companies in 2018. Non-PE-backed middle-market companies grew more slowly that year–7.9%.
Source: The National Center for the Middle Market at the Ohio State University
$713B The total value of private equity deals in the U.S. in 2018. That figure has increased 35 percent from 2014.
Source: PitchBook

For some private equity firms, investing in founder-led businesses is a big part of the strategy–if not the strategy itself. Before you test the private equity waters, however, you should first take a hard look at your company. “Founders need to think about what they want out of a PE fund,” says Nick Leopard, founder and CEO of Accordion Partners, a financial consulting firm that works with private equity-backed companies.

Some entrepreneurs turn to private equity to help execute their vision; others bring in PE firms to collaborate on new strategies or to finance acquisitions. “Doing that self-inspection first is really important,” Leopard says.

Private equity firms are now sitting on a record amount of uninvested capital, which is good news for businesses seeking funds. That cash pile is prompting those firms to expand their purview and do deals with businesses that just five years ago would have been unlikely targets, according to Tom Stewart, executive director of the National Center for the Middle Market. ”

They’re investing in younger, earlier-stage companies, and they’re more willing to take a minority stake than they were, because they’ve got to put the money to work,” Stewart says. “It’s more of a sellers’ market.”

Family businesses are often strong can­didates for outside investment. “It’s a rare family that can continue to evolve and grow a business without help from a third party,” says Dave Brackett, co-founder and CEO of private credit manager Antares Capital, which has helped finance acqui­sitions for more than 400 private equity firms. “You constantly need to innovate and bring people on board.”

Selling a meaningful stake in your company can be life-altering. That’s why we’ve created this list of founder-friendly private equity firms. We identified firms that have invested in founder-led companies, gathered data on how their portfolio companies have grown, and asked entrepreneurs to tell us about their experiences–including what any founder should know about outside investors.

That research has yielded our list of 50 firms with a track record of successfully backing entrepreneurs. Think of it as the first step in doing your own due diligence.

The Top 50 Founder-Friendly Private Equity Firms

PE FIRM U.S. HQ SIZE OF TARGET PORTFOLIO COMPANIES
Accel-KKR Menlo Park, CA $15M-$200M annual revenue
Alpine Investors San Francisco, CA $5M-$100M annual revenue
Berkshire Partners Boston, MA $100M and above in annual revenue
Blue Point Capital Partners Cleveland, OH $20M-$300M annual revenue
Brentwood Associates Los Angeles, CA $25M-$500M annual revenue
Bridge Growth Partners New York, NY $50M-$500M annual revenue
CCMP Capital New York, NY $250M-$2B enterprise value
Clayton, Dubilier & Rice New York, NY Typically invests $100M and above
Clearview Capital Stamford, CT $4M-$20M EBITDA
Cortec Group New York, NY $40M-$300M annual revenue
Endeavour Capital Portland, OR $25M-$250M annual revenue
Frontier Capital Charlotte, NC $10M-$30M annual revenue
General Atlantic New York, NY $25M-$300M annual revenue
Genesis Park Houston, TX $5M-$100M annual revenue
Great Hill Partners Boston, MA $25M-$500M enterprise value
Gridiron Capital New Canaan, CT $75M-$650M enterprise value
JMI Equity Baltimore, MD
San Diego, CA
$10M-$50M annual revenue
JMK Consumer Growth Partners New York, NY $2M and above in annual revenue
Kayne Anderson Capital Advisors Los Angeles, CA $5M-$50M annual revenue
LLR Partners Philadelphia, PA $10M-$100M annual revenue
Main Post Partners San Francisco, CA $25M-$250M annual revenue
MidOcean Partners New York, NY $100M-$500M enterprise value
Mountaingate Capital Denver, CO $5M-$25M EBITDA
Palladium Equity Partners New York, NY $10M-$75M EBITDA
Pamlico Capital Charlotte, NC $10M-$150M annual revenue
Permira Menlo Park, CA
New York, NY
$200M-$5B enterprise value
Prospect Partners Chicago, IL $10M-$75M annual revenue
Quad-C Management Charlottesville, VA $75M-$500M enterprise value
Ridgemont Equity Partners Charlotte, NC $5M-$50M EBITDA
The Riverside Company New York, NY $400M enterprise value or less
Sagemount New York, NY $15M-$250M annual revenue
Serent Capital San Francisco, CA $5M-$100M annual revenue
Shamrock Capital Los Angeles, CA $20M-$300M annual revenue
Shorehill Capital Chicago, IL $3M-$15M EBITDA
ShoreView Industries Minneapolis, MN $20M-$225M annual revenue
Sole Source Capital Santa Monica, CA $35M and below EBITDA
Source Capital Atlanta, GA $10M-$75M annual revenue
Spell Capital Minneapolis, MN $5M and above in annual revenue
The Sterling Group Houston, TX $50M-$750M annual revenue
Stripes New York, NY $10M and above in annual revenue
TA Associates Boston, MA $100M-$250M annual revenue
Tecum Capital Wexford, PA $3M-$15M EBITDA
Thomas H. Lee Partners Boston, MA $250M-$2.5B enterprise value
Tower Arch Capital Draper, UT $20M-$150M annual revenue
TPG Growth San Francisco, CA $15M and above in annual revenue
Trilantic North America New York, NY $100M-$1B enterprise value
Tritium Partners Austin, TX $5M-$100M annual revenue
Trivest Partners Coral Gables, FL $20M-$200M annual revenue
TSG Consumer Partners San Francisco, CA Declines to disclose
Wynnchurch Capital Rosemont, IL $50M-$1B annual revenue

By: Graham Winfrey

Source: The 50 Best Private Equity Firms for Entrepreneurs

Private equity funds are groups of investors that flip companies for a profit. It’s the technique they use that makes them special, as Paddy Hirsch explains. #MarketplaceAPM #PrivateEquity #Investing Subscribe to our channel! https://youtube.com/user/marketplacev…

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Dubai Emerging Market Maverick Abraaj Gets A Lifeline – Kenneth Rapoza

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The past 12 months weren’t great for emerging markets—but it’s been far worse for Dubai-based private equity firm Abraaj Group and its founder Arif Naqvi. Bad fortune of being in the wrong place with the wrong people at the wrong time, including a scandal at a key lender, is what did them in. Its fall from being a respected, $14 billion powerhouse in the world of impact investing in private equity to a company offered a buyout of just $1 is in one of the biggest stories in emerging markets this year. At one time, it was the largest private equity firm in the world, attracting the likes of the Gates Foundation…………

 

 

 

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Billionaire’s Secret Buyout Formula: 110 Instructions and an Intelligence Test – Miriam Gottfried & Laura Cooper

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Billionaire investor Robert Smith believes corporate buyouts can be reduced to a formula. His private-equity firm, Vista Equity Partners, has codified that notion into 110 acronym-heavy directives known as Vista Best Practices. They are secret—stored on a company server that makes a record every time anyone downloads or prints them. Target companies must have “critical factors for success,” or CFS, within their control. Employees of acquired companies and candidates for hiring must submit to tests. A personality test aims to determine which of them are suited to which jobs. Salespeople are better off being extroverted, and software developers more introverted………

Read more: https://www.wsj.com/articles/billionaires-secret-buyout-formula-110-instructions-and-an-intelligence-test-1531151197?mod=djmc_pkt_ff&tier_1=21662325&tier_2=dcm&tier_3=21662325&tier_4=0&tier_5=4508749

 

 

 

 

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3 Things To Watch Following McDonald’s Q3 Earnings – Alicia Kelso

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With global comp sales up 4.2% and U.S. comp sales up 2.4%, McDonald’s turned in a strong third quarter, and investors are happy for now. But we all know that running a restaurant chain is about more than just making investors happy, right? Beyond the financials, a number of narratives emerged during the company’s earnings call Tuesday morning that could qualify as storylines to watch through Q4. For starters, the company continues to endure its largest construction project ever with its Experience of the Future initiative…….

Read more: https://www.forbes.com/sites/aliciakelso/2018/10/24/three-storylines-to-watch-following-mcdonalds-q3-earnings-report/#3f804e0d26d5

 

 

 

 

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DTCC Study: Tech Inspired By Bitcoin Could Work For U.S. Equity Markets – Sarah Hansen

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The Depository Trust & Clearing Corporation (DTCC), which provides infrastructure services to financial markets across the globe, has released the results of a new study indicating that the distributed ledger technology (DLT) first popularized by bitcoin is capable of supporting the average daily trading volumes in the U.S. equity market: more than 100 million trades per day. The study was conducted by consulting firm Accenture with support from the technology service providers Digital Asset (DA) …….

Read more: https://www.forbes.com/sites/sarahhansen/2018/10/16/dtcc-study-tech-inspired-by-bitcoin-could-work-for-us-equity-markets/#7494c5db36d0

 

 

 

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Ivory Tower In The Cloud: Inside 2U, The $4.7 Billion Startup That Brings Top Schools To Your Laptop – Antoine Gara

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In 2014, when Douglas Shackelford was named dean of UNC’s Kenan-Flagler Business School, his most important strategic initiative was clear. UNC was a top-tier public university, but its B-school, barely in the top 20, was on a mission to greatly expand its enrollment without spending much cash. “Our traditional revenue sources were changing, and not in a good direction,” says Shackelford, 60. So UNC forged ahead with a little-known company called 2U, based in Lanham, Maryland. In exchange for 60% of future tuition revenues, 2U would invest $5 million to $10 million building out UNC’s software and marketing capabilities…….

Read more: https://www.forbes.com/sites/antoinegara/2018/09/25/mbas-in-pjs-inside-2u-the-47-billion-startup-that-brings-top-schools-to-your-laptop/

 

 

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Controlling Costs: Should You Buy New or Used Equipment? – Pj Germain

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Making a profit is the primary reason that most businesses are started. Nobody goes into business with the goal of losing money. Once you have committed to starting a business a large portion of your mental energy will be spent on trying to find ways to increase its profitability. Depending on the type of business in question, there may be various marketing methods that work better to spread the word and make potential customers aware of your offering.

While growing your business is the most obvious way to generate greater profits, there are other means to give your business a better chance of being successful. In the restaurant business, there are a number of ways that you can control costs through your purchasing decisions. Searching for better deals on locally grown produce and constantly comparing distributors for the best prices can help minimize costs and increase your profit margin. Finding a used food trailer or food truck for sale can save you a lot of cash when you are looking to expand your business outreach.

Restaurants use a lot of different kinds of equipment to serve their customers. Some of this equipment is visible to the clientele and some is out of sight in the kitchen or a back room. This means that in some instances the appearance of the piece of equipment can be as important as its functionality. In other cases, the primary concern is that the item operates properly and looks are not a consideration when making the purchase.

When you are attempting to control costs in your operation you have the option of buying new or used equipment for your restaurant business. Let’s take a look at some of the benefits and disadvantages of buying new or used restaurant equipment to help you decide which way to go when planning your purchasing strategy.

Buying New Equipment

New equipment usually comes with a higher price tag than used equipment. According to katom.com, there are a number of factors that may sway you toward buying new equipment despite the savings inherent in buying used items. Here are some of the major reasons you may want to purchase new rather than used restaurant equipment.

  • Reduced maintenance – New equipment is less likely to need maintenance than a used component. Service calls are expensive and can quickly eat up the savings that you thought you had achieved by buying second-hand equipment. Parts may also be hard to obtain in the event that a replacement is required.
  • Longer warranties – New equipment will have a manufacturer’s warranty that may extend for the life of the item. Contrast this with the short-term warranty you might get with a used piece of equipment.

Controlling Business Costs

  • Better performance – Technological advances will often mean that a newer piece of equipment will perform at a higher level and also be constructed to minimize water and power consumption. This leads to steady savings over the life of the equipment.
  • Get exactly what you need – If you are ordering a new piece of equipment you can insist on getting all of the features that you need and desire. You may have to make concessions when buying used and have to settle for a less than optimal component for your restaurant.
  • Conform to health standards – As technology advances and materials such as stainless steel are used more often to assist with cleaning, health standards also evolve. That used piece of equipment that you are considering buying may end up causing you some issues with the health inspectors and have to be replaced sooner than you had planned.

Buying Used Equipment

Used equipment can afford you substantial financial savings over purchasing brand new machinery. While at first glance, this may be all of the incentives you need to buy used stuff, slow down for a minute. As with any strategy that saves you money, there are some aspects of buying used restaurant equipment that you need to consider before making your decision. According to restaurant.org, here are some of the key factors to keep in mind when thinking about purchasing used equipment.

  • Know your requirements – If the equipment is an essential part of your business, such as a pizzeria’s oven, you should be cautious of used components. Make sure that the equipment that you are buying is actually what you need, and not a compromise determined solely by price.
  • Cost of the used item – Paying more than 50% of what a new piece of equipment would cost is probably not worth the savings.
  • Consider the total cost of ownership – You may save some money on the initial purchase, but over time a used item may end up costing you more in operating expenses. Saving on energy and water bills can help boost your bottom-line, and older models that are not as efficient can offset any saving made in the purchase price.
  • Reconditioned equipment – If the seller has reconditioned the item and perhaps replaced parts, it may be more serviceable than one that is bought “as is”, but will generally have a higher price tag.

Used Equipment for Sale

  • Warranties – Some dealers offer 30 to 90-day warranties on used equipment. This will not be the case for items bought at auction or through a private individual where no warranty is the norm.
  • Service and part availability – Can your equipment be serviced and can you obtain replacement parts? If not, it is a very risky undertaking if it is an important part of your operation.
  • Check the operability of the equipment – Ask the dealer to hook it up and see how it works. A reputable dealer will do that, though when buying used parts online this not practical.
  • Does the equipment stand up over time – Ovens, ranges, and stainless steel tables will last for a long time with no performance degradation. Other items like dishwashers and ice machines may not have as long a life if not maintained properly by the former owners.

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How Blockchain Technology Is Helping Remodel the Private Equity Industry – Peter Daisyme

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Private equity investment funds have made many people and institutional investors billions. However, structural issues prevent all parties from experiencing the full benefits of this powerful investment vehicle.

Real estate investment has proven inaccessible to many investors across the marketplace. It has required massive initial buy-ins and/or intimate market knowledge for profitable participation.

Private equity today

Historically, private equity funds have been a reliable and steady source of income for investors and fund managers. Unlike public companies, a limited number of in-the-know partners hold private equity. Shares can’t be bought and sold on the stock market. Now, this is where shareholder governance and reporting are significantly easier. Unlike venture capital, private equity is traditionally used to invest in established businesses seeking to expand or restructure.

Therefore, a growth-oriented private equity fund invests the capital it raises in companies seeking growth capital to facilitate expansion, an acquisition strategy, and/or restructuring.  In addition to providing capital, the fund’s investment team will use its expertise to assist a portfolio company in achieving its growth goal.

After a prescribed amount of time, the fund divests its interests in the portfolio companies. Hence, this provides a return to the fund’s investors.  After divesting its holdings, the fund will be wound down. Then, the private equity firm will start a follow-on fund and repeat the cycle.

Stiff structure

In the past, this investment model has been successful. However, it also has struggled with several inefficiencies.

Private equity fund managers have sought to work with a relatively limited number of investors to minimize shareholder reporting needs. Hence, the amount of cash typically required for participation means only large institutional investors like pensions or wealthy individual investors can buy in. A huge portion of the investing world simply isn’t able to participate in this profitable investment structure.

Furthermore, private equity fund structures have defined liquidation deadlines. These deadlines drive certain behavior that isn’t always in the best interest of maximizing underlying asset value.  After the downturn, many funds liquidated their holdings. And, as a result, suffered tremendous losses. These structural deadline elements oftentimes constrain the investment manager from generating the best returns for their investors.

Blockchain token solutions

Blockchain’s immutable ledger can be used to tie real-world assets to tokens. This strategy combines the benefits of blockchain — its transparency, accessibility and security — with the reliability of real-world investments. Smart contracts and an immutable ledger means ownership of those real investments can be secured within the blockchain itself.

Cryptocurrency has made a few people very rich over the past six months. Yet, many tokens have experienced price drops almost as dramatic as their price increases.

People who need lower-risk investment opportunities have been shut out of the cryptocurrency boom. No one wants to sink a large portion of their kids’ college fund into a cryptocurrency that might be worthless tomorrow. This is where asset-backed blockchain tokens come into the picture.

A secure option for investment: Asset-backed tokens

Founded in 2012, Muirfield Investment Partners is a private equity firm. It will launch a TAO for a new generation of private equity investment. Murfield built MIF, a security asset token. And, a private equity real estate investment portfolio managed by the private equity real estate firm will back the token.

Initially, a limited number of U.S. accredited investors and non-U.S. approved parties will receive tokens. Then, public exchanges buy and sell MIF tokens. This can happen after a lock-out period of 90 days to a year. This groundbreaking model presents several opportunities.

Breaking the rigid structure of private equity investment

Tokenization allows a lower barrier of entry to participation. Anyone who owns just one token is participating in the fund.

Furthermore, tokenization allows liquidity that was previously impossible in private equity fund structuring. As a result, this helps optimize the private equity fund structure. Investors in need of redemptions can sell their tokens in exchanges. Someone else acquires the token.

Fund managers face far lighter redemption burdens under the tokenization model. Plus, the fund doesn’t have a liquidation deadline. Therefore, they can manage the fund far more efficiently and drive greater economic returns for their investors.

In fact, tokenization means no fund liquidation. Instead, managers can focus on maximizing the fund’s long-term net asset value rather than reaching a target exit date.

Now, Muirfield wants to improve the traditional private equity fund world. Tokenization opens this world up to a larger participant pool. As Thomas Zaccagnino, Founder of Muirfield Investment Partners, explained, “We are very excited to bring a new and much improved private equity investment structure to the market.

A structure offering better alignment between the investors and investment manager, improved ability to maximize assets values, and enhanced liquidity allowing investors the ability to control how long they participate in the growth of the underlying real estate portfolio.”

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