Viewing entries in
Investing

Green, Yellow, Red: What Signals Investors

What’s not often discussed is the soft side of a deal - the people, their behavior, and what it signals to potential investors. It’s impossible to do a good deal with bad people, which means the personalities, proclivities, and oddities play a large part in dealmaking. 

We’re fortunate to see a lot of opportunities, over 2500 just last year, and are constantly in conversation with executives. This affords us the ability to recognize patterns and develop specific criteria of behavior that provide insights into an owner’s motivations, and subsequent corporate culture. Here are some of the signals and how we interpret them. 

Compounding Knowledge and Returns: 2016 Year in Review

Read about the lessons we learned at adventur.es throughout 2016 as we reviewed acquisition opportunities in the private markets, continued operating and investing in our portfolio companies, and tried not to screw up too often. 

Why We Love to Buy Boring Businesses

We’ve had the opportunity to evaluate and invest in all types of companies, including some “sexy” businesses — ones with high growth, brag-worthy products, or screw-the-rules teams with an average age of 25. While the “sexy” factor is never why we choose to invest, it can certainly be exciting. But the other end of the spectrum also attracts us; it contains what we call “boring businesses,” the almost invisible layer of the economy that hums under the radar, quietly supplying you with what you want and need.

Important Metrics for Small and Mid-Market Companies — Part 5: Investment

In an average month, my organization explores around 50 companies for possible investment. We review everything from organizational structure, culture, and financial performance, to sales systems, competitive position, and leadership style. This gives us an unusual vantage point from which to recognize patterns of success, and failure.

Getting data is never the problem. In fact for most executives, information can be overwhelming. Getting accurate data and interpreting it appropriately is an entirely different story.

In The Ceiling of Brute Force, we discussed what operational areas impede a company from continued growth. In a series of posts, we’re going to break down 19 of the most important key performance indicators (KPIs), which demonstrate how effectively the business is being run. Think of KPIs as the canaries in your coal mines. If one starts going south, you know it’s time to take a closer look.

Presented in a five-part series, here’s our take on what you should pay attention to, allowing you to focus your time, effort, and dollars. The five parts are: BasicsCustomersTeamOperational Efficiency, and Investment. Investment is our focus in Part 5, including: product development, capital expenditures & depreciation/amortization, total asset base, working capital, and ROIC/IRR.

Read More on Medium >

Questions Investors Ask on a Management Call — and Conclusions They Draw

When we are interested in an opportunity, we build two lists of questions: one data-specific list for written response and one with largely open-ended questions for discussion on a management call. We actively avoid processes in which we are not permitted to ask questions before submitting an indication of interest.

A good financial package provides the facts, a great CIM provides the story, but our questions for intermediaries and sellers are not just trying to gather additional details. Here’s what we’re trying to learn, but not explicitly asking, in those question sets:

Read More on Axial's Forum >

11 Reflections on M&A in 2015

As 2015 came to a close, we at adventur.es had a chance to take a breath and think about what we observed, and learned in the past year. These reflections were generated from reviewing over 2000 investment opportunities, of which we deep-dived on 397, leading to 17 indications of interest, 5 letters of intent, and three acquisitions. We hope these thoughts prove useful in adjusting strategies and expectations in the new year. 

From 2000+ to 3: Our 2015 Investment Recap

Adventur.es is entering the new year wiser, stronger and a great deal larger. In the course of making 3 late stage acquisitions and 27 early stage investments, the future of adventur.es, and who will contribute to it, became a bit more clear in 2015.

The Small Business Crunch

The next 15 years will be the largest intergenerational transfer of private businesses in the history of the world. 2012 marked the first year that “Baby Boomer retirement” was the primary driver of business sales in the private lower middle market. Researchers have estimated that more than $10 trillion in business assets may be transferred by 2025.

We are in the beginning of a transition within the American economy where more than half of all businesses with employees will need to sell, restructure, or close their doors. The numbers are finite and inescapable. Mortality is a real thing. Liquidity issues and estate taxes don’t take care of themselves. Without a plan, the likely result is a legacy of chaos and confusion.