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Areas of Interest
Investing successfully in private equity depends on artful management of critical processes and constituencies:
- Opportunity Origination – Early identification of investments and development of proprietary advantages and insights
- Sector Bankers – Ensure a consistent, high-quality flow of relevant ideas and inclusion in sale processes
- Capital Markets – Establish relationships that help ensure successful portfolio company financings
- Executive Contacts – Create a network of talent that can provide insights into sectors and companies
Potential Benefits
There are many potential benefits, both financial and non-financial:
- More Good Deals – Invest where you want, not just where you can
- Successful Syndications – Execute processes that are consistently over-subscribed by collaborative lenders
- Favorable Financing – Obtain debt at the lowest cost and with the most flexible terms
- More Exclusive / First / Early Calls – Get there before the rest and have more time for relationship development, diligence, and approval
- Proprietary Insights – Develop unique perspectives and angles that provide competitive advantages
- Better Market Intelligence – Consistent flow of quality investment ideas; share insights with lenders and industry executives; monitor executive transitions and litigation
- Efficient Origination Efforts – Maximize the most actionable opportunities by meeting key stakeholders early, either directly or at industry conferences
- Firm-wide Brand Promotion – Easy to use tools that provide the right data at the right time will help the firm deliver effective and consistent messages
Available Resources
Your firm has many assets other than investors’ capital that can be leveraged to achieve its goals:
- Intellectual Capital – Sector expertise and insights into companies, particularly those of interest to debt investors
- Fee Pool – Pay firms that are collaborative and provide insights and investment ideas
- Risk Relief – Willingness to help banks manage commitment and distribution risks
- Expert Contacts – Ability to make introductions to companies, executives, bankers, and lenders
- Considerate Relationships – Respect for others’ time, exclusive ideas and opportunities, and business objectives
- Consistent Conduct – Common standards and behavior throughout the firm regarding the pursuit of opportunities and bidding behavior
- Data Goldmine – Capturing and leveraging data can make all this possible
- Process Execution – Wide-spread adherence to adopted protocols ensures seamless operation and messaging
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How can RApportTM help apply the
Principles of Influence?
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Facts and processes that reinforce your point can affect a desired outcome
Reciprocity
Fees
Invitations to pitch for M&A engagements and/or provide financing commitments
Invitations to management meetings
Sector expertise and insight into companies
Executive and banker introductions
Syndication allocations
Early access to management during syndication processes
Regular investor updates from portfolio companies
Scarcity
Fee pool
Limited number of invitations to pitch for M&A engagements
Limited number of invitations to provide financing commitments
Limited number of invitations to management meetings
Limited executive and company introductions
Exclusivity of insights
Syndication allocations
Early access to management during syndication processes
Authority
Sector activity: # deals / market share
% of processes advanced to management meeting after an initial indication of interest
% of processes where bids were placed and the firm advanced to the final round
Total quantum of debt financed: overall / tranche types
% of financings over-subscribed before bank meeting
% of financings over-subscribed
# of debt holders: portfolio / company
Total assets under management by key lenders
Consistency
Fees paid to relationships that are value-added idea sources and opportunity originators
Invitations to provide financing and pitch for M&A engagements given to value-added relationships
Invitations to management meetings
% of allocations given to lenders who commit prior to bank meetings
% of bids placed that were sufficient to advance to management meetings
% of bids placed after fireside chats / gold card meetings that were sufficient to advance to management meetings
Liking
# of previous deals together both as a firm and personally
Appreciative, personal comments during meetings and other events
Systematic congratulatory notes regarding successful transactions with other firms
Alignment of coverage between firms
Systematic monitoring of news source to recognize matters of personal interest and generate personal notes
Optimization of invitations to entertainment / relationship building experiences
Consensus
Comparison to competition regarding value-added origination and other reciprocal efforts
% of available fireside chats / gold card meeting invitations in areas of interest
Number of deals done away compared to competitors
% of financings over-subscribed before bank meetings
Average share of allocations to firms that committed before bank meetings
% of financings over-subscribed
# of debt holders: portfolio / company
Average approval rate for financing amendments, waivers, and other consents
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What are some of the things you will be able to say?
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Multiple Principles can be reinforced with a statement
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See how other groups
can generate alpha
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