High Road Capital Partners Keynote @ Deal Sourcing Conference

How to Win:The Five S’s of Deal Sourcing Robert J. Fitzsimmons Managing Partner, High Road Capital Partners The Capital Roundtable May 26, 2011

Why is Deal Sourcing Important• Large inefficient market (11,000 deals in Large, (11 000 2010)• Quality versus quantity versus probability• One deal a year can be the difference between top quartile and back of the pack il db k f h k• Back end is useless without the front end• Investment strategy drives sourcing strategy

The Five S s of Deal Sourcing S’s• Sources• Strategies• Signature Si• Spreading the word• Statistics

Sources• Companies• Owners• Intermediaries di i• Advisors• Deal aggregation websites• Fundless sponsors• Friends & family

CompaniesRevenues Total Number S Corp C Corp$10 – 50 mm 126,228 73,682 52,546$50 – 100 mm 16,517 ,$100 – 250 mm 9,695$250 + mm 7,48550 mm + 33,697 14,192 19,505 Source: IRS data, 2008

Companies/Owners– How many are relevant based on industry, size, profitability– Considerations • Reaching the right person • Getting their attention • Getting to yes • Getting to a closing

Intermediaries• Intermediaries – Sell-side investment bank – Sell side broker Sell-side – Buyside investment bank – B id b k Buyside broker

Non traditional Non-traditional sources• Professionals (1.1 million attorneys, 500,000 (1 1 attorneys 500 000 CPA’s, 650,000 financial planners/stock brokers)• Deal aggregation websites/services (a handful, but growing)• Fundless sponsors (est. 100 – 200)• Friends and family (unlimited)

Strategies• Direct vs. indirect vs• Inverse relationship between size and representation• Investment strategy drives sourcing strategy

Investment Strategies• Value buyer• Buy and build• Cost C cutting/efficiency generator i / ffi i• Capital markets arbitrage• Family business transition• Turnaround

Sourcing Strategies• Direct • Indirect – Companies – Intermediaries – Owners – Advisors – Fundless sponsors – Deal aggregation sites – Friends & family

Strategies• Reputation x share of mind = deal flow• Build reputation (signature) – Ni h expertise Niche ti – Get things done – Easy/honorable to deal with• Grow mind share (spread the word)

Signature• Varies by market but you must be consistent market,• What do different audiences want? – Companies: highest price take care of employees price, – Owners: highest price, take care of company, help me achieve engagement/disengagement objective – Intermediaries: certainty of close, speed to close, no retrading, easy to deal with – Advisors: fit with client, easy to deal with, recognition – Fundless sponsor: certainty to close, no retrading

Spreading the word• Email• Phone• ACG/Capital ACG/C i l Roundtable/industry events d bl /i d• Meetings• Press (press releases, interviews)• Social media

The Deal Flow Cycle InboundDeal flow EmailsFilter Press releasesCompleted deals Networking Calling programs C lli Outbound

Statistics• Deal flow funnel/waterfall – Top down, bottom up• Industry stats – Comparison of self to market

Keys to Success• Consistent focused deal sourcing effort Consistent, (strategies, sources)• The right message to the right audience (signature, spreading the word)• F db k l Feedback loop, adjust efforts as needed dj ff d d (statistics)

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High Road Capital Partners Keynote @ Deal Sourcing Conference

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