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Here is a detailed checklist to help you qualify private equity firms attending the BlackmoreConnects conference

Written By: Gerald O’Dwyer II The PE Guru — Blackmore Partners, Inc | December 20th, 2024

Checklist to Qualify Lower Middle Market PE Firms

1. Investment Focus

  • Sector Alignment: Does the PE firm focus on your industry (e.g., automotive, B2B, industrials)?
  • Specialization: Does the firm specialize in buyouts, growth equity, or distressed assets that fit your background?
  • Revenue & EBITDA Range: Is the firm’s target revenue and EBITDA range consistent with your company size (e.g., $3M – $20M EBITDA)?
  • Stage of Investment: Is the PE firm focused on the lower middle market? Do they invest in early-stage, growth-stage, or mature companies?
  • Geographical Focus: Does the firm have investments or interest in regions you’re experienced in, like Mexico for near-shoring or the U.S.?

2. Management Philosophy

  • Executive Involvement: Does the firm value hands-on executive involvement in portfolio companies?
  • Cultural Fit: Is their management style and company culture a good fit for your leadership style?
  • Equity Participation: Does the firm encourage or require equity ownership for executives?

3. Investment Criteria

  • Deal Size: What is the typical deal size (e.g., $10M – $100M)? Does it align with the size of companies you are targeting or currently manage?
  • Industry Preference: What industries do they prioritize, and are they aligned with your expertise (e.g., automotive, consumer goods, etc.)?
  • Transaction Type: Does the firm typically engage in leveraged buyouts (LBOs), recapitalizations, platform acquisitions, or add-ons?

4. Track Record (use pitchbook)

  • Portfolio Success: How successful have the firm’s past and current investments been? Have they led to exits that align with your financial goals?
  • Reputation: What is their reputation among executives who have partnered with them? Are there any red flags regarding how they treat management teams?
  • Exit Strategies: Does the firm focus on exits via IPO, secondary sales, or strategic acquisitions? Are these strategies aligned with your exit goals?

5. Operational Expertise

  • Supportive Infrastructure: Does the PE firm provide operational support, such as resources for growth, talent development, or strategic planning?
  • Post-Acquisition Role: Are they open to you taking on key roles (C-level, board member, operating partner) post-acquisition?

6. Relationship-Building Potential

  • Network Size: Does the firm offer opportunities to expand your network within the industry (e.g., other portfolio companies, industry professionals)?
  • Partnership Approach: Are they looking for long-term relationships with executives or short-term engagements?
  • Alignment with Your Goals: How well does the firm’s growth and exit strategies align with your personal and professional objectives?

7. Risk Factors

  • Economic Resilience: Does the firm have a strategy to mitigate risks during economic downturns or periods of inflation?
  • Deal Sourcing: How does the firm source its deals? Are they proactive in managing the risk of overexposure to cyclical industries?
  • Key Performance Indicators (KPIs): What KPIs do they focus on when evaluating portfolio companies, and are these metrics aligned with how you assess business performance?

8. Capital Deployment (pitchbook)

  • Holding Period: What is their typical holding period for investments, and does it fit with your long-term goals (e.g., short-term flip vs. long-term growth)?
  • Dry Powder: Does the firm have sufficient committed capital (dry powder) to deploy in future acquisitions or growth initiatives for portfolio companies?
  • Leverage Use: How heavily do they rely on leverage in transactions? Does their debt strategy align with your risk tolerance?

9. Conference Goals

  • Introductory Meetings: Have you pre-qualified firms you plan to meet during the conference based on their interest in executives like you?
  • Research Preparation: Have you researched their recent deals, current portfolio, and key partners to prepare for meaningful conversations?
  • Follow-up Strategy: What’s your strategy for follow-up communication and positioning yourself for roles or partnerships post-conference?

Use this checklist to refine your approach and ensure you’re targeting PE firms that align closely with your skills, industry experience, and investment goals at the BlackmoreConnects conference.  This is a journey!