Source Talks is a series where we discuss deal origination with PE and M&A pros, in collaboration with David M. Toll of Private Equity Career News.
In the latest installment we speak with Kevin Siedenburg, Managing Director & Head of Business Development at Staple Street Capital about the firm’s flexibility in their investment funds, their understanding on helping deals close in this volatile market, and how they leverage different technological platforms to aid time management.
Kevin, tell us about Staple Street Capital and the kinds of deals that you sponsor there.
Staple Street Capital was founded in 2010. We’re investing out of our third fund now, which is $520 million, and we manage just under $1 billion across three funds. So, with our $520 million fund we’re really targeting platform investments that for performing assets or anywhere between $7 million up to about $50 million of EBITDA. From an enterprise value perspective, we’re looking for businesses that are anywhere from $50 million up to about $400 million. Fortunately, we don’t have strict concentration clauses so we’re able to cut equity checks that may be larger than our fund headline number suggests, which gives us a lot of flexibility, and that’s across all of our funds, we’ve always been able to be extremely flexible. We prefer majority control, but we can also do things along the cap stacks. I would say in today’s market, there seems to be a lot of deals out there but they’re having a tough time closing. So, you know one of the things in terms of finding deals is going to sources that understand who we are and how we operate and being able to understand that we can help get deals closed. Going back to our flexible capital mandate, we can do a lot of things that can be a solution provider to getting a deal done through a lot of different types of ownerships and transaction types.
Tell us about the role that technology plays in your deal sourcing efforts there.
I’ve seen it first-hand. You need data in order to understand where you’re spending your time. We’ve been able to leverage technologies such as Sutton Place Strategies by Bain & Co. to understand exactly where we’re spending our time, where deal flow is coming from, and where we can spend time with the right intermediaries that are focused on industries that we like and the size of opportunities that we like.
Tell us about a recent deal that helps illustrate your approach to deal sourcing and tell us how you did find it.
At Deal Max in May of 2023, I was having a conversation with a banker. We had previously acquired a business called Garden State Bulb which is a distributor of dormant garden bulbs. Fortunately, with the flower connection and the garden connection, I was having a conversation with the banker, and we were able to realize that they were going to be bringing to market in a short time a business in the flower space. I thought this would be a really good add on opportunity. I ended up noting that we have triggers in place. A few months went by, and I didn’t hear about the deal, so I pinged the banker again and to my surprise I found that they had just launched the process. We were able to get in, we got the materials, we submitted a competitive IOI, and we were really excited about the business. Fortunately, we had those triggers in place, which I think is a key essential thing for business development, which is following up on opportunities and we were able to close that deal.
