Source Talks is a series where we discuss deal origination with PE and M&A pros, in collaboration with David M. Toll.
In this episode, we speak with Scott Erickson of Aurora Capital about the firm’s most recent transactions and how bank-led conferences have aided them in remaining competitive in their investments and staying top-of-mind in this volatile market.
Tell us about Aurora Capital and the kind of transactions that you do there.
Aurora Capital has been around for over 30 years. We’re based in Los Angeles, and we focus on investing and growing market-share-leading services and products companies across industrials, business services, and technology. Our current fund is fund VI, and that’s a $1.75 billion vehicle.
Scott, tell us how you find transactions there at Aurora Capital.
So, our strategy at Aurora is really to identify businesses 6, 12, 18, 24 months before a formal auction process is run. One of the best ways we’ve been able to identify these businesses is through investment bank-led conferences. So most middle-market, lower-middle-market banks will host industry-specific or more generally oriented private equity conferences throughout the year and give sponsors like Aurora, the chance to meet with CEOs in a one-on-one format for 30 or 45 minutes. And so, it’s not much time but by the time we get together, we’ve hopefully already vetted the business with a banker who’s hosting. Perhaps we’ve had a team internally at Aurora talk to industry experts and do some outside work. Hopefully we’re informed enough to ask some compelling questions to build a rapport with the CEO, and to take that first step in vetting whether or not this may be an Aurora business or not.
If we like the CEO, if we like the story, we get to work back on the farm, so to speak. And so, we’ll do follow-ups with the bankers. If it’s a private equity fund who owns the business, we’ll reach out to the partner at that private equity fund to express interest, to learn a little bit more. Perhaps we’ll talk to the lenders who were in the deal. Maybe we’ll try to use SPS to figure out who are the other bankers or private equity funds who’ve invested or sold businesses in this space. And hopefully if I’m doing my job, we’re planting a flag – Aurora’s interested in this sub-sector. We’ve spent time with this particular business and so when banks go to pitch that founder, that private equity fund to sell the company, my job is to make sure Aurora’s top of mind.
Tell us about a company that you’re, that you’re really excited about right now.
It’s a business called Sharps. It used to be known as Curtis Bay. We met this company at a Stifel conference a few years ago. We fell in love with the story. What Sharps does is it’s a route-based business and we collect medical waste from hospitals, doctor’s offices, outpatient facilities. It’s just an awesome industry and an awesome business model with three-to-five-year contracts, really high gross retention metrics. That’s just a great representative example of a company we’re all really excited about at Aurora and a company we originally met at a conference.
Tell us about a hidden talent or passion that you pursue outside of work.
Well, I love surfing. That’s the easy one, but my sort of dorky hidden, passion or hobby is coin collecting, which not a lot of people know about. My grandfather got me into coin collecting when I was little, and it’s just sort of stuck. And so, I’ve built a typeset, which is one of every type of coin the US Mint has ever produced. So going all the way back to the 1790s to today.