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 Jay Desai, Partner at Kainos Capital about the firm’s strategic focus within the Consumer sector. Jay also touches on how the firm’s tech stack guides them in creating meaningful relationships, differentiating Kainos Capital within their investment segment.
Tell us about Kainos Capital and the kinds of transactions that you sponsored there.
At Kainos Capital we are a consumer-focused PE firm investing out of our third fund right now. We focus within consumer, which is a very broad category but on a few sub-sectors: food, beverage, ingredients, inclusive of VMS, which is vitamins and mineral supplements. We also play in pet and in household personal care product. We spend time within our fund looking at deals at the low end, probably $60 million of equity up and through $300 million of equity.
Tell us how you source transactions there. How do you find deals?
We look at intermediary outreach. We work with hundreds of intermediaries throughout the United States and Canada to really find these opportunities. To do that we leverage data sources, including SPS, we work with Axial, and we work with our CRM from DealCloud. We use that a lot to make sure we’re just covering everybody efficiently and well. What we’ve found historically in conversations with myriad business owners is that when we’re able to show them or demonstrate to them that we understand the issues that they’re going through, being as close as we are to the portfolio, we’re able to see some of the same issues that bubble up in similar businesses. Whether it’s manufacturing businesses, businesses that use third party manufacturing, you name it, there usually are similar issues that you come up to, especially given the time of year or the overall macro environment. To be able to show that we’ve been in your shoes, we understand where you’re coming from, and hey, here are some ways we’ve been able to counter-act those issues and show some value, it helps over time build relationships. People want to know who they’re partnering with, not who they’re selling their company to.
Tell us Jay, what, what role does technology play in your deal sourcing efforts?
As I mentioned before, Kainos is a very relationship and network driven business in how we get to market and obviously our differentiation. We really found the chance to leverage technology to help us do that better. When you think about our reach as a firm among intermediaries, we’ve leveraged assets like SPS and others to make sure we’re talking to the right folks who know our category given how narrow it is and our focus. They know our category; they know who we are and how we can play a role with their clients.
What’s a hidden talent or passion that you pursue outside of work?
I coach my kids’ soccer teams which has become a huge part of my life, believe it or not. I am not very good at soccer, but it is a really good time coaching these kids. I have been doing that for five years, so an outsized portion of my time is spent coaching soccer and I just absolutely love it.
