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 Kirk Fleischer, Partner at Investcorp about the firm’s middle-market investment strategy and the avenues of growth they look for when sourcing opportunities, including organic, through acquisitions, or service agencies.
Kirk, tell us about Investcorp and the kinds of deals you do there.
So Investcorp is a global alternative asset manager with roughly $50 billion in assets under management today. Within private equity where I spend all of my time, we have a global footprint and we’re investing in the middle of the middle market across service-oriented sectors. So that means blue-collar commercial services as well as white collar business and professional services. We’re investing in companies with between $10M and $50 million dollars of EBITDA, and we’re looking for businesses with the following characteristics. We think about businesses that have a market leading position in growing and fragmented markets with multiple avenues of growth as being pretty important. That’s the first consideration we think about. From a growth standpoint we think about businesses with that. They must have organic growth, that’s first and foremost from us. If they don’t have organic growth, they kind of don’t have anything from our perspective. We look at businesses that can grow through acquisitions, growth through service agencies becomes important from our standpoint- service agencies, as well as the opportunity to expand as appropriate for them to expand their businesses geographically.
Describe your firm’s approach to finding transactions and tell us the role technology plays in that.
We are active users of technology for both business development as well as for managing our overall business. At a high level all of our deals, meeting notes, conference activity. All of that stuff gets logged into Salesforce which we really use as a tool for entering data into our database. We take this data, and we lever it with a customized Power BI front end that we have developed internally. We also feed our Sutton Place Strategies subscription into this Power BI tool, to help us identify deals, bankers, and firms within sectors that are that we’re evaluating, as well as to help us hold us accountable for deals we may not have seen in the marketplace.
Kirk, tell us about an investment theme that you’re pursuing right now that you’re excited about.
Look, we continue to be focused on investing in the consulting and advisory services sector broadly defined. We were an investor in UTA, a leading global talent, sports, marketing, and entertainment agency. We invested in the business in 2018 and exited our investment in 2022 after seeing significant growth in this business. During our ownership period the company invested meaningfully across the new hires sector and really ramped up business from that perspective. They benefited from record content investment at that point in time, pre COVID, post COVID, with the explosion of folks like Netflix creating their own content. They completed four acquisitions across a range of services during our investment period. In 2022 EQT invested in the company, and we exited our position. Today we actively work with one of the former executives from UTA who sits on our advisory board and helps us to source investment opportunities in the sports, media, and entertainment marketplace
