Q: What is the scope of Blackmore Partners' involvement in the deal?
A: Blackmore divides the labor between the executive and our team to allow each party to specialize in their area of expertise. The executive is responsible for researching and contacting target companies, writing the corporate strategy document, and being available to meet with private equity firms. Blackmore is responsible for assisting in qualifying target companies, analyzing and revising the corporate strategy document, and, most importantly, pitching the deal to private equity firms to find the right partner and fit to close the deal.
Q: When does the job start? When does it end? How much time is required?
A: The work begins after Blackmore Partners qualifies the executive as eligible to take part in an executive-led takeover. Executives will not be compensated until after a private equity firm signs a letter of intent to purchase the target company. However, the process is free to executives; only the private equity firms pay fees to Blackmore Partners. Assuming the deal is closed, the executive will lead the company for at minimum as long as the private equity holds their investment in the company. Should a deal not close, the process will continue until either party determines that there is little to no chance of a deal being closed. Generally, executives must commit to a minimum of 20 hours per week to work on the deal. Nevertheless, it is recommended for executives to do consulting concurrently with working on the deal to ensure a source of income and to remain active and current in their respective industries.
Q: What is the success rate of selecting targets and closing a deal?
A: In general, one out of ten targets will be interested in selling their company at any given time. On average, one deal will close for every ten deals we pitch to private equity firms.
Q: Does Blackmore Partners specialize in any specific industry or segment?
A: All industries will be considered; however, Blackmore Partners specializes in the following industries:
• Consumer Products and Services
• Business Products and Services
• Food and Beverage
In the past, we have worked on deals in the following industries:
• Business Services
• Video Gaming
• Government Services
• Environmental Services
• Construction and Building Materials
• Food and Beverage
• Financial Services
• Natural Gas Processing
• Highly Engineered Metal Components
• Consumer Products and Services
• Industrial Products and Services
• Information Technology
• Industrial Chemicals
• Healthcare Products and Services
Q: What is the typical profile of the businesses Blackmore deals for or looks for in a management team (geography profile, size, is there a size cap, undermanaged, distressed, turnaround, bankruptcy, growth)?
A: There are no geographic restrictions for the deals that Blackmore Partners works on. Blackmore has worked on deals in North America, Asia, and Europe. We usually work with companies in the revenue range of $50M-$400M although this is not a set criterion – we have worked on deals with companies with revenues both larger and smaller than this range. Blackmore also works with companies and deals that are undermanaged, distressed, turnaround, bankruptcy, and growth capital.
Q: What is the typical financial structure of a deal? How does the senior executive team participate in the equity? (options, restricted stock, etc.)
A: Private equity firms want majority ownership (in general) and most will do an all equity deal. Management generally purchases ~5% to help mitigate agency problem. The exact structure is contingent on the specific company and private equity firm involved.
Q: What is the typical compensation scheme for senior management? (different business types [growth vs. turnaround], how does it relate to risk profile)
A: Private equity firms generally pay $300K-$1M base salary with double that in bonus for EBITDA improvements. Executives also get greater than 5% equity of the deal and $5M-$15M or greater at exit.
Q: What if the deal closes with the Private Equity firm implementing a different management team?
A. Any executive that brings us a deal that comes to closure without the executive as part of the management team will be compensated with a finders fee. That fee can rage from 5-40% based on the level of involment that the executive brings to the entire deal process. For more information on this topic please click on this link. Connector FAQ
Q: Can Blackmore Partners provide references?
A: Yes, Blackmore provides contact information for references to our clients. We pride ourselves and believe in our process and our services and encourage prospective clients to talk to our references to get a better idea of their experience with Blackmore and how our process was able to help them realize their ambitions.
Q: Why not do it myself?
A: Blackmore has worked on over 115 actionable deals over the course of six years and has thorough understanding and knowledge of private equity. We are on retainer by Wynnchurch Capital and Sawmill Capital and have worked closely with many other private equity firms. We are also in a strategic alliance with Akin Bay, a middle-market investment bank that offers our clients a variety of financial advisory and investment banking services. Our methodologies are very process oriented and we make certain that we work closely with the executive and realize that finding the right fit is paramount to a successful deal. We have a team of analysts that provide rapid turnaround for the executive and offer a high level of personalized attention that cannot be overvalued.
Q: I know some private equity firms, why would I need Blackmore?
A: Not all private equity firms are alike. Each private equity firm specializes in different industries and regions and has specific deal size requirements. It is very important to not only find a private equity firm that specializes in the specific industry of the deal, but one that also fits with the executive. The process of finding the right fit is not as straight forward as it might seem and Blackmore Partners has the expertise and the resources to help you on your search. Our process is a proven one and that makes Blackmore typically more successful in closing a deal.
Q: Tell me how you came about?
A: Our Managing Director, Gerald O'Dwyer, founded Blackmore Partners in 2005. Gerald was consulting Fortune 500 companies and companies owned by private equity firms, when Tom Turpin of Ares Capital (previously Allied Capital) suggested for Gerald to explore the private equity intermediary business model. Upon Tom's suggestion, Gerald leveraged his consulting experience to create the Blackmore business model where he brings executives and quality deal flow to private equity firms.
Q: What is the Blackmore Partners process?
A: The Blackmore Partners process has five main stages. Stage 1 is where we identify an executive that meets our criteria for an executive-led takeover. Stage 2 is where Blackmore and the executive start and dialogue and get familiarized with the process and the requirements and commitment needed. Stage 3 is where the executive develops a deal thesis under our guidance. Blackmore has a very specific guideline for developing a deal thesis that helps the executive get started quickly and efficiently. Stage 4 is where we analyze the deal and have the executive develop specific target companies for the deal thesis. This stage is where the deal becomes actionable to private equity firms. Finally, in Stage 5 Blackmore Partners pitches the deal to private equity firms to find the right fit for the executive.
Q: How does Blackmore pick which private equity firms to use?
A: Blackmore has access to databases that have thousands of private equity firms. We narrow down the ones we contact by different criteria such as the deal size, industry, location, type, etc. We try to find private equity firms that best fit the executive and the specific deal that we are pitching using these metrics and have found a much higher success rate.
Q: I want to buy my division but I am concerned that this might be a conflict of interest, how can Blackmore help me?
A: Blackmore Partners has extensive experience in assisting executives purchase a division of a company as a spin-off opportunity. Generally, this type of activity does not create a conflict of interest; however, we recommend speaking with us to review the pros and cons of such transactions. Our education on the best practices when executing a spin-off help you get in front of the deal for maximum chances of success and provide you with the greatest level of equity and compensation from the deal.
Q: I am a member of a management team and we want to buy-out our company from the owners, how can Blackmore Partners assist us?
A: The Blackmore Partners process can be implemented in many scenarios and situations, this one being no different. We have a very specific yet straight forward process that will help you along each step to successfully buy-out of your company.
Q: I am the CEO of a distressed company owned by a private equity firm, how can Blackmore Partners assist me?
A: Blackmore Partners has extensive experience working with executive management teams and private investors in order to discretely facilitate an arrangement that allows distressed companies to repair and bolster their balance sheets through a partnership with our investors. We can also assist in creating an exit strategy or help in acquiring other companies by working with our private equity partners.
Q: I am looking for growth capital for my company, how can Blackmore Partners help me?
A: This depends on the relationship the executive has with the rest of the executive team and the formal structures that are in place for divestitures. Since this will be a divestiture, the executive team is going to want to know if they are getting a full price or not. If the executive has a good working relationship with the executive team, they may be able to discuss what price they will have to pay to preempt a process. They will then need to negotiate a time frame for sealing up a deal. As insiders, the executive and the team will have to work alongside a private equity group (PEG) and uncover all of the upside opportunities in detail – this will get the deal done. The PEG will want to be sure that they can tie this up with the parent to ensure that they aren't wasting time and money.