You have both an Undergraduate and Master’s degree in accounting. Why did you come to Booth for an MBA?
I worked in corporate finance/accounting and then commercial banking before starting at Maranon Capital in 2015. Pursuing an MBA has been on my radar since undergrad and after a couple years at Maranon I felt it was time. I want to become a leader at the firm and felt a Booth MBA would supplement my existing finance knowledge and provide the necessary management skills to get me there.
Why did you decide to attend this year’s conference?
I thought the title and focus of the conference, ‘Developing an Edge in Increasingly Competitive Markets’ is very relevant given today’s market. As more private equity funds pop up, and capital enters the space, competition is bound to increase. On a day-to-day basis, you might get a chance to talk to one private equity firm, but the conference provides an opportunity to get four or five of them together on a panel exchanging ideas. Rarely do you get PE firms, who could otherwise be competing for deals, together sharing their thoughts on the market, approach to sourcing and how they drive value within their portfolio companies.
What are your top takeaways from the conference?
1. Early on in an investment, even before you buy, you need to understand what your exit opportunities are. The IPO market isn’t really there, so if you execute on your plan and grow the business, who is going to buy it?
You have to know who your likely buyer is from the start. Identifying your likely exit opportunities early is key.
2. Some of the panelists were generalists and some were specialists. It was interesting to hear why the specialist firms feel they are better positioned to be successful in a competitive process.
Being a specialist isn’t something you can do part-time. Joe Osnoss, Managing Director of Silver Lake, shared that with specific technology industry knowledge he is able to quickly dig in, identify and understand key diligence items, and evaluate what improvements can be made to drive equity value within the investment horizon.
3. Don’t forget the personal side of private equity.
Developing internal conviction and being willing to move quickly helps differentiate and win deals. Donald Park, SVP, Vista Equity Partners, shared how he visits industry conferences to understand who the big players and experts in the market are and how to best get an introduction to a management team or seller. Donald feels this approach and familiarity can be a material point of differentiation when there are two offers with an immaterial price difference. You go with the team you’re more familiar with.
Sourcing opportunities range from proprietary to full blow auction processes and a lot of deals fall in the middle of the range. Although there are exceptions given size and market dynamics, most sellers have advisors either running or working in the background of deal processes. In most cases, from a buyer’s perspective, full scale auction processes are less desirable than those of the proprietary nature. That said, being known as the preferred buyer in an industry and developing conviction early in the process allows a buyer to pre-empt what would have otherwise been a full-blown auction process.
Dan Kirmse is a student in the Evening MBA program, Co-Chair of the Evening/Weekend Private Equity Club and Vice President at Maranon Capital.