How Private Equity Firms Differentiate Themselves in a
There are many estimates of the number of US-based private equity firms, with
most pointing to a range of 4,000-5,000. Given the large number of firms seeking
to make investments, how do private equity firms differentiate themselves to
investment bankers who are representing companies for sale and to the selling
companies themselves? Bertram Capital, a private equity firm based in the
California Bay Area, led by Jeff Drazan, Managing Partner, has taken a proactive
approach to differentiating themselves as more than just a capital provider.
Bertram Capital focuses on investing in businesses with $5-30 million in EBITDA, a
particularly competitive sector of the private equity marketplace. In order to
differentiate the firm, Jeff Drazan and the team at Bertram Capital developed a
unique approach to the investment process, highlighted by the following:
Certainty of Close:
o Bertram Capital has a captive debt facility and is not dependant on
third- party financing, positioning the firm to close transactions with a
high degree of certainty.
Close Transactions Quickly:
o Bertram Capital has been successful in closing the majority of their
transactions within 45 days of signing a letter of intent.
Operate Like a Strategic Buyer
o Bertram’s buy and build approach lends itself to fuller valuations for
platform investments, as they focus on generating returns through
operational excellence, not financial engineering.
o All transactions Bertram has completed have been at or above their
initial indication of value.
Bertram Capital has received numerous accolades from investment bankers who
sold companies to the firm, clearly showing that their approach to differentiating
themselves is working just as Jeff Drazan and his team planned.
According to Jonathan Morphett, Managing Director - Investment Banking at
Avondale Partners LLC, who managed the sale of PMG Partners (now
GENASCIS) to Bertram, “Bertram Capital was very professional and a
pleasure to work with throughout the transaction process…they put the
highest bid on the table, stood behind their number with a term sheet that
contained no financing contingencies and closed the transaction within 30
days of signing the LOI. They did what they said they would do.”
Frederic (Ted) H. Garner, Managing Director at Edgeview Partners who
managed the sale of Power Distribution, Inc. to Bertram Capital said, "We
were impressed with Bertram's ability to move quickly and efficiently through
their diligence process. They minimized the burdens required on their future
partners, the management team, while being thorough in their diligence work
product. Additionally, they minimized the risk to the sellers of closing the
transaction by taking financing contingencies off the table. Ultimately, the
Bertram team followed through on their initial terms of engagement to
complete a highly successful transaction for Bertram, the selling shareholders
and the management team. We look forward to working with the firm on
Timothy P. Johnson, Managing Director at England & Company, LLC, who
managed the sale of Marelco Power Systems, Inc. to Bertram Capital had the
following to say about working with Bertram: "Our client was very sensitive
about confidentiality and insistent that the sale process be quick and cause
little disruption to their business. Bertram Capital was extremely
professional, knowledgeable and efficient throughout the process and was
able to close the transaction within 45 days of signing the LOI. It was a
pleasure working with the Bertram team on the Marelco transaction and we
look forward to working with them on future deals."
With glowing reviews like these from well respected investment bankers, Bertram
appears to have found a way to truly differentiate themselves from their private
equity peers. As competition for deals increases, with aggressive strategic buyers
and hungry private equity firms, Bertram Capital and firms like them, will need to
continue to innovate to ensure their long-term success.