Career Networking with Private Equity Firms

Career Networking with Private Equity Firms Andrew Thompson Mei-Mei Tuan Notch Partners, LLC Notch Partners Clients: private equity firms and their portfolio companies Mission: To create partnerships between our clients and top executives to enable profitable deal activity NOTCH PARTNERS Discussion Topics How job-searching executives can position themselves as “deal executives” to improve their marketability in private equity-backed situations What steps executives can take to cultivate relationships with private equity firms for career networking NOTCH PARTNERS Private Equity Today Deal pace has picked up considerably this year vs. last year Continued risk aversion re industries and executive backgrounds Investors are prepared for “hair” in deal structures More club deals Some lemming behavior on sectors   Business services / Outsourcing Consumer goods (niches, defendable brands) “Wall of money”  Fierce competition  pro-active, executive centric deal-sourcing and deal-pursuit PARTNERS NOTCH Going Private…Why? Enhance Career    Degree of control – fewer and more focused stakeholders; lower reporting burden Action-orientation – opportunity for P&L executives to aggressively and proactively build value Wealth creation – ability to share in the upside Enhance Career Search   Expand opportunity set – beyond known “job openings” Opportunity to be proactive – create and define career NOTCH PARTNERS Evolving Skillset for Success 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Late 70s Mid 80s Late 80s Early 90s Late 90s Today Origination Investment Analysis Financial Engineering Value-Added Post-Investment NOTCH PARTNERS Source: David Offensend, Evercore Capital Partners. Presentation materials 11/15/02 The Value of PE/Executive Networking To the Executive     To the Investor    Portfolio job opportunities Consulting/board opportunities Industry intelligence Industry networking   Access to proprietary deals Due diligence assistance Talent pipeline/ virtual bench (board, exec, consultant) Industry intelligence Industry networking NOTCH PARTNERS “Ideal” Executive for Private Equity-Backed Opportunity 20+ years in industry of choice 10+ years in P&L role Significant operational achievements through up and down cycles Strong network of industry contacts Track record for achieving returns to investors and/or improvements in cash flow Active in deal flow Identified proprietary deal(s) Ready 3-4 person management team NOTCH PARTNERS Targeting Executives From a Private Equity Perspective TargetDriven Deal Exec Thesis-Driven Deal Exec Deal Resource Job Seekers NOTCH PARTNERS Elements of a Compelling Deal Thesis Clear definition of industry – niche, size, geography, etc. Outline of value-creation opportunities Outline of plan for pursuing those sources of value Explanation of why you/ your team are ideally suited to lead such an effort – include description of team if applicable Roster of 5-20 target companies, without regard to whether they are acquirable Status of discussions with target companies (if any) Thoughts on likely exit, if known NOTCH PARTNERS Deal Executive Defined Visionary CEO-level leader or direct report Seeking to complete an acquisition and lead the resulting company Desires partnership with a financial sponsor Has a clear sense of how to create value in the sector he or she is targeting Deep experience in industry of target company(ies) Proactively seeking to identify deal opportunities which he/she can bring to the financial sponsor NOTCH PARTNERS The Relationship Value Chain Inadequate understanding of PE firms Establish positioning and determine appropriate targets Misdirected activity Poor follow through Misaligned expectations Determine interest First Conversation with private equity firm(s) Follow on meeting(s) usually with other partners Determine relationship parameters Establish Partnership N Identify investor(s) N Initiate contact N Help refine N Align expectations N Meeting Logistics N Assist on presentations N Intermediate in N Maintain feedback loop negotiations investment thesis N Provide guidance on interaction NOTCH PARTNERS Successful Networking Meet people when you can; don’t wait to be “all buttoned up” Don’t look desperate Bring “gifts” Focus on opportunities, not your background Be prepared for a lengthy process …unless you have a deal Network with multiple partners at each firm Focus on overlapping interests, not firm prominence NOTCH PARTNERS Working with Private Equity Low High C O M M I T M E N T High Opportunism Flexibility Unpaid EIR Paid EIR NewCo Mgt Upside Upside+expenses Upside+Retainer Upside+Salary Low Low R I S K High Free Agent None Maximum Current income Upside Potential High Minimal High Low NOTCH PARTNERS Resume Tips Stick to the story Quantify achievements Explain job transitions “20-30 years of experience” Emphasize M&A, post-merger integration, turnaround and PE experience Emphasize leadership/operational achievements NOTCH PARTNERS Preferred Deal Characteristics Positive Deal Characteristics Growth opportunities -organic/acquisition -demographics -growing industry High-value added -premium product -tech-advantage -branded Healthy Economics -positive cash flow -low debt/equity Industry/Market -growth trends -fragmentation -no “800 lb. gorilla” Viable exit Deal Types Founder “re-caps” and buyouts Non-core spinouts Strategic combinations (not “roll-ups”) Privatizations Growth Capital Viable turnarounds Deal Size $10-500 mil equity checks $15 mil – 2 bil transaction value $5-300 mil EBITDA NOTCH PARTNERS Notch Partners Send resumes to: resumes@notchpartners.com Format: Microsoft Word email attachment preferred Traditional chronological preferred (not narrative bio) Specify: Deal Executive or Job Seeker? If Deal Executive, please include an overview of target company / industry Andrew Thompson, Partner 973-921-0341 athompson@notchpartners.com Mei-Mei Tuan, Partner 973-921-1229 mtuan@notchpartners.com NOTCH PARTNERS