With 2019 just about over, we’re taking a look back at some of what we learned this year.
We’ve talked to dealmakers about the role that Midwestern values can play in facilitating a deal, how blockchain is driving change in commercial real estate dealmaking and what a long-time professor at the University of Michigan is doing to spur economic growth in the Detroit region.
Here’s some of what we’ve covered in a busy 2019.
It’s been a busy year for Brian Demkowicz and the team at Huron Capital, which is just the way he likes it.
“We’ll look at 1,500 opportunities a year and invest in 20 companies,” says the firm’s co-founder and managing partner. “Our primary goal is to help the management team and the owner of the business we invest in make their company bigger and better. If we do that, a lot of great things happen as a byproduct of that.”
Demkowicz spoke with Dealmakers about the firm’s 40-point checklist for evaluating potential investment opportunities and the role that Midwestern values play in negotiating deals at Huron Capital.
The pathway to liquidity
Dividend recapitalization can be an effective pathway to liquidity for a business owner. It can also lead to plenty of headaches if you haven’t thought it way through all the way, says Andrew Dickow, managing director at Greenwich Capital Group.
“Many entrepreneurs don’t think about things like, ‘What are the debt covenants I am going to have?’” Dickow says. “What restrictions are they going to put on my business? What if I lose a major customer and I have a significant amount of debt service? Can I sustain through that?”
Dickow gave us an inside look at how to craft a dividend recapitalization strategy that fits your own unique needs.
Big changes on the way
The future of dealmaking, specifically in commercial real estate, is in blockchain technology, says Inveniam Capital Partners’ Patrick O’Meara.
“People complain about Google and Facebook knowing everything about us, but we get ads that are catered literally just for us,” says O’Meara, who has spent more than 20 years studying the capital market and structuring and executing M&A transactions. “That's eventually going to happen with real estate.”
O’Meara took us behind the scenes to learn more about blockchain technology and how it could impact the way deals get done in commercial real estate.
Sam Simon founded Atlas Oil in 1985 and built it into a $1 billion company that delivers more than 1 billion gallons of fuel each year to customers in 49 states. Around the same time, he started Simon Group Holdings, which has more than 120 companies and direct investments. Both companies were barely a year old in 1986 when Simon made the first of many acquisitions.
“I love entrepreneurs, people who have the drive and the passion to do well,” says Simon, founder and chairman of Atlas Oil and Simon Group Holdings. “There is always a risk in everything that you do. But if you believe in that person, in that leader, and you believe they have the capacity to grow and do well, that’s what I care about.”
In this story, Simon shared the simple premise that launched his career as one of Detroit’s top dealmakers and entrepreneurs.
Balance of power
When you’re bringing two companies together, both sides will do their best to negotiate. But the balance of power is always skewed, says Joseph DeVito, partner at Howard & Howard.
“There are no mergers of equals,” says DeVito, who focuses his practice on business and financial transactions and real estate matters. “That just doesn’t exist. Someone is acquiring someone in every transaction.”
DeVito walked us through his approach to M&A due diligence and the strategies he uses to control costs and minimize risk in his dealmaking activities.
Let’s go Blue
University of Michigan Professor David Brophy is doing what he can to make Southeast Michigan a destination for would-be investors, entrepreneurs and dealmakers. This year marked the 14th annual Michigan Private Equity Conference, which was created more than two decades after the launch of the Michigan Growth Capital Symposium, another Brophy inspiration.
“We have these conferences and bring people back to see what progress we’re making and to meet people and establish contacts here,” Brophy says. “It’s not gigantic, but it’s personal.”
Following October’s PE conference, Brophy took a few moments to talk to Dealmakers about progress made, and progress yet to be achieved, to help the region meet its full economic potential.