The Kingsbarn Difference
The Kingsbarn Private Equity is the latest addition to the firm’s alternative investment platform. As market dynamics continue to shift, the private equity team at Kingsbarn has recognized an opportunity to take advantage of the silver tsunami of retiring business owners, specifically in the lower middle market.
Kingsbarn’s private equity team partners with management teams and independent sponsors across the US and Canada by providing the “last mile” of equity to help complete the sources of financing for each transaction. This investment approach has already generated significant interest and deal flow from the market at large with equity deployments generally ranging from $3-6 million per investment.
The Silver Tsunami
Baby boomers own over 50% of all privately held
businesses in the United States.
Roughly 500 businesses each day will be either
changing hands or shutting down.
This Silver Tsunami of retiring business owners own
over 2.9M businesses.
These businesses are the heart of the U.S. economy
and employ over 32M workers and generate nearly
6.5T in revenue.
- Census 2018 Annual Business Survey (Data from 2017)
Why invest in the lower middle market?
Financially Opportunistic
Larger businesses (greater than $5M EBITDA) typically trade at higher multiples which reduces the return profile to investors.
Acquisition multiples for companies under $5mm EBITDA are much lower, providing multiple arbitrage opportunity when EBITDA growth is achieved.
This creates a form of double return for investors – increase in profits and higher exit multiple – significantly increasing the IRR.
Value Creation
Easily implemented systems and processes that immediately create unrealized value in a small business.
I. Operational Best Practices
- Inventory controls
- Utilization tracking and analysis
- Automation / human
capital efficiencies
II. Financial Best Practices
- Capex ROI tracking
- Cash forecasting / budgeting
- ERP / financial software integration
