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March 21, 2018 No Comments Author: Andy Jones

Data Evolution

Data analytics and machine learning are making great progress. But it’s simply the next adjacent possible in the on-going evolution of data production, storage, sharing and networked learning.

Evolution of Data…

March 13, 2018 No Comments Author: Andy Jones

Interview – Nate Nead with

I recently spoke with Nate Nead with Below are some excerpts from our conversation.

About Your Firm… is a technology-enabled investment bank. We increase the quantity and quality of deal flow by using web-based tools and marketing. We work on lower middle market deals with enterprise values between $10 – $50 million–sometimes less for a particularly interesting deal.

What do you mean by “tech-enabled”?

In one sense, we are tech-enabled as an investment bank for our own internal marketing purposes. On the other hand, we work with investment banks to get broader distribution for sell-side mandates.

Investment banking, especially deal sourcing, is very much relationship driven. When investment bankers work on a deal, they become so focused on the transaction, they are not nurturing their pipeline. As the deal closes, they immediately go back to hunting mode for new opportunities. We employ technology to ensure we have a good, steady deal origination platform. We may not always have the best quality of deals, but we have the quantity. You can always find the diamonds in the rough when you have the quantity. “If you get 20 potential deals in a day, 21 of them are garbage so you have to kiss a lot of frogs.”

March 06, 2018 No Comments Author: Andy Jones

Interview – Ben Wallace with Azalea Capital (#2)

In recent years, there has been heightened interests from private equity firms in the lower middle market. In this market segment, companies are predominantly family/founder owned and privately held. With that, comes a variety of opportunities and challenges for a private equity owner.

Differences between lower mid-market and more mature businesses…

As you said, the lower middle market is largely comprised of smaller, family-owned businesses. We have a great deal of respect and admiration for the entrepreneurs who founded and built a company from scratch. A key difference in this segment of the market is that a business owner is often looking for a partner in the truest sense of that word – someone they can trust to bring into their business, someone who brings skills and perspectives they may not have, and someone who will carry on the legacy and reputation of their company. Larger middle market companies have often been owned one or more times by outside investors, and the “pride of ownership” may not be as present as when the company was smaller.

A common theme we see in smaller companies is that they are often managed to support a lifestyle, rather than to build long-term equity value. One approach isn’t necessarily better than the other, but the mentality and mode of operation can produce quite different results.

Companies that consistently generate $1 million+ in annual earnings can provide a nice lifestyle for an owner and their family, however, taking current income versus investing in future growth has consequences. As private equity investors we are tasked with providing a meaningful return on capital for our limited partners. Given the relatively short window of time we have to meet return expectations (typical hold period of 5 to 7 years), we usually must grow an investment two to three times its original revenues to accomplish our goals. This requires us to pro-actively manage risks while addressing the typical impediments to growth – the market, people, capital, and product/service offerings to successfully meet our investment objectives.

Each company is different, but many investments have similar issues centered around strategy and people – having the right person in place to properly execute mission critical activities. It’s less about the rate of change at the start and more about maintaining a steady cadence of continuous improvement throughout our involvement as investors.

What do you find missing from owner/founders that prevents them from scaling the business further (i.e. risk appetite, balance sheet, skills)?

March 02, 2018 No Comments Author: Andy Jones

Using ICOs to Raise Capital

Using an Initial Coin Offering as a mechanism to raise capital seems to be in vogue. But how does this financial mechanism actually work? And how it is better than just raising capital with traditional currency?

Creating a Cryptocurrency

Creating a new cryptocurrency it extremely simple. You only need to decide on the following points:

  • Total supply (# of coins)
  • Name of your new currency
  • Set the number of decimal places for the coin
  • Coin symbol (like a stock ticker symbol)

With that and a click of the mouse, you can create a new digital currency. But creating a coin and marketing/selling it in exchange for real money are two entirely different things.

Marketing Your Currency

The road show is fully electronic in the ICO world. Instead of holding multiple in-person meetings with money-people, as is done for a traditional IPO, most ICO issuers create a white paper that describes their project. The white paper is then distributed to potential investors.

Dodging the SEC

Isn’t an ICO really just a capital raise (or IPO) in disguise in an attempt to dodge SEC Regulations?

No Comments Author: Andy Jones

What is a Middle Market Company?

Corporate finance professionals often refer to companies in the “middle market”. Operating executives rarely use this terminology. So, what does it mean?

While there is no universal, standard definition of a middle market company, the term normally refers to companies with an enterprise value between $50 – $500 million. Within this range, people refer to “lower middle market” ($50 – $250 million) or “upper middle market” ($250 – $500 million) companies.

For the purposes of building our M&A Research Database at, we have broken the size ranges of deals that the various private equity firms will consider into the following four categories.

Category    Deal Size
Small          $0 – $50 million
Mid             $50 – $250 million (lower middle market)
Large          $250 – $500 million (upper middle market)
Mega          $500+ million

February 22, 2018 No Comments Author: Andy Jones

How to Get a Job at an Investment Bank

Note: This article is for more junior people without previous investment banking experience. I may write a follow-up article for senior bankers looking to change firms.

For every available investment banking position, there are literally thousands of interested applicants. I have been fortunate enough to have worked as an investment banker at a bulge bracket firm, in the middle market and as an information provider to the industry through

Upon completing business school, I had my share of investment banking interviews – Goldman Sachs, Deutche Bank, Bear Stearns and others. While I had multiple rounds of interviews with Goldman Sachs, they ultimately did not make me an offer. I did, however, receive and accept an offer from Bear Stearns, at the London office. While at Bear Stearns, I also participated in business school recruiting events for the firm. Because of these experiences, I have formed some views on how to increase your chances of landing a job at an investment bank.

The Right School

By far, the single best way to get your foot in the door is to attend one of the “right” universities, where “right” means one of the top finance schools. In the United States, the schools are (not necessarily in order):