Business Insider had this story up today about the Koch brothers and their pursuit of private deals. It’s always great to be in good company! Obviously, we are so small that we aren’t even eating the crumbs left in the Koch brothers wake. That’s great with us. We can successfully deploy some capital and help smaller companies that are subject to the same trends:
- Banks are pulling back – It feels like every commercial banker I talk with tells me the same story about increased regulation and reduced levels of risk. There is another challenge facing the lowest middle market companies coming from bank consolidation. Banks have money; lots of it. However, they seem to want larger and larger deals. It’s almost like larger deals are deemed safer than smaller deals. I’m more than happy to step into the void.
- Control Issues – Often a business owner doesn’t want to give up control of their business. This is actually very similar to the private equity business where the professional management of a public company is just the wrong leadership for the business (don’t believe me – look at the retail industry right now, yes the entire thing). The Koch brothers can help get large companies into better hands. Often smaller businesses don’t want to raise equity because the business already is IN the best hands possible. Same issue, different sides of the same coin.
In short, as public markets become more and more efficient (more investors gravitating to low cost ETF’s, too many hedge funds chasing the same ideas), we are thrilled to be able to help companies and generate good returns in the process.