Startup Private Equity Fund Builds Competitive Deal Flow with Novel Data Strategy
Marion Street Capital (“MSC”) helped a startup private equity firm create a unique, repeatable top-down deal sourcing strategy by leveraging DataOps to identify and prioritize 300+ potential platform acquisitions in the Northeastern U.S. standby generator industry.
The Most Pressing Challenge
MSC helped its client solve several key challenges traditional middle-market private equity firms face when sourcing deals:
The “wait, not create” auction-style process where investment banks create competitive tension to inflate multiples on rosy projections
Deal origination in the current market requires casting a large net which is a challenge for smaller funds
Qualifying investable deals by specific firmwide investment criteria can be a strenuous process
How Marion Street Capital Solved the Most Pressing Challenge
This client approached MSC about its hypothesis on the standby power industry, but without a clear roadmap to identify and prioritize a potential platform acquisition and subsequent bolt-on acquisitions. MSC’s DataOps service helped this startup private equity firm leverage:
A universe of 300+ potential platform targets, including revenue and EBITDA estimate
Comparative transactions data, and insights into previous PE activity in the industry
Retrospective and forecasted demand metrics for standby power generation
Insights from industry experts, without engaging an expert network or recruiting firm
In this engagement, MSC delivered an interactive dashboard to overlay 300+ potential acquisition targets with their most attractive markets.
From the universe, the dashboard recommended the top 25 potential acquisition targets for next steps, by:
Identifying which targets fit the client’s target size (EBITDA) criteria
Excluding targets in highly competitive markets
Excluding targets in markets with weaker than average demand (retrospective & forecasted) for standby power generation