Have an opportunity, curious about PE

1,834 Views | 11 Replies | Last: 2 mo ago by Sims
Bag
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AG
Hi,

A little background, I spent 20 years in oil and gas, left corporate america in 2018 to start a company providing geospatial analytics and logistics products for oil and gas and shipping companies. This company is doing well, not perfect but certainly has been a success by most metrics.

I recently came across an opportunity that has massive potential. It would involve forming a new LLC and a relatively complex organizational structure. Most of the complexity is around the need to raise a not insignificant amount of money to get this off the ground.

I have about 18 months to raise the funds but I know very little about how PE works, where to find investors and how the payout structures work.

Is anyone on this forum experienced with private equity, raising cash and or the gotchas on setting up something like this?
Sims
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AG
If the upside is what you indicate it could be, you should consider starting a C corp.

The Sec 1202 improvements in the OBBB make C corp very attractive to start over the typical default of scorp/llc.

You could find any number of middle market banks with sell side advisors/third party partners. You'd have to pitch them since there is no history or familiarity with what you're trying to start. It will feel like a dog and pony show and you're the attractiion.

I would start with a short pitch package and just try to connect with different banks you might already have a relationship with.

I'd probably also consider starting legal upfront for what you want the deal structure to look like. That will make the negotiations easier to where they know your starting point rather than just exchanging redlines for 3 months when you'll never come to an agreement. That's a waste of time.
Bag
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AG
this is why I love this forum, thank you
DfwAg11
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Don't forget about your insurance.
CaptAmerica03
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Not saying PE is the wrong road, but you ought to at least pursue Family Offices as well. If you have PE contacts with whom you can be transparent, ask them what they think. Family Offices can potentially be a little more nimble/flexible if it's within their appetite.

If you are unfamiliar with FOs, just think really wealthy families...
Dirt 05
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AG
Sims advice was good.

Private Equity is an expensive way to fund the business, and they often take a much more active role in management of the business that can leave you as the founder on the outside looking in, but if they have a partnership team with experience in your product/service space or connections (think future customer ties) that you can leverage it may be a reasonable route to pursue.
DfwAg11
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If you connect with a good aggregator, you can find funding without giving up equity. Plenty of money out there that doesn't require equity to lend.

Likes it been said, when you link up with private equity you are no longer the boss but instead you answer to firm. You would be seen as a founder/operator but no ownership.
AgsMyDude
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AG
Sounds pretty interesting. You hiring?
CamAg
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AG
Bag, shoot me an email, mdenio at gmail.
Mas89
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AG
Why would it need a " relatively complex organizational structure"? I always like to keep things as simple as possible. I know several guys that put together big real estate purchase groups with an LLP for each purchase.
Not uncommon to have 20 plus investors. And the organizers have significant " skin in the game" as partners themselves with serval being the managing partners.
Kenneth_2003
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AG
OP...
Depending on exactly how many commas you're referring to and the size of the leading integer, a poster crowd funded a startup here from this board a couple years ago.

As I recall he set up a couple of zoom calls for ultra high level talks and everyone that was interested in moving to the next level signed an NDA.
Sims
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AG
I'm CFO with a small family office, the family just exited a loan converted to equity and I know they're always looking for interesting upside.

That aside, the operating company is cash flush right now. We have a freight broker partner that is top notch and MSAs with all the energy majors.

Lots of intersections that would be worth exploring if OP chose to go that way.

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