Holding All-Equity Deals Forever

Houston-based Logan Walters founded Forge Equity in 2021 after a career in traditional private equity (focused on oil services). Dismayed by the limiting 5-year holds of conventional private equity, Logan and his partners have developed a strict preference for indefinite hold periods. We discuss how this affects deal screening and explore their dividend philosophies.

Minds Capital is an equity fund for independent sponsors. We invest $1-3m of equity per platform and average one commitment per month.

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Many Family Offices love the indefinite hold model as it matches how they generated wealth: by compounding capital over multiple generations. The downside of exits, for FOs, is that they receive cash they need to redeploy, as opposed to keeping it in a well-performing, compounding asset. HNWIs, on the other hand, prefer standard hold periods: they look for liquidity windows to fund lifestyle goals.

Logan's case study: STS shows how lucrative earnings volatility can be. Acquired in 2022 via a 51% majority recap, the electronics recycling business used an all-equity structure to shield the asset. The conservative balance sheet paid off when internal issues and weather disasters caused $0 EBITDA (!) in year 1. Luckily that was the trough, and massive growth followed. Logan has since bought out 1 original investor, and the company has returned 35% of capital to date.

Another case study, Axis Rentals, illustrates an even faster route to value. Revenue doubled in less than 1 year after acquisition, from $18m to $35m. Thanks to this explosive trajectory, Axis might be a shorter hold, as Forge Equity stays pragmatic & flexible on timelines.

Logan focuses heavily on being a good constituent in the independent sponsor space. He mentors aspiring sponsors and actively routes excess deal flow to his peers. His single best piece of advice for solo sponsors is to find a trusted partner at your own level/capacity. Having a consistent sounding board prevents isolation and ensures better strategic decision-making.

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