The 123-Year-Old Firm's Independent Sponsor Blitz

The 123-Year-Old Firm's Independent Sponsor Blitz

HKW is a 123-year-old firm (!!). First an investment bank, then a PE investor across 5 funds, and now an independent sponsor with 5 new platforms in the last 18 months. Ted Kramer is the CEO of this venerable institution, and he shares why thae history matters as they've converted 180 completed buy-side transactions and 25,000 tracked deals into pattern recognition.

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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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Ted's divided the organization into four pillars: sourcing, transaction, operations, exit. This differs from other sponsors who often only divide between Business Development and Operations. Splitting Sourcing from Transaction enables business development to be truly unencumbered, which every sponsor with a live deal will recognize. And having a senior partner always focused on priming the portfolio for exits is also differentiated.

For exits, Ted isn't a fan of reacting to market conditions or strategics' timelines. He prefers preparation and proactiveness. Know the buyer universe early, build the company accordingly, institute the infrastructure, and be ready when the window opens.

Macro factors (from COVID bump) have slowed deal timelines and hold periods are consequently stretching. But Ted still prefers the standard 5-year holds: he says it takes ~36 months to execute 80-90% of the playbook/plan. After that, compounding can slow, management may be ready to move to the next ownership group, and investors may want liquidity. The job is to stay honest about the asset, not fall in love with the hold.

Ted says the market is more accepting of independent sponsors now, and to other buyers without committed capital, but sellers still care about certainty. Founders and bankers might be more flexible on structure and timing, but they still want to know a buyer can close. That's where HKW’s history gives them an edge.

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