Tripled EBITDA, Doubled Multiple, Exited Early

After a distinguished career at BCG and as an executive in retail, Richard Baum was directed to the deal-by-deal model amid fundraising woes in the mid-2000s. Today he's viewed as one of the pioneers of the independent sponsor model, building Consumer Growth Partners around deep sector expertise. Over 20 years, he helped turn the independent sponsor ecosystem, previously mostly known for its lack of committed capital, into the dominant buyer of lower-middle market companies in North America.

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

This episode is sponsored by

In 2009, Richard acquired a family-founded Western wear and workwear retailer. Despite being owned by a private equity firm, the 15-store chain was still led by the third generation of its founding family. Richard bought the business at under 5x EBITDA. After doubling the store count, he exited at more than twice the entry multiple. The buyer later took the company public at 17.5x EBITDA.

Sector specialization continues to be Richard's ticket to success. Focusing on specialty retail and branded consumer productsl; speaking founders' vertical's language triggers immediate bonding. He doesn't believe tech and AI will kill the knowledge edge, but on the contrary sees experience as a strong bond than ever.

A mentor to emerging independent sponsors, Richard says that sourcing proprietary deal flow is the ultimate differentiator for independent sponsors when they interact with institutional capital providers. Interestingly, he points out that deals do not require steep valuation discounts if the sponsor provides distinct value-add capabilities (e.g., deep sector focus).

Richard expanded his model by launching Strategic Advisory Services to generate steady revenue and proprietary deal flow, where they consult businesses that want to get ready to go-to-market. Through this arm, his firm reviews 50-100 deals annually, maintaining close relationships with boutique M&A firms. These intermediaries refer quality businesses that are not yet ready for a formal sale process. Acting as the plastic surgeons of the sponsor world, Richard's team helps these companies scale from ugly to beautiful. And they inevitably have first looks on all these deals.

Minds Webinar Series

Bespoke educational content for independent sponsors by dedicated service providers

For more information or to get involved as a panelist, reach out to webinar@mindscapital.co