How We Partner With Entrepreneurs
Turn-key Infrastructure for New Operating Partners
We arm potential business buyers with industry-leading proprietary systems to quickly canvas the market for opportunities and close deals.
While typical infrastructure setup for deal origination can take months to set up, we historically generate opportunities in <1 month for a new business buyer.
We originate thousands of investment targets annually.
Thesis differentiates itself from independent sponsors, self-funded searchers, and traditional acquisition models – we provide a partnership model that enables all acquisition practice types to be successful.
We have interviewed over 200+ business buyers, independent sponsors, and similar investment groups to understand where the lower middle M&A market is headed. Thesis Capital is the product of not only this extensive research but also the product from successful acquisitions, growth, and sales of existing businesses we have acquired. Thesis was built by independent sponsors – we are seeking to add partners including:
- Independent sponsors
- New business buyers / searchers
- Family offices and private equity groups seeking to materially expand deal-flow quickly
- Strategics seeking end-to-end buy-side acquisition (vs. standing up a dedicated deal team)
Perspectives on Searchers and independent sponsors – data from over 200+ interviews:
- Self-funded search (Main Objective: Maximize economics for the searcher)
Through Thesis, self-funded searchers can expect to see a very high volume of quality deals ideal for self-funded search. We have existing relationships with SBA 7a lenders to whom we can quickly introduce search partners and help get your deal funded. While the 7a process can be a longer diligence process, we believe this is still an excellent vehicle for closing self-funded transactions. During the diligence process with your lender, our team will also work with and advise you on document preparation. Our focus on self-funded search models is to help maximize economics for fellow searchers in any transaction. For context, we see numerous opportunities suitable for self-funded / 7a approaches between $1m-2.5m EBITDA. - Independent sponsors (Main Objective: Go big(ger) and partner with our team)
We have helped several independent sponsors also launch their own searches through Thesis Capital’s infrastructure. Our network of investment banking relationships and leading intermediaries enabling new independent sponsors to tap high quality and larger deals quickly. New independent sponsors often face two challenges: 1) Originating larger, high quality deals in the range of $3-7M EBITDA and 2) Convincing intermediaries you have the network to actually raise the capital. Thesis has helped prior sponsors solve for both items leveraging our network of additional debt and equity providers where needed. For context, we see many opportunities suitable for sponsors between $3m-7m EBITDA. - Traditional search (not our sweet spot).
After our interviews across 200+ searchers (and continuing to interview new searchers in the market), we have determined traditional search is commonly less than optimal for the searcher. For context, we define traditional search as an entrepreneur with limited capital typically raising two funds: Fund 1 supports the “search” for ~24 months then Fund 2 provides acquisition capital. We recognize the decision to search and how to search is a subjective decision to be best determined only by a prospective searcher. Our assessment leading to the non-optimal nature of traditional search revolves around several factors:- Limited exit economics – most traditional searchers exit with 15-25% (on average) equity of companies valued at ~$10M. Comparatively, one could instead choose to buy a smaller firm through self-funded search or independently sponsor a deal (see above) and increase their personal returns materially.
- Geographic constraints – Most sponsors which support traditional searchers will require the entrepreneur to search for opportunities across all 50 states in the USA. The requirement to relocate to potentially anywhere in the US coupled with limited upside increases risk and opportunity risk. Thesis was developed to offer highly targeted search services in specific geographies as defined by the searcher.
- Loss of control – Our research across 200+ prior searchers and similar funds includes stories of traditional searchers / entrepreneurs ousted by their boards over marginal differences in returns and approach.
- Short-sighted – Most traditional sponsors will seek to exit the company via sale within 4-7 years. At Thesis, we promote the idea of permanent equity and long-term holds. Why search for 24-36+ months to find a top, lower-middle market company only to sell? Why sell a company you have spent several years leading and becoming an expert in an industry only to sell? While a sale is an opportunity to reclaim cash proceeds, at Thesis, we have aligned alternative approaches with partners to facilitate cash distributions for our partners and investors without the need for a sale.
In summary, for reasons mentioned above as well as other reasons not listed, Thesis firmly believes Traditional Search is non-optimal for most entrepreneurs entering this space. There is a clear opportunity cost consideration one must carefully assess and execute against and we recognize only the prospective business buyer can best make this decision.
We pride ourselves on several key service offerings:
- Launch a search in 4 weeks.
On average, starting a new search requires ~6-9 months of setup time. Starting an effective search requires considerations across personal opportunity cost assessments, setting up core infrastructure such as email systems and CRMs, developing base relationships with legal and accounting firms as well as brokers, and much more. Across multiple new investors and searchers, our search launch time reduces this setup time down to ~4 weeks. Within 1 month, you will begin seeing high-quality deal-flow tailored specifically to your criteria. - Leading M&A advisory support.
We are here to help you see the deal through from starting your acquisition search to closing (and beyond). After running our own acquisitions, we understand the criticality of having other advisory members available. You will receive support from our team across all aspects pre-closing including but not limited to helping you structure your acquisition search, filtering and reviewing companies, LOI process, diligence, guidance on capital raising, and closing. Our processes and documents are standardized to help you expedite diligence and close successfully. - Massively scaled (and tailored) deal origination.
In 2022, we originated over 3,000+ quality deals. This is a result of several years of refining acquisition origination processes, building deep relationships with national intermediaries, and bringing in other smart acquirers who have helped us develop new origination approaches. By joining Thesis, you gain access to these systems and processes to help you identify and close opportunities quickly. Our network and systems are one of a kind. We are your one-stop shop to scale deal flow across all strategies whether on or off market. - We’re flexible on terms.
Whether you are conducting a solo self-funded search, an independent sponsor search or if you’re a family office or private equity group, our service offerings and related terms are built to suit.
FAQs
Q: How does Thesis Capital’s search infrastructure help me find deals faster?
- Thesis’ sourcing / origination infrastructure has enabled acquiring partners to reduce >6-9 months from their timelines when searching for a company to acquire. Thesis is setup in a way that offers new acquiring partners capabilities to begin seeing quality deals in as little as 1 month.
Q: What are my economics as a Thesis acquiring partner?
- Economics are deal dependent and may vary widely. We help entrepreneurs consider both self-funded searches as well as independent sponsor models, tradeoffs associated with economics, control, and other components. For self-funded search, we focus on optimizing economics for the searcher / entrepreneur. For independent sponsor models, we seek entrepreneurs who will become our partners on related transactions while also seeking much larger opportunities (e.g., enterprise values >$15M+).
Q: How much does it cost to be a part of Thesis?
- Our services depend on needs and fit of respective acquiring partners. Please contact us to share the needs of your acquisition processes / search and we can then best guide you to a respective package.
Q: How are deals sourced through Thesis’ pipeline?
- We follow a proprietary process to source opportunities including a full deal team and automation integrations with a number of the top service providers. You will start to see and even receive new deals by as early as week ~3 – our services are focused on ensuring we can help new operating partners gain access to quality deal-flow in as little as 1x month VS. setting up new infrastructure and sourcing processes which typically requires 6-9 months to build these functions alone.
Q. What is expected of me as an acquiring partner with Thesis?
- While Thesis does provide highly curated deal-flow without you needing to lift a finger, we expect all of our acquiring partners to be involved in promoting and accelerating their origination processes. In the end, your success in originating and closing a deal is still your responsibility to lead while Thesis supports and guides in parallel. We expect our acquiring partners to join weekly check-in calls so that we can ensure our Team is best supporting and optimizing your deal flow processes. Thesis can provide support calling brokers/investment banks pre-LOI; however, we ask our acquiring partners to lead the process during and after a qualified deal is sourced. While under LOI, we also expect acquiring partners to lead the diligence processes. We are here to support to ensure you can quickly and efficiently close.
Q. What if I don’t want to / cannot move to the acquisition’s location?
- We would need to understand this prior to marketing your key criteria to brokers, investment banks, and other intermediaries. There are absolutely ways around this but it must be planned – we are here to help you think through the best approach based on your goals.