Boutique Private Equity Firms
In today's uncertain economic climate, statistics show that most boutique private equity firms continue to do well according to Albert Gasparro. Some analysts suspect that this is due to the fact that smaller equity firms have a streamlined management infrastructure, and are therefore able to move more quickly than larger firms. Also, with fewer investments to manage, small firms are able to monitor developments more closely than their larger counterparts.
As well, private equity firms are most often helmed by strong leaders. These leaders have the ability to aggressively pursue desirable companies and properties, which gives boutique companies a personal edge that larger organizations can't match.
One example of a firm steered by an industry leader is Toronto's Primanagement Inc., a company owned by businessman-philanthropist Albert Gasparro
. This firm has been impressing analysts since its inception in 1999, and is expected to perform well in the future.
Hallmarks of A Superior Firm
Superior private equity firms share a number of characteristics. These include:
- Investment and management of both residential and commercial real estate
- Investments that are located in various geographic locations
- Investments in major metropolitan markets with sustainable growth projections
Look also for a firm that performs various types of business. These functions may include:
- Asset Management
- Private Equity
- Asset Backed Financing
- Real Estate Development
Better North American companies will be incorporated or registered in more than one jurisdiction. It's considered desirable for Canadian companies to have a stateside presence in at least one state.
How It Works
Using a firm like Primanagement, Inc. as an example, we can elaborate on the types of activities that an effective boutique private equity company does best.
Primanagement, Inc. looks to acquire ownership in mid-market companies.
It does this either by finding companies with significant debt, or by acquiring equity in the company – or both. The boutique firm prefers to work with management to pursue transactions, and it has a good track record of being able to do this. Part of this ability is certainly due to Mr. Gasparro's personal charisma, and his known preference for collaboration whenever possible to achieve results.
Here are some of the transactions that Primanagement, Inc. specializes in:
- Traditional leveraged buyouts of established companies. Using time-tested strategies, Primanagement can achieve leveraged buyouts in most cases where this option is available.
- Transactions involving start-up businesses in well-established industries. This activity requires close monitoring of sectors in which the firm has expertise and interest. These types of transactions can be the most lucrative, providing a larger ROI than other options.
- Buyouts of distressed assets and turnaround situations. This is where the flexibility of a small firm can be particularly useful. Fast action during this type of situation can yield good results.
- Minority investments in viable companies. Another strategy that can foster success, investing in viable companies helps small private equity firms to maintain a balance.
In short, boutique private equity firms have many advantages over their larger, more unwieldy cousins. Be sure to do due diligence, and choose a firm with a bright future!