March 28, 2013
Interviewed by: David Snow
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Hunting Deals with Lincolnshire Management

T.J. Maloney of New York-based middle-market buyout firm Lincolnshire Management describes the resources and network his firm has established to scout for investment opportunities.

T.J. Maloney of New York-based middle-market buyout firm Lincolnshire Management describes the resources and network his firm has established to scout for investment opportunities.

Privcap: How has your firm structured its deal origination function?

TJ Maloney, Lincolnshire Management: Well, we have a number of individuals that are dedicated to what we call originating. And originating is sourcing transactions, investment opportunities for the firm. And we’ve been doing this for a long, long time. Over 20 years, almost 26 years now. And so part of the thinking is that you have to source on a geographic basis. Deals that you’ll see on the west coast don’t tend to come this direction necessarily. So, it’s important to have boots on the ground and have a presence in the area. And also, I think, be recognized by the community in terms of being a part of the community and known in the community. So, we’ve had offices in L.A. for some time. That’s headed up by a fellow, Ed Moss, does a good job for us out there. We have an office in Chicago. Sometimes, you’ll find that businesses in the Midwest are not particularly interested in talking to financial people in New York. They’re more comfortable with fellow Midwesterners and so we definitely have a presence in Chicago. And the same is true for the southeast. We have an office in Atlanta. And then, we have a number of people in New York that source transactions across the country and U.S. assets that are owned, in many instances, by Europeans. That’s been a fertile market force. And we have a number of Europeans in our New York office that cover different parts of Europe and source there.

It does a number of things for us. Number one is puts us in a position to find, we believe, some good investment opportunities. Some investment opportunities that not necessarily everyone else sees. But also, from the investment perspective and from the credit prospectus, it gives us sort of an overview of the market. So, we see one particular industry suddenly putting up ten or 12 businesses for sale, we might say, well, maybe something is going on in that industry that might make us a little skeptical, a little weary. So, I think it makes us better investors. We’re generally looking at somewhere between 700 and 1,000 opportunities a year. So, we think-, well, we know we never see all the opportunities that are out there. We think we see the vast majority of them. And we think that makes us both better investors and gives us a leg up, in terms of finding a good opportunity to make some money on it.

What other sourcing methods does Lincolnshire use?

Maloney: I think relationships are part of it. And part of it is just being in front of people. I think you constantly have to be in front of people. And sourcing is not always necessarily a logical endeavor in that you might spend a lot of efforts cultivating a particular channel where you’ll find an opportunity. And then, for one reason or another, you don’t call someone for a month. And they just go to someone else. So, I think it’s constantly being in front of those individuals that have the potential to bring you an opportunity is really the key to the business. And we have a lot, as I say, boots on the ground that do that. And we’re constantly staying in front of the major sources of deals for us.

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