August 19, 2019
Interviewed by: David Snow
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My Life as a Deal Sourcer

Gretchen Perkins, the head of business development at 20-year-old, Detroit-based, middle market private equity firm Huron Capital talks about her career path, the art of finding proprietary deals, and why entrepreneurs prefer to partner with Huron Capital. Interviewed by RSM’s Kerensa Butler.

Gretchen Perkins, the head of business development at 20-year-old, Detroit-based, middle market private equity firm Huron Capital talks about her career path, the art of finding proprietary deals, and why entrepreneurs prefer to partner with Huron Capital. Interviewed by RSM’s Kerensa Butler.

PRIVCAP TRANSCRIPT

My Life as a Deal Sourcer

Kerensa Butler, RSM: So, Gretchen – you’re the partner in charge of Business Development at Huron Capital. What does your role entail?

Gretchen Perkins, Huron Capital: I lead a dedicated team that spends all of its time sourcing investment opportunities for Huron Capital, both majority-control acquisition opportunities,and minority investments in lower-middle market companies. Our job entails a lot of boots on the ground. We all travel almost every week. This is a people business, despite all of the deal portals, and all the efficiencies, and all sorts of best practices where you can improve your efficiency. We’re taking someone’s baby – their business. And we’re talking millions and millions of dollars that we’re entrusted to be careful stewards of on behalf of our investors – pension funds, college endowments, family offices. So it is still very much a people business, and we think that’s the best way to source transaction opportunities.

Butler: So how did your career lead you to deal sourcing? How’d you get here?

Perkins: I started out in commercial lending. I realized that in lending I really liked the variety. I really liked always having many different types of businesses to look at, and assess, and learn about, and that just energized me. One of my borrowers, a private equity fund, approached me, and said, “Hey, you’ve always been very diligent in calling on us for our deal lending activity – we are now at a size where we’re adding a full-time dedicated deal sourcing person, and we’ve admired your diligence, and we want you to come do that for us.” I was there for six years. Then I joined Huron Capital.  I love the variety. We’re constantly sitting around our Monday morning meeting looking at the deals that came in the prior week, and we’re struck that, huh, somebody does that. I never thought of that. Didn’t know that was a business. Didn’t know that was something in some supply chain. It’s fun.

Butler: And then the most important question that I have is, how did playing the French Horn in marching band prepare you for this life you live?

Perkins: [laughs] It was a grueling, grueling training schedule at St. John’s High School marching band. Geez. Training, making sure your delivery is perfect and great, and exactly what it needs to be for the moment. I feel that is very similar to what we do here in deal sourcing. Finding the proper opportunity. 

Butler: What do you think gives Huron the advantage in sourcing the deals?

Perkins: We have a differentiated way of sourcing, and we also have a very operational approach. One, our boots on the ground – calling on referral sources, accounting firms like yourself. You’re the trusted advisors of many business owners. Calling on attorneys, investment bankers, business brokers, wealth managers, all sorts of trusted advisors to business owners, and we’re calling on them, and that’s our boots on the ground approach that I referred to.

We attend almost 30 conferences a year among my group, specifically to get in touch with all of these folks that I mentioned. We also have a way of finding deals that we have branded the Exec Factor Initiative. That’s where we back an executive who’s very experienced in his or her field, but there’s no deal at hand. It’s simply someone who either is ready for their next gig. They’re maybe in large corporate America in a leadership role, and they’re looking to create more wealth for themselves. They move out of the huge company into the lower middle market to build a company from the ground up, so we partner with that executive. A lot of firms will say, “Oh yeah – bring us a deal and we’ll back you,” but we say, “We’ll back you in your idea for creating a buy and build scenario within your area of expertise.” It might take 12 months. It might take 24 months to find that first deal, but we have committed to that executive. 

Butler: So when you meet a potential portfolio company, what’s your pitch for Huron? Why do you say us and not them?

Gretchen: We say we have operational resources to help take them to the next level. We can help you get bigger and better than you are on your own. Many entrepreneurs realize they’ve taken their company to a certain level, and they’re kind of maxed out on their capabilities, and they’re looking for a partner like Huron Capital to help them scale the business, and get bigger, and create more jobs, and enhance their legacy, and build the company that they started. 

Butler: In Huron’s corner of the middle market, are deals heavily intermediated?

Gretchen: I would say, as a whole in our industry there is a lot of intermediation in the deals. However, we’re pretty proud of the fact at Huron Capital that 68% of all closed deals we’ve ever done since the beginning of time – and we’re celebrating our 20th Anniversary this year, by the way – over 68% of deals that we have closed have been proprietary, and there’s been no intermediary. So we’re pretty proud of that fact. 

Butler: What do entrepreneurs care about in an acquisition other than the price? Obviously, you probably don’t win deals based only on price.

Gretchen: It’s the relationship, number one. It’s a marriage we’re going into. It’s a multi-year commitment to working collaboratively with each other with a common goal. Hopefully, our goals are aligned, and so we try to vet that at the beginning. What are your goals, Mr. or Ms. Executive? What do you want to do with this business? Do you want to push organic growth? Do you want to do add on acquisitions? We can help you however you want to grow. We’ll have a vision for a company, as well. Numerous portfolio companies of ours now have done, six, seven, ten add-on acquisitions. 

Butler: What advice would you give for somebody who wants to enter into private equity?

Gretchen: Well, it took me 15 years as a lender before I got into private equity, but I’d say the more traditional path for associates and vice presidents entering our business is they have a couple of years of investment banking, and then we hire them after that, so they know how to run models and do deals. We have them for two to three years, and then very typically they go back and get their MBA. And then if we love them, and they loved us, we offer them a job back after their MBA is completed. It’s also very common to hire vice presidents and associates that didn’t work for us before. Now, if you are an operating partner, you’re going to be hired because of your multiple years of experience either helping implement ERP systems or optimizing supply chains or maybe you’re an operating partner of human capital. There’s two levels: Either you’re super experienced or you’re new, and a gunner, and want to learn, and work hard, and like the pace of a private equity firm.  

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