What did you do before launching Red Oak?
I was a management consultant, working for Toronto, Canada based boutique consulting firm Satov Consultants. Satov is a generalist strategy and operations consulting firm founded by ex-Bain consultants, and specialising in serving mid-size businesses. After four years at Satov, I briefly worked on an mobile app software business, before joining Imperial Capital, a mid-market private equity firm in Toronto with about $1 billion under management. At Imperial, I was involved in several transactions, including the acquisition of a security alarm business, the sale of a short-term disability case administration business, and operational, financial, and strategic help projects at several portfolio companies. You can also download my full CV.
How old are you?
33 years old
What did you study?
I studied international business, both for my undergraduate degree at the Schulich School of Business, at York University in Toronto Canada, as well as for my MBA at INSEAD, a dual-campus school where I split my degree between France and Singapore.
What industries have you worked in?
My career has been quite broad, given that both my management consulting and private equity work spanned many industries. Industries I’ve spent significant amounts of time in include:
- Laboratories and Contract Research Organisations (Food, Healthcare, Agrochemical, Chemical)
- Multi-location Healthcare Clinics (Veterinary, Dental)
- Back-Office Environments
- Professional Services (Advertising)
- Manufacturing (Highly specialised healthcare-related)
I’ve been involved in many aspects of these businesses, from operational improvement in production, back-office, and sales, to strategic decisions such as which customers to focus on, how to price, where to focus growth efforts, and what businesses to exit.
Plans for the Acquired Business
Are you acquiring just one business, or a portfolio?
I am acquiring just a single business, as I plan to operate it full-time myself. I am not building a portfolio like a typical private equity fund.
What is your team like?
The team is just myself, so I would be stepping in to your business and keeping the existing team in place.
Are you going to move to my city?
Yes, while I am based in Toronto, Canada today, I will move to the location of the acquired business to run it.
What is your investment horison?
Long-term; a minimum of five years, and potentially much longer. I’m looking to operate the business as an owner/CEO, and am not a “quick flip” investor. My ambition is to grow the business over time and build a strong company that leads in its industry.
Red Oak’s Investment Structure
What is your fund structure?
Red Oak Succession Capital, LLC is backed by a group of 20 investors have invested in the fund, each paying in an initial management fee. Each investor is then entitled to invest in the acquisition itself at their pro-rata share of their initial investment.
What is the approval process to call capital?
I am in continuous dialogue with my investors about the nature of investment opportunities I am pursuing, ensuring that I have their full support throughout the process. I will ultimately require each investor to sign off on the capital call at the time of acquisition. In the event an investor opts out, the others are entitled to invest that investor’s pro-rata share. While I am aiming to have all 20 investors participate at their pro-rata amounts, most of my investors have both the capacity and the desire to write investment cheques in excess of their pro-rata, and some are mid-market private equity funds able to write the entirety of the equity cheque themselves, should that be desirable. I should also point out that all of these investors have already put their initial capital at risk to fund the search.
How much capital do you have to deploy?
We can deploy up to $25 million in equity, so depending on the business we can acquire a company with a value of approximately $50 million. However, we can also complete larger transactions by calling additional capital from some of our larger investors.
Do you have minimum / maximum EBITDA (pre-tax profit) criteria?
Yes, I am looking for an investment with a minimum EBITDA of $1 million, and a maximum EBITDA of $5 million. The exception is software businesses with a subscription revenue model, where I’m looking for minimum annual recurring revenue (ARR) of $3 million.