advocates

2018 is starting off well for K Squared!

2018 is starting off well for K Squared!

2018 is starting off with a quickened pace. In May, we will celebrate our one-year anniversary.  This milestone is a testament to our team and folks like you who are supporting our firm.  Thank you for all of your support!!Following is your regular installment of K Squared happenings, highlights and acknowledgments.

Thank You for Your Support in 2017!

Thank You for Your Support in 2017!

2017 Was a Banner Year! Thank You for Your Support! Following is your regular installment of K Squared happenings, highlights and acknowledgments.

2017 Was a Banner Year! Happy Holidays!

In the beginning of 2017, Ryan and I set out to build our first fund and a firm that would allow us to give back to entrepreneurs. As of May 2017, we launched the fund and we were joined by over a dozen exceptional teammates who have helped us attract deal flow and evaluate many compelling opportunities.

During this holiday season, we find ourselves reflecting on the past year and celebrating our team's accomplishments! 

We are proud of our team’s accomplishments and look forward to furthering our progress in the New Year! Thank you for your continued support and we wish you happiness and peace during the holiday season.

Screen Shot 2018-04-11 at 8.30.17 AM.png

100+ opportunity accepted and other miscellany

In September, we celebrated our five-month anniversary, and accepted the 100th opportunity into our deal flow! We look forward to making our first investment and continue to pursue acquisitions of service based companies, primarily in Energy, Healthcare and Technology. We have pursued a number of opportunities, but have been a bit reluctant, and it appears we are not alone. 

Other firms are reluctant to invest and in 3Q 2017 Private Equity (PE) firms invested over ~$160 billion across ~1000 deals, which is down 11% compared to the first three quarters of 2016.

And, there appears to be a classic supply and demand gap emerging. 

The oldest baby boomer turns 71 in 20171, and there are ~ 12 million “baby boomers” who own small businesses nationwide2.  For argument's sake, let's say that 1 million of those companies are considered viable – at current deal volume, it would take over 125 years for all of those companies to find a suitable exit.  This is partly the problem Ryan and I set out to solve. As you may know, we offer owners a way to exit with liquidity and transition their company to a suitable successor; preserving the owner's legacy is one of our main priorities.  If you or anyone you know are exploring the sale of your business, we can help. In fact, for the remainder of October, we are offering free valuations for businesses with EBITDA of $1.5+ million. To apply, visit the following page k2fund.co/valuation.  

Thank You. We would like to extend a special thank you to those below. We are very lucky to have your support and look forward to an opportunity to reciprocate! 

- Jasmine Ewing of Prime Health

Katherine Darius of the University of Chicago, Booth School of Business

- Keith Wegen of Flatirons Capital Advisors

- Matt Rasmusson of UMB Bank

- Michael King of Brownstein Hyatt Farber Schreck, LLP

- Tim Dailey of Peakview Partners

 

Congratulations To

- Richard Thaler, UChicago won the Nobel Prize in Economic Sciences

- Mike Hartman, Chicago MBA, now Exec Director, Colorado Department of Revenue

 

Team Spotlight

Sarah Wynn, MBA Candidate, University of Chicago '18. Sarah was our first hire and one of our absolute best! She started as an associate and has begun to oversee deal flow and fellow associates. After graduation, Sarah would like to pursue an investor communications role in venture capital or growth equity in New York, Chicago or San Francisco. Should you hire Sarah - you won't regret it! 

Marina Chumakova, MBA Candidate, University of Chicago '18. Marina was instrumental in shepherding many deals and her ability to analyze markets and business models is exceptional. After graduation, Marina would like to pursue a role in private equity, We endorse Marina fully! 

Alex Hechtner, B.S. Finance Candidate, University of Denver (DU) '18. Alex was our second hire and supported our industry analysis, development of internal processes and tools, as well as our outreach. At the DU, Alex is a Hornbeck Scholar, he also is the Portfolio Manager of the student-run Reiman Fund, a member of the Wall Street Club, and a member of the Student Investors Group. Alex is a team player with natural leadership abilities and is poised for a great career. After graduation, Alex would like to stay on the buy-side of private equity and would like to pursue a role in Denver; Chicago; or New York.

Open Positions. We are accepting applications for School Year and Summer Internships.  Please direct any interested and qualified candidates to our Open Positions

What We Are Reading.

No A**hole Rule by Robert Sutton. A must-read for anyone looking to build a culture of collaboration and remove arrogance or ego

Customer Development for Entrepreneurs by Mike Fishbein. A collection of simple tactics for anyone looking to reach customers

What Your Innovation Process Should Look Like by Steve Blank and Pete Newell, a short list what most organizations will need to innovate internally

 

What We’re Listening To. “The Future of U.S. Health Care: What Comes Next?” podcast moderated Mike King and sponsored by Brownstein Hyatt Farber Schreck

What We’re Watching. The World Series – go Astros!! (We are Indians fans.  We’re supporting the Astros because I married into an Astros family and one of our teammates is from Houston.)

What We Are Exploring. "Reboot Your Board" an online course with tactics to develop a high functioning board. Regardless, Jerry Colonna offers a wealth of experience and practical knowledge for executives

Thoughts For Business Owners. Retirement for business owners is different than retirement for employees who work for companies owned by others.  Many business owners have their retirement tied up in their own businesses and will need to sell part or all of their company to reveal the value of those assets. On that note, the following article in caught my eye by posing the question of “Baby Boomer” business owners, "Is Your Retirement Tied Up?"

Referrals. Following are a selection of anonymous opportunities that did not fit our criteria, but are attractive opportunities. If you are interested, email referrals@k2fund.co and we will connect you with the appropriate party. We are not a broker-dealer. We are not a Wholesaler. Nor do we receive no compensation for referrals. Our aim is to help the same people who help us. 

 

- Apollo - Non-medical home-based personal assistance services

- Apparatus - Industrial and agriculture equipment sales and service

- Asclepius - Biologics manufacturer 

- Blowtorch - Specialized welding, pipe fitting, rigging, and engineering 

- Chain hand - Oil & gas facility and pipeline contractor

- Habitat - Environmental consulting and civil engineering services

- Heat -  Heating and air conditioning installer

- Hermes - Telecommunications and audio-visual systems integrator

- Liquid - Waterproofing and restoration contractor

- Omaha -  Specialty pharmaceuticals

- Redwood - Horticulture equipment and supply wholesaler  

- Themistocles - Drug rehab and disorder treatment center

- Tracks - Railroad track construction and track maintenance

- Trojan - Developer of workplace safety and protective equipment

 

1 California Business Association 

2 U.S. Small Business Administration

 

© 2017 K Squared Fund LLC. All rights reserved.

Exciting times at K Squared and the US Economy

Since launching in May, we've focused on building our team and meeting business owners. We on-boarded ten team members, selected from a pool of 200+ candidates, from 20+ universities.  Each one of our team members were handpicked, and we are honored to have the support of such an exceptional group of individuals.  With the team up and running, Ryan and I have had the time to meet with fellow business owners to discuss their ambitions and exit plans.

Ryan and I built K Squared to offer fellow entrepreneurs a way to transition their company to operators who understand how to build a sustainable business. We met with firms, ranging from startups to companies that have survived for multiple generations. The individuals we spoke with included owners who plan to sell their business, and those who don’t.

The leaders we spoke to consider their business as a primary asset, and consider selling the business is an integral part of retirement.  Many want to time their exit for when the economy peaks, yet over half planned to sell before the last market correction in 2008.  Those we spoke to have been so focused on the business, that selling and preparing for retirement have lost priority. One owner said it best, and acknowledged that her company have been stuck in limbo, and have been “selling” since 2008.

Preparing to sell your business is like selling your home, and should compensate you for years of hard work. We all want to time the sale of our homes and our business for an economic peak. The value of our companies, our assets, and our investments all move in roughly the same direction and are effected by external factors like the health of the national economy and availability of credit.  In recent years, we’ve enjoyed market growth and low interest rates. valuations for companies with an enterprise value of less than $50M are trading at 5.0x to 6.0x EV/EBITDA in 2016, levels not seen since 2013.  Despite these trends, we expect a future market correction.  

Apparently, we're not alone. Here are seven billionaires worried about a market correction, including the man himself, Warren Buffett.  As growth slows and interest rates increase, buyers leave the market and financing is more expensive, which leaves few buyers and less money available.

With strong valuations and affordable capital, we suggest owners strongly evaluate their options within twelve months and take advantage of this window of opportunity.  Contact us if you’re considering an exit or selling your business interest.  We understand the concerns of business owners, and our passion is to work alongside business owners: serving, advising, providing insight, and improving businesses.  We’d be happy to help you evaluate your options, pursue the sale of your company or chat with a fellow business owner.

Thank You. We would like to extend a special thank you to those below. We are very lucky to have your support and look forward to an opportunity to reciprocate! 

Helping Our Friends. Deal flow is building, thanks to our Partners. Following are a selection of anonymous opportunities that did not fit our investment criteria. If you or anyone you know are interested, email referrals@k2fund.co and we will connect you with the appropriate party. We are not a broker dealer and receive no compensation for referrals. Our aim is to help the same folks who are helping us.

  • Baywatch - Marine product manufacturer
  • Comanche - Rail services company potentially looking for growth equity
  • Data - Supply chain software and services
  • Green - Indian Solar Plant in search of equity or debt project financing
  • Lookout - manufacturer of integrated security hardware, software, solutions and services
  • Orange - Technology Consulting and Contract Management
  • Oz - Travel Nurse Staffing Company looking for subordinated debt
  • Rent - Niche private home rental platform, specializing in properties near major events (e.g. concerts, sporting events, etc.) in underserved markets
  • Stella - Digital strategy and social media consulting firm
  • Turf - Artificial turf surface designer and installer
  • What about Bob? - An online psychiatric medical education provider
  • Vulcan - Medical practice management service provider 

Team Spotlight. It’s with a heavy heart that we say goodbye to Alvaro. Fortunately, Chris is staying on part time, through the school year. Following is a little background about a couple members of our team. 

Alvaro Arizcun, MBA Candidate, MIT, Class of 2018. Originally an engineer, Alvaro is now a seasoned Private Equity professional and Vice President of the MIT Private Equity Club. Following graduation, Alvaro has expressed an interest in Private Equity roles in Madrid, New York or London.  Ryan and I both endorse Alvaro fully and would be honored to work with him again.

Chris Odeh, MBA Candidate, University of Chicago, Class of 2019. In his previous life, Chris worked in Capital Markets research at the Federal Reserve Bank of New York, where he authored a piece on equity valuations and flows following the French Election for the Federal Open Market Committee. Chris is looking for a role in Private Equity or Investment Banking in Chicago, New York or San Francisco. Chris brings an energy and thoughtfulness that raised the bar for our team. We recommend Chris highly.    

Open Internships. School Year and Summer Associate, Analyst and Marketing positions are now open. Please direct any interested and qualified candidates to our Open Positions

Please contact us should you have any questions or suggestions. Thank you for your continued support!

What we are Reading

Tools of Titans, by Tim Ferris of the Four Hour Workweek. A collection of tactics and routines from an eclectic and interesting group folks like Marc Andreesen (Netscape), Reid Hoffman (LinkedIn), Malcolm Gladwell (Tipping Point) and Laird Hamilton (pro Surfer)

Hacking Growth by Sean Ellis and Morgan Brown. A selection of strategies to create value and employed by companies like; Facebook, Uber, Dropbox, Pinterest, AirBnB and many more.

I Am the CEO … So Why Am I Confused About How I Should Spend My Time? by Mike Smerklo. We’re all busy and Mike offers set of simple techniques to help prioritize and manage our time.

K Squared Fund LLC (“K2”), do not provide tax or legal advice. Consult a tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters.

© 2017 K Squared Fund LLC. All rights reserved

Welcome to the K Squared Blog

I’m pleased to announce that Ryan Kunzi and I launched the K Squared Fund, a private equity fund based in Denver’s Larimer Square. We built K2 to offer fellow entrepreneurs a way to transition their company to operators who know how to build a sustainable business. We aim to acquire an existing North American company with revenues between $10-75 million. Following the acquisition, Ryan and I will take a management role and focus on long-term growth. We have just begun our search for companies to acquire. If you know of business interested in selling, contact me directly. 

The past few months have been a whirlwind and we thought you might enjoy a brief glimpse into what we’ve been working on. We are honored to have the support of thirteen investors and ten teammates.  Our investors have invested in more than 150 businesses ranging between $2 million and $8.5 billion in revenue, and offer over 300 years of management experience. Our team now consists of ten exceptional professionals all who have gone above and beyond in the past months! We are proud of how quickly our team has come together. You can find additional information about our investors and team on our website and in future updates.

Thank You. Ryan and I are very lucky to have your support of many.  We would like to extend a special thank you to the folks below who have been nothing but supportive! 

Referrals. Deal flow is building, thanks to our Partners. Unfortunately, those below did not fit our investment criteria, and we decided to pass. If you'd like more information regarding any of these deals, please email referrals@k2fund.co.

  • Project Apple - Supply tools and construction equipment distributor
  • Project Tomato - U.S. fast casual Italian restaurant chain
  • Project Vulcan - Provider of forensic disability evaluations
  • Project Tangerine - Healthcare tech focused on physician performance and patient care
  • Project Giant - Aerial equipment rental company within the construction industry

Some final thoughts...

1. We anticipate a future market correction and potentially a recession looms as interest rates continue to rise. What sort of impact will this have on small business exit strategies?

2. Selling your company can be a wayward venture. K2 aims to ease the burden of the sale, and following are tips for owners considering selling

3. Protect yourself from the increasing number of ransomware attacks, like the one that hit the US this week. You have to wonder: when will we be able to insure ourselves against malware damages?!

Don’t hesitate to contact us if we can be of help! And, if you’re in the area, please visit!