260 Drawn to The Collaborative Growth Series "Private Equity" Event on January 28th The Collaborative Growth Series event on January 28th attracted 260 CEOs, CFOs, investors and executives for an information packed two-panel, 3-hour discussion, Private Equity – 2010: Guarded Optimism and Lots of Money on the Sidelines. The panels featured some of Minnesota's most active private equity investors, two CEOs who have completed $100+ million private equity deals, and veteran experts in investment banking, legal and accounting/tax who regularly facilitate these transactions. In addition to a morning packed with networking and information, attendees also received a 40-page booklet that provided a detailed outline on how to execute a private equity transaction and more to bring back to their offices.

The morning began with a panel of experts delving into reasons to seek private equity and how to get a deal done. The panel included Kent Adams, Managing Director at Greene Holcomb & Fisher; Matthew Knopf, Partner, and Christopher Bellini, Of Counsel at Dorsey & Whitney; and David Gale, Partner, and Todd Miller, Partner at Ernst & Young.

Panelists addressed the kinds of private capital sources, what level of return is expected on those investments and how today's challenging market has affected the availability and use of those sources. Coupled with an extensive outline, the panel detailed costs, regulatory issues, valuation, tax considerations and more. When it comes to getting the deal done, the panel stressed the importance of being prepared and giving the process plenty of time. Financial and legal due diligence is essential to successfully executing the transaction, and the panelists discussed, step-by-step, how to prepare your company to get a private deal done.

Panelists (L-R) Kent Adams, Matthew Knopf, Christopher Bellini, David Gale and Todd Miller

Following a brisk networking break, the second panel addressed “Why Private Equity? When Private Equity Makes Sense and What the Recession has Brought to the Market.” The panel included both experienced CEOs and investors: Marti Morfitt, CEO of Airborne, a two-time CEO (Airborne and CNS) who sold CNS for $566 million; Mike Sweeney, Chairman of Star Tribune, a veteran investor and executive and former partner at Goldner Hawn; Andrew Hofmeister, CEO of GeoDigm, with a $100 million private equity deal in February 2009; Tim Kuehl, Partner with Norwest Equity Partners, Minnesota's largest private equity firm; and Dan Carr, CEO of The Collaborative (moderator).

Panelists discussed how companies make the decision to pursue private equity over other types of financing, including the benefits and drawbacks of private equity. Veteran Kuehl spoke about the differences between venture financing and private equity, and when each type of financing is most appropriate. “Venture financing is typically earlier stage, when the company has an incomplete management team -- a big idea, and big opportunity. Private equity is more of a liquidity event. Rather than money fueling the big idea, it's typically a change in control,” said Kuehl.

Panelists (L-R) Dan Carr, Tim Kuehl, Andrew Hofmeister, Marti Morfitt and Mike Sweeney

Morfitt and Hofmeister have been involved in private equity transactions with their respective companies, and discussed what factors motivated their companies to choose private equity. Morfitt emphasized how important trust is in a private equity deal, contrasted to a more casual relationship one can have in other types of investments. “Private equity is like a marriage – you must create a strong relationship and trust. It is fundamentally necessary to understand that the plan you lay out never goes exactly as you hope. You need your investors to be partners and enjoy the good times, and stick with you through the bad times,” stated Morfitt. Hofmeister added that when looking for a private equity partner, you need to do your research, “Make sure they have an interest in you, and that you are fishing in the appropriate pond. Look for a match in chemistry – you are so intensely involved with them, if the chemistry doesn't work, move on.”

Panelists continued by discussing the effects of the current market on private equity transactions. Sweeney shared the story of his current company, Star Tribune, selling when the market was hot, but the industry (newspaper) was in decline. “Too much leverage in an industry under pressure with management not prepared to make tough decisions is a recipe for disaster,” stated Sweeney.

Panelists wrapped up by emphasizing that while the market remains difficult, deals are still getting done for strong companies and reminded the audience that business fundamentals like due diligence remain as important as ever. The morning closed with a lively audience Q&A session.

The Collaborative was pleased to host this well-received event and would like to thank our co-sponsors who made this event possible: Dorsey & Whitney, Ernst & Young, Greene Holcomb & Fisher and the Minneapolis/St. Paul Business Journal.

The Collaborative Growth Series
The Collaborative is thrilled to offer significant topics that are of vital importance to today's entrepreneurs, investors and professionals while also utilizing our demonstrated seminar format of 3-hour, 2-panel events, which include extensive take home materials.

The 2010 Growth Series offerings include:
January 28 – Private Equity
April 15 – Mergers & Acquisitions
May 2010 – Going Public