Private Equity Partnerships

In today’s fast-moving and competitive world, business owners are often overwhelmed. Competitors are constantly evolving and developing new products and ideas. Customers are demanding faster, better, and cheaper. And technology is impacting nearly every aspect of business and life.

Owners of fast-growing, lower-middle market businesses are constantly assessing the opportunity to grow versus the capital and resources required to generate that growth. Many business owners attempt to bootstrap capital needs and rely on friends and family for advice. Increasingly, business owners who are looking to accelerate growth and consider their business as a lifetime asset instead of simply something they “sell” are looking for financing partners who can provide sophisticated resources, guidance, and capital. In these situations, choosing a proper “growth partner” is the single most important decision these business owners can make.

A business owner who finds the right partner can sell a majority of their ownership to “take chips off the table” and diversify their assets. At the same time, by retaining a significant ownership stake going forward and finding the right partner with expertise and appropriate capital, the business owner can make materially more on a round-trip basis through the second transaction (when the owner and the new partner both exit) than what they would have if they fully monetized at the original transaction. At each liquidity event (assuming a financial buyer), the business owner could have the opportunity to obtain partial liquidity and retain equity for the next phase of growth with a new partner. In a successful business, the business owner can ultimately obtain many multiples of the original enterprise value in liquidity through a series of transactions. With the right partners, the business owner can also ensure the appropriate culture and legacy continue and provide exciting opportunities for employees.

When New Harbor considers business owners to partner with, we are looking for people who are motivated to stay involved in the next phase of their company’s growth, and who share our desire to make a positive contribution to society while aggressively growing their businesses into industry leaders. Growth and success do not necessitate cutting corners, and in fact, quality tends to win in the end; we look for partners who share these values. From there, we spend a great deal of time not only evaluating the business but also evaluating if we believe the partnership will be successful.  We focus on three main considerations:

  1. Trust – Is there mutual trust between both parties, with open communication and an ability to work through disagreements? Trust allows for and promotes reconciliation, which in turn leads to solutions. Distrust promotes disagreement. The ability to work through issues is the most important aspect of a successful partnership when navigating unexpected situations.
  2. Common Goals – Do we want the same things? New Harbor’s mission statement reads “New Harbor Capital exists to transform businesses and is deeply invested in the success of our partners.” We are mission-driven, partner-focused investors.
  3. Team Mentality – Do we support each other? Not everything goes well all the time, and no one is right 100 percent of the time. Just like it “takes a village” to raise kids well, it takes a collaborative culture to be successful.

Strong relationships built on trust, common goals, and a team mentality require hard work. But strong relationships create great partnerships, and great partnerships increase the likelihood of success. Great partnerships are the foundation of New Harbor Capital.

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