Insights from the 2015 Private Equity Conference: Using Investment Criteria as a Guide to M&A

Darden

Peggy Roberts (MBA ’01), chief operating officer of the Riverside Capital Appreciation Fund; Charlie Larkin (MBA ’90), founding partner of Webster Capital; and Taylor Cole (MBA ’98), partner at Harren Equity Partners, returned to the University of Virginia Darden School of Business on 17 April to participate in a panel at the fourth annual Darden Private Equity Conference, hosted by the student-led Darden Private Equity Club. They brought their expertise in leveraged buyouts back to the School in the familiar format they knew so well as students: the case method.

After dissecting the successes — and shortcomings — of deals from Larkin’s and Cole’s past for toymaker Wham-O, designer jeans brand Hudson Clothing, behavioral health and education services business Camelot Schools and even Robert Redford-founded Sundance Catalog, the panel shared key investment criteria they’ve identified to successfully target and execute a buyout or M&A deal.

Highlights of the group’s guidelines for investment criteria include:

  • Prioritize sectors of interest.
  • Dialogue with “the knowers” in a given sector.
  • Develop sector expertise.
  • Define and refine your investment thesis.
  • Work with entrepreneurs.
  • Rely on “old” partners.
  • Proactively and creatively pursue targets.
  • Identify risk and establish mitigants (Alternatively, ask, “What did we miss, and now what do we do?”).
  • Account for the “annoying economical cycle.”
  • Create an appropriate deal structure, capitalization and alignment.
  • Establish clear expectations.
  • Measure, monitor and communicate.

When it comes time to strike a deal, Larkin summed up that the business of buyouts and M&A is about people. Success comes down to a few things at the end of the day:

  • The power of your network is not a cliché.
  • “Street cred” rules.
  • Experience and humility count — not your school GPA.

For more insights from the fourth annual Darden Private Equity Conference, including those from David Rubenstein’s keynote address, please see “Carlyle Group CEO to UVA Darden School: ‘An MBA Is a License to Make a Difference.’

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