Middle Market Deals and how to buy, sell and raise capital from $5 to $500 million

Kevin O'Connor, Senior Vice President of basketball operations for the Utah Jazz spoke to the Association for Corporate Growth this morning.

He shared great stories about recruiting and negotiating today, drawing parallels between picking up players in trades, the free agent market and the draft to buying business. He emphasized preparation or due diligence as the key to both competing successfully for good players and for not overpaying.

Kevin explained the luxury tax in the league. The luxury tax requires teams to pay a tax to the league of $1 per every dollar in aggregate salary above $62 million per team. The Knicks are presently paying $63 million in tax.  The tax is split among all the teams in the league.

Overall, it was a great opportunity to hear some great sports stories, applied to business concepts and principles.

(Thanks to Matt Marsh who helped me pull together my notes.)

The highlight of the ACG conference today was the panel discussion about two women owned businesses, Handi Quilter and Making Memories Wholesale, Inc., that had been purchased (80%) by Peterson Partners, a Utah-based private equity fund.

For anyone (as clueless as I) that couldn't imagine how quilting or scrapbooking could create real businesses, it was a fascinating session. 

Laurel Barrus, founded Handi Quilter, a manufacturer of quilting frames and equipment, after running a small quilting business out of her home and realizing that she needed better equipment.  She designed, contracted for its manufacture and sold the finished products--lots of them.

She decided to partner with Peterson late last year in order to step out of the role of CEO and get back to a more balanced life.  Peterson helped her find a new CEO to take the firm to the next level.

I've recently been giving some thought to the on-line practice of building and selling databases of venture capital firms.  It seems like such a great idea to buy a directory, especially if you can get actual E-MAIL addresses.

I once had a client who had purchased a list of 2,000+ venture capitalist e-mails and was planning to casually send a blast e-mail to everyone on the list.

I almost killed myself trying to jump in front of that train. I've often said that there is no such animal as an angel investor--only friends and family who happen to know what they are doing.  That is an exaggeration, but the fact is that angel investors and venture capitalists don't like to invest in people that they don't know or can't vet with people they know well.

The process of raising capital can, therefore, take many months or even years as you build your network in the venture community.

As an entrepreneur or mid-market executive, you really want to know a few key people in the "deal community" in your local market.  Typically, these folks can be found in one place, one group, one organization, one association.  In larger towns, there may be several key groups to join.

In Salt Lake, where I live and work, there are several organizations.  The first group on the scene was the MountainWest Capital Network (formerly the MountainWest Venture Group).  Over the years, a number of other important groups have been formed, including a local chapter of the Association for Corporate Growth and the Utah Information Technology Association, among others.

As an officer of the MountainWest Capital Network (MWCN), I want to use MWCN as an example of the benefits that come from networking within a networking organization of this sort.