FREQUENTLY ASKED QUESTIONS
What makes for a good investment and how do you decide to proceed?
How do you determine the value of a company?
Company size and industry position
Competitive dynamics of the industry sector
Growth trends and opportunities
Depth and caliber of management
Diversity of customer base
Capital expenditure and working capital dynamics
Cash vs. non-cash consideration of transaction
Stock purchase vs. asset purchase
How does Bel Air structure deals?
How does a recapitalization differ from a sale transaction?
Why sell to a private equity firm?
It’s important for sellers to consider various buyer types. A strategic buyer may be able to offer the highest price, while the right private equity buyer will preserve a company's legacy and provide ownership opportunities and operating autonomy for management.
Aren't private equity firms short term investors?
Who are Bel Air's investors?
Our investors consist of several high net worth individuals and ourselves. We have a significant amount of our personal net worth in these investments and a long term view. For certain situations, we may use one of the many institutional investors we know that seek to invest in our transactions.
What type of return does Bel Air look for on investments?
We generally target returns of 20% or more compounded over the life of an investment, generated through earnings growth and the prudent use of leverage. Our return targets are consistent with our historical results.
What factors besides price are important to consider?
How, when and on what terms the transaction closes
What happens to employees
What happens to the business post-closing
How much equity can management expect to receive?
Historically, management has owned 10% - 45% of transactions through a combination of direct investment and granted equity options. Such factors as respective capital contributions, personal resources, transaction dynamics and post-closing financial performance play a role.
Does Bel Air need controlling ownership in a transaction?
What is a business owner’s typical role after a transaction?
Does Bel Air require management continuity?
No. Management continuity is preferred, but not required. We've recruited numerous company leaders in previous transactions.
How involved does Bel Air get with managing a business?
Partner with incumbent management teams
Recruit leaders in the absence of leadership
Serve on the board of directors
Facilitate strategies such as add-on acquisitions
Do the companies in which Bel Air is invested work together?
In rare instances. While we attempt to share best practices amongst investee companies, we recognize that most managers want to run their own show.
Will the culture of the business change after a transaction?
The best performing businesses are ones with strong corporate cultures. We encourage fostering an environment of respect and opportunity to lay the groundwork for a strong corporate culture.
How will a transaction affect employee compensation?
Our transactions typically include market based salary along with equity ownership opportunities and bonus plans for key managers.
What happens if things don’t turn out as planned?
How does Bel Air add value to companies?
Our role is one of marrying good businesses with the resources to achieve their potential. While many companies are already well run, we often find that our bias for growth enables us to focus a firm’s development.
How is Bel Air different from other private equity firms?
When it comes to lower middle market deals, we believe few firms can match our combination of experience, capabilities and track record. It's critical for a business owner to find the right fit, and we believe our blend of Midwestern style, meaningful personal investment in transactions and long-term horizon sets us apart.