A nontraditional approach to private equity investment.
Lead Capital has long seen the inherent conflicts of interests in traditional private equity investing between management/employees, investors and fund managers. Lead was created to be a different type of investment firm that allows all constituents of a business to have the proper alignment for long-term stability and success.
When Lead’s investors have asked traditional private equity funds why they sold a portfolio company that was performing well and growing, often the responses have been “we need to show an exit so we can raise our next fund” or “we have been invested in the business for 5 years and it is time to sell”.
Good businesses are hard to find, and in Lead Capital’s opinion (or Warren Buffett’s opinion for that matter), selling a performing investment for the sole purpose of fundraising or satisfying a pre-described timeline for fundraising requirements does not make sense. If management has performed well and the future prospects are strong, it is in an investors’ best interest to stay committed to the management and strategy that is in place.
Lead is not restrained by these conflicts. Our investors understand that churning portfolio investments reduces net returns through increased fees and higher taxes. Furthermore, once the capital is returned, the investor has to find a new investment with unknown risks. In our opinion, investors are best served by compounding equity returns in existing investments where transaction fees are minimized, taxes are deferred, and capital remains invested with trusted management.
With our investors’ aligned, long-term focus, Lead creates an attractive and differentiated environment for management and employees relative to traditional private equity. Our teams don’t have to worry about being constantly sold, merged, resold, consolidated, flipped or divested by different owners every few years. That “churning” environment creates a tremendous amount of stress and distraction in an organization and prevents it from focusing on growing the business.
Furthermore, Lead Capital’s fee structure is much more aligned and dependent on each investment’s performance relative to traditional private equity. Our investors prefer this structure as they know Lead will win when they win.
For all the reasons described above, Lead Capital has created an environment and platform where all constituents of a business are aligned to be successful for the long-term.
What Lead Does
Lead Capital provides liquidity to shareholders of privately owned businesses, facilitates transition of ownership to key managers, and provides an environment that allows employees and management teams to capitalize on growth opportunities. We are not operators; rather, we are a resource for management. We leverage our healthcare industry knowledge and experience in operating in a highly regulated environment. We work closely with management to set the company’s strategic direction and support activities that will increase the company’s value at the eventual time of exit.
The following are services we typically provide to our companies, when applicable:
We assist with site-level unit economics analysis, profitability analysis, business process improvement, and provide improvements to compliance, billing, coding, and software/IT infrastructure.
We help identify strengths, weaknesses, opportunities, and threats to craft a strategic roadmap.
We help identify, recruit and retain leading executives who have the experience to help companies grow and improve operations.
We assemble a value-add board of directors specific to each investment.
We develop systems, metrics reporting, detailed budgeting, financial trend analysis.
Management Service Organization
We create a management service organization (MSO) that centralizes management functions and administrative services.
We help companies manage their payer networks, improve the credentialing process, and help ensure proper billing compliance.
Third-party Advisory Consultants
Lead has a broad healthcare-specific network relating to regulatory, compliance, audit, legal, tax, insurance, benefits, etc.
We analyze sales trends, develop branding and marketing strategies.
We review hiring practices, personnel evaluation and development, organization, structure, and compensation.
We assist with developing and executing an acquisition strategy.
Capital Markets Advisory
We negotiate with financing sources, facilitate add-on acquisition opportunities, and provide debt and equity capital as needed.
We help companies optimize timing, hire sector-specific advisors, negotiate with buyers.
We take great pride in partnering with management teams to lead companies forward to become more professionally managed. We know that when we execute on these initiatives, companies grow, become more profitable, and management and employees have greater success.
The Family Capital Advantage
By investing private capital from high-net-worth individuals and families, Lead Capital Partners makes a personal commitment to achieving your company’s highest potential.
We believe in growing healthy companies and establishing a stable environment where all constituents of a business are aligned for long-term success.
With Lead Capital, sellers retain a meaningful equity ownership and gain a partner that helps accelerate growth and professionalize management. Together, founders, investors and Lead’s managers signal a belief in the future of the business – and lead the way toward a meaningful legacy.